July 24: Construction, rental DSCR, warehouse products; Agency news; interview on MBS & rate sheet pricing; retail branch profitability study

Some things are fortuitous. For example, if Sting hadn’t been in Montserrat windsurfing when Dire Straits was recording “Money for Nothing,” would we have ever heard the iconic “I want my MTV” 38 years ago? Some things don’t go so smoothly, like insurance in places like California and Florida. Farmers Insurance is the latest home insurer to pull out of Florida’s market, labeling the move as a business decision that was “necessary to effectively manage risk exposure,” per the company’s statement provided to Fortune. Shortly after, AAA announced it’d reduce its presence in Florida. And some things are neither fortuitous nor bad, but just are. Occasionally I am asked about branch models, especially as companies, realizing that summer is passing with no huge uptick in sales and no great reduction in interest rates, are once again examining overhead and what kind of branch makes the most sense. I turned to STRATMOR Partner Jim Cameron who reminded me of an article he had penned, taking an in-depth look at the pros and cons of expense management branches. (Today’s podcast can be found here and sponsored by ReadyPrice, offering the industry’s most powerful universal delivery portal that gives brokers the edge they need. Shop, lock and deliver with multiple lenders, all in one place, for free! Hear an interview with Chris Whalen in a wide-ranging capital markets discussion on how MBS pricing is determined and how that ultimately flows onto lenders’ rate sheets.)

 

Lender and broker products, services, and software

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While some inexplicably seek out a terrible time, like the hundreds who visited Death Valley for the 128-degree heat, most would give those conditions a hard pass. SimpleNexus, an nCino company, prides itself on creating a home financing experience that all borrowers love, with its award-winning point-of-sale technology enabling consumers to manage their mortgage application from anywhere. Not only does the digital mortgage solution allow borrowers to apply for loans quickly and easily, but it also keeps them up to speed on loan status, prompts them to take action when needed, and loops their agents in on loan progress. To explore how SimpleNexus can elevate your borrower experience, schedule a demo today.

We are pleased to announce the latest addition to our team at First Horizon Mortgage Warehouse Lending as we continue to expand our presence in the mortgage industry. Please join us in warmly welcoming Chris Karnes as our newest Relationship Manager! With an impressive background in the mortgage industry Chris Karnes brings over 25 years of industry experience and expertise to our organization. For over 40 years, First Horizon has consistently offered committed warehouse lines and a suite of sub-limits to qualified borrowers. We are growing and ready for the opportunity to support your business. To learn more about our services and how First Horizon Warehouse Lending can assist you please reach out to Chris (214)-693-3203 or our National Sales and Business Development Manager Scott Walker (901)-517-0320.

With natural disasters on the rise, homeowners may experience unexpected hardship and financial challenges. That’s why it’s time to rethink how you assist distressed homeowners. Black Knight data shows that most borrowers in forbearance during disaster events ultimately return to performing status. And what’s more, a multi-year analysis revealed that many borrowers embrace assistance options when they’re offered to them via self-service technology. This encouraging data indicates that access to the right technology may help more borrowers stay in their homes during periods of financial hardship. Read more in Black Knight’s complimentary case study, “Helping Homeowners in Times of Financial Hardship.”

Loan officers, if there was an easy button for creating incredible video marketing content on social media, would you press it? Now you can thanks to Video Catalyst by SocialCoach. Say goodbye to the days of wondering what to say, what equipment you’ll need, and how you’ll edit. With Video Catalyst, we’ve made it easy to create compliant, scroll-stopping, professional-grade videos in record time. Here’s how: We write four fresh, relevant (and compliant) scripts for you every month, you simply read the scripts while recording the video from your smartphone, and then send it back to us for professional editing, which includes the addition of music, dynamic captions, gifs, and emojis. We then post it to your account for seamless sharing. That’s it. You press record, we do the rest. Want to see how Video Catalyst can unlock the power of video marketing for your business? Book a demo today.

