Jan. 29: Full speed ahead on SOFR; vendors raising money & offering new products; Saturday Spotlight: Lender Toolkit

I could tell my cat Myrtle was miffed last night, and it was probably something other than me moving her from Fancy Feast “Organic Turkey Giblets” to Kroger’s “Chicken Innards” canned cat food. Sure enough, it was news that the Bidens had adopted Willow, a cat from Pennsylvania. I was blunt, and reminded Myrtle that, unlike her, Willow seems to have two good ears and two good eyes, making her more appealing for adoption. At least neither doesn’t have to wear a face mask, or pay for them. As it turns out, we can now get them for free, with the U.S. Government’s seemingly endless supply of money riding to the rescue: N95 masks are being given away for free. Meanwhile, back in mortgage land, the final housing numbers for 2021 aren’t in but CoreLogic put out its estimates of the record-breaking year. Sales numbers were below the highs seen during the 2000s, but the value of transactions skyrocketed. In Q1 2021, $750 billion was spent on 1.91 million transactions. Per CoreLogic, the major contributor to the increase was the location of sold homes: More properties sold in higher-priced areas over the past year when compared to the 2000s. And the combination of relocations to more expensive areas and rising housing price appreciation led to over $1.25 trillion in transactions for the first six months of 2021, which is the reason CoreLogic predicted a $2 trillion year.

 

Saturday Spotlight: Lender Toolkit, Your Digital Mortgage Expert

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In 3-5 sentences, describe your company (when was it founded and why, what it does, where, recent growth and plans for near-term future growth).

Lender Toolkit was created to transform the mortgage manufacturing process. We digitize and automate processes by developing innovative custom software solutions, including AI Underwriter and Disclosure Automation to minimize errors, provide superior consumer experiences, and maximize profits.

Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why. 

Last year, we supported the Wounded Warrior Project which specializes in offering services to wounded veterans and their families. We have a corporate matching program for employees who make individual contributions. This year we will continue to support the Wounded Warrior Project, as well as Homes for Heroes, a charity that helps veterans get mortgages.

 

What does your company do to help elevate your employees’ growth? Describe any mentoring programs, outside classes or training, in-house training. How does the company help people develop?

This past year Lender ToolKit hired an in-house Wellness & Culture Coordinator. We created a wellness roadmap that focuses on teaching our team stress-reduction techniques, ways to be more active, and strategies for eating cleaner. We offer bi-weekly guided mindfulness meditation, periodic mindful managing trainings for our management team, and mindfulness teachings on team meetings.

 

In addition, we also developed a Challenge Coin program where employees can nominate one another for specific coins which all have their own awards.

 

Our company is committed to making sure that our employees have access to learning opportunities they are interested in. For example, we offer a certification reimbursement program to become certified in LOS administration.

 

Tell us how your company maintains its culture in a work-from-home environment, or how you plan on bringing employees back into the office, if applicable.

We’ve been a remote company since our inception, so even before Covid we had to find ways to connect remotely. In addition to our bi-monthly team meetings, we offer monthly happy hour trivia nights, cooking classes, book clubs, photo contests, bi-weekly guided meditation, monthly fitness challenges, and more.

 

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

We are proud of our commitment to employee wellness. Fintech is an exciting and challenging business that requires deeply thoughtful humans to succeed. We have a superior and fast-growing group of talented mortgage experts with highly technical backgrounds. The team is the reason  Lender ToolKit has grown nearly 80% year over year. It’s also the reason we’re on the list of Top 100 Utah companies.

Fun fact about Lender Toolkit

Lender Toolkit developed an employee recognition program mirroring the “challenge coin” concept in the military. PowerCoins recognize and reward employees for their excellence.

  

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

Lender Toolkit’s clients fund more than $600 billion a year in mortgage volume. Helping to improve the loan quality and experiences for tens of thousands of Americans is exceptionally gratifying.

(For more information on having the charitable, employee improvement-centric side of your firm featured, contact Chrisman LLC’s Anjelica Nixt.)

LIBOR to SOFR

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This week ex-Deutsche Bank traders had their Libor-rigging convictions overturned as a New York appeals court acquitted Matthew Connolly and Gavin Black of manipulating the benchmark index.

Yes, LIBOR/Libor is back in the news to some extent. The London Interbank Offered Rate, which has underpinned the pricing some $265 trillion of derivatives and loans (ranging from mortgages and student loans to business funding and credit cards) is ending a role it had held for about four decades. It is estimated that banks, lenders, and mortgage servicers have spent around $10 billion preparing for Libor’s demise, according to an estimate by management consultancy Oliver Wyman.

Recall that Libor was set each day by collecting estimates from a series of global banks on the interest rates they would charge for different loan maturities. It was also calculated across five of the biggest global currencies and quickly became the default standard interest rate at the local and international levels. However, over the last decade, Libor has been fraught with scandals and calamities, such as the role it played in worsening the 2008 financial crisis, as well as the big bank manipulation/collusion scheme that surfaced in 2012.

The Secured Overnight Financing Rate (SOFR) will be the main replacement for Libor in the U.S. The SOFR benchmark, which is based on the rates U.S. financial institutions pay each other for overnight loans, is said to be more accurate and secure around pricing. As for existing loans, Overnight Libor, 1-month, 3-month, 6-month, and 12-month USD maturities will continue to be published through June 2023.

Regulators are expected to take a close look at how synthetic Libor is being implemented, and the bond markets may find it challenging to shift to another interest rate index, according to Shankar Mukherjee, a partner at EY. “The question is how this is going to impact the transition strategy for US regulators,” he says.

