Daily Mortgage News & Commentary

Jan. 27: National bus. dev, MLO jobs; U/W, non-QM, processing tools; CD tips; conforming conventional shifts; the Fed has spoken

Overheard in the hallway: “My email got hacked again. That’s now the third time I’ve had to rename the cat.” But there’s a lot of other conversation and session topics here in the hallways at the IMB in Nashville. Discussion about the rapidity of the Federal Reserve’s moves in attempting to combat inflation, and how might those moves actually eventually push rates back down if they dampen the economy. How volume and margin projections for 2022 are changing the minds of lenders, potentially turning them into sellers. The impact of Experian Go: a free, first-of-its-kind program designed to help credit invisibles begin building credit on their own terms. The continuing shift by employees, and the mangers managing them, in hybrid work-from-home arrangements. Trends in signing and retention bonuses. (The STRATMOR Group has a compensation survey, as does the MBA’s Compensation Survey.) Conventional servicing multiples up to 5×1! Conventional forbearances are way down, but Ginnie forbearances are still troubling and will take a while to work out. Along those lines, today’s audio version of the commentary is available here and this week’s is sponsored by TMS, a top 10 subservicer with a 98 percent customer satisfaction rate. TMS is on a mission to “Grow Happiness” and delivers next level service with their award-winning proprietary technology, SIME. Today’s features an interview with me regarding news from the Fed and the IMB Conference in Nashville.)

Employment

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Synergy One Lending, Inc.  is proud to welcome Randy Vance and Team Vance to the family!  Based in Bend, Oregon, Randy and his team rank among the top producers in Oregon after only a few years full-time in production. Asked why he chose Synergy One, Randy said, “We all agree that in order for our team to take it to the next level we needed to align ourselves with a company that is forward-thinking and fully transparent!” President Aaron Nemec added, “It’s a true honor to have this A+ team join us. We look forward to serving them as they continue to grow in the years ahead!” To find out why so many elite mortgage professionals are choosing Synergy One, please contact Aaron Nemec or Ben Green, or visit Join Synergy One.

Shamrock Home Loans, named the #5 best mortgage company to work for in 2021 by National Mortgage News, is looking for a new executive leader for national growth and recruiting. The company’s vision and execution has led to doubling its loan origination staff in just 18 months. You can hear Shamrock’s CEO, Dean Harrington, speak about vision, purpose, and growth with Rob here (link). “We’ve been blessed to attract some incredible people over the years and each of them basically tells us the same thing”, says Shamrock president (and former MLB baseball player), Rod Correia. “They tell us Shamrock has the best group of people they’ve ever met. And ultimately, that shows up in the lives of your referral partners, vendors and communities.” Learn more about Shamrock’s vision here. Reach out to Executive VP of Sales, Bruce Weltin to learn more.

Thrive Mortgage knows every top-producing RMLO has five priorities: extensive program catalog, highly competitive pricing, killer Marketing support, the right mix of technology, and a community that cares about and supports each other. Thrive has offered this perfect mix for a very long time. “The goal in our 21st year, is to take our system, our community and make some serious waves in the industry,” stated Tay ToliverDirector of Community Advancement for Thrive. “Leveling up is critical to continued success and we are seeking new talent who are ready to step up their game. We excel at providing career development opportunities, coaching, and resources because want everyone who joins us to be a ‘Thriver for life’.” If you are a great producer (or have the passion and drive to be), but need the right environment and support, we want to talk to you. To learn more, visit ThriveMortgage.com/Grow and start your journey.

Lender and broker products & services

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Deephaven is launching a series of webinars for independent Brokers and Loan Officers eager to take advantage of the burgeoning Non-Agency/Non-QM market. As the conventional refinance market continues to taper and the competition for purchase loans remains hotter than ever, the Non-Agency/Non-QM space offers an opportunity for brokers to serve a broader range of borrowers to keep their pipelines flowing. The 30-minute webinars provide training on Deephaven’s core programs and products including Expanded Prime, Non-Prime, Jumbo-Prime, Bank Statement and Debt Service Coverage Ratio programs including a DSCR Foreign National program. While always lending responsibly, in-house underwriting allows Deephaven to be more flexible and innovative with its products and programs. To attend the next Deephaven webinar at 2pm on February 9th (topic: Bank Statement Programs), please register here.

Charles Blondin is history’s most legendary tightrope walker, having crossed 1100 ft over the Niagara River a number of times, often with different theatrical variations. Balancing the obligations of regulatory compliance and sales growth may feel like a tightrope act, but a compliance-friendly mortgage tech stack makes it look as easy as Blondin. In its latest eBook, Black Knight’s Surefire CRM breaks down how mortgage marketing CRMs allow lenders to assert automated compliance controls while reducing drag on productivity created by regulation. Download the free eBook today for tips on automating compliance controls with your CRM.