Leveraging technology to improve the daily lives of mortgage professionals and homebuyers is core to Cloudvirga’s mission, so when FHFA announced the inaugural Velocity Tech Sprint, they seized the opportunity. For this event, FHFA assembled some of the best and brightest from across the industry to develop solutions for lenders to reduce costs and delivery times, while being more inclusive and transparent. Cloudvirga had members on two award-winning teams. These winners helped develop Cloudvirga’s Horizon platform which offers an innovative approach that creates a 5-star user experience across the lending process for both borrowers and loan officers. The result: underwriter-ready loan files in less than 30 minutes, shaving days off the process. Generate more loans, more referrals, more repeat business, and retain your top talent. Cloudvirga’s technology even reduces the touch time by 70 percent between LOs and borrowers. See it for yourself. Schedule a demo to learn more.

Using the right data to drive your decisions? Curinos is please and privileged to welcome industry veteran Rob Chrisman to our (F)insights podcast series. Join us as Rob lends his forward-looking and consistently thought-provoking insights into today’s highly challenging mortgage market. One key element separating winners from losers, according to Rob, is data-driven decision making: having the foresight and courage to rely on data to make the tough calls. Along with Curinos’ Rich Martin, director of real estate lending solutions, Rob covers the pressing issues of the day, including inventory, housing affordability, mortgage availability, home equity and what may be ahead for rates and volumes. You’ll even learn the derivation of the word “mortgage” It’s a lively and informative discussion you won’t want to miss! Tune in now.

“With over 35 years of experience in mortgage banking, Richey May knows the industry from every angle. Many of our team members are credentialed industry experts who dedicate much time to building up other industry experts. From this expertise, Richey May has created a wealth of services and products to help lenders stay ahead: audit and tax services, cybersecurity solutions designed to protect company assets and sensitive borrower information, intelligent automation tools for streamlined operations…you name it! Whether you’re leveraging our innovative platforms or having us work as your extended team for outsourced internal audit or accounting services, get ready to tackle challenges faster with some serious firepower on your side. Everything you need! Contact our experts today!”

Broker & correspondent loan programs

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Thinking about boosting volume with construction loans? Think outsourcing. Homebuilder confidence is slowly improving, with sales of newly built single-family homes rising 4.1 percent in April, according to the NAHB’s latest numbers. If that’s piquing your interest in launching a construction loan program or scaling your existing offerings, CFSI Loan Management can provide the foundation you need to excel. “We’ve seen it time and time again,” says CFSI CEO Brian Mingham. “Outsourcing the trickiest aspects of construction lending, like budgeting, inspections, funding draws and disbursements, can reduce costs and unleash new business opportunities.” Imagine having all the complexities seamlessly handled by a team of seasoned experts, so you close more deals. CFSI has helped hundreds of lenders do exactly that for the past 10 years. To find out how they can help you, contact Brian Mingham (855-344-2374).

Grow that pipeline with LoanStream’s Summer Specials on Non-QM and Government. Includes Price Improvements on FHA, VA, Select Government loans. Plus, Specials for Non-QM includes Full Doc, Alt Doc and DSCR. Here for a limited time so don’t wait, contact your Account Executive for full details as restrictions apply, or visit here. Plus, MaxONE DPA programs are now available in Massachusetts! Finance up to 100 percent CLTV with 600 Min FICO. Contact your AE to learn more or visit here.

“Exciting Updates and Special Offers for LendingOne TPO Mortgage Brokers. Between July 24th and August 31st, LendingOne brokers can receive 50bps Bonus YSP on qualified new applications submitted for RentalOne DSCR Loans and RentalOne Portfolio DSCR Loans. Also, LendingOne has increased its leverage amounts for our Rental Loan products, giving our brokers more competitive rates and terms for their clients. The LendingOne TPO team can be found in Orlando, Florida on August 2nd-5th at the FAMP 2023 Annual Convention and Tradeshow. If you are attending, let’s schedule a time to meet onsite to discuss these new opportunities for LendingOne TPO brokers. Call us today to learn more: 866-794-0937 or visit our website.”

Agency changes impacting conventional conforming loans

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Let’s not forget that Freddie and Fannie are under conservatorship, and probably will be for quite some time. The changes that the Federal Housing Finance Authority (FHFA) and other agencies make directly impact their business, as well as other programs.

