Apr. 13: Cost of homeownership; CMG/Norcom deal; FICO 10 T & Planet Home; vendor news; Saturday Spotlight: OptiFunder

Blanket statements like “owning a home create wealth” are somewhat misleading but are a very good way for loan originators to prove their value and have a discussion about the considerations. For example, owning a home isn’t always what it’s cracked up to be. Clever Real Estate released a study on the true cost of homeownership, revealing that 67 percent of homeowners have regrets about their home purchase. That number increases to 82 percent for those who bought a fixer upper. About 36 percent of homeowners say their home has negatively affected their finances, and 23 percent say it’s negatively impacted their mental health. Additionally, about 21 percent of homeowners say owning a house is not worth the cost, and 25 percent say homeownership hasn’t been worth the hassle. In fact, 60 percent of homeowners say they would have approached buying a house differently had they realized the true cost of homeownership. Common regrets include purchasing a home that requires too much maintenance, not negotiating a better price or contingencies on their current home, buying a home before they had more money saved, not paying for an inspection, purchasing too expensive a home, and not waiting until mortgage rates were lower. Once again, all good coaching moments for every LO.

Saturday Spotlight: OptiFunder

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“Revolutionizing Warehouse Management for Mortgage Lenders”

 

Describe your company (when was it founded and why, what it does, recent growth and plans for near-term future growth).

OptiFunder, the pioneer of the Warehouse Management System (WMS), was founded in 2018 to bring optimization and automation to warehouse lending. An award-winning mortgage software company, OptiFunder has announced a revolutionary new software for warehouse lenders, called Greyhound by OptiFunder, featuring the same scalability, security, and automation from its flagship solution.

Over the last five years, OptiFunder has developed the most comprehensive warehouse management system for mortgage originators. With 40 percent of top IMB’s on OptiFunder’s roster, 1 in every 7 loans funded across IMBs go through the OptiFunder system. Built by a team of mortgage professionals, the OptiFunder software not only reduces risk, but the user-friendly system condenses hours of manual work into automated tasks. From funding through loan sale, OptiFunder has automated the entire process for many originators.

OptiFunder’s innovative solutions and remarkable growth earned it a top 100 spot on Inc5000’s Fasting Growing Private Companies in 2023. From 2020 – 2024, HousingWire has named OptiFunder a Tech100 Mortgage Winner, and in 2023 and 2024 OptiFunder was recognized as a Progress in Lending Innovations Winner.

 

Describe any new products or solutions and how they will bring positive change to the industry.

“We wanted to create a platform for warehouse lenders that would run independent of OptiFunder but leverage the same technology and incredible team,” said CEO Michael McFadden. “While Greyhound represents a new brand, the underlying software, configurability, and proven rules engine have already routed and funded nearly a million loans with over 70 warehouse lenders.”

Greyhound provides new options for warehouse lenders looking for alternatives to legacy solutions. With its security-first design, highly configurable workflow, seamless integrations, and unparalleled efficiency, Greyhound is an ideal fit for warehouse lenders looking to grow market share in today’s challenging environment. With effortless client onboarding, robust reporting, and simple loan ingestion from originators, warehouse lenders of all sizes can easily scale their business with minimal cost and complexity.

 

Tell us about your team (what types of volunteer work are employees encouraged to engage in, how does your company help elevate growth, how does your company maintain culture in a work-from-home environment?)

OptiFunder appreciates its highly experienced team of professionals with over 125 years of mortgage banking experience, offering generous flexibility for work/life balance and volunteer work. Being part of OptiFunder means being first to market with breakthrough solutions.

 

Things you are most proud of that don’t have to do with sales.

OptiFunder is most proud of its customers’ experiences and positive feedback with not only the software, but with the whole team. “We’re a technology company,” said McFadden, “but it’s the direct feedback I get around our people at OptiFunder that means the most to me.”

Is there anything else you’d like to share along these lines?

OptiFunder released a monthly newsletter reporting on warehouse lending trends, available the second Tuesday of every month. Sign up here for next release on April 9th.

(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)

 

The big are getting bigger

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Privately held CMG Financial announced the retail acquisition of Norcom Mortgage, a northeastern mortgage company boasting over three decades of success and allowing Norcom to focus on wholesale. “The 25-branch-addition will enhance CMG’s northeastern presence from Maryland to Maine.” Norcom’s retail assets will move to CMG and the wholesale side of the company will remain intact.

