Daily Mortgage News & Commentary

May 3: MLO & mgt. jobs; customer experience, non-QM, eClosing products; conventional conforming program adjustments

With the yield on the risk-free 10-year Treasury note hitting 3 percent for the first time since 2018, you deserve some cutting-edge humor. Two hats were hanging on a hat rack in the hallway. One hat said to the other, “You stay here; I’ll go on ahead.” In our lending biz, some companies are thinking it is best to “go on ahead” with someone else. Garth Graham, Senior Partner at STRATMOR, fresh off the Planet Home Lending Home Point deal, fired off this note to me. “In a market like this, we expect to see industry consolidation. Planet Home Lending is being opportunistic as being one of the first to seize scale benefits in the TPO space. Planet could double its market share in correspondent, and likely be a top 5 or top 10 player this year. Management is taking advantage of the market dynamics in a way I expect to see others follow. The M&A market is very hot, similar to the numbers from 2018. In 2018, there were 33 deals, then it started to drop as the market improved, and only 13 deals in 2020 during the Covid boom. Last year we were up to 29 deals as the market softened, and this year will likely be over 40 with a large pipeline of active buyers, and conversations with a lot of sellers given the Q1 earnings performance for mortgage bankers. Deals can be put together in less than 90 days like HP and Planet deal. The challenge is when the sellers wait too long to get started.” (Today’s podcast is available here and this week’s is sponsored by MCT’s BAM Marketplace, the world’s first truly open loan exchange, where buyers can bid regardless of approval status, and sellers receive automated live pricing from every buyer on the platform. Interview with MCT CEO, Curtis Richins, on ways BAM Marketplace continues to evolve and disrupt the secondary mortgage marketplace.)

Employment

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“As a National Top 15 Mortgage Lender, we routinely create opportunities for leaders and winners. Currently, we are seeking nationwide Sales Managers and experienced Loan Officers who want to become Sales Managers. Applicants must be energetic, ambitious, motivated, reliable, driven, persistent and consistent. Our go-getter candidates must ideally produce a minimum of $500K in monthly sales and manage at least one LO. We have a dedicated team of experienced management professionals who provide recruiting, marketing, sales, and operations support. Take advantage of our industry-leading One-Time Close Construction Loan program, which is available for all product types, including Conventional, FHA, VA, USDA, and Jumbo. This is your chance to achieve great success. In an industry filled with stress and pressure…we are looking for diamonds. Period. If interested, please send your resume confidentially to Anjelica Nixt and specify this opportunity.”

Lender & broker programs and services

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Between requesting, reviewing and re-requesting bank statements, determining a borrower’s true ability to pay (ATP) can feel like a Sisyphean task. Fortunately, FormFree is making the verification of income (VOI) easier than ever for lenders and their borrowers with its AccountChek digital income verification tool. An authorized report provider for Fannie Mae’s rent payment history underwriting initiative and Freddie Mac’s AIM for income using direct deposits, AccountChek enables an improved loan manufacturing process that offers lenders enhanced productivity and cost savings. Quit pushing that VOI boulder up the hill, and consider FormFree CEO Brent Chandler’s case for using direct source bank data to determine borrowers’ ATP.

 

Do your customers trust you? How can you be sure about that? What is the cost to your business if they don’t? Join Dr. Eli Jones, Mays Business School Professor at Texas A&M University and XINNIX President, Michael “Go-To” Norton, on May 11 at noon ET for “How Much Does Your Customer Trust You…And How Do You Know?: a virtual discussion that no sales professional can afford to miss. XINNIX, the company that helps our industry grow, is also currently seeking two National Sales Executives to join their award-winning team as they continue to see explosive growth themselves. For more information and to apply, click here.

The digital journey culminates in the electronic closing. The development of the hybrid eClosing was a huge step in the right direction. Over 90% of lenders say they are currently planning to move to hybrid eClosings in 2022. Lenders can easily skip the hybrid step and go all the way to eClosings thanks to an integration between Fiserv and DocMagic. LoanComplete from Fiserv and DocMagic’s Total eClose allows lenders to achieve a 100% paperless workflow that seamlessly integrates every component of the closing process, automatically. It includes, a full eDocument library, a SMARTDoc eNote, eNotary technology with RON, a seamless connection to the MERS® eRegistry, and a certified eVault. It’s a lights out process for the lender. Check out 5 Keys for e-closings in this recent Point of View document by Fiserv.

