Daily Mortgage News & Commentary

July 9: Vendor news & products; Freddie deals motor along; NAR’s thoughts on job data & mortgage rates

Predicting that Monday is National Free Slurpee Day is a safe prediction. (It’s true.) Seriously, no one can predict the future, and when they try, they’re often wrong. But it is certainly worth taking a look at current data and ruminating on where it might take interest rates. For example, yesterday we had the employment data, and along with it a reaction from NAR Chief Economist Lawrence Yun. “Mortgage rates took a breather this past week on the prospect of less aggressive Fed interest rate hikes in the upcoming months. Mortgage rates, however, will be higher next week as the job market continues to expand. Friday’s data showed companies added 372,000 net new jobs in June. Since the lockdown, nearly 20 million jobs have been added and total jobs now essentially match the previously high job numbers seen right before the onset of the pandemic. The unemployment rate remains tight at 3.6%. Wages are up 5.1%. Job creation is good, of course. But it also means the direction of interest rates will be higher. Home sales have been coming down this year back to pre-pandemic levels after the gangbuster performance of the past two years, due to a steep fall in housing affordability. Alleviating the housing shortage, therefore, will help with affordability. Disappointingly, however, construction jobs in building homes and apartments fell in the latest month. That means the housing shortage will linger and apartment rents will rise.”

Vendor and third-party developments run the gamut

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The technology, processing, efficiency, and compliance products offered to lenders has exploded in recent years. Let’s take a random look at who’s doing what.

Insellerate, a leading provider of customer relationship management (CRM) and marketing automation solutions to the mortgage lending and real estate industries, announced the launch of its new AgentConnect solution. This powerful solution takes co-branded marketing to a new level to increase collaboration and transform partner relationships with innovative automation and dynamic content. AgentConnect takes Co-Branded marketing to a new level by automatically delivering dynamic open house flyers, property websites, and landing pages instantly through MLS data in real-time, which is auto-generated and compliantly displayed, including loan officer’s specific loan and pricing options.

Beginning August 10th, Appraisal management companies and lenders will have an opportunity to utilize the first nationwide service for Freddie Mac’s ACE+ PDR where property condition reports are collected and created with a 48-72 turnaround time. Asteroom’s proprietary 3D tour, floor plan, and mobile app technology services will deliver all required data for Freddie Mac’s eligible property condition reports.

Mortgage lenders using FormFree’s AccountChek® verification of asset (VOA) reports in conjunction with a Freddie Mac Loan Product Advisor® (LPASM) solution will soon benefit from an enhancement that will be in effect once announced in the Freddie Mac July Guide Bulletin. The enhancement will take borrowers’ rent payment history into account when assessing eligibility for qualified first-time homebuyers. LPA will automatically identify on-time rent payments, including those made via mobile apps like Venmo, Zelle and PayPal, within FormFree AccountChek VOA reports.

Clear Capital announced the launch of two Application Programming Interfaces (APIs), The Property Valuation API and Risk Assessment API. Each API connects directly into existing systems through a single integration for lenders, investors, and system providers. With Property Valuation API, lenders and investors have the ability to track their property valuations with the API providing real-time status updates from order creation through completion. The Risk Assessment API allows users to tap into the value of CCR, including review tools, ClearQC®, ClearCollateral Scores, ClearPhotoTM Rules, UCDP review tier assessment, auto-approve determination, and all the supporting data directly into their workflow or platform/technology stack.

MISMO® announced its new dataset that supplies a standard set of data points that map to Form 4506-C, which is used for requesting tax transcripts from the IRS. The dataset has achieved “Candidate Recommendation” status, meaning it’s been thoroughly reviewed by a wide range of organizations and industry participants and is available for use across the industry. A related initiative is MISMO’s Taxpayer Consent Language which provides a consistent way for the mortgage industry to obtain borrower consent to share tax information received from the IRS with other parties involved in a mortgage transaction.

Mid America Mortgage announced its offering eNotes capabilities via its wholesale channel to enable non-delegated correspondents to operate more efficiently and competitively as they make the transition from mortgage broker to banker. Through this program, third-party originators (TPOs) can deliver the convenience digital closings provide to their customers and enhance relationships with their existing real estate and title partners amidst an otherwise challenging operating environment. For information on the Mid America eNote program for non-delegated correspondents, contact Adam Rieke or Soliman Martinez.

RiskSpan, a leading provider of residential mortgage and structured product data and analytics, announced a series of new enhancements in the latest release of its award-winning Edge Platform. Enhancements include the ability to project performance and cash flows of loans with deferred balances. Easily compute the quantity of hedges that must be sold to offset the effective duration of assets in a given portfolio on one single step. Plot burnout effect on prepays with a cumulative burnout metric, a virtual walk-through of this functionality is available. Comprehensive details of these new capabilities are available by requesting a no-obligation demo.

