April First: LO jobs; new DPA program; NAR adjusts stats; wholesalers come to agreement; another rate prediction

FinCEN will require FNMA, FHLMC and the FHLBs to develop AML programs and file SARs reports with the FHA. According to SIFMA, RMBS, and CMBS probably will not be impacted, nor will DU or LP, but the MBA, NAR, HUD are reviewing the program to see its impact on MLOs and CRAs are once again adjusting margins. The CFPB is expected to issue a rulemaking on it. Meanwhile, the ABA is analyzing ARMs with respect to the ATR requirement, and any implications they may have on AVM effectiveness, CD revisions, FCRA provisions, FDIC scope, CLTV changes, HMDA reporting, and HFA volumes. And vendors are planning changes to the POS, CRM, PPEs, VOE, VOR, VOA, and VOD processes while MGIC and other MI companies are revising their pricing machines. Meanwhile, LOs and LOAs are baffled.

 

Jobs

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A formerly growing, but now rapidly contracting and under-capitalized retail mortgage lender, is seeking un-motivated, mediocre loan originators and branch managers to join us in hopes of originating enough loans to keep us afloat in a rising rate environment. “We offer an outdated origination platform with in-house underwriters who seem incapable of approving loans without borrowers providing urine samples at application. We will allow you to set up the branches any way you see fit, and then hope for the best. We offer an unrealistic compensation package (that really won’t pan out for you) so that you can hope to earn a good living by closing one or two loans per month. If you consistently over-promise and under-deliver and are looking for yet another 6 months draw guarantee, with a verbal point bank agreement, then we have a place for you! Call whoever is currently in charge of recruiting at 213-555-1234, and they will tell you when you can start.”

Ground-breaking down payment assistance program

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Rob Chrane, CEO of Down Payment Resource, writes, “I just received a question I haven’t seen before: ‘Are there down payment assistance programs for cash buyers? If so, how do I find those programs?’ The note prompted us to search far and wide. I am pleased that DPR has uncovered the most innovative new DPA program ever. It solves every objection that lenders have about offering DPA!

“The Lender’s Dream DPA” has no lender participation agreement or approval required, no paperwork for the borrower, no delays, instant approval, no max HH income, no maximum sales price, no geographic restrictions, and no table funding or wire transfers are required. Those using the program are allowed to pick their repayment terms: 1-time due on sale, fully amortizing, interest only, zero interest, or fully forgiven grant at closing. And the program is Fannie/Freddie/FHA approved!” Thank you, Rob!

NAR back in the news

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The National Association of Realtors, with various capital letters, (“NAR”) shocked the real estate and lending world with the announcement that it discovered what many have believed to be the case: it has been double counting numbers. The press release suggested taking any statistic from NAR and dividing it in two to give a more accurate description of local activity. One unnamed official said, “If a selling agent sells a place for $750k, and a buyer’s agent helps the buyer buy the place for $750k, somehow our statistics have been showing $1.5 million in transactions! And to think, we’ve been double counting for decades!”

Wholesale news

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A sign that tensions may at last be thawing in the bitter wholesale arena has come to light. Rivals United Wholesale Mortgage, Rocket, Orion, Kind Lending, Newrez, Pennymac, Freedom, Plaza, JMAC, Paramount Residential Mortgage Group, Angel Oak, Homebridge, LoanStream, and others reportedly agreed to a prisoner exchange Easter morning following months of behind-the-scenes negotiations. The exchange will begin with doc drawers incarcerated at the headquarters of each company, along with junior Ops managers who went missing in 2019, as part of a rare act of diplomacy amid the acrimonious conflict that has long raged between the lenders.

 

“After extensive talks, we have ensured the release of our team members and are eager to repatriate them to the nearest branch office. If our counterparts fulfill their end of the agreement, we will proceed with the exchange immediately. Though many more of our personnel have either been hired away or remain captive in our competitor’s strip center branches across the country, we hope that this transfer signals a willingness to lessen the climate of mistrust and open hostility that has plagued relations for decades and we can get back to helping brokers.”

 

According to company representatives who spoke on condition of anonymity, the prisoner swap will occur at the MBA’s National Secondary in May. The exchange will reportedly be overseen by third-party mediators and MI reps, because they all know how to throw a good party.

 

Insiders admitted that the prisoner transfer was delayed due to several sticking points, including LoanStream’s refusal to come to the table until its rivals agreed to give it a seat at the table. Negotiations were reportedly also nearly scuttled due to JMAC’s refusal to turn over its RFC and Lehman Brothers jumbo underwriting manual collection from 1997-2001 in exchange for three of its AEs hired away in 2023.

