Apr. 8: Letters on the word “suspense,” a new presidential candidate, community housing developers; vendor news; secondary mkt. deals

Inside the business, we’re continuing to see mergers and acquisitions, and will easily see them, big and small, through the year. (The latest example, not the first and won’t be the last, being Homepoint, part of Home Point Capital, the third-largest wholesale lender by origination volume for 2022, entering into a definitive agreement to sell certain assets of the company’s wholesale originations channel to Tucson’s The Loan Store, Inc., a national wholesale lender.) At the macro level, lenders are always stuck between wanting lower rates (but knowing they’re generally caused by an economic slowdown and therefore potentially fewer qualified borrowers) and more qualified borrowers (but knowing that a very healthy economy generally leading to higher rates). April data has begun to show clear indications of an economic slowdown. This is, however, exactly what the Fed has been pushing for with their policy decisions starting back in March of last year. This week ADP employment data, which measures job hires in the private sector, decelerated in March significantly more than expected, adding 145,000 jobs vs 210,000 expected. Expect jobs and earnings data to continue to drive market moves until the next Fed meeting; currently the market is pricing in a 50 percent chance of a rate hike in May. Which also means there’s a 50 percent chance of them not raising rates. More economic trends are spelled out below.

The economy: everyone has an opinion

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There have been predictions of a recession for over a year. At some point the predictions will be correct, but in the meantime, people tend to forget predictions, and certainly shouldn’t base their business or family’s finances on them.

Bank economists expect credit conditions to weaken over the next six months as economic growth slows and interest rates trend higher, according to the American Bankers Association’s latest Credit Conditions Index. The latest summary of ABA’s Credit Conditions Index examines a suite of indices derived from the quarterly outlook for credit markets produced by ABA’s Economic Advisory Committee (EAC). The EAC includes chief economists from North America’s largest banks. Readings above 50 indicate that, on net, the bank economists expect business and household credit conditions to improve, while readings below 50 indicate an expected deterioration. EAC members expect banks to tighten credit standards this year in reaction to still-elevated inflation and higher interest rates leading to weaker growth in consumer spending and business investment.

A borrower-friendly thought

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Nearly every lender is focused on the customer experience. Fairway’s Jennifer Salazar shared her personal opinion about verbiage. “I have a proposal for a change that would be FREE for our industry. I wish they would rename the file status ‘suspended’ to something less negative. I feel like it’s a morale killer, especially when it’s typically an easy fix. I propose changing the status to a file ‘pause’ or ‘hold.’

“That word is for misbehaved kids in high school. Or for DWI offenders’ licenses. If it were a huge file problem in the file, maybe someone could just pick up the phone and talk to the LO. But if it’s a minor need, I suggest we trash the word ‘suspended.’ When LOs see this word, they’re already mentally preparing to tell the real estate agent that the file won’t work instead of going out to get more business with a positive attitude. You know: what we SHOULD be doing.

“Since our business world is so sensitive about everything, we need a more positive term. I saw an LO start panicking yesterday when they saw the word suspended come across for their file. And all they had to do was send in an updated paystub. Seriously. The panic translates to our clients and referral partners, and it isn’t good for our customer satisfaction scores. This is a free change with no basis points charged.

“In a world where we were forced to change terms from Good Faith Estimate to Loan Estimate, somehow this one got missed. In an environment where can’t even say ‘master’ suite anymore, why should we be able to say a word that gives employees (who need to stay positive) anxiety and potentially adds to other mental issues? The word is issued only by someone who never has to go in front of realtors or clients.” Thank you, Jennifer.

Community Housing Developers

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Julie Cooper from Evergreen writes, “Rob, I’ve shared the idea that there’s loan business at affordable housing and ownership developers. These loans can come through Community Housing Developers (CHDOs), housing authorities, local municipalities, and county ownership units, housing trust funds, nonprofits and more. Seats at those tables can be very fruitful for companies with a heart for the work. (For example, here is one in Northern California.)

“Additionally, all of these organizations are hiring, and these are great living wage jobs. Mortgage people are uniquely qualified for them. Loan folks know guidelines, compliance, qualifying and systems that may be used to qualify applicants to these programs. The math may be a little different but the origination and closing methodology and systems are pretty much the same.” Thank you, Julie!

Presidential timber?

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There are certain requirements to be the President of the United States, but the vast majority of U.S. citizens have a shot at it. This includes Georgia-based entrepreneur Gibran Nicholas who is well-known via his upcoming StoryTeller event and will be taking a run at being the Democratic nominee. “Although I am considered a long-shot, I feel a need to stand up for moderation amid all this craziness we’re seeing. Worst-case scenario, I get the word out about my ideas, which is more important to me than winning the Presidency. Best case scenario is that I gain some traction and the attention of some large donors. This is definitely going to be a grass-roots campaign with housing is a big part of my platform, specifically pages 29-32 of my Letter.