We’ve known for years that LIBOR is going away, and it appears that the CFPB is catching up. The CFPB finalized a rule facilitating the transition away from the LIBOR interest rate index for consumer financial products, establishing requirements for how creditors must select replacement indices for existing LIBOR-linked consumer loans after April 1, 2022.

Heading into the end of 2021 the vast majority of U.S. financial market participants said they were prepared to cease issuing contracts linked to LIBOR by the end of the year, a Practice Insight survey found. And Fannie Mae, Freddie Mac, and HUD have been keeping us informed for quite a while.

Although the most highly utilized LIBOR tenors for U.S. financial arrangements has been delayed until June 2023, the recent announcement formally recommending Term SOFR as a replacement floating rate has propelled lenders and borrowers alike to proceed with new Term SOFR-based loans with increased fervor during the final half of 2021.

Two recent statements regarding the use of the LIBOR Index came out. Back in November 2020, the Board of Governors of the Federal Reserve System (FR), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) issued a joint statement on managing the LIBOR Transition. The post Additional Interagency Clarifications for Transitioning from the LIBOR Index appeared first on Docutech’s Compliance.

Vendor tidbits

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All kinds of companies are valued based on predicted future cash flows. Huh? A new $240 million financing round has propelled Kim Kardashian’s line of underwear, Skims, to a $3.2 billion valuation, double the value of April 2021. Really? (Sorry, not a fan of that family, basically being famous for being famous.)

A couple Blend alumni started a new company, San Francisco-based Vesta, which announced it has raised $30 million in Series A financing led by Andreessen Horowitz (a16z) with participation from new investor Zigg Capital. Existing backers Conversion Capital and Bain Capital Ventures also participated in the round, bringing the company’s total raised since its November 2020 inception to $35 million. In a nutshell, Vesta’s technology aims to provide a customizable platform for mortgage origination, supporting approval, underwriting and the closing and funding of home loans.

Earlier this week this Commentary reported that Sales Boomerang, a provider of automated borrower intelligence and retention software for lenders, and Mortgage Coach, a borrower conversion platform empowering lenders to educate borrowers with interactive presentations that model home loan performance over time, today announced strategic investments from Philadelphia-based private-equity firm LLR Partners. Sales Boomerang and Mortgage Coach will maintain their existing brands and teams.

Polly™, the SaaS technology company transforming the mortgage capital markets, announced it has raised $37 million in Series B funding, bringing Polly’s total funding to over $50 million. The round was led by Menlo Ventures with participation by new investors including Movement Mortgage, First American Financial, and FinVC. Existing investors 8VC, Khosla Ventures and Fifth Wall also participated in the round.

The Mortgage Collaborative (TMC), the nation’s largest independent cooperative network serving the mortgage industry, announced yesterday that the TMC Emerging Technology Fund LP (the “Fund”) recently participated in a $38M Series C investment round for AI Software, LLC dba Capacity. Capacity is an AI-powered support automation platform that connects into an organization’s tech stack to answer questions, automate repetitive support tasks, and build solutions to any business challenge.

Meanwhile, others are rolling out new products and signing up users. Let’s take a random look.

Daily AI, the provider of intelligent solutions with its suite of automation tools for the future of mortgage lending, has acquired Whiteboard CRM, provider of a mortgage CRM built to accelerate lead management, partner relationships, team production, and revenue growth. This acquisition will enable Daily AI to continue its significant expansion of market share since its founding in 2019. With a growing user base, and the velocity of new users joining the platform increasing, the company marked a more than 1000% increase in new users in 2021.

MeridianLink announced the availability of its Engage platform, a consumer lending, account, and card marketing automation solution. The offering combines Saylent and MeridianLink capabilities to help financial institutions’ marketing efforts, allowing them to remove challenging data silos and the need for IT support. Financial professionals now have a single platform to anticipate consumer needs and provide personalized consumer lending offers through advanced data.

LenderHomePage added custom “Loan Milestone” capabilities to its mortgage point of sale software, Loanzify, designed to help originators improve business processes by synthesizing information based on loan type. Mortgage companies are increasingly turning to technology to help them comb through rising volumes of data sets and sources required for credit decisions. By adding customization capabilities to the intake process, mortgage professionals can collect data relevant to the specific loan product and quickly organize it to hasten fact-driven funding decisions and improve the customer experience.

ReverseVision®, national provider of HECM and private reverse mortgage sales and origination technology, announced that established mortgage banker, Trust Lendinga has gone live with ReverseVision’s Exchange (RVX) platform for its wholesale lending channel to automate its reverse lending process. The mortgage lender is leveraging RVX to provide elevated service to senior borrowers, tech tools for brokers, and service a significantly underserved market. Its goal was to grow a new reverse product line amid a profit-pinched market along with providing its broker partners with easy-to-use technology tools that help them quickly and efficiently originate and manage reverse mortgage deals.

Alanna, the title industry’s only conversational AI technology, able to engage in complex conversations with clients via SMS text or web chat translates intelligently and maintains conversational integrity. With a recent enhancement, Alanna Now “Speaks” 54 Languages and is capable of intelligently facilitating a conversation in more than two languages at the same time, where needed (including cases where three parties are engaged in the conversation using three different languages). Alanna is also available on a “white label” basis, through which it can be custom branded to fit the title agent’s business.

As the Northeast prepares for some snow…

A wife texts husband at work on a cold winter’s morning: “Windows frozen, won’t open.”

Husband texts back: “Gently pour some lukewarm water over it.”

Wife texts back 5 minutes later: “Computer really messed up now.”

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).

qoɹ

(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.)

Rob Chrisman