Six federal regulatory agencies, the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, National Credit Union Administration, and Office of the Comptroller of the Currency requested public comment on a proposed rule designed to ensure the credibility and integrity of models used in real estate valuations. In particular, the proposed rule would implement quality control standards for automated valuation models (AVMs) used by mortgage originators and secondary market issuers in valuing real estate collateral securing mortgage loans.

The FHFA announced that it is seeking to amend the existing Suspended Counterparty Program (SCP) regulation to expand the categories of covered misconduct on which a suspension could be based to include sanctions arising from certain forms of civil enforcement. The FHFA is seeking comment on the proposed rule that would amend the Suspended Counterparty Program (SCP) regulation.

A notice regarding the Single Family Housing Section 504 Home Repair Loans and Grants in Presidentially Declared Disaster Areas Pilot Program was published in the Federal Register on Tuesday, July 18, 2023. The pilot includes multiple program waivers.

Capital markets: Fed meeting week, the last ‘til September

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Friday was a slow news day with no economic data and no Fed speak, though investors were lying in wait all week for the most part looking ahead to this week’s batch of economic data and central bank meetings that includes the FOMC meeting on Wednesday, the ECB meeting on Thursday, and the BOJ meeting on Friday.

Glancing at last week, June’s retail sales rose 0.2 percent, less than market expectations for a 0.5 percent increase. After accounting for inflation, sales at food and beverage stores as well as gas stations fell during the month. Sales at food service and drinking places rose below the pace of inflation indicating sales declined there as well. Overall, retail sales in the second quarter have been flat. Building permits declined 3.7 percent in June and housing starts were down 8.0 percent in June. Both permits and housing starts rose overall during the second quarter.

This week the advance estimate of real GDP for the second quarter will be released. Economists are forecasting growth to be 1.7 percent, down from 2.0 percent in the first quarter, but the Atlanta Fed’s GDPNow model shows 2.4 percent as of July 19. A widening trade deficit, slower inventory growth as well as sluggish retail sales may prove to be headwinds to a stronger GDP reading for the quarter.

Economists show a consensus view that the anticipated 25 basis points fed funds hike this week will mark the end of the Fed’s tightening cycle, with rate cuts expected to come in March of next year. Fed Chair Powell’s follow up press-conference after Wednesday’s rate decision will be closely watched, as will how 2-year Treasuries react going forward because 10-years are “tied to the hip and mortgages can’t handle another flattener,” per Adam Quinones. Speculation that the Fed may end its tightening after one more hike next week has led to bond yields falling as of late (10-year U.S. Treasury yields have fallen to about 3.8 percent, from this year’s high of 4.1 percent set in early July) following multiple softer-than-expected inflation reports two weeks ago. However, new commodity inflation pressures have come to the fore following a warning from the Russian Ministry of Defense that any ships entering Ukraine ports will be considered potential military targets. This has sent the price of global wheat futures higher by roughly 10 percent.

This week brings the latest central bank decisions from the Fed, ECB and BoJ, respectively on Wednesday, Thursday, and Friday. Treasury will auction $120 billion in fixed coupon supply, while economic data of note include the first look at Q2 GDP on Thursday with June PCE on Friday. Bank regulators are expected to announce new capital requirements on Thursday where risk weightings for mortgage loans in MBS are expected to increase for most from the current 50 percent. Today’s scheduled economic news: Chicago Fed National Activity Index for June, preliminary June S&P Global Markets manufacturing and services PMIs, and a Treasury auction of $42 billion 2-year notes. We begin the week with Agency MBS prices better by .125, the 10-year yielding 3.80 after closing last week at 3.85 percent, and the 2-year’s at 4.82.

Saturday night I was in the local tavern, and the bartended yelled out, “Does anyone know CPR?!”

I replied, “I know C-P-R, and the whole rest of the alphabet!”

We all laughed and laughed and laughed. Well, except for one guy.

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. STRATMOR’s current blog is titled, “Interest Rates are Like the Weather? Or Like Signs of the Zodiac?” 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 2023 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