The American Credit Union Mortgage Association (ACUMA), a non-for-profit trade association dedicated to supporting the credit union mortgage lending industry through educational and networking opportunities, announced a partnership with The National Association of Minority Mortgage Bankers of America (NAMMBA). The partnership supports NAMMBA’s Mission 2025, its goal to connect 50,000+ students to the real estate finance industry by the year 2025. With a more diverse talent pool comes fresher ideas and innovations, and NAMMBA is excited to have the collaboration with ACUMA to help achieve its objectives.

Mortgage Bankers Association (MBA) and National Fair Housing Alliance (NFHA) announced a new online toolkit for mortgage lenders interested in developing Special Purpose Credit Programs (SPCPs) which permit lenders to offer mortgage credit to economically and socially disadvantaged borrowers. An important tool for ensuring financial institutions can meet the needs of their consumers. Developed with technical assistance from the Homeownership Council of America (HCA) and input from the Urban Institute; the online toolkit provides background information, best practices and guidance, industry examples, data, and other useful links to aid mortgage lenders in their work in developing SPCPs.

The Federal Register posted a Final Rule Correction due to typographical errors that appeared in the Final Rule published in the Federal Register on June 2, 2022, titled “Enterprise Regulatory Capital Framework – Public Disclosures for the Standardized Approach.”

Secondary market news

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Rates have moved higher for much of 2022, recently came back down, but have recently shot up. Nothing, it seems, goes in a straight line. But let’s face it: there is more pressure for rates to move higher than there is for rates to move lower. And what is moving rates are the simultaneous impacts of inflation, which is being driven by the Russian invasion of Ukraine, supply-chain issues, and rising inflation expectations, which collectively push yields up, and the increasing likelihood of a recession, due to recent outsized Fed rate hikes and expectations of more, a yield curve nearing inversion, and falling equities, which drive rates down. There’s a lot of yammering about a recession… perhaps it will be mild and brief (in terms of unemployment and financial markets) if it happens at all.

While rumors of the appetite for non-Agency products (like non-QM) ebbs and flows, the capital markets for Agency (primarily Freddie and Fannie) loans continues to move ahead. The demand for this production in the secondary markets, along with the value of servicing, continues to drive the rates that borrowers see on rate sheets: what happens in the secondary markets drives the rates that borrowers see in the primary markets. Poor adjustable-rate pricing for your borrowers can be attributed to a lack of liquidity in the secondary markets for ARMs. The same thing happens with fixed-rate securities. Let’s take a sample of what the very active Freddie Mac is up to.

Freddie Mac priced a new $1.1 billion offering of Structured Pass-Through K Certificates (K-122 Certificates), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 10-year terms. Pricing for the deal is as follows. Class A-1 has $117.800 million of principal, a weighted average life of 6.47 years, a spread of S+26, a 0.863% coupon, a yield of 0.85587% and a $99.9968 price. Class A-2 has $939.313 million of principal, a weighted average life of 9.91 years, a spread of S+29, a 1.521% coupon, a yield of 1.19227% and a $102.9964 price. Class A-M has $140.841 million of principal, a weighted average life of 9.94 years, a spread of S+34, a 1.250% coupon, a yield of 1.24491% and a $99.9943 price. Here is the K-122 Preliminary Offering Circular Supplement.

Freddie Mac priced a new $185 million offering of Multifamily WI K-Deal Certificates (WI-K134 Certificates), which are initially backed by cash assets that will be used to purchase the A-M class of a to-be-issued reference K-Deal. Once the reference K-Deal class is issued and purchased by the WI trust, the WI Certificates will be indirectly backed by a pool of fixed-rate multifamily mortgages with predominantly 10-year terms. The one offered class, Class A-M ($185 million), has a weighted average life of 10.24 years, a spread of S+25 bps, a 1.911 percent coupon, a yield of 1.905 percent, and a $99.9994 price.

Freddie Mac priced a new $380 million offering of Structured Pass-Through K Certificates (K-L06 Certificates), which are multifamily mortgage-backed securities backed by a single mortgage note secured by 10 multifamily properties. The mortgage has two fixed rate and two floating rate components, each having 10-year terms. Pricing for the deal is as follows. Class A-FL has $82.233 million of principal, a weighted average life of 8.75 years, a spread of S+37 bps, a 1-month LIBOR+37 bps coupon and a $100.00 price. Class A-FX1 has $32.900 million of principal, a weighted average life of 6.65 years, a spread of S+38 bps, a 1.010% coupon and a $99.9976 price. Class A-FX2 has $148.000 million of principal, a weighted average life of 9.04 years, a spread of S+48 bps, a 1.327% coupon and a $99.9949 price. Class A-FX3 has $117.194 million of principal, a weighted average life of 9.04 years, a spread of S+40 bps, a 1.247% coupon and a $99.9969 price. The transaction collateral is part of Freddie Mac’s K-L series of certificates, which are backed by large loans or pools of related mortgage loans on multifamily properties. The K-L06 Certificates are expected to settle on or about December 10, 2020. The K-L06 Preliminary Offering Circular Supplement can be found here.

