Dec. 11: One swindle’s timeline; vendors merging, raising money, partnering; secondary market deals; an economic riddle instead of a joke

How are things going, industry-wide? According to Curinos, November 2021 residential mortgage rate-lock volume was down 26% YoY and 5% MoM across all channels, while funded volume decreased 14% YoY and 9% MoM. In the retail channel, lock volume decreased 23% YoY and 5% MoM, while funded volume was down 13% YoY and 9% MoM. The average 30-year conforming retail funded rate in November was 3.26%, 10bps higher than October and 26bps higher than the same month last year. Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures. And Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased 0.8 points to 74.7 in November as consumers expressed disparate views of home buying and selling conditions and their greatest economic pessimism in 10 years. Approximately three-fourths of respondents in November reported it’s a good time to sell a home, compared with 29% of respondents who reported it’s a good time to buy a home. Consumers expressed strong expectations that mortgage rates will increase over the next 12 months and even greater pessimism about the direction of the economy, according to the HPSI.

The anatomy of a scam

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From Colorado, Fairway Independent’s Kelly F. sent this note on how someone lost $20,000. There are plenty of “red flags” to someone who is trained to recognize them. But if you weren’t on the lookout for them…

  1. 12/1 – My wife received got a $50 Amazon Gift Card from her girlfriend and opened up an Amazon Account – a first for us as we never had an account at Amazon. The card was in her name and not mine. My cell and name were not on the account.
  2. 12/2 – I received an email to my personal email, addressed to me and requesting that I contact Amazon. I did as it said and contacted the Amazon Support team at 786-706-3157 on my cell. I told them they have the wrong person as I live in. He requested the Invoice number (135-0322-22XX).
  3. The person I spoke to asked where I banked, and I replied, “BOA.” He said, “Do not turn off your laptop.”
  4. In order to proceed, he said, I had to give him my BOA Account numbers (checking, savings, VISA). If anyone questioned me as to what I was doing with the money, he said to tell them that it was for a car.
  5. Somehow, he put a hold on all 3 accounts and said that I must go to my local BOA branch as they made a computer error and deposited $20,000 into my checking. Sure enough, when I viewed on my BOA account that there was a deposit from Amazon in the amount of $20,000. BOA has no limit for me and the branch manager never questioned me as to what I was doing. He had me leave my cell on while I did what I was just requested
  6. The person said that it was a mistake, and I had to get the money back to them. He told me to take out $20,000 in $100 bills and use a bitcoin ATM and get it back to them. If I did not comply, I could be charged with money laundering
  7. Bitcoin has a limit of $15,000, so I had to go to a second bitcoin machine and deposit the balance in another ATM. He would assist me with the bitcoin company.
  8. Red flags started to appear when he warned me, “Do not tell the bank teller, or my wife, or anyone” about what I was instructed and do, and not tell anyone what I was doing.
  9. At 3:30 PM I visited another BOA and the branch manager went into my BOA accounts and saw what he was doing. This BOA branch manager said she had 3 of these the prior week.
  10. I filed a report with my local police department, and sent to the real Amazon the attached scam. The police department will be contacting me with a detective soon. My next step will be to contact my credit card companies.

 

All of my BOA accounts, User Ids, and passwords have been scrubbed, my personal computer hard drive has been scrubbed. And going forward I will only use an IPAD and IPHONE as the scammer cannot access those type of accounts!

Vendor tidbits

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Secure Insight and Lenderworks have entered into a strategic agreement that allows Lenderworks to offer SI’s closing agent vetting and wire fraud prevention tools to Lenderworks clients. Lenderworks is a premier service provider offering mortgage banks experienced back-office support such as compliance and regulatory assistance, post-closing assistance, secondary market, technology, and accounting assistance, so that lenders may focus on what they do best: originating and closing loans. Secure Insight was the first company in the mortgage industry to address closing table and wire fraud, and has built the largest database of vetted and monitored closing agents and verified trust account data in the industry. According to SI COO Wayne Doctor, “This new partnership is another relationship which allows our premier suite of fraud services to be offered through a unique re-seller arrangement. We are excited to serve Lenderworks clients by providing wire and closing fraud protection as an additional menu item in the Lenderworks product and service line.”

