May 10: LO jobs; cap mkts., TPO, referral, appraisal, AI, processing products; be careful about LO comp; April consumer prices as expected

“We are going to have a sales contest this month. The winners will get to enter next month’s contest.” Hardy har har, right? (Note: watch Glengarry Glen Ross.) As rumors swirl, and you know what they say about rumors, about the FHFA rescinding recent changes to its loan level price adjustment matrix this afternoon, I received this note. “Hey Rob, do you think that the CFPB is wise to some lenders switching referral sources to switch commission structures? Like where a loan comes in off the street, and a price is quoted with 1.25 for the LO, and client balks, so then the loan is referred in-house and the LOs commission knocked down to .50 to keep the deal?” Yes, I have heard that they are and the CFPB is probably aware of those kinds of things too, but you should check with your lawyer or compliance department to see if that runs afoul of LO comp rules. Whether the original street LO receives zero commission when a loan goes to the in-house team/call center, or is paid a lower commission, you will want to get qualified counsel about this. You can also always submit a regulatory inquiry to the CFPB. And anyone can always report something anonymously here. (Today’s podcast can be found here and this week’s is sponsored by SimpleNexus, an nCino company and the homeownership platform that unites the people, systems, and stages of the mortgage process into one seamless, end-to-end solution. Part one of an interview with FundingShield’s Adam Chaudhary on protecting against wire and title fraud.)

Employment

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“Have you realized that once you close a loan, you’re not getting any residual income from that customer, but your company might be? Want to share in the servicing revenue of your closed loan customers? We think you should. Caliber’s MSR program rewards our loan officers with annual incentives. Because we service almost all of our loans, our loan officers have more opportunities to get paid. Even better, there is a possibility of receiving an additional bonus based on client retention rates. Want to know more? Contact the busiest recruiter in the world, Tina Jablonski.

You can’t fix tomorrow’s problems with yesterday’s technology.  The good news is Canopy Mortgage created tomorrow’s technology. Canopy provides a better way where you gain ultimate control with its proprietary Loan Origination System. Canopy’s tech was developed by industry experts for top producers. An independent study by the STRATMOR Group recently found that Canopy’s tech reduces the cost to fund a loan by up to 35% – Finally a better way! A better business model that is sustainably good for every party involved in the mortgage process. Reach out to Josh Neumarker at Canopy Mortgage for more information 888-696-9076.

Lender and broker software and services

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Are you ready for your next CFPB Exam? The CFPB issued updated servicing examination procedures in January, marking the first manual update since 2016. The specific changes are not a surprise as they represent issues identified in the examination findings and Supervisory Highlights published in the interim. Discover what you may have missed by reading our blog, “Are You Tracking New CFPB Examination Updates?” to see what’s new. CLARIFIRE® is designed to help you readily address these industry changes, from the CFPB to the GSEs to FHA, VA, and the USDA. Creating accuracy and velocity through modern workflow automation and intelligent decisioning, CLARIFIRE brings innovation to the forefront of your organization. Find out how you can expedite the incorporation of industry change, removing the chaos while creating a seamless servicing experience with CLARIFIRE. Transform your approach to exam readiness with CLARIFIRE, truly BRIGHTER AUTOMATION®.

AI for mortgage is real. Despite all the recent hype about how AI is taking over the world, Zoral’s AI Automation Platform is amazingly safe for mortgage. Our AI is affordable and delivers immediate ROI. Zoral’s automation will dramatically speed up your loan manufacturing process. From Point of Sale, through Processing, Underwriting, Closing and Post-closing, we assist your humans by eliminating repetitive, error-prone, manual work. For the past 18 years, Zoral has been creating, implementing, and supporting affordable AI/ML powered automation for banking, lending, and mortgage. Whether you’re Taking your first step or your next steps of automation, Zoral will speed up your workflow by 5x to 10X. For a candid discussion, let’s chat!”