“Norcom Mortgage has made the strategic decision to focus on and continue to grow our wholesale platform as TPO GO,” said Norcom President Phil DeFronzo. Speaking of growth, CMG Financial was the nation’s #12 mortgage company with an origination of over $21.5 billion in 2023. Between CMG and its additions in recent years, “Most of the top lenders in the nation saw steep year-over-year origination declines, yet CMG had a strong increase of 19.9 percent.”

Credit: fewer loans to run it on, but still

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Optimal Blue released its March 2024 Originations Market Monitor report, which revealed the average homebuyer credit score has reached 737, an all-time high since the company began tracking this data in January 2018. In February and March 2024, average FHA borrower credit scores reached 676 and 675, also all-time highs since tracking began in January 2018. Those highly qualified purchase applicants and the traditional spring home buying season have driven a 17 percent increase in purchase rate lock volumes month-over-month, even in the face of increasing home sale prices and a 6.74 percent 30-year benchmark rate.

Rate/term refi activity rose 19 percent and cash out refi activity rose 11 percent, aided by improving rates. The average loan amount rose by $8,000 to $367.3k and the average home purchase price increased $9,700 to $463.8k. Despite strong month-over-month gains, March purchase lock counts were down 24 percent from the same period in 2023, at least partially due to the Easter holiday weekend falling in March this year and April last year.

One issue that seems to be lingering, however, is when lenders address the rising cost of credit. It is important to know the difference between a CRA, a credit bureau, and a data analytics firm. And in this situation, CRA stands for “Credit reporting agency” not “Community Reinvestment Act.” (Experian, Equifax, and TransUnion are credit bureaus; CRAs include several smaller companies.)

FICO, originally Fair, Isaac and Company, is a data analytics company based in Bozeman, Montana, focused on credit scoring services. It was founded by Bill Fair and Earl Isaac in 1956. FICO is the commonly used name of the company and is a division of Fair Isaac.

Will Lansing, the Chief Executive Officer of FICO, writes, “At $3.50 per score, FICO royalties constitute only 15 percent of the cost of a $70 tri-merge credit report and 2/10ths of one percent of mortgage closing costs… Despite the value the FICO Score provides, it is important to note that FICO has neither the access to the necessary credit data nor the means of distribution to provide Scores directly to end users (e.g., lenders). Instead, FICO licenses its proprietary credit scoring models to the three CRAs. Accordingly, it is ultimately the CRA, not FICO, that sets the price the resellers and end users pay for the FICO Score.”

Certainly, the credit bureaus (Experian, Equifax, and TransUnion) should be allowed to earn a profit for their services, just as credit reporting agencies (CRAs) should be able to earn a profit. Remember that credit bureaus are different from credit-scoring companies, such as VantageScore and FICO.

“With average closing costs of approximately $6,000 per mortgage, FICO’s royalties remain an exceedingly small percentage (approximately two tenths of one percent or less) of a consumer’s closing costs and are therefore not an impediment to home ownership.”

In other, more constructive news, FICO announced that national mortgage lender, servicer and asset manager Planet Home Lending will be using FICO® Score 10 T in real-time comparisons for mortgage originations and to inform retention and recapture analytics for its $100 billion servicing portfolio. Xactus will supply Planet with the new score.

Vendors/third-party providers: always up to something

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Let’s take a random look at who’s doing what.

STRATMOR Group’s Customer Experience Strategy program, MortgageCX, is now integrated with Encompass and available through ICE Marketplace! MortgageCX personalizes CX feedback and coaching tips for every LO, processor, and manager, leveraging STRATMOR’s industry expertise, peer benchmarking data, and the lender’s own customer feedback. Participating lenders are transforming their customer experience and igniting their revenue growth. Contact STRATMOR for more on the MortgageCX program and join those lenders already benefiting from this integration.

BSI Financial Services, a leading mortgage fintech platform, and its affiliate, Bizzy Labs, announced a major enhancement to Bizzy Labs’ compliance technology, Libretto.

Now, Libretto integrates business rules with automated workflows to minimize risk when MSR clients are boarding newly acquired loans on their servicing systems. The enhancement incorporates dozens of business rules that check for common errors and discrepancies in the loan boarding process. It also provides end-to-end reporting that gives all internal business and compliance stakeholders, including prior servicers, the ability to monitor status updates, loan boarding issues, and deliver accurate results almost instantaneously.

While some lenders have retrenched during this market cycle, CMG Financial, noted above in its acquisition of Norcom’s retail group and buying Homebridge’s retail division a year ago. Has brought their servicing in-house. To power this homeowner-first strategy, CMG sought a modern fintech partner that would set them apart and chose a new seven-year partnership with Sagent.