“If you’re attending the MBA Secondary in NYC in May, Arc Home welcomes you to schedule a meeting to discuss the launch of our proprietary Non-QM Access and Elite Non-Agency loan programs. We are excited to share that these programs are now available to Delegated Correspondents.  In 30 minutes Arc will give you a comprehensive overview and determine how these flexible products can fit into your business growth strategy. As a top-10 Non-QM and Non-Agency lender, Arc Home provides strength and stability to a changing market. Our commitment to customer service guides our strategic growth and by meeting at the MBA we can better understand your needs throughout 2022 and beyond. Schedule your meeting today.”

As a lender, you can rely on Richey May’s Subservicer Oversight Review for standard loan-level testing on 25 loans in your portfolio, focused mainly on default and escrow attributes. Sometimes that’s enough. Sometimes it’s not. Are there other areas you wish you knew more about? Could stopping at compliance be your biggest oversight? Richey May’s loan-level testing is tailored to fit your needs and digs deep to provide valuable insights into how your portfolio is serviced. We look to surface new details and strengthen the client-subservicer relationship. We test the areas where you’ve received consumer complaints so you know exactly what happened and what you can do to drive value for your business. For more information on Richey May’s Subservicer Oversight Reviews and custom loan-level testing, contact us today!

Customer Experience is critical. The industry has been focused on the Digital revolution taking place within the mortgage life cycle. While speeding up cycle times and lowering costs are important, we must not lose sight of the key element that drives our business: The Consumer. How do you lower costs while improving customer experience? That is why Lenders and Servicers are partnering with Sutherland. Our Design and Innovation Labs in San Francisco are a customer centric think tank that allows us to uncover opportunities to increase our client’s business. Whether you’re trying to reduce withdrawal rates, increase portfolio retention or reduce call center volumes with Conversational AI, our focus is to pinpoint areas of improvement that keep your most precious asset, ‘the borrower.’ We’d like to hear from you: Please contact Tim Gillis.

Conventional conforming, Freddie/Fannie, changes don’t stop

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Fannie Mae’s first quarter 2022 earnings were released. $4.4 billion net income for the first quarter of 2022, with net worth reaching $51.8 billion as of March 31, 2022. $255 billion in liquidity provided to the Single-Family and Multifamily mortgage markets in the first quarter of 2022. $104 billion of Single-Family home purchase acquisitions in the first quarter of 2022, of which nearly 50% were for first-time homebuyers. Fannie acquired approximately 312,000 home purchase loans and 487,000 refinance loans during the first quarter of 2022, helping homeowners take advantage of low interest rates.

The industry continues to weigh in on the FHFA’s plan to impose a 2% liquidity requirement on servicers’ hedging position in the to-be-announced (TBA) market, a measure designed to mitigate turmoil at the beginning of the pandemic.

Research shows that inequities in home lending and appraisal processes disproportionately impact communities of color. For example, research from Freddie Mac shows that appraisers’ opinions of value are more likely to fall below the contract price for homes in majority Black or Latino census tracts than for those in White tracts. An action plan published March 23 by the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) calls on housing industry stakeholders to take affirmative steps to advance equity in the valuation process by addressing potential bias in appraisals and AVMs.

Fannie Mae’s Appraiser Diversity Initiative, in partnership with the Appraisal Institute, Freddie Mac, and the National Urban League is fostering diversity in the residential appraisal field. With help from industry sponsors, dozens of aspiring appraisers are receiving scholarships, professional mentorship, and jobs. Meet two future appraisers, Marcus Knight and Jessica Brown.

Fannie Mae revised its Learning Center FAQs to include information regarding Phase 4a ULSS updates and added a new FAQ regarding Qualified Mortgage (QM) edits and the comparison of the ULDD Price Lock Date to the Uniform Closing Dataset (UCD) Current Rate Set Date.

ULDD Phase 4a is rapidly approaching. To help prepare, Freddie Mac provided updates to supporting documents and data points. Initial testing begins on June 2, 2022, optional delivery August 1, 2022 and the eventual implementation of Phase 4a next year.

Fannie Mae issued a reminder regarding its updated uniform legal instruments: security instruments, notes, riders and addenda, and special purpose documents enhancing clarity and usability. Lenders can use the updated forms any time but must use them for loans with note dates on or after Jan. 1, 2023. Review the fact sheet for an overview of the updated forms.

