May 21: LO jobs; DPA, qualification, servicing, appraisal tools; lending report; MBA Prez on a National Housing Policy Director

Overheard walking through Times Square: “Daddy, I want ice cream!” “Believe me, honey, I do too. But Mommy only gave us enough money for three beers.” Here at the MBA’s Secondary Conference, there’s the official news, and the unofficial news. Heard or asked in the hallways… “What does it mean for lenders, if anything, when Martin Gruenberg steps down as head of the Federal Deposit Insurance Corp. after findings of a toxic work environment put the regulator at the center of a heated political fight?” “Rather than more regulations, how about better or more relevant regulations?” “If you’re looking for looking for any changes that involve political decisions, don’t hold your breath in 2024: it’s an election year, and the odds of any decisive political action are negligible.” “How will the decline in commercial real estate impact residential lenders?” (If you don’t think commercial real estate is “taking it on the chin,” how ‘bout this: Burnett Plaza, the tallest building in Fort Worth, Texas, has been purchased via foreclosure auction for only $12.3 million just three years after it was sold for more than $137.5 million.) (Found here, this week’s podcasts are Sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Today’s features an interview with the Mortgage Bankers Association of New Jersey’s Matt VanFossen about the 40th Regional Conference of MBAs at the Hard Rock Hotel and Casino in Atlantic City, NJ on June 4-7, 2024.)

Employment

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“Dreaming of a better way to run your business? We’re on a mission to empower independent mortgage banks like yours to reach new heights of success. As part of the Homestead Funding team, you’ll maintain your independence so you can focus on production. We provide cutting-edge tools, technology, and executive support to help you thrive without the burdens of regulations or compliance. Our extensive product line is constantly evolving to meet market demands, ensuring you have the programs and financing solutions to successfully assist diverse clients. Plus, our dedicated marketing team is here to amplify your visibility and attract new leads through print and digital campaigns. Since 1995, we’ve been inspiring professionals like you to thrive. Our force in the industry has proven that growth doesn’t mean sacrificing independence. Contact Dave Stagnitti to learn how you can accelerate your career with Homestead Funding, 518-390-5960.”

Lender and broker software, products, and services

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ICE is making servicing simple with MSP® Digital Experience (MSP® DX), the new conversational user interface for the industry-leading MSP® loan servicing system. MSP DX replaces traditional screens and menus with intuitive chat-like interactions, allowing servicers to work as easily as they speak. With MSP DX, users can simply type in the description of a servicing task they want to perform, and the system will automatically call up the relevant information. And since MSP will continue to automate routine servicing processes, back-office teams can focus on exception work, and prioritize issues that require a human touch to resolve. Read more here to learn how MSP DX is making servicing simple.

Innovation-Powered Precision, Time-Tested Excellence! With a foundation built on 43 years of experience, PCV Murcor brings a deep understanding of our clients’ goals that complements appraisal modernization. Over our long history, we have honed our processes to provide reliable and unparalleled appraisal management services, setting the standard for excellence in the industry. Our use of state-of-the-art AI technology ensures precision and efficiency in every aspect of our service. AI’s ability to enhance efficiency, accuracy, and flexibility is reshaping the way properties are evaluated with distinct advantages. To learn more about our future-ready solutions for today’s appraisal management, visit here.

Join Servbank, the nation’s leading bank subservicer, at IMN’s Annual Mortgage Servicing Rights Forum on June 25-26th in Dallas, TX. Our team is proudly sponsoring this forum where attendees can expect to explore MSR investment, trading, risk management, and servicing solutions. In addition, look to connect with key decision-makers, gain insights into overcoming industry challenges, and expand their network with new and old connections. Discover how Servbank’s subservicing ensures superior portfolio and overall delinquency performance. In addition, Servbank offers unmatched and complete transparency for their clients with their award-winning SIME platform, providing real-time, on-demand portfolio surveillance. Don’t miss this opportunity to learn how Servbank can elevate the performance and oversight of your servicing operations, keep your customers current and help your bottom line. Visit our booth to meet our experienced and caring team and explore how our innovative solutions can meet your unique needs. See you at IMN! Learn more about Servbank and/or join Servbank at IMN Annual by registering.”

NEW: Maxwell’s Q1 2024 Mortgage Lending Report shows market stabilization and the rise of first-time home buyers. While interest rates didn’t dramatically descend in Q1, Maxwell’s latest Mortgage Lending Report points towards the first signs of market recovery. In the first quarter of the year, loan volume grew 23% quarter-over-quarter, and rates fell to 7.0%, the lowest quarterly average since Q2 2023. Meanwhile, borrowers showed a continued appetite for HELOCs, VA loans, and FHA loans, and first-time home buyers displayed resilience despite market challenges, with loan volume growing at twice the rate of the overall market. Want to access exclusive data that sheds light on today’s market, along with actionable tips to get ahead of the competition? Click here to get your copy of Maxwell’s Q1 2024 Mortgage Lending Report.