TitleEQ, a national title and settlement services provider specializing in commercial real estate settlements and residential consumer purchase transactions, has unveiled an integration with Liquid Logics’ cloud-based loan origination system (LOS), Nova. The integration will provide access for mortgage lenders using Nova to TitleEQ’s instant title quotes and full settlement service suite. TitleEQ utilizes TitleBox LIVESearch, an instant, AI-generated assessment of title searches designed to help clear title more efficiently and cost-effectively.

LenderLogix, a leading provider of mortgage point-of-sale and automation software for banks, credit unions, independent mortgage banks and brokers, announced the integration of AccountChek by Informative Research into its point-of-sale system LiteSpeed. This

With AccountChek’s Verification of Assets (VOA), LenderLogix clients can expect enhanced efficiency and accuracy in the loan origination process, with VOA orders routed through the Encompass loan number and documents and data populating directly into the Encompass loan file. The VOA data will flow directly into the automated underwriting systems at the GSEs, allowing the lender seamless access to programs like Day 1 Certainty®, Asset and Income Modeler (AIM) and pre-close employment verifications.

The Federal Housing Administration model security instruments and notes are generally modeled on the Fannie Mae and Freddie Mac (the GSEs) uniform instruments. In 2021 the GSEs published revised uniform instruments which were mandatory in 2023, but as of this date FHA has not required their use as a base for their forms. However, Mortgagee’s utilizing 2023 GSE Forms were advised that FHA added instructions on the FHA-specific modifications that must be made to the 2023 GSE Forms to be acceptable for FHA mortgage insurance.

Docutech has completed a revised set of FHA notes and security instruments based on the 2023 GSE forms.

Xactus, a leading verification innovator for the mortgage industry, announced a new flood zone determination integration using Encompass Partner Connect, the latest API framework from Intercontinental Exchange (ICE) for mortgage technology and available via the Encompass® digital lending platform. This modern framework enables industry participants to integrate with ICE solutions and provide their services to loan originators and servicers through secure API-enabled technology. Lenders can also obtain easy access to other Xactus verification products through Encompass Partner Connect.

LoanPASS announced the successful completion of its Series E Preferred Stock financing of $5M to support its expansion efforts and new sales initiatives. “Despite challenging market conditions, particularly for fintech ventures, LoanPASS has secured significant growth capital, underscoring our sustained effort over the past five years to develop what is now being recognized as the industry’s leading PPE for mortgage and all lending products” said Bill Roy Founder & CEO of LoanPASS. Emerging as the new industry leader in pricing and loan decisioning technology solutions for lending institutions throughout the US, LoanPASS is a no-code, SaaS application with an open API network allowing seamless integrations with leading CRM, POS, and LOS providers.

Verus Mortgage Capital (VMC), a correspondent investor specializing in residential non-QM and investor rental programs, was the top issuer of non-agency mortgage-backed securities last year. A recent ranking by Inside Nonconforming Markets listed Invictus Capital Partners, Verus’ parent company which focuses on expanded-credit MBS, as the top issuer of non-agency mortgage-backed securities last year. It surpassed JPMorgan Chase, which focuses on jumbo MBS. Invictus issued $5.75 billion while Chase issued $3.95 billion. Verus specializes in expanded credit/non-QM and investor rental loan programs and financed 11 deals totaling more than $5.71 billion. Additionally, the platform saw a 45 percent increase in the number of unique investors per securitization. Since it was founded, Verus has financed approximately $28 billion through 54 rated securitization transactions, establishing itself as the predominant non-QM issuer since 2017.

FirstClose, Inc., a leading fintech provider of data and workflow solutions for mortgage and home equity lenders nationwide, announced that its home equity platform, FirstClose Equity, is now integrated with The Closing Exchange’s, notary and eSigning service, CXChoiceTM, to offer a complete suite of signing options for home equity transactions providing lenders with a flexible way to schedule and manage their signing services, whether it’s traditional ‘wet signing’ in branch, mobile notary, RON, IPEN or a hybrid. The Closing Exchange’s built-in logic ensures compliance with state regulations and lender specific guidelines. The ultimate result is that home equity lenders can now offer digital signings to their borrowers with ease, limited set up time, and all through one system: FirstClose Equity. Digital and hybrid signings accelerate loans closings, reduce errors, and instantly return signed documents. Built-in know your customer technology increases the security of these transactions.

The government denied tax exemption for my church that believes Jesus spoke with a lisp.

It was a real slap in the faith

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is titled, “Relying on the Fed: How Did This Happen?” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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Rob Chrisman