John Travolta tested negative for coronavirus last week. Turns out it was just Saturday night fever. He’s healthy as a horse. How healthy is your pipeline? From what I hear, pipelines are still relatively substantial but new locks are slowing somewhat and lenders are working hard on closing loans locked before March. Sure enough, according to FBX, March 2021 mortgage rate-lock volume was down 13% year over year and up 1% month over month across all channels, while funded volume increased 78% over 2020’s March and 26% over February 2021. Rates are still fine on an historical basis: The average 30-year conforming retail funded rate in March was 2.98%, 7bps higher than February and -73bps lower than the same month last year. FBX sources a statistically significant data set directly from lenders to produce these benchmark figures.
Saturday Company Spotlight: First Community Mortgage (FCM): “Giving back and helping others within the community.”
In 3-5 sentences, describe your company (when was it founded and why, what it does, where, recent growth and plans for near-term future growth).
First Community Mortgage is privately held and headquartered in Murfreesboro, just outside Nashville. Our 19-year-old organization does business across 46 states, and last year we announced the acquisition of a Mortgage Boutique, continuing the growth, strength, and expansion of our Wholesale Division. We funded over $3.5 billion in home loans in 2020. Our CEO, Keith Canter, who also is one of the founders, says “people-focused” sums up FCM’s approach. (First Community Mortgage is an Equal Housing Lender, NMLS ID 629700.)
Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why.
Most First Community volunteer and philanthropy work is through FCM Cares, our nonprofit foundation run by our employees. We believe that giving back and helping others within the community is one way we can make real our mission statement of being the lender of choice in communities we serve.
Our largest FCM Cares event is our annual TMO Golf tournament; last year the tournament included 66 teams,103 sponsors, and raised $65,000+ for local charities. There are many other community events throughout the year where our employees are actively engaged in serving their communities.
Our team members also participate in and lead community and business organizations.
What does your company do to help elevate your employees’ growth? Describe any mentoring programs, outside classes or training, in-house training. How does the company help people develop?
Our FCM Leadership Academy is an internal, comprehensive, and innovative leadership curriculum open (by nomination) to any employee seeking to improve their leadership skills. We of course have other training opportunities, both standard offerings and more individualized opportunities.
Tell us how your company maintains its culture in the office, or in a work-from-home environment if applicable.
Pre-covid, we always had get-togethers designed to enjoy time with one another. During the pandemic we have been sending periodic packages to staff. Individually, some teams hosted various events on Microsoft Teams to stay in touch. One week, Keith (our CEO) even called every single employee personally, making sure they and their families were healthy.
Things you are most proud of that don’t have to do with sales.
From our CEO, Keith: I am probably most proud of how our team members were so incredibly agile and dynamic in the face of the pandemic throughout 2020. Their performance was truly remarkable. I am also proud that employees lead our philanthropy and community outreach efforts through FCM Cares.
Fun fact about First Community Mortgage.
A lot of customers think we are a local organization because of our tailored, people-centric approach, but we originate in 46 states.
Is there anything else you’d like to share along these lines?
In 2020, we recruited an experienced financial services pro to head Community Engagement, building on our already successful Multi-Cultural Lending Initiative.
(For more information on having your firm, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)
Clearly what Freddie Mac and Fannie Mae (GSEs) do impacts every lender, and I received this note from Refinitiv’s Michael Ehrlich. “Over the past few days, I have been on the phone with over a dozen lenders, discussing the GSE caps on 2nd Home and Inv Property Loans and the impacts felt due to the speed of implementation. Please participate in this survey; individual respondents will not be disclosed in survey results. This survey should only take a few minutes to complete. The results will be presented at the next MBA Secondary and Capital Markets Committee call for those who are members. I will also send the survey results directly to all who participated. Please contribute to the discussion!”
Vendors: working hard, playing hard
Okay, maybe not so much play. Vendors do a lot more than make up odd company names where middle letters are capitalized and that create spellcheck speed bumps. Or putting “e” in front of words. Services and products are always in demand by residential lenders who’d rather scale up or scale down using vendors rather than hiring and firing employees. Who is doing or writing what?
