July 1: Vendor bytes; secondary market deals; warehouse news; the most common holiday around the world is…?

Aside from Michigan’s House passing a law on pronoun usage, here’s something interesting to throw out at those picnics in the Upper Peninsula and around the nation this weekend and Tuesday: The most common national holiday around the world is independence from the British. Here in the States we’re focused on housing, but in keeping with the global theme, here is a site that shows housing appreciation and depreciation in other countries around the world. With eight billion “people” now on the planet to do things, we should all be amazed at how many avoid using even one word that refers to a person. Things get attached, enclosed, needed, completed, performed, and worked on without one person in sight. It’s like robots do half of the business in this country. Or magic. For example, “Attached, please find a letter of apology” or, “It might not be necessary to hire an in-house attorney.” The writers could have written, “I have attached a letter of apology” or, “You might not need to hire an in-house attorney.” The next time you write, “Significant progress has been made…” ask yourself, who’s made the progress? and instead write, “We have made significant progress.” Or use the names of those responsible for the significant progress, Deirdre and Samantha!

Warehouse line topics from the MBA

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Last Saturday my Commentary noted some current events going on in the world of warehouse lending. This week MBA President and CEO Bob Broeksmit published a blog post titled, “Regulators: Take Steps to Recognize Warehouse Lenders’ Important Role in Today’s Housing Finance Market.”

Bob highlights the essential and irreplaceable form of liquidity for the mortgage market that warehouse lending provides, connecting Wall Street to Main Street to provide broad mortgage credit access for borrowers across the country, and offers two key regulatory changes that should be considered to ensure the stability of the warehouse funding market.

First, “Reduce the risk weighting on warehouse lending facilities to align with the risk weighting on the underlying collateral. Under current rules, a warehouse line secured by single family loans is assigned a 100% risk weight. If those same loans were taken on balance sheet by the bank in the event of default by the mortgage company, the risk weighting would be cut in half. This makes no sense: for single-family mortgages that meet agency and GSE guidelines, regulators should reduce the risk weighting from 100% to 50%.

“Second, the Federal Housing Finance Agency (FHFA), as the regulator of the Federal Home Loan Banks (FHLBs), should ensure that advances from the FHLB system remain available to support warehouse lenders through all market cycles. Some FHLBs do not permit advances against warehouse line of credit, even though the collateral directly supports housing finance activities.”

Vendor news in the primary and secondary markets

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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.

“It’s like if Zillow and your lender had a baby! With HomeDashboard, your Loan Officers deliver property data and live mortgage products to homeowners and homebuyers, building trust and deepening relationships. Realfinity onboards retail lenders at no cost. We directly engage with your Loan Officers, giving them full access to our enterprise solution now, including recently launched features such as Client Self-Registration, Live/ Adjustable Pricing, Realtor Co-branding, and Single-Sig-On. Help your Loan Officers to keep their clients in a closed ecosystem, increasing referrals and expanding their databases. Contact Luca Dahlhausen to get the integration set up asap, for free. We take care of the rest!”

Mortgage Automation Technologies (MAT) and Candor Technologies have completed an integration of services to transform the way consumers search for loans. By integrating Candor Technologies’ patented Virtual Underwriting System (VUS), Decisions on Demand, with the innovative The BIG Point of Sale platform developed by Mortgage Automation Technologies, the integration aims to revolutionize the mortgage application review process, providing lenders with the ability to convert consumers into fully approved borrowers in 45 minutes or less.

Tavant announced the launch of Asset Analysis to Touchless Lending®, its AI-powered digital lending platform. With this addition, Touchless Lending will further solidify itself as the most comprehensive automated underwriting solution available to mortgage lenders by providing coverage over all four major underwriting components, including Income, Credit, Collateral, and soon Asset Analysis. Touchless Lending Asset Analysis is in the near-final stages of production and will be available in-market by the end of June 2023.

DocMagic, Inc. announced the addition of ADA-compliant mortgage loan documents to its extensive document library. The new digital documents are accessible to visually impaired users and others with disabilities, unlocking opportunities for these consumers into the broader mortgage market. DocMagic’s ADA-compliant loan documents are dynamic, data-driven and designed to automatically identify and index critical document components during the document generation process. The new documents implemented at scale by some of the nation’s largest financial institutions, enabling them to serve more clients and lead the way in providing a heightened level of customer support. Lending entities of all types and sizes trust DocMagic’s document generation and eMortgage services to streamline the mortgage lending process, resulting in significant business benefits and a measurable ROI.

Vice Capital Markets is one of the first Freddie Mac-integrated Secondary Market Advisors (SMAs) to release an integration with Freddie Mac’s Income Limits application programming interface (API). The API grants Vice Capital customers easy access to area median income (AMI) information to quickly determine if a loan meets the AMI percentage eligibility criteria for certain Credit Fee Caps. Income Limits is one of several integrated Freddie Mac APIs that Vice Capital leverages to help its clients extract maximum value from their relationship with Freddie Mac. Other integrated Freddie Mac APIs include Cash Purchase Settlement Statement and Cash-Released Xchange®.

Secondary market liquidity drives primary market rates

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Lenders know that if there is no outlet for a funded loan, whether it is going into an asset portfolio or securitized and sold in the secondary market to an investor, a lender won’t originate that loan. And so, lenders are well aware of Freddie and Fannie’s activities in the capital markets.

