July 25: Credit Risk Transfers helping mortgage rates; SOFR transition status; Saturday Spotlight: Thrive Mortgage

All the smart folks are predicting these low rates and high residential volumes to continue through the year. (I remind people that no one was predicting all of this precisely only five months ago. Who can really predict where we’ll be five months from now, Christmas Day?) But with low rates, and low inventory, and people wanting out of their 2-bedroom, 1 bath apartments, and hopefully working and saving more and more for a down payment, things should be good for quite some time for residential lenders. As one originator sent, “Our submissions are way down from the frenzy but still holding.”

Marci Francisco, the SVP of member experience at Premier America Credit Union, has some thoughts on the pandemic and about something every originator should remember. “I don’t think things will slow down for a while as we recover as a society and as an economy. The gains we’ve made in technology, creativity, and employee engagement are not short-term gains. In fact, I think everyone has seen just how much we care… blood, sweat, and tears are proof. My sister worked for Disney, and as she came up through the ranks, she told me something I haven’t forgotten. If a child hugs a character at a theme park, you’ll never see that character let go first. They understand everyone is coming to them with a story or a need, so they’ve got to be there for that person until he or she gets what they need and more. For us, we have to understand everyone is coming to the credit union with a need, even if it’s not obvious what it is. The best thing our team members can do is to be there for them for as long as they need us to be.”

Saturday Company Spotlight

This week we highlight Thrive Mortgage’s focus on the founding, growth, employee mentoring in a work from home environment, entrepreneurship, and charity work.

In 3-5 sentences, describe Thrive Mortgage (when was it founded and why, what it does, where, recent growth, and plans for near-term future growth). Thrive Mortgage was originally founded in 2001 by Roy and Barbara Jones as an independent mortgage brokerage in, what was then, a sleepy suburb just north of Austin, TX. The company began to grow quickly and quietly (much like the Austin market itself) until reorganizing as an Independent Mortgage Bank in 2008 and adopting the name Georgetown Mortgage, LLC. Fast forward another ten years and the growth continued, and the company went through a complete rebranding to become Thrive Mortgage. Since that time, Thrive has established itself as a major influence in the mortgage industry through the adoption of leading technology solutions, a highly efficient operations process, and continual involvement with various trade associations and leadership committees within the industry.


Tell us about company culture and what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why. One of the first things employees of Thrive Mortgage point to when asked what they appreciate the most is the focus on their personal development and the company’s involvement in the local community. One such example is the company’s recent partnership with an organization named Defenders of Freedom. Based in the Dallas, TX area, Defenders of Freedom works with military veterans to overcome the impact of Post-Traumatic Stress and Traumatic Brain Injury. The partnership is more than financial commitments, however. Thrive employees and leaders donate their time and expertise to assist the organization with their ability to fundraise, their marketing, and even their technology infrastructure.

Initiatives such as this are the result of having executive leaders like Donna Fisher who oversee the company’s “ThriveCares” initiative. This team is dedicated solely for the purposes of showing appreciation to Thrive’s clients, business partners, and especially employees who make a difference in the lives of others.


Tell us how your company maintains its culture in the office, or in a work-from-home environment if applicable. Thrive is deeply vested in the development of the talents and skills of its employees. Whether launching initiatives such as the Loan Officer Training Academy, supplementing the cost of industry or job-related coaching, or hosting weekly coaching calls across multiple departments; Thrive believes that the best talent often comes from within the organization. When conducting an annual survey by an independent agency, most employees rank the topic of “Opportunity for advancement” as one of the key reasons they remain at Thrive.

Prior to the current “COVID-19 environment”, almost 70% of the workforce at Thrive Mortgage was remote. The only thing that the current pandemic has curbed is the number of in-person, team building events which were commonplace for so many departments. Despite the changes to our everyday lives, Thrive has managed to maintain the effectiveness within all departments through the adoption of technology as a tool to maintain those connections.

