June 22: Reverse, non-QM, pricing, work flow, products; STRATMOR & customer service; con’t reaction to NOO & 2nd home Agency changes

Is office work returning? Some watch traffic patterns, and, sure ‘nuff, cars on the freeways of Los Angeles are traveling slower indicating that the city is returning to a sense of “normalcy.” On the northbound I-5 freeway in June 2019 at 10 a.m., the average travel speed was 43 miles per hour. During the pandemic in June 2020, the reduction in congestion brought that average speed up to 61 miles per hour; today, the speeds are back down to around 40 miles per hour. (And to think that there are people out there who don’t believe “they” know how fast you’re driving, or what you’re looking at on your computer, at all times.) Something else people are watching is the bond market. A shift to haven assets, prompted by an equity sell-off, has sent the yield on the 30-year U.S. Treasury to 1.93 percent, the first time the yield has been under 2 percent since February. The 10-year yield has reached a four-month low of 1.35 percent. Of course mortgage prices are lagging. Today’s audio version of the commentary and is available here and is sponsored by Candor Technology, offering a dynamic underwriting engine that eliminates underwriting bottlenecks. It features an interview with Tom Showalter, the CEO of Candor, on lender innovation.

Lender and broker services and products

Want more local leads in your pipeline? Complete the form to learn more about LO Connect and find high-intent borrowers primed to purchase. Use the app to buy local leads, take live transfers on your schedule and expand your referral network —all while taking advantage of LendingTree’s network of high-intent borrowers. Tired of buying leads that ultimately go nowhere? LO Connect lets you review borrower profiles before you make your purchase, for free. That means no deposit or upfront costs are necessary. Scale your business with fully filtered lendable customers right in your local market! Fill out our form to learn more and get started! Once that’s done, we’ll show you how to take advantage of this opportunity!

Silvergate Warehouse Lending (La Jolla, CA) is pleased to announce the opening of its East Coast Operations Center located in Port Charlotte, FL. “This new hub will allow Silvergate to continue its exponential growth while providing the exceptional service that our customers have come to expect,” said Elaine Batlis. Silvergate offers credit line sizes of $20M – $200M that can accommodate unique and niche markets. Specialty products include Jumbo, Non-QM/DSCR, Small Balance Commercial, and Aggregation Facilities. For more information contact Elaine Batlis (EVP), Greg Davis (West), or Steve Klein (East), and visit Silvergate.com.

Some combinations are so iconic, you almost can’t think of one without the other: peanut butter and jelly, spaghetti and meatballs, Batman and Robin. And now there’s the combo of borrower and business intelligence. The average lender grew LO headcount by 32% from Q1 2020 to Q1 2021. As refi volume wanes, it’ll be up to managers to make data-informed decisions about who stays and who goes, and what to do with the orphaned deals that result from staffing down. Join Sales Boomerang’s Alex Kutsishin, LBA Ware’s Chris Gassel, and Homespire Mortgage’s Bill Napier on June 24 at 2 pm ET to learn how the combination of borrower and business intelligence can help you turn orphaned deals from a cold-calling nightmare into an instant pipeline that results in more revenue for your team. Register today to learn more about this classic combination.

The Community Home Lenders Association (CHLA), the distinctive voice and only national association that exclusively represents small and mid-sized IMBs, today released its latest “IMB Report.” The report seeks to educate Congressional and federal agency housing policy makers about the critical role community IMBs play and to lay out CHLA’s policy agenda. The CHLA report documents how IMBs now dominate mortgage lending, with IMBs making over 60% of all new mortgage loans and 90% of new FHA loans and Ginnie Mae issuance. The Report cites independent sources that conclude that IMBs do a better job lending to minorities, lower-income, and other underserved borrowers. The CHLA report also sets the record straight on how IMBs have much stronger consumer protection requirements than banks, particularly with regard to SAFE Act requirements and CFPB supervision and enforcement and concludes by rebutting the myth by certain Washington insiders that IMBs pose the next new financial or systemic myth.

You’re not dreaming; you CAN automate it all! With one platform. Richey May’s RM Automate, powered by the world-class Zoral Automation Platform, is a holistic automation solution to charge every part of your business. Build and customize automation across the whole organization, from POS to loan delivery and trailing docs, allowing you to reimagine the entire loan origination process. Seamless integration of processes, decisioning and workflow is hosted and managed by an automation platform in the cloud. This leaves your employees free to deal with more complex, challenging, and revenue-generating tasks. Contact us to schedule a demo today to see how this intelligent automation can change the game for lenders. 