Fannie Mae priced Connecticut Avenue Securities (CAS) Series 2023-R03, an approximately $622 million note offering that represents Fannie Mae’s third CAS REMIC transaction of the year. 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 2023-R03 consists of approximately 113,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $38.0 billion. The reference pool includes collateral with loan-to-value ratios of 80.01 percent to 97.00 percent, which were acquired between January 2022 and May 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 the completion of this transaction, Fannie Mae will have brought 56 CAS deals to market, issued over $61 billion in notes, and transferred a portion of the credit risk to private investors on over $2 trillion in single-family mortgage loans, measured at the time of the transaction. To promote transparency and to help credit investors evaluate our securities and the CAS program, Fannie Mae provides ongoing, robust disclosure data, as well as access to news, resources, and analytics through its credit risk transfer webpages.

Fannie Mae announced that as part of Fannie Mae’s ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market, it has executed two Credit Insurance Risk Transfer (CIRT) transactions, CIRT 2023-2 and CIRT 2023-3. The transactions transferred a combined $926 million of mortgage credit risk to private insurers and reinsurers. Since inception to date, Fannie Mae has acquired approximately $23.5 billion of insurance coverage on $793 billion of single-family loans through the CIRT program, measured at the time of issuance for both post-acquisition (bulk) and front-end transactions. As of December 31, 2022, approximately $1.1 trillion in outstanding UPB of loans in our single-family conventional guaranty book of business were included in a reference pool for a credit risk transfer transaction. To promote transparency and to help insurers and reinsurers evaluate the CIRT program, Fannie Mae provides ongoing, robust disclosure data, as well as access to news, resources, and analytics through its credit risk transfer webpages. This includes Fannie Mae’s innovative Data Dynamics® tool that enables market participants to interact with and analyze both CIRT deals that are currently outstanding in the market and Fannie Mae’s historical loan dataset. For more information on individual CIRT transactions, including pricing, please visit the Credit Insurance Risk Transfer webpage.

Freddie Mac Multifamily released its annual Impact Bonds Report detailing the company’s successful efforts to issue more than $15 billion in Green, Social and Sustainability Bonds since 2019. The annual report showcases how Freddie Mac’s Impact Bonds continue to support multifamily properties that address persistent housing challenges, particularly environmental and social issues, and provide additional transparency to investors. Historically, more than 90 percent of the eligible rental units Freddie funds are affordable to families with low-to-moderate incomes earning up to 120 percent of area median income. Freddie Mac securitizes about 90 percent of the multifamily loans it purchases, thus transferring the majority of the expected credit risk from taxpayers to private investors. The Impact Bonds Report highlights properties and impacts across Green, Social and Sustainability Bonds. Freddie has issued more than $5 billion in Green Bonds since 2019. Green Bonds are backed by Multifamily loans that incentivize energy- and water-efficiency improvements at workforce housing properties. Freddie has issued more than $4.6 billion in Social Bonds since 2020. Social Bonds focus on supporting affordable housing by providing liquidity to financial institutions with a distinct mission of addressing affordable housing challenges or providing financing targeted toward underserved populations. Freddie has also issued more than $5.4 billion in Sustainability Bonds since 2020. Sustainability Bonds attract capital to support residents’ economic mobility and, more broadly, generate community economic growth and sustainability.

Fannie Mae announced that it has executed its fourth Credit Insurance Risk Transfer (CIRT) transaction of 2023. The covered loan pool for CIRT 2023-4 consists of approximately 40,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $12.9 billion. The covered pool includes collateral with loan-to-value (LTV) ratios of 60.01 percent to 80.00 percent acquired between March 2022 and May 2022. As part of Fannie Mae’s ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market, CIRT 2023-4 transferred $501.6 million of mortgage credit risk to private insurers and reinsurers. Since inception to date, Fannie Mae has acquired approximately $24 billion of insurance coverage on $806 billion of single-family loans through the CIRT program, measured at the time of issuance for both post-acquisition (bulk) and front-end transactions. As of December 31, 2022, approximately $1.1 trillion in outstanding UPB of loans in Fannie’s single-family conventional guaranty book of business were included in a reference pool for a credit risk transfer transaction. To promote transparency and to help insurers and reinsurers evaluate the CIRT program, Fannie Mae provides ongoing, robust disclosure data, as well as access to news, resources, and analytics through its credit risk transfer webpages.

Fannie Mae announced that it has executed its fifth Credit Insurance Risk Transfer (CIRT) transaction of 2023. As part of Fannie Mae’s ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market, CIRT 2023-5 transferred $424.4 million of mortgage credit risk to private insurers and reinsurers. Since inception to date, Fannie Mae has acquired approximately $24.5 billion of insurance coverage on $823.7 billion of single-family loans through the CIRT program, measured at the time of issuance for both post-acquisition (bulk) and front-end transactions. The covered loan pool for CIRT 2023-5 consists of approximately 53,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $18.1 billion. The covered pool includes collateral with loan-to-value (LTV) ratios of 80.01 percent to 97.00 percent acquired between March 2022 and June 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. As of March 31, 2023, approximately $1.17 trillion in outstanding UPB of loans in our single-family conventional guaranty book of business were included in a reference pool for a credit risk transfer transaction. To promote transparency and to help insurers and reinsurers evaluate the CIRT program, Fannie Mae provides ongoing, robust disclosure data, as well as access to news, resources, and analytics through its credit risk transfer webpages.

A golfer sliced a ball into a field of chickens, striking one of the hens and killing it instantly. He was understandably upset and sought out the farmer. “I’m sorry,” he said, “my terrible tee-shot hit one of your hens and killed it. Can I replace the hen?”

“I don’t know about that,” replied the farmer, mulling it over. “How many eggs a day do you lay?”

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Rob Chrisman