June 25: Florida insurance crisis; notes on Black Knight/ICE, Flagstar breach, S&D and bridge loans; vendor news; Saturday Spotlight: Change Wholesale

This week we had the official start of summer, although “summer life” has already begun for many. (Cue Kenny Chesney’s summer song… two bare feet on the dashboard…) Unfortunately many in our biz will have extra time on their hands to enjoy the season. This week, for example, there were rumblings that FGMC (First Guarantee) had big layoffs, or shut down its correspondent and wholesale divisions entirely. That said, true or not, what makes headlines these days should be lenders and vendors who aren’t laying people off rather than those that are. Because let’s face it, nearly every lender and investor are, or certainly at least not replacing employees who leave. (I am reminded of this, given the news this week of JPMorgan’s mortgage-related layoffs.) The residential lending industry isn’t the group with problems. How about Florida residents, and the lenders that lend to them, service those loans, and own those assets? Florida’s homeowners are facing an insurance crisis. FedNat Insurance has said it will cancel 68,200 homeowner insurance policies in Florida at the end of June, just the latest insurer to retreat from the Sunshine State where the industry has been beset by powerful storms and pervasive fraud. This industry-wide pullout has forced hundreds of thousands of people onto the state insurer of last resort, Citizens Property Insurance Corp, which has seen the number of policies jump and sent their exposure up from $107 billion in May 2019 all the way to $294 billion, with about half of that in three hurricane-prone counties. It’s a terrible business from the insurer’s point of view, even after they jack up the rates: From 2017 to 2021, property insurers in Florida lost an estimated $3.2 billion.

Saturday Spotlight: Change Wholesale 


Brokers: Start closing more loans, faster.

Change Wholesale, a mission-based company focused on closing the wealth gap through home ownership, is America’s largest Community Development Financial Institution (CDFI). Our CDFI certification from the U.S. Department of Treasury allows us to help brokers, borrowers, and communities in ways other lenders and banks simply cannot.


What should everyone know about Change Wholesale? 

Change Wholesale is on a mission to deliver home financing solutions to prime, credit-worthy borrowers who may have been neglected, ignored, or excluded by other lenders and banks. Our goal is to help more Americans achieve their dreams of home ownership—one closed loan at a time.


How big is Change Wholesale?

Change Wholesale is the nation’s largest CDFI by origination. We are a vertically integrated organization that offers licensed services throughout the United States, employs over 700 talented staff, and works with over 1,600 of the nation’s best lending partners.


How important is diversity and representation at Change Wholesale? 

Change Wholesale is proud to have a Community Advisory Board (CAB), leadership team, and staff that is as diverse as the communities we serve. Diversity and representation don’t end with our team though. As America’s CDFI, we create custom programs that are tailored to meet the needs of more quality borrowers from all walks of life.


What kind of social impact has Change Wholesale had?

In 2021, we committed to lending $2 billion to expand Black and Latino home ownership. A year later, we have far exceeded our goal by successfully funding over $2.9 billion in loans to Black and Latino families… and we’re not done yet!


Want to know more about America’s CDFI?
 Visit ChangeWholesale.com today!

(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)


Vendor M&A watch


Scott Olson with the Community Home Lenders Association scribes, “I am not sure how much attention your readers are paying to the proposed purchase of Black Knight by ICE, but it could be a big deal for IMBs that use their software and related sources. CHLA sent a letter to the Justice Department asking for an antitrust review – raising concerns about industry concentration, about how it could encourage anti-competitive practices like bundling and tying, and how it could hurt consumers and smaller IMBs.

Attorney Brian Levy writes, “The primary tension with the merger relates to the prospect for transformative process improvements in loan production and administration against unfettered monopolistic pricing and service control over the technology and data needed to originate and service mortgage loans… So, is this merger something CFPB Director Rohit Chopra can and will engage on? Chopra has a consumer protection philosophy that is unlike any other regulator I’ve ever encountered. He expressly eschews the traditional lawyer-like consumer protection approach of strict enforcement of technical compliance violations of complex rules.”

Dave Stevens, CMB and CEO of Mountain Lake Consulting Inc., writes, “This ICE/Black Knight deal has huge implications for industry, more than I fear are being considered. Your readers need to think about the data involved. The ICE acquisition of Black Knight is different because of one very important component: data. Historically, no single lender has ever had control of so much consumer information. This is key because if one company exercises majority control of mortgage data and its platforms, there is a future opportunity for a market shift to result in the cutting out of the vast competition.

“ICE today already owns Encompass, the Loan Origination System (LOS) platform owned by Ellie Mae and clearly the largest platform used by IMBs (independent mortgage bankers). They own MERS and thus have access to knowing who the servicer of record is for all mortgages and where they are recorded. This is already a significant amount of data to own. With the acquisition of Black Knight, they would take on MSP’s servicing platform, which is used today for an estimated 65% of all mortgage servicing in the market. This purchase would also include the acquisition of the other mega loan origination platform, Empower, which together, with Encompass, covers nearly 75% of all mortgage loans originated.