American Reporting Company (ARC) is pleased to announce it has joined Ascend Companies, Inc. This carefully executed decision will be beneficial to both companies, their clients, and their partners. ARC will continue to function independently for the immediate future, then begin to combine their operations, while also focusing on expanding appraisal product offerings to Ascend client partners. ARC brings its thirty-five plus years of experience in the mortgage industry, a significant presence in the Pacific Northwest, and an impressive level of concierge service in appraisal, credit, and verifications. Ascend Companies, which includes Advantage Credit, Partners Credit, Advanced Data, and Credit Interlink, will provide ARC expanded access to data sources as well as their proprietary software solutions. ARC will enable Ascend the capability of offering expansive appraisal services to its client partners.

Insellerate has successfully integrated to ICE Technologies Encompass TPO through dynamic API objects, enabling its award-winning Customer Experience Platform to communicate and automate all communications to TPO, partners, brokers, loan officers, customers. In addition, this seamless integration also allows the reporting on TPO business production and gives a place for account executives to interact with their customers. Insellerate’s platform now serves all markets and facets of the mortgage industry.

First American Financial Corporation announced that the United States Patent and Trademark Office has issued the company two patents for the innovative application of artificial intelligence (AI) and text-analysis methods to title production. The two patents, now part of the company’s portfolio that includes more than 30 active patents, allow First American to rapidly and efficiently analyze and select relevant property description data, fueling more accurate automated title production. The patented AI-driven analysis helps accelerate the creation of the title commitment.

LoanLogics, a digital mortgage solutions provider creating the premier investor network ecosystem for digital loan commerce announced today its acquisition of LoanBeam, leading provider of income calculation and verification technology endorsed by government-sponsored entities (GSEs) Fannie Mae and Freddie Mac. LoanBeam’s products enable mortgage lenders to get upfront borrower income validation from any income source, cutting days out of the risk review process. Using patent-pending data pairing technology that leverages machine learning, LoanBeam interprets, sanitizes, categorizes, and converts unstructured data points from any document type into an organized set of information. Terms of the private transaction were not disclosed.

Mortgage FinTech Beeline announced Series A Funding. The round of financing was led by the Cavalry Fund and included participation from strategic co-investors Atalaya Capital Management, Ellington Financial Inc., and Australia-based Pipeline Capital. The capital funding will enable the Providence, R.I.-based FinTech to invest in AI and automation and create an innovative borrower experience.

Secondary markets

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Demand for loan products in the secondary markets drive what borrowers see on rate sheets. Freddie Mac and Fannie Mae dominate the secondary markets for residential mortgages, and after packaging loans that they purchase from nearly every lender in the U.S., sell a variety of securities to various insurance companies, pension funds, and money managers around the world. And although the loans are not explicitly guaranteed by the government, the securities’ safety and soundness are viewed quite favorably by investors. Let’s take a walk through who’s doing what.

The transition from LIBOR to other indices such as SOFR (Secured Overnight Financing Rate) continues. A while back Fannie Mae priced Connecticut Avenue Securities (CAS) Series 2021-R01, a $1.2 billion note offering that represents Fannie Mae’s first CAS REMIC® transaction of the year and the company’s first credit risk transfer offering indexed to SOFR. CAS is Fannie Mae’s benchmark issuance program designed to share credit risk on its single-family conventional guaranty book of business. The reference pool for CAS Series 2021-R01 consists of approximately 246,836 single-family mortgage loans with an outstanding unpaid principal balance of approximately $72 billion. The reference pool includes one group of loans comprised of collateral with loan-to-value ratios of 60.01 percent to 80.00 percent, the majority of which were acquired from October through December 2020. 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 the completion of this transaction, Fannie Mae will have brought 42 CAS deals to market, issued $48 billion in notes, and transferred a portion of the credit risk to private investors on over $1.5 trillion in single-family mortgage loans, measured at the time of the transaction.