Rates are high, inventory is low, but borrowers are still out there buying houses. How can you equip your borrowers to get their offers accepted? QuickQual by LenderLogix. Set the parameters, fire off a QuickQual, and give your borrowers the tools and confidence to get their dream house.

It’s said that honeybees are among the hardest working insects, staying on the job up to 12 hours a day. The Down Payment Resource team can definitely relate. Today, DPR “busy bees” Rob Chrane and Tani Lawrence are at MBA Secondary demonstrating DPR’s new integration with the Encompass LOS by ICE Mortgage Technology that automatically matches borrowers with eligible DPA programs based on loan app data and guides underwriters through requirements, including product overlays. It’s a match made in heaven: DPA can help more borrowers qualify and help lenders strengthen referral relationships and meet CRA requirements. Email Rob or Tani to catch the buzz at Secondary, or schedule time to learn more virtually.

MBA President Bob Broeksmit on a National Housing Policy

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Bob’s speech yesterday supported the thinking of many in the audience here in Manhattan at the conference: we continue to beat upon, and things need to change. Below are some edited comments.

“You’ve made it possible for more than 65 percent of American households to own their homes. Every day, you expand the American Dream. But instead of helping you, the federal government is tying your hands. It sometimes feels like it is attacking you directly, and injuring the Americans you serve. I will address this crisis today. But I don’t just want to lay out the problem. I want to provide a practical solution. And I want you to know: The MBA is fighting tirelessly… for your sake, and for the American people.

 

“A good example is the progress we’re making on trigger leads. The MBA has developed the Homebuyer Privacy Protection Act. This federal legislation would severely curtail trigger leads. Consumers would only be contacted by companies they know, including their lender, their servicer, and their depository institutions. This simple reform would mean consumers get contacted only a handful of times, not hundreds of times, like the status quo.

 

“Washington, D.C. is tying us in ‘regulatory knots.’ As these knots grow tighter, they restrict our industry and the millions of people we serve. They’re the real victims here, and they’re who we are trying to help. New regulations are rolling out at a breakneck pace with little regard for how they affect each other, much less the American people.

 

“The CFPB is at the center of many knots. In March, the bureau suddenly announced in a blog post that it would soon target what it called ‘junk fees’ in mortgage closing costs. It declared that such fees drive up costs unreasonably, while asking consumers to submit complaints. The CFPB may be planning to force lenders to absorb these costs.

 

“But here’s the thing: These fees they’re targeting? By the White House’s own definition, none of them are junk fees. And many are for services required by other federal agencies.

 

According to the White House, a junk fee isn’t disclosed to consumers. But everything the CFPB mentioned is thoroughly disclosed early in the loan process. And in supreme irony, these fees are disclosed because of CFPB regulations, on forms designed by the CFPB itself. If these are ‘junk fees,’ then the word JUNK has no meaning.

 

But there’s another, more important problem. What the CFPB calls “junk fees,” federal agencies call mandatory. They pay for services like appraisals, credit reports, and flood certifications. Fannie Mae, Freddie Mac, the Federal Housing Administration, the Department of Veterans Affairs, and the USDA can’t guarantee a mortgage without these things, for good reason. They provide tangible benefits to borrowers and protect taxpayers. But now the CFPB is attacking them.

 

“The CFPB’s campaign began a day after President Biden floated a proposal to scrap title insurance. But again, clear title protects borrowers, lenders, and investors and is required by Fannie and Freddie before they purchase a loan.

 

“Such confusion poses a serious threat to a smoothly functioning and sustainable market. And even if it’s just a political stunt, it betrays a lack of knowledge about a critical part of our economy. Blog posts and the bully pulpit are no substitute for real, thoughtful, informed regulation. We need commonsense rules of the road. We don’t need regulators to build the car as they drive it at a hundred miles an hour.

 

“The Biden administration is tying more regulatory knots with the so-called Basel III end-game proposal. Consider how Basel would affect low-to-middle income lending. It raises risk weights on specific kinds of mortgages, particularly low downpayment loans. That inevitably means fewer loans will be made, and the loans that are made will be more expensive.

 

“This directly conflicts with the Biden Administration’s attempts to encourage precisely this type of lending. They’re also trying to revise the Community Reinvestment Act to encourage more low- and middle-income homeownership. Well, which is it? Do we want more lending to these communities, or less? This is the definition of a regulatory knot.

 

“Basel’s treatment of mortgage servicing rights exacerbates the problem. It reduces the amount of servicing a bank may have on its balance sheet, compounding an absurdly high 250% risk weight that has already driven many banks out of mortgage lending and servicing. Going further would weaken the entire market for MSRs, driving up costs for borrowers. While one part of D.C. is trying to untie the knot, another part is making it tighter.