“I’ve published a 61-minute video and 82-page letter outlining proposals. What if there was a way to resolve our country’s major problems, reduce the impact of political extremism, and launch the next 250-year chapter of America’s Epic Story? Yet, for the first time in recent memory, we’re pessimistic about our future, and we think our children will be worse off than we were. I believe that’s because we’re going through sort of a mid-life crisis. We’re just burned out.

“But I have an idea I want to run by you…several ideas, in fact. I’ve outlined my ideas in a 61-minute video and 82-page love letter to you, My Fellow Americans. Please take some time and check it out because it contains my vision for how we can launch the next chapter of our epic American Story.

It’s a story where we modernize social security, healthcare, education, and create equal economic opportunity for all Americans so that our children will be better off than we are. It’s a Story where we modernize our gun safety laws and put an end to the partisan bickering that’s threatening the safety of our children. It’s a Story where our elected officials create laws that reflect OUR values, instead of doing things that are often extreme and out of touch with reality. It’s a Story where we modernize our foreign policy and launch a modern era of peace and prosperity.

“I invite you to join me on this Journey to resolve our country’s major problems, reduce the impact of political extremism, and launch the next 250-year chapter of our Epic American Story!”

Vendor/third-party provider bits and pieces

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Westlake Origination Center is turning leads into sales for mortgage companies and creating a buzz among loan officers struggling to find new clients on their own with little success. WOC creates exclusive leads using custom tailored data algorithms and verified fail-proof tactics to identify and engage with targeted clients, ensuring a steady stream of high-potential leads for businesses. Every exclusive live transfer is a potential client that is qualified and truly looking to buy a home in the LO’s specific area! With a combined 30 years in the industry, WOC’s team works closely with clients to ensure leads convert to sales. Seasoned LOs are currently at a 62 percent application rate after the initial call from a generated WOC live transfer. “Our platform is the result of years of research and development and is designed to be flexible and scalable, so it can adapt to the changing needs of our clients,” said EVP Matt Matsuda. “This has proven to be a game-changer for businesses looking to sell and succeed in today’s highly competitive marketplace.” Connect with Justin Clark at Westlake Origination Center to capture your market share.

OptifiNow announced the successful implementation of its OptifiNow TPO CRM platform with Plaza Home Mortgage accomplishing Plaza’s major goals of combining large amounts of data from multiple sources and providing accounts executives with easy access to marketing functionality. John McGee, President of OptifiNow, said the smooth implementation was due to the close collaboration they had with Plaza Home Mortgage’s team continuing to meet regularly to gather feedback and make incremental changes to the platform. OptifiNow believes this “continuous improvement” technical support model yields better CRM software satisfaction and value.

Mobility Market Intelligence (MMI) received a growth investment from WestView Capital Partners (WestView), a Boston-based private equity firm focused exclusively on middle market growth companies. Headquartered in Salt Lake City, Utah, MMI provides a comprehensive software suite that enables participants in the mortgage origination process to track and analyze production data effectively. Its platform combines highly accurate and real-time data with broad nationwide geographic coverage and an intelligent, user-friendly interface, allowing its users to access the most relevant information and draw actionable insights quickly. WestView’s investment not only recognizes the value that MMI adds to the mortgage and real estate industries, but it also signals that MMI is poised for continued success.

Fortuna Finance announced the official launch of its Home Sales Assurance (HSA) program that works with real estate agents to provide a guaranteed purchase offer on a client’s current property, which allows the client to make a non-contingent offer on their new home while deducting their mortgage debt from their DTI ratio when qualifying for a new loan.

Fortuna’s Guaranteed Backup Contract ensures the client’s current home is sold within 90 days, during which time the real estate agent can stage and sell their client’s home at the highest possible price. If the home does not sell after 90 days, Fortuna will buy and relist the home for sale with the current agent. When the home is sold, 90% of the proceeds go back to the original homeowner, as Fortuna only keeps enough to cover the costs of the transaction.

FundingShield, a leading provider of FinTech risk management and fraud prevention tools announced that its Consumer-Wire Account Verification Service (referred to as “CWAVs”) will be made available to Milestones.AI clients. This partnership comes on the back of increased concern of wire fraud from the National Association of Realtors, The Federal Bureau of Investigation (FBI) and other regulatory and insurance organizations where coverage is opaque and limited. Milestones is a customer-for-life experience platform for buying, selling, moving, and managing home ownership, provided to consumers by professionals in real estate, mortgage, insurance, and title. The integrated and open platform creates private personalized client portals where agents can stay connected, educate, and create value at every stage of the homeowner journey. For more information, view the Full Press Release.