Refer to Fannie Mae’s SEL-2021-06 for additional information.

AmeriHome revised multiple policies, effective April 29th which include the removal of existing property flipping overlay for Fannie Mae and Freddie Mac loan transactions and clarifications on specific types of unique and/or non-traditional structures that are ineligible for sale to AmeriHome. Also described in AmeriHome Mortgage Announcement 20220405-CL, the addition of a new 30-year fixed-rate, interest-only product offering within the Portfolio Express and Portfolio Expanded programs.

Pertaining to the current COVID overlays, Flagstar Bank updated requirements, effective immediately, on Conventional and Non-Agency Construction and Renovation lending.

The specific products and topics effected are listed in Flagstar memo 22038.

AmeriHome revised multiple policies, effective April 29th which include the removal of existing property flipping overlay for Fannie Mae and Freddie Mac loan transactions and clarifications on specific types of unique and/or non-traditional structures that are ineligible for sale to AmeriHome. Also described in AmeriHome Mortgage Announcement 20220405-CL, the addition of a new 30-year fixed-rate, interest-only product offering within the Portfolio Express and Portfolio Expanded programs.

Pertaining to the current COVID overlays, Flagstar Bank updated requirements, effective immediately, on Conventional and Non-Agency Construction and Renovation lending.

The specific products and topics effected are listed in Flagstar memo 22038.

What’s new at loanDepot Wholesale? The addition of a New Payroll Vendor (Finicity), Special Purpose Cash-Out Deletion in loanDepot’s Conventional Lending Guide, and information on Minimum Loan Amounts for jumbo Advantage EXPRESS ARMs.

Wells Fargo Funding Newsflash C22-015 includes Seller Guide updates on the process for information security incident reporting, taxpayer consent, conventional Conforming Loans policy updates and clarification regarding Desktop appraisals.

Capital markets: the Fed

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When automation’s overdue, but you’re finally meeting with Optimal Blue, that’s amore. The MBA Secondary & Capital Markets Conference & Expo is right around the corner, but there’s still time to schedule a meeting with Optimal Blue at Carmine’s Italian Restaurant on May 16 or 17. Simply request a meeting, and one of Optimal Blue’s secondary marketing experts will be in touch to coordinate scheduling. Don’t miss this opportunity to enjoy renowned Italian cuisine in New York City’s Times Square while discussing ways to automate your secondary marketing functions and boost competitive strategies.

We saw a selloff to open the week in nothing more than preparation for today’s and tomorrow’s Federal Open Market Committee (FOMC) meeting, when the Fed expected to deliver its biggest hike in two decades (50 basis points). Balance sheet reduction pace and timing is also a big question mark forward.

In terms of second-tier economic stats, the April ISM Manufacturing Index decreased from March to its lowest level since July 2020, but still posted the 23rd consecutive month of expansion for the manufacturing sector. Manufacturing activity is being held back by COVID issues abroad, ongoing supply chain problems, inflation pressures, and labor constraints that have made it challenging to satisfy demand, which has ironically detracted from demand. Total construction spending increased 0.1 percent month-over-month in March, missing expectations as the figure declined from February. On a year-over-year basis, total construction spending was up 11.7 percent, but there isn’t much strength in spending activity in either the private or public sectors.

Today’s economic calendar doesn’t have anything major (Redbook same store sales, March factory orders, and JOLTS job openings). The first day of the two-day FOMC meeting will also get under way in Washington, D.C. The Desk will conduct two operations for up to $2.08 billion targeting 30-year 3.5 percent through 4.5 percent. We begin the day with Agency MBS prices better by about .125 and the 10-year yielding 2.96 after closing yesterday at 3.00 percent.

An elderly couple went to breakfast at a restaurant where the Senior Special was two eggs, bacon, hash browns and toast for $1.99.

“Sounds good,” the woman said. “But I don’t want the eggs.”

“Then I’ll have to charge you two dollars and forty-nine cents because you’re ordering a la carte,” the waitress warned her.

“You mean I’d have to pay more for NOT taking the eggs?” she asked incredulously.

“Yep,” stated the waitress.

“I’ll take the special,” she replied.

“How do you want your eggs?”

“Raw and in the shell,” she exclaimed.

She took the two eggs home.

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, “A Primer on the Federal Reserve and Mortgage Rates.” 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 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.)