Milliman has summarized key trends in the PMI industry and relevant management comments discussing business trends and outlook. The Private Mortgage Insurer (PMI) market trends and highlights, 4Q 2020 report includes summaries of Trends in NIW, IIF performance, Delinquent inventory, Forbearance/foreclosure moratoriums, Loss reserving, Recent capital markets ILN issuances and Additional excerpts from earnings calls.
Insellerate announced the delivery of key data insights for lenders through its Data IE™ solution. “Turn your borrower data into actionable insights and intelligent engagement. Insellerate’s Data IE solution enables loan officer’s to craft the right message at the right time with the right offer leading to more timely engagement, higher conversions, and enhanced borrower retention.” (To learn more, contact Insellerate.)
Spruce announced the launch of its new underwriting model, providing a fully underwritten title commitment in minutes and bringing the company one step closer to its mission of building the one-click checkout for real estate transactions. The automated underwriting model is being launched in conjunction with Spruce’s partnership with American Digital Title Insurance Company, which is owned by Digital Partners, a Munich Re company.
Top of Mind has introduced an integration between its Surefire CRM and the LendingPad® suite of loan origination solutions (LOS). The direct API connection enables real-time sharing of contact records and loan milestones between LendingPad and Surefire CRM, which in turn allows lenders to automate the delivery of personalized communication. For instance, originators can use Surefire CRM to dynamically generate and deploy interactive content that walks first-time homebuyers through what to expect during the loan process.
Blend released its new toolkit for loan officers, LO Toolkit, offering a streamlined workflow across the entire loan process. Key features include significantly reduce time of loan cycles, entire loan process from start to finish is managed in one workflow, flexibility to work on the go, from home to the office to on the road, and to collaborate with borrowers in a digital environment built in the cloud. Read more information here.
The Sprout Mortgage “BROKER AdvantEDGE” is a series of operational improvements that will continue to evolve over the balance of 2021 and beyond. The first phase of BROKER AdvantEDGE streamlines fee management. Brokers can gain increased accuracy by controlling data input, immediately access compliance results prior to loan submission, fill out fewer forms and worksheets, and preview loan estimates before submitting loans for disclosure.
Agency deals help keep borrower rates low
Originators tend to have their heads in the primary market, working with borrowers and funding loans. Why should an MLO care what happens in the secondary markets? The Agencies (aka Freddie and Fannie) continue to help borrowers both the primary and secondary markets, hoping to achieve competitive pricing in the secondary market while limiting risks borne by taxpayers. It’s a function of supply and demand, and if someone wants to own risk, why not sell it to them?
Both Fannie and Freddie are very active in the secondary markets. Freddie is known for its “K Deals” featuring “a range of investor options with stable cash flows and a structured credit enhancement. K-Deals include guaranteed senior and interest only classes. The related underlying private label trust includes unguaranteed mezzanine, subordinate, and interest only bonds.” Let’s take a random look some of Freddie’s deals just for one month, their sizes, and their parameters to show originators what investors are interested in. Finding investors for securities is a great way to help keep rates low for borrowers.
Freddie Mac priced the new $535 million K-SG1 offering of Structured Pass-Through K Certificates which are multifamily mortgage-backed securities. K-SG Deals are sustainability bonds from which the proceeds will be used to finance multifamily properties that (a) finance affordable housing to low-to moderate-income families, (b) may have features, or be located in areas, that further economic opportunity for residents and (c) may include certain environmental impact features. Pricing for the deal is as follows. Class A-1 has $55.500 million of principal, a weighted average life of 6.53 years, a spread of S+27, a coupon of 0.799%, a yield of 0.79272%, and a $99.9949 price. Class A-2 has $480.151 million of principal, a weighted average life of 9.71 years, a spread of S+40, a coupon of 1.503%, a yield of 1.16822%, and a $102.9988 price.