Of course, not every borrower makes their payments, not every loan is good. Freddie Mac also issues pools of non-performing loans.

On October 19th, Freddie Mac announced it sold via auction 7,186 non-performing residential first lien loans (NPLs) from its mortgage-related investments portfolio. The loans, with a balance of $1.2 billion, are currently serviced by Specialized Loan Servicing LLC, Select Portfolio Servicing, Inc., and NewRez LLC, d/b/a Shellpoint Mortgage Servicing. The sale is part of Freddie Mac’s Standard Pool Offerings (SPO®). Freddie Mac, through its advisors, began marketing the transaction on September 16, 2021, to potential bidders, including non-profits and Minority, Women, Disabled, LGBT, Veteran or Service-Disabled Veteran-Owned Businesses (MWDOBs), neighborhood advocacy organizations and private investors active in the NPL market.

Late last year Freddie Mac announced it sold via auction 2,806 non-performing residential first lien loans (NPLs) from its mortgage-related investments portfolio. The loans have a balance of approximately $464 million, and the transaction settled in December. The sale is part of Freddie Mac’s Standard Pool Offerings, which saw the loans offered as four separate pools consisting of mortgage loans secured by geographically diverse properties. Investors had the flexibility to bid on each pool individually and/or any combination of pools. Pool #1 had 601 loans with a total UPB of $101.0 million, on average 15 months delinquent with an average loan balance of $168k. Pool #2 has 1,065 loans with a total UPB of $143.1 million, on average 25 months delinquent with an average loan balance of $134.4k. Pool #3 had 809 loans with a total UPB of $149.6 million, on average 20 months delinquent with an average loan balance of $184.9k. Pool #4 had 331 loans with a total UPB of $70.1 million, on average 18 months delinquent with an average loan balance of $211.8k. Given the delinquency status of the loans, the borrowers have likely been evaluated previously for or are already in various stages of loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 62.5 percent of the aggregate pool balance. Additionally, purchasers are required to honor the terms of existing loss mitigation agreements and solicit distressed borrowers for additional assistance except in limited cases and ensure all pending loss mitigation actions are completed.

Freddie Mac announced an approximate $1.3 billion non-performing loan (NPL) sale, via an auction of seasoned non-performing residential first lien loans held in Freddie Mac’s mortgage-related investments portfolio. The NPLs are being marketed via six pools: four Standard Pool Offerings and two Extended Timeline Pool Offerings, which target participation by smaller investors, including non-profits and Minority, Women, Disabled, LGBT, Veteran or Service-Disabled Veteran-Owned Businesses. Bids are due from qualified bidders by October 14, 2021 for the SPO pools, and November 16, 2021 for the EXPO pools. To participate, all potential bidders must be approved by Freddie Mac and successfully complete a qualification package to access the secure data room containing information about the NPLs and to bid on the NPL pool(s).

It’s a slow day in some little town. The sun is hot, the streets are deserted.

Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day, a rich tourist from back west is driving thru town.

He stops at the motel and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs in order to pick one to spend the night.

As soon as the man walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

The pig farmer takes the $100 and heads off to pay his bill at the feed store.

The guy at the Farmer’s Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her services on credit.

She, in a flash rushes to the motel and pays off her room bill with the motel owner.

The motel proprietor now places the $100 back on the counter so the rich traveler will not suspect anything.

At that moment, the traveler comes down the stairs, picks up the $100 bill, states that the rooms are not satisfactory, pockets the money & leaves.

Now… no one produced anything… and no one earned anything… however, the whole town is out of debt and is looking to the future with much optimism.

 

 

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Rob Chrisman