Secondary market deals drive primary market rates for borrowers

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In HELOC news, Figure Lending is set to issue a $236.7 million securitization backed by newly originated home-equity lines of credit originated by Figure, Guaranteed Rate, Homebridge Financial Services and Movement Mortgage — using Figure’s technology and underwriting guidelines. DBRS assigned preliminary AAA ratings to the transaction, marking the first Figure HELOC securitization to receive ratings. The HELOCs differ in many ways from the HELOCs traditionally offered by banks. For example, Figure’s HELOCs are fixed rate without interest-only or balloon features. The loans have shorter draw periods, ranging from two to five years.

Fannie Mae announced that it has executed its first Credit Insurance Risk Transfer (CIRT) transaction of 2023, CIRT 2023-1, consisting of approximately 35,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $11.8 billion. As part of Fannie Mae’s ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market, CIRT 2023-1 transferred $407.5 million of mortgage credit risk to private insurers and reinsurers. Since inception to date, Fannie Mae has acquired approximately $22.6 billion of insurance coverage on $761 billion of single-family (SF) loans through the CIRT program, measured at the time of issuance for both post-acquisition (bulk) and front-end transactions. The covered loan pool includes collateral with loan-to-value (LTV) ratios of 60.01 percent to 80.00 percent acquired in January 2022. The loans included in this transaction are fixed-rate, generally 30-year term, fully amortizing mortgages and were underwritten using rigorous credit standards and enhanced risk controls. With CIRT 2023-1, which became effective January 1, 2023, Fannie Mae will retain risk for the first 75 basis points of loss on the $11.8 billion covered loan pool. If the $88.6 million retention layer is exhausted, 22 reinsurers will cover the next 345 basis points of loss on the pool, up to a maximum coverage of $407.5 million.

Fannie Mae marketed its twenty-seventh sale of reperforming loans as part of the company’s ongoing effort to reduce the size of its retained mortgage portfolio. The sale consisted of approximately 6,130 loans, having an unpaid principal balance of approximately $997 million, and is available for purchase by qualified bidders. Interested bidders could have registered here. Bids were due in September. Reperforming loans are loans that have been or are currently delinquent but have reperformed for a period of time. The terms of Fannie Mae’s reperforming loan sale require the buyer to offer loss mitigation options to any borrower who may re-default within five years following the closing of the reperforming loan sale. All purchasers are required to honor any approved or in-process loss mitigation efforts at the time of sale, including forbearance arrangements and loan modifications. In addition, purchasers must offer delinquent borrowers a waterfall of loss mitigation options, including loan modifications, which may include principal forgiveness, prior to initiating foreclosure on any loan. Interested bidders register for ongoing announcements, training, and other information here. Fannie Mae will also post information about specific pools available for purchase on that page.

Fannie Mae announced that it executed its eleventh and final Credit Insurance Risk Transfer (CIRT™) transaction of 2022. The eleven transactions, part of Fannie Mae’s ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market, covered $213 billion of single-family loans, and secured $7.2 billion of coverage, which was more than 2.7 times the previous single-family CIRT record for coverage acquired in any single year. Since inception to date, Fannie Mae has acquired approximately $22 billion of insurance coverage on $749 billion of single-family loans through the CIRT program, measured at the time of issuance for both post-acquisition (bulk) and front-end transactions. CIRT 2022-11, which became effective October 1, 2022, transferred $343 million of mortgage credit risk to private insurers and reinsurers. With CIRT 2022-11, Fannie Mae will retain risk for the first 65 basis points of loss on the $10.1 billion covered loan pool. If the $65.5 million retention layer is exhausted, 21 reinsurers will cover the next 340 basis points of loss on the pool, up to a maximum coverage of $342.5 million. The covered loan pool for CIRT 2022-11 consists of approximately 34,000 single-family mortgage loans with an outstanding unpaid principal balance (UPB) of approximately $10.1 billion. The covered pool includes collateral with loan-to-value (LTV) ratios of 60.01 percent to 80.00 percent acquired from November to December 2021. The loans included in this transaction are fixed-rate, generally 30-year term, fully amortizing mortgages and were underwritten using rigorous credit standards and enhanced risk controls.

A thief broke into the police headquarters during the night and took all of the toilets.

The cops say they have nothing to go on.

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