Some lenders are moving through the “return to the office” procedure, trying to leave plenty of room for adjustments later on while focusing on employee health, avoiding potential illness and lawsuits. Others are grappling with the ongoing shifts of Fannie Mae and Freddie Mac, at the direction of the FHFA, most recently seen reportedly by lenders’ changes to gfees of 3-18 basis points, pushing lenders toward private label securitization. Others are dealing with volume and margin changes in an interest rate environment that is puzzling to some. Namely, we’re almost halfway through the year, and rates have not gone up (yet) but refi “burnout” and lack of available home inventory is hitting volumes. Bring back cash-out refis! Speaking of rates, and thus the economy, tis the season… It’s a great year if you’re a teenager who wants a job, with the percentage of 16- to 19-year-olds who work now up to 33.2 percent, the highest level since 2008. Leisure, hospitality, and retail, which employ the majority of teens, are desperate for workers. As of the end of March, there were 1.2 million open hospitality jobs and 734,000 open retail jobs.
Saturday spotlight: Usherpa, creating relationships that last a lifetime using data intelligence and multi-channel marketing.
Describe your company (when was it founded and why, what it does).
When Dan Harrington founded the company in 1995, he was a Loan Officer in search of a better tool for marketing home loans. He developed a system that would allow him to stay connected with his past borrowers and Realtor business referral partners. His mortgage volume skyrocketed. After the 2008 housing market crash, Dan and Co-Founder Chris Harrington turned his system into Usherpa and evolved it into the industry’s most sophisticated, cloud-based CRM/Marketing Automation system.
Today, the Usherpa Relationship Engagement Platform has helped thousands of Loan Officers stay connected with partners and clients. Loan Officers, Marketing Directors, and CEOs rave that Usherpa is the easiest to use system on the market.
The goal was to be the universal guide to painless CRM, sales, and marketing automation for the housing industry. Because the system integrates seamlessly with the technology in use by the majority of loan originators today, many are unaware that we founded the mortgage and real estate CRM category back in the mid-90s.
What does Usherpa do to help elevate your employees’ growth?
Our core operational structure revolves around the Entrepreneurial Operating System® (EOS). EOS keeps us growth-orientated, so we can systematically concentrate on the development of employees through professional education/training, certificates, business/leadership coaching, and industry-specific seminars. Our IT Development team is very active with Microsoft Azure User Groups and Boot Camps.
Tell us how Usherpa maintains its culture in a work-from-home environment.
Usherpa has certain Core Values. Be Passionate. When our employees are passionate about what they do and the difference they make, it’s infectious. Our Cheers for Peers program gives employees a public forum to thank other co-works for their work. Do the right thing for the right reason. We’re focused on long-term results, not quick wins. Usherpa went to 100% telework at the start of the pandemic, providing staff with at-home offices so they could work comfortably and continue providing stellar service to members. And Laughter. To maintain a joyful culture, we implemented team-bonding virtual events such as one-on-one rotating coffee breaks, Thirsty Thursday cocktail hour, Bingo, Trivia Night, and a Zoom “campfire” with s’mores!
Things you are most proud of that don’t have to do with sales.
We’re proud of the tenure of our team and our customer base. We have employees who have been on our team since 1995, corporate clients that have been customers for over a decade, and individual users who have been with us for over 20 years. We are proud to report that our clients on average convert 46% more prospects, close 2x more deals, and increase their repeat business by 57%.
Fun fact about Usherpa
In 1995 our first technology was a fax machine and the databases were in Excel! We’ve come a long way since then: Usherpa’s Open REST APIs connect with 20+ FinTech services and our Relationship Engagement Platform is secured in the Microsoft Azure Cloud.
(For more information on having your firm, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)
Return to the office… or not
Some lenders have plans in place for a partial, gradual return to the office, especially for those vaccinated. The legal industry is interesting to watch, as it is also a service business. Most law firms don’t want to get out in front of the issue like that for fear of having to reverse course,” one industry consultant said. “Law firms pay very, very close attention to where their clients come out on these issues, and I don’t think that is known or understood right now.”
Large law firms are increasingly diverging on flexible work arrangements—particularly on whether to require a specific number of days in the office for lawyers and staff, and if so, how many. Multiple large firms have announced plans in which there is no target number of days for employees to spend working remotely post-pandemic, or have only offered vague suggestions for flexibility. Others have suggested goals, usually around two or three times per week. Meanwhile, some firms have crafted more specific guidelines, often ones in which the expectations for in-person work gradually increase.
