For those who missed it, yesterday was the 21st day of the 21st week of the 21st year of the 21st Century. I spent yesterday, and much of this week, in Kalispell, Montana (unofficial state slogan: “Don’t Tell Me What to Do”). The natter in the lending community is definitely about volumes and margins and how to reduce costs, echoing thoughts in the current STRATMOR blog, “Summer Concerns.” And although it seems like a family-oriented community, it didn’t make the top of the WalletHub survey on the best and worst states to raise a family based on 52 key indicators of family friendliness. The three best states were Massachusetts, Minnesota, and North Dakota, while West Virginia, Mississippi, and New Mexico ranked as the three worst. Some fun stats from the survey: Minnesota has the highest median annual family income (adjusted for cost of living), $85,473, which is 1.5 times higher than in New York, where it is lowest at $57,450. Utah has the lowest separation and divorce rate, 15.74 percent, which is 1.7 times lower than in Nevada, where it is highest at 26.07 percent. New Hampshire has the lowest share of families living in poverty, 4.60 percent, which is 3.4 times lower than in Mississippi, where it is highest at 15.50 percent. Maine has the fewest violent crimes (per 1,000 residents), 1.15, which is 7.5 times fewer than in Alaska, the state with the most at 8.67.
MISMO®, the real estate finance industry’s standards organization, announced that it is seeking public comment on MISMO Engineering Guidelines (MEG) 21 and 40. The 30-day public comment period for both guidelines runs through June 18, 2021. The MISMO MEGs ensure that MISMO work products adhere to all applicable technology standards, are produced in a consistent fashion, and meet the needs of the mortgage industry. MEG 21 provides guidance for term name, data point name, enumerated value, and container name representations. MISMO’s Architecture Workgroup has recently updated MEG 21 to change mentions of “XML” to “data interchange” to prepare for the use of JSON and possibly other formats and include reference to the Logical Data Dictionary.
MEG 40 offers guidelines for the data point and container definitions. MISMO’s Architecture Workgroup recently made updates to MEG 40 by modifying the introduction to remove XML specific language, updating language in sections 40.2.1 and 40.1 and adding 40.2.3 and 40.2.4 definition rules for detail containers. These public comment periods allow those who participated on the proposals at least 30 days’ notice prior to final release to review and disclose any applicable Patent Rights (as defined by MISMO’s 2018 Intellectual Property Rights Policy).
DataVerify® announced it has agreed to an association with Dytrix, Inc. to offer wire validation and counterparty risk mitigation services to its valued lender clients. “DataVerify is now able to direct clients to a workflow solution at Dytrix where Dytrix helps lenders to ensure a safe closing transaction while meeting Know Your Counterparty/Vendor requirements. These advantages together with the added flexibility and automated approach this solution can help to lower lender loan fulfillment costs. At Dytrix, the lender’s balance sheet is protected through a process where closing agent identity is authenticated and wiring information is validated by Dytrix to prevent losses due to wire fraud, while at the same time optimizing the loan manufacturing process.”
Gridiron Capital, LLC announced its acquisition of Class Valuation. The company will partner with and support Class Valuation’s management team as they continue to execute on a shared vision for growth and strategic innovation within the residential valuation services industry. Gridiron is acquiring Class Valuation from Narrow Gauge Capital (“NGC”), which will retain minority ownership in the Company.
OptifiNow announced an integration to the ICE Mortgage Technology™ platform that focuses on wholesale lenders and third-party originators (TPO). OptifiNow utilized the Encompass® API to integrate with TPO Connect and provide lenders with an efficient method to synchronize the TPO Connect and Encompass loan data with their CRM platform.
Doma, a leading force for disruptive change in the real estate industry, announced that its Doma Intelligence platform combined with its title and escrow solutions will help power the real estate closing experience for Wells Fargo & Company (NYSE: WFC). The relationship will enable Wells Fargo to leverage Doma’s proprietary machine intelligence technology to remove key points of friction and frustration involved in the traditional way of fulfilling mortgage closings, for both loan officers and mortgage customers. Recall that Doma entered into a business combination agreement in March 2021 with Capitol Investment Corp. V (NYSE: CAP, CAP WS and CAP.U) (“Capitol”), a publicly traded special purpose acquisition company.