Are you looking to reduce the time it takes to process a loan? Capacity is a mortgage support automation platform, powered by artificial intelligence, that empowers mortgage professionals by connecting to apps, mining documents, capturing tacit knowledge, and automating processes. Capacity works in tandem with lenders by directing loan officers to use the Capacity bot as a first line of defense. If the bot does not know the answer, it escalates to the appropriate support agent. Want to hear more? Capacity makes scaling an organization easy by simplifying tasks in the UW Scenario Desk, Lock Desk, and Encompass Support Desk. Capacity reduces the level of human interaction required to answer expense and HR questions and to complete tasks for compliance requirements and document processing. Bottom line, Capacity allows you to take care of borrowers with superior customer experience and 24/7 automated support. Deploy within 30 days. Learn more about Capacity.

Mortgage assembly lines continue to outperform traditional operations. Henry Ford reduced car production time from 12.5 to 1.5 hours with an assembly line. The benefits were revolutionary: Shorter timelines, increased efficiency, near zero errors, plus the ability to employ both high and moderately skilled workers to get work done. The same has proven true for mortgages. 2021 has seen more mortgage operations move to a “moving assembly line” model to produce higher volumes and shorten “lead to close” timelines. Case in point: A division of American Pacific Mortgage quadrupled its volume and produced 280% more revenues after implementing TeamworkIQ, a simple task-based-workflow platform that drives virtual assembly lines. Work moves forward faster. bringing the right task to the right person at the right time with the right priority. And some tasks can even be automated to achieve even greater efficiency. See the case study and request a test-drive.

More than 50% of mortgage lenders expect profit margins to decline in the months ahead and their sentiment matches the data. Mortgage margins have narrowed steadily with 30-year fixed mortgage rates expected to rise to 4.4% by 2022, according to the Mortgage Bankers Association. The inflection of market conditions and a wave of well-funded lenders are turning up the pressure on lenders, but three tried-and-true tactics can help insulate your lending business against any market pressure. Access Total Expert’s guide with strategies to get ahead and win in this hyper-competitive market.

Lenders: Want to become the go-to referral partner for top agents in your market? Get advice from a veteran agent on simple ways to stand out from the pack! In the Clear to Close podcast’s latest episode, Maxwell hosts sit down with tenured real estate agent Mindy Jensen to discuss how she chose her go-to lender. Each month, Mindy hands her lender borrower business AND recommends him to countless colleagues. The kicker? This lender differentiates himself from the competition simply by committing to a few game-changing habits. To learn a blueprint for referral success, don’t miss this entertaining episode. Listen to the Clear to Close podcast’s new episode on Apple PodcastsSpotifyGoogle Podcasts, or your browser.

Loan products & product pricing

LoanStream Mortgage is running our Spectacular Summer Specials right now! Take advantage of our huge non-QM price improvement that makes us the top in the rates. Plus, get 50 bps price improvement on Non-QM purchase loans and then your get our Non-QM Best Price Promise: we will beat the rate or price from any competitor for all locked loans from 4/20 to 7/31. View our Matrix and Rates here. Need Govy? Free Appraisal on our FHA Streamlines, no appraisal, no income needed. Lots of great reasons to get in touch with LoanStream right now. Don’t wait. We are the one Lender that makes you the one to call. Restrictions apply so contact your Account Executive today. Visit www.LoanStreamWholesale.com for our great rates and programs.”

Reverse Jumbo just got a whole lot better & bigger at Plaza Home Mortgage. Plaza has lowered the interest rates and enhanced the principal limit factors in its Reverse Jumbo program. The program, offered through Plaza’s Wholesale channel, now originates private reverse mortgages up to $4 million. It features fixed-rates as low as 5.50% and accepts FICOs as low as 640 and is available for single-family, 2-4 units, townhomes, and condominiums. Unlike a traditional reverse mortgage, the Plaza Reverse Jumbo program has no mortgage insurance or lender fees so borrowers can access more equity without the additional MI fees. Plaza’s program lowers the cost of reverse jumbo financing and is an ideal product for housing-rich seniors at a time when housing appreciation is at or near its all-time high. Learn more today. Reach out to Plaza Home Mortgage at hereforyou@plazahomemortgage.com.

Manage and search program pricing across every loan product type including Non-QM, Government, Jumbo, and GSE loansReadyPrice gives Brokers the flexibility to price every type of loan all from one easy to use platform. In addition to a simple tool, they continue to add new lenders to their pricing engine every week. In fact, just this past week ReadyPrice added JMAC Lending, Sun West Mortgage Company, and AmRes Lending to its growing network of lending sponsors. The ReadyPrice network of lending sponsors features lenders of all shapes and sizes, and they are the reason that the ReadyPrice platform available to brokers nationwide at no cost! Join the ReadyPrice community of brokers and lenders and be a part of the positive change happening in the mortgage industry today.

Customers: Job #1

Have you ever wondered why every Target you walk into has a familiar feel to it? The company goes to great lengths to achieve that consistency because familiarity boosts our confidence and trust in a brand. Achieving this singularity in service is easier said than done, especially in mortgage lending. “The experience may differ greatly from one loan to another, based on cultural differences from one branch to another or one channel to another,” says STRATMOR MortgageSAT Director Mike Seminari. “To achieve consistency in customer experience, you need two things; a clearly stated set of cultural values and employees who buy into those cultural value.” Seminari outlines three action items as he answers the question “Is Consistency in Customer Experience Achievable Across an Organization?” in his June Customer Experience tip.