Freddie Mac priced a new $328 million offering of Structured Pass-Through K Certificates (K-J32 Certificates) which are backed by underlying collateral consisting of supplemental multifamily mortgages that are expected to settle on or about November 30, 2020. Pricing for the deal is as follows. Class A-1 has $65 million of principal, a weighted average life of 3.52 years, a spread of S+17 bps, a 0.5160% coupon and a $99.9996 price. Class A-2 has $166.415 million of principal, a weighted average life of 7.06 years, a spread of S+44 bps, a 1.3940% coupon and a $101.9999 price. Class A-FL has $96.826 million of principal, a weighted average life of 4.93 years, a spread of 25 bps, a coupon of 1-month LIBOR+25 bps, and a $100.00 price.

Freddie Mac priced a $1.2 billion offering of Structured Pass-Through K Certificates (K-119 Certificates), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 10-year terms. The K-119 Certificates are expected to settle on or about November 13, 2020. Pricing for the deal is as follows. Class A-1 has $114.000 million of principal, a weighted average life of 6.49 years, a spread of S+25, a 0.850% coupon, a yield of 0.84288% and a $99.9975 price. Class A-2 has $1,017.725 million of principal, a weighted average life of 9.82 years, a spread of S+37, a 1.566% coupon, a yield of 1.23378% and a $102.9960 price. Class A-M has $146.865 million of principal, a weighted average life of 9.88 years, a spread of S+42, a 1.293% coupon, a yield of 1.28798% and a $99.9923 price.

Freddie Mac recently priced several new offerings of Structured Pass-Through Certificates (K Certificates), which are multifamily mortgage-backed securities. The company issued approximately $626 million in K-SG2 Certificates, which are expected to settle on or about December 16. The company also priced a $175 million offering of Multifamily WI K-Deal Certificates (WI Certificates), which are initially backed by cash assets that will be used to purchase the A-M class of a to-be-issued reference K-Deal. Once the reference K-Deal class is issued and purchased by the WI trust, the WI Series WI-K748 Certificates will be indirectly backed by a pool of fixed-rate multifamily mortgages with predominantly 7-year terms. Freddie also priced a new $740 million offering of Structured Pass-Through K Certificates (K-1522 Certificates), which are multifamily mortgage-backed securities and a new $1.2 billion offering of Structured Pass-Through Certificates (K-135 Certificates), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 10-year terms.

Freddie Mac priced a new offering of Multifamily Structured Credit Risk (MSCR Series 2021-MN3) Notes, designed to reduce Freddie Mac’s exposure to mortgage credit risk and bolster the company’s mission of supporting affordable and quality rental housing. MSCR transactions transfer to private investors a portion of the credit risk on eligible multifamily mortgage loans backing certain fully guaranteed securities issued by Freddie Mac through its Participation Certificates program. The approximately $317 million in MSCR Notes are unsecured and unguaranteed mezzanine classes issued by a trust. The amount of periodic principal and ultimate principal paid by the trust is determined by the performance of the MSCR 2021-MN3 reference pool, which consists of 270 multifamily loans backing Multifamily PCs issued between December 2020 and October 2021 with an approximate unpaid principal balance of $5.5 billion. The loans adhere to Freddie Mac’s multifamily underwriting, internal fraud prevention and quality control standards.

HOSPITAL CHART BLOOPERS

(Actual writings from hospital charts)

1. The patient refused autopsy.

2. The patient has no previous history of suicides.

3. Patient has left white blood cells at another hospital.

4. She has no rigors or shaking chills, but her husband states she was very hot in bed last night.

5. Patient has chest pain if she lies on her left side for over a year.

6. On the second day the knee was better and on the third day it disappeared.

7. The patient is tearful and crying constantly. She also appears to be depressed.

8. The patient has been depressed since she began seeing me in 1993.

9. Discharge status: Alive but without permission.

10. Healthy appearing decrepit 66-year-old male, mentally alert but forgetful.

11. She is numb from her toes down.

12. While in ER, she was examined, X-rated and sent home.

13. The skin was moist and dry.

14. Occasional, constant infrequent headaches.

15. Patient was alert and unresponsive.

16. Rectal examination revealed a normal size thyroid.

17. She stated that she had been constipated for most of her life, until she got a divorce.

18. I saw your patient today, who is still under our car for physical therapy.

19. Both breasts are equal and reactive to light and accommodation.

20. Examination of genitalia reveals that he is circus sized.

21. The lab test indicated abnormal lover function.

22. Skin: somewhat pale but present.

23. Patient has two teenage children, but no other abnormalities.

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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.)