Law.com reports, “Last month, Sullivan & Cromwell told lawyers and staff it was ‘strongly encouraging’, but not mandating!, a return to the office. That approach garnered some criticism from industry observers for potentially sending mixed messages. Still, a number of other firms appear to be taking a similar tack. As Law.com’s Bruce Love reports, Arent Fox and Baker McKenzie, for example, both say they expect to allow for some level of flexibility when it comes to post-pandemic remote work but, like a number of other firms, appear reluctant to define exactly what that means, instead emphasizing individual responsibility in their recently announced office return policies.
Colin Murray, CEO of the North America region at Baker, said coming back to the office is ‘voluntary,’ but ‘we’re hoping people follow the guidance of coming in at least three days a week.’ Meanwhile, when Arent Fox’s offices reopen fully Sept. 6, the firm is expecting staff and lawyers to maintain a ‘routine physical presence’ there, but isn’t planning to specify how many days they must show up each week. Instead, firmwide managing partner Cristina Carvalho said, the firm is asking its people to exercise ‘good judgment.’
Credit Risk Transfers by the Agencies have pretty much gone away through the recommendations of Fannie & Freddie’s overseer, the FHFA. “Untested” and “serious risk of loss” seem to dominate the report. By handicapping CRTs, Fannie Mae and Freddie Mac are limited in their ability to transfer the risk to entities who are willing buyers of credit risk (typically hedge funds, insurance companies, pension funds, and REITs). Like typical agency bonds, CRTs pool thousands of different mortgages into a single security, and investors receive regular payments based on the performance of the underlying loans. But CRTs carry no government guarantee, and private investors could absorb losses if a large number of the loans default. GSEs retain a share of the risk for each security they issue, but the actions of the FHFA to crimp issuance of these securities has impacted liquidity in the secondary markets, thus impacting Agency activities in the primary markets.
Despite CRT deals subsiding, the Agencies are still active in the capital markets, regularly issuing securities. Many of these deals are backed by the cash flow from multifamily loans. And the demand by investors for these securities directly impacts the rates offered by Fannie and Freddie to borrowers.
Fannie Mae announced it provided $76 billion in financing to support the multifamily market in 2020, the highest volume in the history of its 32-year Delegated Underwriting and Servicing (DUS) program. Despite a year of pandemic-related disruptions to the nation’s economy and financial markets, Fannie Mae supported the needs of multifamily borrowers while increasing its commitment to affordable housing at a time when borrowers and their tenants faced unprecedented challenges. Multifamily Affordable Housing volume rose more than 9 percent to $7.8 billion last year from $7.2 billion in 2019. Structured Transactions volume totaled $11.6 billion, up nearly 34 percent from $8.6 billion in 2019, helping support multifamily affordable housing, particularly workforce housing. Fannie’s Manufactured Housing Communities financing program also helped support affordable housing, reaching a record $5.5 billion, a 120 percent increase from $2.5 billion in 2019.
Freddie Mac announced pricing of the SB86 offering, a $372 million multifamily mortgage-backed securitization backed by small balance loans underwritten by Freddie Mac and issued by a third-party trust. Freddie Mac Small Balance Loans generally range from $1 million to $7.5 million and are generally backed by properties with five or more units. Pricing for the deal is as follows. Class A-5H has $50 million of principal, a weighted average life of 4.07 years, a spread of 3 bps, a 0.90 percent coupon, a 0.7619 percent yield and a $100.4978 price. Class A-10F has $145 million of principal, a weighted average life of 7.26 years, a spread of 18 bps, a 1.61 percent coupon, a 1.5305 percent yield and a $100.4658 price. Class A-10H has $177 million of principal, a weighted average life of 7.26 years, a spread of 33 bps, a 1.75 percent coupon, a 1.6676 percent yield and a $100.4716 price. This is the fifth SB Certificate transaction in 2021.
Fannie Mae priced a $691 million Multifamily DUS® REMIC (FNA 2021-M13) under its Fannie Mae Guaranteed Multifamily Structures (Fannie Mae GeMS™) program, the sixth Fannie Mae GeMS issuance of 2021. This is its first CMBS backed by Secured Overnight Financing Rate (SOFR)-indexed collateral, with the Group 1 collateral consisting of Fannie’s ARM 7-6 capped, floating-rate product, which has been SOFR-based since late 2020. The M13 also includes two fixed-rate groups of collateral and marks another GeMS program first with an A3 tranche backed by 12-year collateral. The A3 tranche offers a more call-protected option for investors requiring a more predictable maturity window as the market transitions away from LIBOR. Fannie Mae ceased purchasing and issuing LIBOR-based products and launched new SOFR-based offerings in 2020. Fannie Mae will continue to prepare for legacy LIBOR contract conversion in 2023 and will share additional information about its LIBOR transition efforts and milestones to provide full transparency to all stakeholders. All classes of FNA 2021-M13 are guaranteed by Fannie Mae with respect to the full and timely payment of interest and principal. For additional information, please refer to the Fannie Mae GeMS REMIC Term Sheet (FNA 2021-M13) available on the Fannie Mae GeMS Archive page.