“My advocacy is to simply take a closer look, as this could really matter in the years ahead. The critical question is, ‘What will be the long-term impact of such a concentration of market power, and how will that market concentration affect the consumers’ experience over the years to come.’”

Flagstar’s breach


This week, on the 23rd, this commentary mentioned Flagstar’s data breach. (“Flagstar Bank recently became aware of a privacy breach that occurred during December 2021 involving unauthorized access to Flagstar Bank’s network.”) A company spokesperson from Flagstar sent me an email clarifying the situation. “We detected and contained the incident in December 2021 when it occurred. Upon detection, we immediately took steps to secure our environment and commenced a thorough investigation. There are several stages between detecting an incident, investigating it, and issuing notification letters. The June 2, 2022, date on the Maine AG’s website refers to when Flagstar’s investigation and comprehensive document review determined the individuals whose personally identifiable information was affected.

The note ended with, “Our thorough forensic investigation, which took place over the course of several months, has provided us with a comprehensive understanding of this incident’s impact and scope. Now that the extensive forensic investigation is complete, we are in the process of notifying individuals who may have been impacted directly via U.S. mail.”

Thoughts on the whole loan market


Tad Dahlke with Rams Mortgage Capital, a market maker in whole loans and servicing writes, “In our view, the scratch & dent loan sector is currently pricing cheapest in the residential loan market. Yields for scratch & dent loans, using reasonable prepay speeds, are in the high single digits, unlevered, and well into the double digits if the borrower pays off early. Production is way down, but homeowners still pay off when they move up, move down, have babies, divorce, or just need cash. Also, NPL buyers, from an asset management standpoint, buying performing loans for less than 80% of UPB, allows you to make short payoff offers to borrowers in need of cash.

Not all sellers are ready to accept today’s levels, but the current ebb and flow of liquidity allows investors to be more selective and targeted than in normal times. For ease of review and loan selection, here is the link to a consolidated schedule of all loans in the 33 referenced pools. Column “A” identifies the loan offering. Please contact us if you want the complete address for any loan.” (Yes, any questions about the link, or the market in general, should be addressed to Tad.)

Tad went on. “If you are a residential loan buyer, bridge loans offer a high return with much shorter duration. Before the recent run up in interest rates, bridge loans were typically sold at par with a passthrough rate of 5.5% to 7.0% on a servicing retained basis. Today, that rate has risen to 8.5 and above. Currently, bridge loans can be purchased on a servicing released basis, as well.

“Another way to look at this sector, If you are a residential non-performing loan buyer, you need to consider buying performing bridge loans. Par yields today range between 8% and 9%, depending on quality and if there is a rehab component. Unlike a 3% interest rate 30-year NPL, where there is material risk of the loans performing and being stuck with a 3% yielding asset, bridge loans have higher interest rates and short durations, usually 2 years or less. Also, if a performing bridge loan defaults, or does not payoff at maturity, many have default interest rates that range between 18% and 25%. If you are adept at managing REO, you should be comfortable taking over a rehab situation in the event of default because the result can be a much larger return.” Thank you, Tad.

Vendor goodies


Secure Insight conducted a survey of 2007 mortgage industry executives nationwide to gauge the impact of the recent mortgage market decline on their business and operations. Some of the results follow: To address volume drop off, 73% of respondents indicated that they have started or are considering staff layoffs, 52% of respondents are cutting wages, 25% are cutting marketing spends, and 22% are cutting back vendor expenses to manage their balance sheets. When asked whether the recent downturn was expected or came as a surprise, leaving them unprepared to respond quickly, 75% of respondents did not see the downturn coming. Finally, when asked how long they see the current downward business trend continuing, 69% responded 12-18 months. This survey is one of periodic polls conducted by Secure Insight to learn more about how the mortgage industry views current issues and trends. It was conducted between June 4 and June 20, 2022.”

HomeLight has acquired Accept.inc, a Denver-based fintech lender that gives homebuyers a way to submit all-cash offers on a home upon qualifying for a mortgage, in an all-stock transaction. Now the largest agent-focused cash offer program in the entire country as well as in operating in California, Colorado, Arizona, Florida, and Texas, launching in Washington this month. HomeLight Cash Offer has 500% year-over-year growth in transaction volume as of April 2022, in addition to $3 billion in referred transaction volume in Q1 2022 alone. HomeLight raised $115 million in additional capital, including $60 million of Series D equity and $55 million of debt financing to fund operations.

The leading loyalty program for renters, Bilt Rewards, is rolling out free rent reporting to residents and landlords within Bilt Alliance buildings, a network of more than 2 million rental units across the country. Rent reporting has been shown to increase renter credit scores by an average of 60 points, according to TransUnion, which can be the difference in qualifying for a home or major loan down the road. As the first company to offer free rent reporting to both landlords and residents from all 3 bureaus, this step is part of Bilt’s larger mission to ease the burdens of renters and create a path towards homeownership.