Thoughts on Freddie and Fannie

Lenders around the nation are watching the Agencies (Fannie Mae, at least at this point) shrink their footprint. The second home/investment business will move away from Fannie, either to Freddie (for now) or to investors through private label securities, with some of it going into portfolios.

Lenders are reacting by not doing concessions as well as worsening margins. MLOs who haven’t seen it already, will. Any MLO who expects imposing the 7 percent, 3 percent, or 0 percent cap on second homes and investment properties not to impact the business of the lender they’re working for, or brokering to, is mistaken. And any lender whose deliveries for July come in above what Fannie has dictated may have Agency lending for second and investment homes cut off altogether. Who wants that? Change is afoot, and MLOs and management are in it together!

A steep reduction for certain lenders in the percentage of GSE loans they can do (for combined investor and second homes) prompted the Community Home Lenders Association (CHLA) to send letters Treasury Secretary Yellin, FHFA Director Calabria, and Fannie Mae CEO Hugh Frater, expressing “significant concerns” about Fannie Mae notifying certain lenders that starting in July, they will be subject to a strict 3% cap on combined investor and second home loans – calling such actions “wildly disproportionate to the ostensible 7% GSE-level cap in the January PSPA agreement.”

The CHLA letter explained how these draconian actions can be traced back to the retroactivity provision in the PSPA restrictions which impose the percentage volume caps on loans dating back to January of 2020 and which stretch through the COVID-19 crisis. The CHLA letter makes a request for immediate action to reverse these 3% lender-by-lender caps. Why? First, the only reason for these 3% lender by lender caps appears to be the retroactivity feature of the PSPA restrictions. Second, it is unfair and inappropriate to penalize the very lenders that stepped up during the COVID crisis to provide mortgage credit to rental home investors and the renters they serve.

The third reason, per the CHLA, is the PSPA restrictions, particularly these draconian actions to cut investor/second home loans to 3% for certain lenders, are contradictory to virtually every other federal and state public policy and financial action taken since the beginning of the COVID crisis. Fourth, these actions disproportionately harm non-bank lenders, particularly smaller ones. Finally, we would like to raise concerns on behalf of our lender members that similar draconian caps might soon be placed on so-called “higher risk” loans, which are subject to even lower percentage levels.  These loans are vital, since they are critically important for access to mortgage credit for minorities, lower income, and other underserved borrowers.

The Federal Housing Finance Agency (FHFA, which oversees Freddie & Fannie) published its yearly Report to Congress, which provides details on the Agency’s activities over the course of the past year, including its actions as conservator of Fannie Mae and Freddie Mac. This year the report highlighted FHFA’s response to COVID-19, changes allowing the GSEs to retain capital, and also included a list of legislative recommendations to Congress that had remained largely unchanged from the prior year.

The MBA points out that, “Some of the legislative recommendations in the report echo long-standing MBA priorities, including chartering authority for new guarantors and steps to foster a competitive national housing finance market. Recommendations related to examination authority over third-party service providers include references to IMB servicers – a topic on which MBA remains engaged, including through detailed work with FHFA and the GSEs regarding updates to IMB liquidity requirements. The report also highlights recent steps taken to create a roadmap for the end of conservatorship.”

Capital markets

That Fed meeting last week had the bond market feeling anxious. Most Fed policymakers now expect to make two interest rate increases by the end of 2023, a more aggressive plan than anticipated that reflects recent inflation concerns. Fortunately, a measure of calm set in yesterday. As the FOMC works to keep growth steady despite moving up predictions for the economy’s recovery, Fed Chair Powell heads to Capitol Hill today and his remarks will be scrutinized by investors as lawmakers question him about the central bank’s support for the economy and he attempts to square higher inflation concerns with the Fed’s commitment to seek gains in the labor market. As far as mortgage bankers are concerned, the Fed’s rate outlook has pushed short-term rates higher while longer-term ones have fallen as the Fed has assured the market there is only a small risk that U.S. inflation will remain above its 2 percent target for long.


Today’s calendar is already under way with the Philadelphia Fed’s nonmanufacturing indices for June (+34.6 to 56.7). Later this morning brings Redbook same store sales for the week ending June 19, May existing home sales, and the Richmond Fed indices for June. In addition to Fed Chair Powell, we will also hear from several Fed speakers including Cleveland’s Mester and San Francisco’s Daly. Today is also Class D 48-hours. The Desk of the NY Fed will conduct two operations targeting up to $4.9 billion 30-year 2 percent and 2.5 percent. We begin the day with Agency MBS prices nearly unchanged and the 10-year yielding 1.49 after closing yesterday at 1.48 percent.

I saw an ad for burial plots and thought to myself, “That’s the last thing I need.”

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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 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 2021 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