To start the year Freddie Mac priced a new $276 million offering of Multifamily Structured Credit Risk (MSCR) Notes (2021-MN1). The MSCR (pronounced “M-SCORE”) program is designed to transfer a portion of the credit risk on eligible multifamily mortgage loans backing certain fully guaranteed securities issued by Freddie Mac to private investors, thereby reducing U.S. taxpayers’ exposure to mortgage credit risk. The approximately $276 million in MSCR Notes were priced. The MSCR 2021-MN1 reference pool consists of approximately 302 multifamily mortgage loans originated between 2013 and 2020 with an approximate unpaid principal balance of $4.9 billion. The loans adhere to Freddie Mac’s multifamily underwriting, internal fraud prevention and quality control standards. Pricing for the deal is as follows. Class M-1 has $69.143 million of principal, a 6 percent initial credit enhancement, a weighted average life of 5.33 years, 30-day average SOFR as a benchmark, a +200-bps spread, and a $100.00 price. Class M-2 has $161.334 million of principal, a 2.5 percent initial credit enhancement, a weighted average life of 9.54 years, 30-day average SOFR as a benchmark, a 375-bps spread, and a $100.00 price. Class B-1 has $46.095 million of principal, a 1.5 percent initial credit enhancement, a weighted average life of 11.40 years, 30-day average SOFR as a benchmark, a +775-bps spread, and a $100.00 price.
Freddie Mac priced a new $198 million offering of Structured Pass-Through K Certificates (K-131 Certificates) which are backed by underlying collateral consisting of supplemental multifamily mortgages. Class A-1 has principal of $55.000 million, a weighted average life of 3.98 years, a spread of S+23, a coupon of 0.5690%, a yield of 0.5605% and a $99.9980 price. Class A-2 has a principal of $143.672 million, a weighted average life of 6.95 years, a spread of S+35, a coupon of 0.9340%, a yield of 0.9275% and a $99.9937 price. The K-J31 Certificates settled around Halloween.
Freddie Mac priced a new $796 million offering of Structured Pass-Through K Certificates (K-1519 Certificates), composed of multifamily MBS. Pricing for the deal is as follows. Class A-1 has $142.500 million of principal, a weighted average life of 9.28 years, a spread of S+24 bps, a 1.32 percent coupon, a yield of 1.31426 percent, and a $99.9927 price. Class A-2 has $654.251 million of principal, a weighted average life of 14.80 years, a spread of S+38 bps, a 2.013 percent coupon, a yield of 1.77959 percent, and a $102.9881 price.
Freddie Mac priced a new $938 million offering of Structured Pass-Through K Certificates (K-F112 Certificates), which includes a class of floating rate bonds indexed to the Secured Overnight Financing Rate (SOFR). The K-F112 Certificates are backed by floating-rate multifamily mortgages with 10-year terms, which are SOFR-based. The one offered class (Class AS) has a weighted average life of 9.57 years, a coupon of the 30-day SOFR average plus 23 bps, and a $100.00 price.
Freddie Mac also priced a $1.2 billion offering of Structured Pass-Through K Certificates (K-123 Certificates), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 10-year terms. Pricing for K-123 is as follows. Class A-1 has $110.913 million of principal, a weighted average life of 6.58 years, a spread of S+18 bps, a 0.932 percent coupon, a yield of 0.92454 percent, and a $99.9967 price. Class A-2 has $1,003.665 million of principal, a weighted average life of 9.80 years, a spread of S+21 bps, a 1.621 percent coupon, a yield of 1.28692 percent, and a $102.9994 price. Class A-M has $150.434 million of principal, a weighted average life of 9.91 years, a spread of S+26 bps, a 1.351 percent coupon, a yield of 1.3457 percent, and a $99.9939 price.
The lawyer was cross-examining a witness. “Isn’t it true,” he began, “that you were given $5,000 to throw this case?”
The witness did not answer. Instead, he just stared out the window as though he hadn’t heard the question.
The attorney repeated himself, again getting the same reaction, the same no response.
Finally, the judge spoke to the witness, “Please answer the question.”
“Oh,” said the startled witness, “I’m sorry your honor. I thought he was talking to you.”
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