Specializes in building custom CRM solutions for mortgage lenders, OptifiNow successfully deployed its custom CRM platform for Reverse Mortgage Lending, a reverse mortgage originator based in San Diego, California, to efficiently manage their marketing campaigns and track loans in process more effectively. “Our custom design-build approach means we can support any type of mortgage lending,” said John McGee, president of OptifiNow. “Wholesale, retail, forward, reverse – we have a wide range of experience to draw on that our clients benefit from.” In addition to supporting reverse mortgages, OptifiNow built integrations to Reverse Mortgage Lending’s website and a variety of landing pages in order to capture new leads and identify high-value lead generation sources. OptifiNow provided a custom marketing store to supply personalized collateral for loan officers to enhance engagement with borrowers and referral partners.

Homebot, the award-winning, customer engagement and retention portal that empowers consumers to build wealth through homeownership, announced a new integration with Total Expert, the only CRM and customer engagement platform purpose-built for modern financial institutions. With this new integration, contacts in Total Expert can be assigned a unique group, which will automatically upload those contacts to Homebot with their unique loan and home information. Total Expert customers can also use the Journeys feature in Total Expert to upload any new contacts into Homebot automatically when those contacts meet a specific criteria or achieve specific triggers within a Journey. This integration marks the first of two feature announcements, ultimately aiming to unlock Homebot’s actionable client behavioral data into Total Expert’s powerful CRM.

Xactus, the new name for the recently merged family of companies that includes Credit Plus, Universal Credit Services, CIS Credit Solutions, Avantus and DataFacts Lending Solutions, announced that it is offering active listing data to help lenders attract new applicants and retain existing relationships. Active Listing Scan is a monitoring solution that scans residential addresses for changes in listing status, alerting lenders when properties have recently been listed. It leverages a combination of the most comprehensive, continuously updated listing databases available and includes MLS listing data as well as public records from data aggregators.

Reggora’s mortgage solutions team is heavily focused on helping lenders reduce appraisal turn times and operational costs, and this complimentary evaluation provides valuable insight to give lenders an actionable path to reduce cycle times, decrease their cost per loan and improve borrower satisfaction. Additionally, lenders participating in the evaluation will learn how their operation compares to their peers across the country. The evaluation will review appraisal costs, turn times, AMC vs. panel operations, appraisal-dedicated employees, appraisal-revision requests, industry pain points, and more.

In today’s constantly changing lending environment, providing tools that allow your AEs to deliver a superior experience for your TPO channel through timely and relevant content is critical. Insellerate is Revolutionizing TPO AE Outreach from the palm of your hand with Insellerate Mobile App for TPO, available on both Apple and Android. This app Delivers Full AE Communication Management, lead & pipeline management, lead distribution, click to call, inbound call routing, two-way compliant texting, content distribution, outreach tracking.

An Englishman, a Scotsman, an Irishman, a Welshman, a Latvian, a Turk, a German, an Indian, several Americans (including a southerner, a New Englander, and a Californian, an Argentinean, a Dane, an Australian, a Slovakian, an Egyptian, a Japanese, a Moroccan, a Frenchman, a New Zealander, a Spaniard, a Russian, a Guatemalan, a Colombian, a Pakistani, a Malaysian, a Croatian, a Uzbek, a Cypriot, a Pole, a Lithuanian, a Chinese, a Sri Lankan, a Lebanese, a Cayman Islander, a Ugandan, a Vietnamese, a Korean, a Uruguayan, a Czech, an Icelander, a  Mexican, a Finn, a Honduran, a Panamanian, an Andorran, an Israeli, a Venezuelan, a Fijian, a Peruvian, an Estonian, a Brazilian, a Portuguese, a Liechtensteiner, a Mongolian, a Hungarian, a Canadian, a Moldovan, a Haitian, a Norfolk Islander, a Macedonian, a Bolivian, a Cook Islander, a Tajikistani, a Samoan, an Armenian, a Aruban, an Albanian, a Greenlander, a Micronesian, a Virgin Islander, a Georgian, a Bahaman, a Belarusian, a Cuban, a Tongan, a Cambodian, a Qatari, an  Azerbaijani, a Romanian, a Chilean, a Kyrgyzstani, a Jamaican, a  Filipino, a Ukrainian, a Dutchman, a Ecuadorian, a Costa  Rican, a Swede, a Bulgarian, a Serb, a Swiss, a Greek, a Belgian, a Singaporean, an Italian, a Norwegian and 47 Africans walk into a fine restaurant….

“I’m sorry,” says the maître d’, scrutinizing the group, one by one, and barring their entrance, “You can’t come in here without a Thai.”

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 titled, “The All-Cash Phenomenon.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).


(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.)

Rob Chrisman