Duplicative training? “Don’t Need No Education? (P.Floyd) With Mortgageeducation.com, launch Compliance (ex: AML, FL, Fraud) in Q1 to satisfy your Org’s requirements PLUS – those hours count toward MLOs Annual Continuing Ed with Platinum Modular CE.  All progress is tracked, certs stored.  No more year-end rush- Save Compliance Manager sanity and give your MLOs a gift of less training this year!  Contact Dave Olchek.  Don’t allow your MLOs to risk their licenses: ensure all are using a vetted NMLS Provider.

With mortgage costs rising, now is the time to improve your lending efficiencies. Maxwell offers innovative technology that centralizes your processes, promotes team productivity, and helps you close more loans with less work. The over 300 lenders using Maxwell Point of Sale slash their time-to-close by 13+ days and save an average of 21 BPS in costs per loan. Loan officers using Maxwell POS close 15% more loans per month, helping lenders attract and retain the industry’s best talent. Beyond front-end improvements, Maxwell Processor Edge, a first-of-its-kind processing workflow technology, transforms the loan fulfillment process, accelerating document review, reducing errors, and boosting processor capacity. Maxwell POS or Processor Edge customers gain exclusive access to secondary market trading solution Maxwell Capital. Learn how to increase your lending profitability and combat this year’s margin compression with Maxwell technology. Click here to set up a demo.

This is news worth sharing. First Guaranty Mortgage Corporation  (NMLS #2917) is excited to announce they’ve improved pricing AND turn times on Maverick Solutions™ products, again! As the market continues to shift, it’s no question that Non-QM is a must-have for your 2022 strategy. Lower rates and 48 hour turn times mean you save time, and your client saves money. Whether your client is a first-time investor, experienced credit challenges, or has unique income documentation needs, we can expand your loan options while helping them reach their homeownership or refinancing goals. With Non-QM & Non-Agency products designed for today’s borrowers, Maverick Solutions has loan options for every scenario. Reach out to Tom Davis to start growing your business today!

Last week, MBA Chief Economist, Mike Fratantoni, joined MCT COO, Phil Rasori, for a webinar outlining how mortgage lenders can stay prepared during a changing market. The topics discussed included mortgage market cycles, trade desk recommendations and MCT client lock metrics. Additionally, the webinar gave attendees a look at MBA 2022 forecasts and how MSR servicing is a natural hedge for rising rate environments. View the webinar recording or join MCT’s newsletter to be notified of upcoming events. Determining how recapture impacts MSR valuations can be tough to pinpoint. It must take into account the number of refinances, gain on sale and the likelihood a borrower would have made a decision to pursue a new loan independent of their servicer. To learn more about this topic, download MCT’s Whitepaper, Recapture: Impact on Servicing.

Never worry about Margin or Capacity againCandor’s AI technology makes it possible with a 1 UW touch on 70% of loans, >1,100 data cross checks to identify data mismatches, one-of-a-kind ability to scrutinize information for integrity issues. A 47,000-defect solution gauntlet for data and information defects. 13.69 autonomous underwrites per minute. 0 defects. 0 put backs. Decisions rep & warranted. Happy clients. It’s hard to think of a reason to not contact Candor for more information. Calculate your added profit here.

Consumer direct success

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The MBA’s most recent Mortgage Finance Forecast predicts purchase loans will rise to 67 percent of all originations by the end of 2022. Shifting from refinance to purchase business is no small feat, and it will be significant change for lenders who have trained their staff and optimized their processes for refinance transactions. In the just-released STRATMOR Group Insights Report, Senior Partner Garth Graham digs into the changes Consumer Direct lenders need to make to have success in a purchase market. “Pivoting to purchase is not a matter of changing marketing messages and starting a pre-qual program,” says Graham. “Success in the purchase money market will require CD lenders to understand the emotional drivers for all borrowers.” Read Graham’s article, “Consumer Direct: It’s Nurture vs Nature in Purchase Business” in the January Insights Report.

Investors & lenders follow Agency changes

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With FHFA raising upfront fees on Second Home and High Balance loans, Fairway Wholesale Lending will be building these adjustments into conventional pricing based on lock period.

The implementation schedule is posted in Fairway Wholesale Lending Client Announcement 2022-01-20.

Stay up to date with what’s happening at loanDepot Wholesale with What’s New This Week.

Access LDW’s WNTW 01-17-22 for information on Fannie Mae’s Homebuyer Education Provider Expansion and the VA Lending Guide – Form 26-0592 update.

In Announcement 21-107, PennyMac describes updates in alignment with Fannie Mae including Homeownership Education and Counseling Providers and Military Service Member Owner Occupancy.

Mountain West Financial Wholesale Bulletin 21W-099 covers changes to the Fannie Mae Selling Guide which include Military Owner Occupancy special feature code, Comparable Sales for New (or Recently Converted) Projects, tax return extensions and measuring gross living area.

First Community Mortgage Correspondent posted RefiPossible Guideline updates in FCM Announcement 2022-1.