What is your company most proud of that doesn’t have to do with sales? Beyond the growth, the industry awards, and the notoriety that comes with being an established leader in the mortgage industry… Thrive Mortgage is all about its people. Fully two-thirds of the employees at Thrive are female, and more than 70% comprise the Executive and Department Management positions. Thrive is actively addressing issues of minority homeownership and housing needs in underserved markets. Several of the company’s executives and top leadership are either the heads of or involved with multiple committees, organizations, and trade associations whose goals are to further advance our industry.

Is there anything else you’d like to share along these lines? Mortgage lending is what we do, but it is not the sole determinant of who we are. Community is the best descriptor of our people. With backgrounds and experiences as varied as the clients we serve; we are a community of professionals who care about each other. Our achievements are celebrated together. Collectively, we support and engage in the things that matter. Our culture is what drives our success. This is why we say, “Alone we dream. Together we THRIVE!”

(For more information on having your firm featured, contact Chrisman LLC’s Anjelica Nixt.)

LIBOR & SOFR & bears, oh my!

The transition is continuing to occur, slowly percolating below the service at many institutions. For example, want a webinar on the transition away from LIBOR? Here you go. Remember that there is no guarantee that LIBOR will be published, and owners and servicers tied to adjustable rate loans (not only home loans) tied to that index are moving away from it.

In May the FHFA, therefore Freddie and Fannie and the Federal Home Loan Banks, published its stance on the transition.

The Federal Financial Institutions Examination Council released a Statement on managing the LIBOR transition.

Intercontinental Exchange, who basically owns MERS and LIBOR, is certainly active. ICE aims to offer solutions on all new benchmarks. Intercontinental Exchange’s benchmarking arm, ICE Benchmark Administration, is positioning itself to become the lead administrator for the Sterling Overnight Index Average Rate and the Secured Overnight Financing Rate, as well as building the market norm for the Euro Short-term Rate. “We’re trying to come up with all the solutions and tools that market participants need to support the transition to risk-free rates,” said IBA chief Stelios Tselikas.

Vendors are paying careful attention. Docutech, for example, sends out regular notes to clients. “Document Updates and New Programs: Secured Overnight Financing Rate (‘SOFR’). Fannie Mae and Freddie Mac have jointly published a LIBOR Transition Playbook and FAQs to help the housing finance industry transition to SOFR: Fannie, Freddie. The Playbook includes the following table: Support has been added to ConformX for the new FNMA/FHLMC SOFR products announced here. The post Document Updates and New Programs: Secured Overnight Financing Rate (“SOFR”) appeared first on Compliance.

CRT: A Good Acronym to Know

The Agencies (aka Freddie and Fannie) continue to help that process in both the primary and secondary markets, hoping to achieve competitive pricing in the secondary market while limiting risks borne by taxpayers. Along those lines, billions of dollars of conforming conventional loans have been bundled into CRT (Credit Risk Transfer) bond deals, nonperforming, or multifamily deals, which help reduce taxpayer exposure to the large book of mortgages guaranteed by the two housing giants and help the Agencies manage their capital.

These deals involve sharing part of the credit risk with third party investors – for a price. In the deals, the investors pay cash up front and purchase debt securities that are designed to absorb the credit losses on GSE (government sponsored enterprises) loan pools. The goal is to attract private capital into the mortgage market and shift some risk away from taxpayers since we are currently on the hook for Freddie & Fannie. Fannie Mae and Freddie Mac have still been pricing transactions to aid liquidity in the mortgage space, providing support for its borrowers and up-to-date disclosures for our investor base. And that helps rate sheet pricing for borrowers! Let’s see what Freddie has been up to lately.

On June 24, Freddie Mac priced a new $993 million offering of Structured Pass-Through K Certificates (K-F79) which includes a class of floating rate bonds indexed to the Secured Overnight Financing Rate (SOFR). The certificates are expected to settle on or about June 30, and are backed by floating-rate multifamily mortgages with 10-year terms, which are currently LIBOR-based. K-F79 includes one class (Class AL) of senior bonds indexed to LIBOR and another class (Class AS) of senior bonds indexed to SOFR. Freddie Mac will provide a basis risk guarantee on Class AS that covers any floating interest rate basis risk if the value of SOFR exceeds the value of LIBOR. The $593 million Class AL has a weighted average life of 9.39 years, a coupon of 1-month LIBOR plus 47 bps, and an even $100.00 price. The $400 million Class AS also has a weighted average life of 9.39 years and an even $100.00 price, but has a coupon comprised of the 30-day SOFR average plus 58 bps.