 

“Finally, Basel raises capital requirements on warehouse lending, the lifeblood of independent mortgage banks. This will reduce the liquidity available to independent mortgage banks and make it more expensive, and the cost will be passed on to borrowers. Yet IMBs do the vast majority of lending to low- and moderate-income and first-time homebuyers.

 

“Once again, that directly conflicts with a key Biden administration goal. The federal government is trying to lower costs for consumers and improve housing affordability, and it wants to ensure financial stability. Yet Basel III will make housing less affordable, not more. How are we supposed to untie this knot?

 

“Basel III will destabilize the housing finance market by pushing banks even further away from mortgages. To fill the vacuum, independent mortgage banks will step up and do more lending. But even there, the Biden administration is tying yet another knot.

 

“The FSOC (Financial Stability Oversight Council, a group of federal regulators including the Treasury Secretary and the Director of the CFPB) issued a report that called on Congress and state regulators to increase oversight and capital requirements on IMBs.  It’s essentially doing to them what Basel III does to banks. If this bad idea moves forward, who will be left to lend?

“Mortgage companies are constantly being whipsawed. They’re trying to understand the competing and contradictory rules that govern them. You are spending more than ever on regulatory compliance. But that leaves less money to spend on innovation, customer service, and actual lending. None of this helps the millions of Americans who want to buy homes.

 

“As the regulatory knots tighten, consumer trust in the mortgage industry falls. Take the alleged junk fees. The CFPB is telling consumers that lenders are out to get them. In fact, lenders are following the law. Ditto the regulations that raise costs while limiting options. They give the impression that the mortgage industry is sticking it to consumers. But the true fault lies with bureaucracy, not business.

 

“These regulatory knots exist because no one can untangle them. There are so many agencies issuing so many rules, that the buck doesn’t stop anywhere. But it should stop somewhere, and it should stop with someone. That’s why I’m proposing a ‘National Housing Policy Director.’ This position would bring order to the chaos. The Housing Director would oversee every housing policy, no matter which agency it comes from. They could spot contradictory rules from a mile away. Ultimately, the Housing Director would stop agencies from making regulatory knots worse and start the long overdue process of unraveling them.

 

“A Housing Director is a basic matter of good government. And there’s precedent. The Director of National Intelligence was created two decades ago to address similar concerns. At the time, in the wake of September 11th, the intelligence community was overseen by fragmented and often competing agencies. The Director now makes them work together, ultimately strengthening national security.

 

“We need the same kind of streamlined, collaborative, and commonsense leadership in the housing market. The current approach is clearly failing the American people. The costs are too high, and so are the stakes. We need to encourage a new era of safety, trust, and innovation, not continue this slouch toward stagnation and discontent.”

Capital Markets: all quiet on the bond market front

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Without any top-tier data for markets yesterday (as is the case today) and with many traders away from their desks to attend MBA’s Secondary Conference here in Manhattan, it was a quiet open to an abbreviated week that ends with an early close on Friday before the Memorial Day holiday weekend. Fed Vice Chair of Supervision Barr and Fed Vice Chair Jefferson spoke yesterday, but their comments did not draw a reaction from the market. Pricing in fed funds futures markets suggests even odds between one or two 25 basis points cuts before the end of the year.

The numerous economic reports released last week did nothing to change the current narrative around inflation and the broader economic perspective. Higher services costs continue to drive producer prices up while consumer prices eased on a year-over-year basis. Annualized core CPI was 3.6 percent, which represents a three-year low. Much like with producer prices, service prices remain elevated and are the primary reason inflation is easing at a much slower pace than many would have hoped. Meanwhile, retail sales were flat in April and control group sales were down 0.3 percent. Industrial production was also flat in April, however manufacturing production fell 0.3 percent as demand has cooled. Housing starts jumped 5.7 percent in April due to a spike in multifamily development while elevated mortgage rates are discouraging some builders from starting new projects and eroding affordability for buyers who might otherwise be in the market.

As a reminder, this week won’t have much in the way of market-moving data, although we will receive plenty of remarks from Fed speakers. Today’s economic calendar has the Philadelphia Fed non-manufacturing indices for May, usually a non-event. Later today brings Redbook same store sales and remarks from Fed members including Governor Waller, Richmond President Barkin, New York President Williams, Atlanta President Bostic, Vice Chair for Supervision Barr, Atlanta President Bostic, Cleveland President Mester, and Boston President Collins. We begin the day with Agency MBS prices unchanged from Monday and the 10-year yielding 4.42 after closing yesterday at 4.42 percent; the yield curve continues to be inverted with the 2-year yielding 4.82.

Ahead of summer travel, it is good to be fast and efficient. I have no idea why I seem unable to quickly fold a t-shirt like this. Pure sorcery!

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, “Down Payment Assistance Programs Helpful But Not a Universal Remedy.” 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 2024 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