Updated LLPA information was issued by Citizens Bank advising that effective for locks on Monday, January 10th a new price adjustment will be applicable for transactions meeting the following parameters: Cash-Out Refinance / LTV >70 / Loan Amount >$350k. Pricing for these transactions will be worsened by 5 basis points (.0005) and the rate sheet will reflect this LLPA beginning Monday.

Pennymac’s January Product Highlights Affordable Housing programs including HomeReady/Home Possible, Community/Affordable Second and RefiNow. And Coming Soon: Manufactured Housing. Detailed information is available in Pennymac Correspondent Announcement 22-05.

Pennymac Correspondents are advised that any Fannie Mae Single Close loan with an application date prior to 7/1/2021 that meets the former QM Patch rules but does not meet the new revised QM rule must be delivered on or before 1/31/2022. More information is available in

Pennymac Announcement 22-04.

Freddie Mac published Guide Bulletin 2021-38, issuing temporary project review requirements regarding projects in need of Critical Repairs and projects with special assessments effective for Mortgages with Settlement Dates on or after February 28th and will remain in effect until further notice. Applicable to all loans secured by units in projects with five or more attached units, review the information in AmeriHome Mortgage Company Product Announcement 20220106-CL.

Effective Monday January 24th, 2022, Pennymac updated its Conventional LLPAs for Best Effort commitments 45 days and longer. Pricing details by feature and lock period can be viewed in PennyMac Announcement 22-08.

Wells Fargo Funding updated its conventional Conforming Loans policies for Condo and Co-Op project requirements to align with Fannie Mae. Projects with significant deferred maintenance or significant special assessment requirements are ineligible. Two new forms have been introduced that will be required. Also included in Wells Fargo Newsflash C21-065, details Seller Guide updates to better reflect Non-Conforming PerformanceWorksSM plan information policy and process there is no change to the policy.

Flagstar Bank implemented FHFA’s new Agency Second Home and High Balance/Super Conforming loan level price adjustments for locks 45 day and greater. Locks less than 45 day will be subject to the existing LLPAs until further notice.

This week Wells Fargo Funding has aligned its conventional conforming adjusters for second home and high balance Loans with those recently announced by the Agencies. Pricing and pages 2 and 8 of the rate sheet were updated accordingly on January 25th. Contact a member of your regional sales team regarding Loans that meet the Agencies’ criteria for exemption from the high balance adjuster.

Capital markets react to Fed news

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Headlines yesterday were always going to revolve around takeaways from the January Federal Open Market Committee meeting. The FOMC left the overnight rate unchanged but signaled that the U.S Central Bank is ready to hike the Fed Funds target rate in March and shrink its $9 trillion in bond holdings after “liftoff.” Although risks to the outlook remain, the economy and the employment situation have continued to strengthen. Fed Chair Powell didn’t rule out raising rates at every meeting to tackle high inflation, but noted that no decisions have been made yet and policy needs to be nimble. Expectations are for a total of 100 bps of rate hikes by the end of 2022.

It now seems that asset purchases will conclude in early March versus the previously implied mid-March time frame with the Fed making it clear it plans to end any further growth to its balance sheet, thereby reducing accommodation at the longer end of the yield curve. The Fed is expected to begin allowing runoff more quickly this time than last and at a faster pace once it starts. Some believe that the Fed delivered what markets wanted and expected, while falling further behind economic developments on the ground by not stopping the purchase of assets immediately and giving a clearer signal on rates.

Treasury prices dropped and the MBS “basis” was bashed due to a dovish statement and Chair Powell’s comment that “there is quite a bit of room to raise rates without dampening employment.” While he dodged questions on when the balance sheet reduction would begin, the Fed Chair said that it was likely to be discussed at the next couple meetings, likely pushing its start into the summer at the earliest. The thought that the Fed would like to return to a balance sheet that is primarily Treasuries at some point is putting additional pressure on MBS yields over the medium term.

Today’s busy calendar, not that it matters much, is already underway with the first look at Q4 GDP (+6.9 percent; old news), durable goods orders (-.9 percent, ex-transportation +.4 percent), and jobless claims (-30k to 260k, continuing claims +51k to 1.675 million). Later this morning brings pending home sales, Freddie Mac’s Primary Mortgage Market Survey, Kansas City Fed manufacturing, and a Treasury auction of $53 billion 7-year notes. The Desk will purchase up to $3.4 billion of conventional MBS. The Treasury purchase operation will target $1.8 billion 22.5- to 30-year coupons. We begin the day with Agency MBS prices worse a solid .5 and the 10-year yielding 1.83 after closing yesterday at 1.85 percent as the market further digests the Fed’s path and the reality sinking in that the Fed a) will likely not reinvest MBS prepayments, and b) was not going to lock itself into a quarterly rate increase pattern… It could be faster!

A vulture boards an airplane, carrying two dead raccoons.

The stewardess looks at him and says, “I’m sorry, sir, only one carrion allowed per passenger.”

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, “Opening the Door to Consumer Direct” about the pros and cons of the CD channel. 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 2022 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.)