“While we are focused on welcoming home our underwriters, we must also remember that our rival’s history of abuse toward its prisoners leaves open the possibility that our staff members may have been tortured while in captivity,” said one Plaza exec, referring to persistent allegations that detainees held in UWM’s locations had been shackled to steel fold-up chairs and forced to listen to motivational sales presentations. “Should we learn of such cruel treatment, it will leave us no option other than swift and devastating retaliation by offering non-QM products at QM rates, which will viciously undercut our competition and draw in considerable foot traffic.”

Capital Markets

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The MBA came out with its weekly revision of production forecast for 2024. Interestingly, it mimicked, nearly word for word, its 2023 forecast. “The good news is that many lenders will reach their goal of 70 percent purchases making up their volume! The bad news is that overall volume will be down by 90 percent.” This once again has spooked the LO herd, and I received this note from a new LO in Wisconsin: “Rob, my mentor told me that I could make a living originating loans, especially refi’s. And now we hear this forecast. I’ve spent most of my time focusing on hobby farms. I’m really starting to gain traction, but do you think that I need to reevaluate my future in lending?” Yes.

Private Capital is returning to the mortgage market! I received an odd e-mail last week saying, “Meet me at Pier 12 at 10:30PM tonight.” I was intrigued, especially having seen all “The Sopranos” episodes, and had nothing better to do than to visit a loading dock rather than sleep. I showed up, and Private Capital immediately commented that based on my e-mails I should have been taller, younger, better looking, and more educated. The meeting went downhill from there. I asked why Private Capital hadn’t been around in any kind of noticeable fashion in several years, and PC replied that the returns just weren’t there. And in fact, they were getting worse.

PC then shot off several demands. “First, I want returns in the teens. No one wants a 30-yr fixed rate asset at 6.5 percent. Give me intermediate ARM loans, like 3-1s or 5-1s or 7-1s, at 14%. I either want no delinquencies, so servicing is a breeze, or give me pools with lots of delinquencies so that I can either foreclose and sell the house at a profit or collect a lot of fee income. And lastly, I need you to take care of Fannie Mae and Freddie Mac. The two of them are really muddying the waters… first they want out of conservatorship, now they don’t. Make it quick, because the last thing the mortgage industry needs is continued droning on by politicians and regulators about the ‘final solution’ during an election year. Don’t remind your readers that in the past they served a critical role in housing – this is a new era!” Before slipping into the darkness Private Capital finished with, “If you do all that, we’ll let you invest in our funds and pay our management fees.”

Turning to the markets, the economy is going to improve slowly. The economy is also going to improve fast. Or vice-versa. It will definitely be one or the other. Or something in between. It’s just an issue of sooner or later, more or less. The opposite is probably true, too. Even so, no matter how gradual the improvement, it will be sudden. The economy will stall around the third quarter, before Halloween, then build momentum through the rest of 2024, reverse course in 2025, then pause for a cigarette break. Whatever the case, the economy is headed in the right direction, roughly east by southeast. This comes to us from a new predictive algorithm from the CFPB.

The good news here is that the recovery is fully underway. The bad news is that the recovery will most likely take the rest of our lives. In fact, once we finally do turn the corner, we’ll still have to turn another corner, and then at least two more, only to bring ourselves full circle, a phenomenon MBA economists call “cyclical.” In short, the only rebound that will happen this year will take place on a basketball court. All signs point to that scenario, even though our mother always told us it’s rude to point. Evidence to that effect is considerable. Some companies looking to scale back payrolls will now offer early retirement packages only to employees who have recently died. Anyone who has lost a job since the recession began, that actually never did begin, can now get a tax credit toward retaining a private investigator to try to find it for you. And the private sector is increasingly making fun and pointing at the public sector.

Economists at Fannie Mae and Freddie Mac say all of these are surefire signs of a surging economy. Until they aren’t. To be sure, the dollar is still weak, driving up gasoline prices, but reports have come in from Europe that it has started doing some cardio and eating more cruciferous vegetables. (Use a dictionary.) And though it’s already a given that the recovery from the recession that never was may be jobless, it now appears likely it will also be shirtless and hairless as well.

What happens when you put a magician in charge of a convenience store check out register?

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, “Wholesale Channel Overview and Outlook.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2024 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)

Rob Chrisman