April 15th was the day that significantly altered the appraisal game for many borrowers, loan officers, and Realtors®. Fannie Mae’s Modernization Initiative is ushering in many changes, including further removing agents and borrowers from the appraisal process and creating a greater risk of undervaluation. How will the modernization initiative impact your business, borrowers, and realtor clients? Watch this video from R3 AMC and discover the changes that have been made to the appraisal process, why you must communicate regularly with your borrowers and agents, important tips for borrowers, and what the future of appraisals looks like. R3 AMC’s Concierge Services are designed to help mitigate risk and prevent agents from asserting, “The appraiser never came to the property.” To learn more about how R3’s Concierge Services can help protect your business, email Brent Jones, CEO/Chief Appraiser, or call him @ 800-791-6817.

Want to make requesting borrower conditions 100x easier? With LiteSpeed by LenderLogix, you can request borrower documents right from within Encompass® by ICE Mortgage Technology™, regardless of how the application was entered. Your borrower gets a link to upload conditions, and everything fires into the eFolder. It’s an amazing borrower experience. Head over to LenderLogix and check out LiteSpeed, you could be up and running in a week!

It’s been an unusually slow year for mortgages. Spring inventory has finally picked up with new listings up 12.1% from last year. However, despite the increase in inventory, home prices continue to rise, presenting both opportunities and challenges for loan officers. And navigating a shifting market with rate fatigue and buyer disappointment can be especially difficult. Join Homebot’s VP of Marketing, Ashley Remstad during her chat with Nicole Rueth, Colorado’s #1 Top Producing Loan Officer as they discuss key strategies and tactics every loan officer should be taking in order to thrive in a shifting housing market. Register for the webinar here.

FREE EBOOK: Winning Agent Business: The Lender’s Guide to a Strong Referral Network. In today’s volatile market, a steady stream of referrals means the difference between maintaining a pipeline and scrounging for leads. And as we move towards market recovery, a robust book of business will serve as an invaluable tool to take full advantage of profitable opportunities. Real estate agents still hold the keys to the referral kingdom. To create this eBook, Maxwell interviewed agents and broker-owners across the country. The result is firsthand advice to help you better network to create a strong funnel of referral leads. Download your free copy to learn the 4 qualities real estate agents value in their lending partners, agent networking dos and don’ts, 5 ways to become a go-to lender for real estate agents, and more. Click here to download “Winning Agent Business: The Lender’s Guide to a Strong Referral Network.”

Ready to become the King of Closings? Join National Mortgage Professional on Thursday, May 11th at 2:00 pm ET / 11 am PT for an NMP Webinar Use Chat A.I. Or Cower While the Lions Feast. In today’s unpredictable market, there’s no time to sit back and wait for business. Old habits will only stymie your career. Discover how Sun West loan officers are feasting on new business with proprietary A.I. technology. Learn how A.I. can help you halve your declines, double your closings, and grow your business. By attending this webinar, you’ll gain insight into the transformative power of A.I., a simple formula for securing more agents and loans, the impressive speed at which A.I. can close a loan, and how a TRU Approval is like a cash offer. This webinar will equip you with the knowledge and tools you need to thrive in the market. Don’t let the lions feast without you! Register here.

TPO loan program news

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Verus Mortgage Capital offers Foreign Nationals loan programs that answer the unique needs of your international borrowers looking to invest in the U.S. housing market. These loan programs enable non-U.S. citizens to easily purchase or refinance a property by gaining access to the funds they need. Verus’ Foreign Nationals loan programs offer flexible guidelines, including the use of projected rental income to qualify. Borrowers can also access up to $500k in cash outs with LTVs up to 65%, making it easier to finance their investments. As the non-QM leader, Verus offers a comprehensive suite of non-agency programs, providing lenders with new and sustainable sources of business. With Verus’ deep financial resources and liquidity, you can capture more market share. Contact Jeff Schaefer, EVP – National Sales (202-534-1821) or meet with Verus at the MBA’s Secondary and Capital Markets Conference in New York to learn more.