Yes, Freddie Mac has been busy pricing K-deals, which transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds. On October 5, Freddie Mac priced a new offering of Structured Pass-Through K Certificates (K-117 Certificates), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 10-year terms. The company expects to issue approximately $1.1 billion in K-117 Certificates, which are expected to settle on or about October 13, 2020. Pricing for the deal is as follows. Class A-1 has $116.000 million of principal, a weighted average life of 5.97 years, a spread of S+27, a coupon of 0.697% a yield of 0.69039% and a $99.9979 price. Class A-2 has $931.422 million of principal, a weighted average life of 9.80 years, a spread of S+38, a coupon of 1.406%, a yield of 1.07657%, and a $102.9908 price. Class A-M has $128.743 million of principal, a weighted average life of 9.91 years, a spread of S+43, a coupon of 1.138%, a yield of 1.13275%, and a $99.9983 price.
Freddie Mac priced a $986 million offering of Structured Pass-Through K Certificates (K-F86 Certificates), which includes a class of floating rate bonds indexed to the Secured Overnight Financing Rate (SOFR). The K-F86 Certificates are backed by floating-rate multifamily mortgages with 7-year terms, which are currently LIBOR-based, and settled on October 13. K-F86 includes one class (Class AL: $536.049 million, coupon is 1-month LIBOR + 29 bps) of senior bonds indexed to LIBOR and another class (Class AS: $450.000 million, coupon is 30-day SOFR average + 32 bps) of senior bonds indexed to SOFR. Freddie Mac will provide a basis risk guarantee on Class AS that covers any floating interest rate basis risk if the value of SOFR exceeds the value of LIBOR. Both classes have weighted average lives of 6.47 years and $100.00 prices.
Freddie Mac priced a new $999 million offering of Structured Pass-Through K Certificates (K-739 Certificates), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 7-year terms. Pricing for the deal is as follows. Class A-1 has $80.979 million of principal, a weighted average life of 4.11 years, a spread of S+18, a 0.521% coupon, a yield of 0.5132% and a $99.9991 price. Class A-2 has $796.747 million of principal, a weighted average life of 6.64 years, a spread of S+32, a 1.336% coupon, a yield of 0.8592% and a $102.9953 price. Class A-M has $121.532 million of principal, a weighted average life of 6.89 years, a spread of S+37, a 0.9370% coupon, a yield of 0.9302%, and a $99.9952 price. The K-739 Certificates settled on November 5, 2020.
Freddie Mac priced a $1 billion offering of Structured Pass-Through K Certificates (K-F90 Certificates), which includes a class of floating rate bonds indexed to the Secured Overnight Financing Rate (SOFR). The K-F90 Certificates are backed by floating-rate multifamily mortgages with 10-year terms, which are currently LIBOR-based. K-F90 includes one class (Class AL – $564.255 million, coupon of 1-month LIBOR+33 bps) of senior bonds indexed to LIBOR and another class (Class AS – $450.000 million, coupon of 30-day SOFR average+38 bps) of senior bonds indexed to SOFR. Both classes have a weighted average life of 9.61 years and a $100.00 price. Freddie Mac will provide a basis risk guarantee on Class AS that covers any floating interest rate basis risk if the value of SOFR exceeds the value of LIBOR. The K-F90 Certificates settled on November 5, 2020.
And to wrap up that month, Freddie Mac priced a $1.1 billion offering of Structured Pass-Through K Certificates (K-118 Certificates), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 10-year terms. Pricing for the deal is as follows. Class A-1 has $94.500 million of principal, a weighted average life of 6.44 years, a spread of S+25, a 0.788% coupon, a yield of 0.78141% and a $99.9967 price. Class A-2 has $977.893 million of principal, a weighted average life of 9.83 years, a spread of S+37, a 1.493% coupon, a yield of 1.16216% and a $102.9976 price. Class A-M has $119.155 million of principal, a weighted average life of 9.91 years, a spread of S+42, a 1.223% coupon, a yield of 1.21757% and a $99.9978 price. The K-118 Certificates settled on October 29, 2020.
Why is the letter W, in English, called double U? Shouldn’t it be called double V?
Maybe oxygen is slowly killing you and it just takes 75-100 years to fully work.
The word “swims” upside-down is still “swims”.
Intentionally losing a game of rock, paper, and scissors is just as hard as trying to win.
110 years ago everyone owned a horse and only the rich had cars. Today everyone has cars and only the rich own horses.
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