Sales Boomerang, automated borrower intelligence and retention system and a provider of SaaS-based integrated with Volly, a fintech and creative marketing services. By combining market intelligence with a lender’s own credit underwriting preferences, Sales Boomerang identifies exactly when a prospect or past customer is ready for a new loan. Lenders can take immediate action enabling higher borrower retention, increased loan volume and lower per-loan costs.
Finastra announced the launch of its single platform encompassing consumer and business deposits, loans and mortgages. Fusion Originate represents the consolidation of several of Finastra’s best-of-breed lending and account opening solutions, including Fusion uOpen (business and consumer deposits, consumer lending), Fusion Consumerbot (consumer lending), and Fusion Mortgagebot POS (mortgage origination), combined with new functionality for business lending (available in Summer 2021).
RealKey is launching a mortgage automation solution that enables mortgage loan originators (MLOs) to enhance the mortgage processing experience for borrowers by improving efficiencies, shortening the document collection and the review and verification stages. The company is led by Christopher Hussain, previously the #1 Mortgage Originator in the U.S., having personally funded over $2b in residential loans in all 50 states. RealKey cuts the loan processing cycle by 50% while its differentiated platform features include Automated and Intuitive Collection, Centralized Communication, Automated Review of Documents.
AppraisalWorks™ platform is now available through the ICE Mortgage Technology™ Platform. The seamless integration is built on the latest Partner Connect API Platform and allows lenders to order, assign, monitor, and review real estate valuations, from a marketplace of AMCs and appraisers, directly through the Platform. Lenders can fully leverage the platform and order appraisals and property valuations through both Encompass® and Encompass LO Connect™. Throughout the order process, stakeholders have permissions-based access to messaging, status updates, payment processing, and automated alerts.
Accurate Group announced the acquisition of Coast to Coast Title & Escrow (CTC), further expanding its local presence in the fast-growing southeast U.S., strengthens its national title insurance and closing capabilities and broadens its title and closing technology platform and loan origination system integrations. Learn more about Accurate Group’s next-generation Archer® appraisal management and title platform, the GroundWorks property inspection mobile app, and the market-leading iValueNet home equity appraisal solution.
Bizzy Labs announced that MCM Capital and its affiliate, Temple View Capital, have selected Libretto from Bizzy Labs for compliance monitoring on their entire portfolio. The regtech improves loan portfolio compliance by automating identification of data anomalies in loan files, enabling their timely research and remediation. Its comprehensive business rule library is curated by legal and compliance experts and can be configured by loan type. Its systematic and automated approach to loan diligence translates into fewer borrower complaints and higher loan valuations.
Return to WFO (work from office)
Will everyone be working from home from here on out? Nope. Many banks and lenders are already back in the office. Certainly, the prediction that commercial office space is going the way of tannery buildings and buggy whip manufacturers has disappeared.
Lenders and vendors have already started to discover that, while there’s more than one right away to bring people back to the office post-pandemic, there are also plenty of potential wrong ones. As the hope of getting back to some semblance of normalcy after nearly a year and a half in lockdown grows, some management is anxious to stop paying rent on empty space and to start bringing employees back together in the office, at least for part of the week. But the method and, perhaps more importantly, the message firms choose can impact their ability to attract and retain talent. After all, in the competitive lending industry, there’s bound to be paranoia about the potential consequences of failing to read between the lines of office return memos from upper management. How do employees take the phrase, “strongly encouraged”? Does that mean “required”? Even if that was never the company’s intention, that kind of miscommunication can have serious consequences.
Employees who have been hired remotely, or within driving distance of the office, want to see and be seen and should get back into the office quickly, right? Think again. It turns out some employees actually feel like remote work has afforded them opportunities they wouldn’t have otherwise had, and don’t want to give them up. They like the lack of commute, and have grown accustomed to working virtually. In Zoom, everyone is all in the same-sized box on the screen, and as a result, you get more face time with management and clients. Employees are able to network with people across the region or nation in a different way than telephones and twice a year meetings. On the other hand, many employees are eager for in-person coaching from mentors and other employees.