As a correspondent lender, can you really have your cake and eat it too? Can you get the best of both worlds: the best price with the least amount of repurchase exposure? Can you maximize your execution at the time of loan sale and still preserve your gain on sale, even if that loan comes back for repurchase? Yes, you can…when you sell to Plaza Home Mortgage. Whether a repurchase stems from borrower or employee fraud or misrepresentation or a manufacturing defect and whether it occurs after day 1 or 5 years down the road, Plaza offers comprehensive rep and warranty relief coverage known as the Certified Loan Program. Every loan sold to Plaza is eligible for Certified Loan Program coverage, at no additional upfront cost to the correspondent. Reach out to us to schedule a meeting at MBA Secondary in NYC, May 21-24 and learn more about how Plaza’s National Correspondent channel can help you achieve the best short-term and long-term execution.

Capital markets: CPI as expected

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As mentioned above, capital markets crews are watching for news from the FHFA that loan level price adjustments will be modified or rescinded. In the meantime…

With the current market volatility, it’s even more important that your hedge advisor understands today’s market.  A true seasoned advisor knows how to evaluate conditions and look at alternate coupons to hedge rather than taking bids at face value. Experience matters, especially in markets that are trading very wide. At Vice Capital Markets, the average trader has over 10 years of experience, which ensures that every trade is made with the best interest of each client’s individual portfolio and goals. Reach out Chris Bennett or Troy Baars today for a frank discussion on best practices for trading in today’s market or schedule a time to meet with Troy in person at the MBA Secondary conference later this month.

In advance of today’s latest CPI inflation news, the yield curve “bear flattened” and mortgages traded wider yesterday. Put another way, short term rates rose faster than long term rates in a harbinger of an economic contraction and mortgage rates didn’t fall by as much as Treasury yields. The day’s $40 billion 3-year note sale met spectacular demand, with the high yield (3.695 percent) stopping through the when-issued yield by nearly three basis points. New York Fed President Williams said that inflation remains too high and that the Fed has not said it is done raising rates. President Biden discussed the debt ceiling with Congressional leaders, but House Speaker McCarthy is reportedly opposed to a short-term debt ceiling extension through September. Huh? Opposed to kicking the can down the road?

Today’s most likely market moving events include the April CPI release and a $35 billion 10-year Treasury note auction. CPI came in at +.4 percent, year over year +4.9 percent, core +5.5 percent year over year, almost spot on with predictions. Prior to CPI, the mortgage market digested the latest mortgage applications from the MBA. Mortgage applications responded positively to a drop in rates last week, increasing 6.3 percent from one week earlier, as the Fed signaled a potential pause at the current level for the federal funds rate.

Now that the U.S. government has released new inflation figures, the question is how long the Fed will be in pause mode when it comes to the fed funds rate? The Case-Shiller Home Price Index peaked in June of last year, so we are close to having the owner’s equivalent rent portion of the CPI fade into the background. However, the labor market remains tight. Friday brought strong employment figures, meaning it could be some time, and certainly longer than hoped for by those who have been crossing their fingers for rate cuts.

The unexpected rise in both U.S. hiring and wages last month increases the chances the Fed will hold interest rates high for longer, and potentially keeps the door open to an 11th straight hike in June. Regardless, the Fed doesn’t set mortgage rates, and though eventually lower mortgage rates will help with affordability, they won’t solve for the lack of inventory on the market, particularly of existing homes. The dearth of supply will continue to be the primary constraint on home sales through 2023. Later today brings the Treasury Budget for April, with the CBO estimating a surplus of $173 billion compared to $308.2 billion a year ago. We begin the day with Agency MBS prices, the 10-year yielding 3.44 after closing yesterday at 3.52 percent, and the 2-year at 3.93.

NEWS FROM THE YEAR: 2059 (part 3 of 5)

Last Castro finally dies at age 112; Cuban cigars can now be imported legally, but President Chelsea Clinton has banned all smoking.

The Postal Service raises the price of first-class stamps to $17.89 and reduces mail delivery to Wednesdays only.

85-year and $75.8 billion study: Diet and exercise are the keys to weight loss.

Global cooling blamed for citrus crop failure for third consecutive year in Mexifornia and Floruba.

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 Yield Curve Is Inverted: Should Lenders Care?” is the current blog. The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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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 2023 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