On June 18, Freddie Mac priced a new $1 billion offering of Structured Pass-Through K Certificates (K-110), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 10-year terms. The K-110 Certificates are expected to settle on or about June 25. Pricing for the deal is as follows, Class A-1 gas principal of $142.411 million, a weighted average life of 7.17 years, a spread of S+45, a coupon of 1.016 percent, a yield of 1.00904 percent, and a $99.9949 price. Class A-2 has principal of $781.306 million, a weighted average life of 9.67 years, a spread of S+42, a coupon of 1.477 percent, a yield of 1.14176 percent, and a $102.9944 price. Finally, Class A-M has principal of $141.004 million, a weighted average life of 9.83 years, a spread of S+50, a coupon of 1.236 percent, a yield of 1.23095 percent, and a $99.9935 price.

On June 12, Freddie Mac announced the pricing of the SB75 offering, a multifamily mortgage-backed securitization backed by small balance loans underwritten by Freddie Mac and issued by a third-party trust. The company expects to issue approximately $444 million in SB Certificates (SB75 Certificates), which are expected to settle on or about June 19. Freddie Mac is guaranteeing the following four senior principal and interest classes of securities issued by the FRESB 2020-SB75 Mortgage Trust and also acting as mortgage loan seller and master servicer to the trust. Class A-5F has principal of $83.506 million, a weighted average life of 4.17 years, a spread of 49 bps, a coupon of 0.99 percent, a yield of 0.8570 percent, and a $100.4847 price. Class A-5H has principal of $161.487 million, a weighted average life of 4.11 years, a spread of 70 bps, a coupon of 1.20 percent, a yield of 1.0627 percent, and a $100.4807 price. Class A-10F has principal of $92.479 million, a weighted average life of 7.29 years, a spread of 71 bps, a coupon of 1.39 percent, a yield of 1.3132 percent, and a $100.4606 price. Finally, Class A-10H has principal of $106.729 million, a weighted average life of 7.25 years, a spread of 79 bps, a coupon of 1.47 percent, a yield of 1.3906 percent, and a $100.4714 price. Freddie Mac Small Balance Loans generally range from $1 million to $7.5 million and are usually backed by properties with five or more units. This is the sixth SB Certificate transaction in 2020.

The day prior, Freddie Mac announced pricing of a new offering of Structured Pass-Through K Certificates (K-1515), which are multifamily mortgage-backed securities designed to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds. The company expects to issue approximately $729 million in K Certificates, which are expected to settle on or about June 19. Pricing for the deal is as follows. Class A-1 has principal of $105.800 million, a weighted average life of 9.64 years, a spread of S+65, a coupon of 1.433 percent, a yield of 1.42753 percent, and a $99.9912 price. Class A-2 has principal of $624.152 million, a weighted average life of 14.40 years, a spread of S+75, a 1.9400 percent coupon, a yield of 1.70096 percent, and a $102.9996 price. Class X1 has principal of $729.952 million, a weighted average life of 13.22 years a spread of T+385, a coupon of 1.51326 percent, a yield of 4.76129 percent, and a $14.9170 price. Class X3 has principal of $59.186 million, a weighted average life of 14.43 years, a spread of T+675, a coupon of 3.67977 percent, a yield of 7.72862 percent, and a $32.3922 price.

Great Truths About Growing Old

1) Growing old is mandatory; growing up is optional.

2) Forget the health food. I need all the preservatives I can get.

3) When you fall down, you wonder what else you can do while you’re down there.

4) You’re getting old when you get the same sensation from a rocking chair that you once got from a roller coaster.

5) It’s frustrating when you know all the answers but nobody bothers to ask you the questions.

6) Time may be a great healer, but it’s a lousy beautician.

7) Wisdom comes with age, but sometimes age comes alone.

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, “Mortgage Outlook: What if it is Cloudy?”, focused on the current political climate. If you have the inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.


(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is designed 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 2020 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