In my unofficial conversations with lenders around the nation, it seems most are a) taking their time about returning to the office, and b) at this point favor some kind of staggered approach.
Capital markets deals
Freddie Mac and Fannie Mae aren’t the only entities driving supply and demand in the capital markets. (And the capital markets drive rates for borrowers in the primary markets.) For example…
Ginnie Mae issued a record $89.7 billion of mortgage-backed securities in April. Approximately 332,300 homes and apartment units were financed by Ginnie Mae guaranteed MBS in April. “Investors continue to add Ginnie Mae MBS to their fixed-income portfolios because of the high-quality and liquidity of the securities,” said Ginnie Mae Acting EVP Michael Drayne. “Our commitment to maintain a strong and flexible MBS program that produces the types of securities investors demand is the foundation of Ginnie Mae’s ability to finance affordable homeownership and rental housing.” Ginnie Mae’s total outstanding principal balance as of April 30 was $2.109 trillion, up from $2.095 trillion in March, and down slightly from the April 2020 level of $2.145 trillion. For more information on monthly MBS issuance, UPB balance, REMIC monthly issuance and global market analysis visit Ginnie Mae Disclosure.
Angel Oak Capital Advisors announced the completion of AOMT 2021-2, the first-ever non-agency mortgage-backed securitization that qualifies as a social bond in the U.S. The securitization, which is Angel Oak’s second of 2021, adheres to strict ESG standards from the International Capital Market Association (ICMA), the industry leader for providing framework for social/green bond issuers. Angel Oak also received a second-party opinion from the ISS which confirmed it adhered to the principles of the ICMA. Angel Oak oversaw the entire process from origination to securitization thanks to the vertical integration of its lending and capital entities, providing transparency and oversight allowing the firm to ensure all mortgages in the securitization adhered to the framework provided. The majority of the mortgages in the securitization offer solutions for self-employed individuals, who are typically underserved in the mortgage industry.
Fitch Ratings assigned expected ratings to JP Morgan Mortgage Trust 2021-6 (JPMMT 2021-6). The certificates are supported by 1,673 loans with a total balance of approximately $1.564 billion as of the cutoff date. The pool consists of prime quality fixed-rate mortgages from various mortgage originators. The servicers in the transactions consist of JP Morgan Chase Bank and various other servicers. Nationstar Mortgage LLC will be the master servicer. All of the loans qualify as either Safe Harbor Qualified Mortgages or Agency Safe Harbor QM loans. The collateral comprises 100 percent fixed-rate loans, and the certificates are fixed rate based off of the net WAC, or floating/inverse floating rate based off of the SOFR index, and capped at the net WAC. This is the fifth Fitch-rated JPMMT transaction to use SOFR as the index rate for floating/inverse floating-rate certificates.
The King & the weatherman
The King wanted to go fishing, and he asked the royal weather forecaster the forecast for the next few hours.
The palace meteorologist assured him that there was no chance of rain.
So the King and the Queen went fishing. On the way he met a man with a fishing pole riding on a donkey, and he asked the man if the fish were biting.
The fisherman said, “Your Majesty, you should return to the palace! In just a short time I expect a huge rainstorm.”
The King replied: “I hold the palace meteorologist in high regard. He is an educated and experienced professional. Besides, I pay him very high wages. He gave me a very different forecast. I trust him.”
So the King continued on his way.
In a short time, however, a torrential rain fell from the sky. The King and Queen were totally soaked.
Furious, the King returned to the palace and gave the order to fire the meteorologist.
Then he summoned the fisherman and offered him the prestigious position of royal forecaster.
The fisherman said, “Your Majesty, I do not know anything about forecasting. I obtain my information from my donkey. If I see my donkey’s ears drooping, it means with certainty that it will rain.”
So the King hired the donkey.
And so began the practice of hiring dumb asses to work in influential places.
The practice is unbroken to this day.
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