Nov. 26: Thoughts inspiring LOs, from an LO; vendor news; Agency deals; conferences: nothing good happens after 9PM
It is important for originators and vendors to know trends in the industry, their clients, and with whom they’re competing. Despite the slowing pace of growth in the third quarter, the number of single-family build-to-rent starts over the past four quarters has increased 42% compared with the prior four quarters. While consumers desired more single-family residential space due to lifestyle changes during the pandemic, home sizes for single-family starts are declining as the housing market cools and affordability concerns worsen. The annual income required to afford the typical monthly payment has increased 45.6% on a year-over-year basis, largely due to rising mortgage rates. Not only that, but as Len T. points out, real excess disposable income is gone! But how about this for opportunity: there’s almost $30 trillion in home equity out there. Go help some owners tap into theirs.
Hunter Marckwardt, EVP with CrossCountry Mortgage, LLC, writes, “This market is a challenging one. Have we heard that before? New news? Tired of hearing about it? There are aspects of this market that are not fun but there is also massive opportunity for growth. For many of us, the last couple of years have been crazy. My personal production tripled. I was just that good. To triple my business in a 2-year period of time is nothing short of massive kudos to me for being that good at my job. Had nothing to do with market, conditions…just me being amazing.
“So clearly-I’m joking. This market feels like a hangover. The refinance boom was the equivalent of eating our young. We’re all left looking at each other with a “what now” look in our faces. It’s almost funny…. almost.
“I’ve been having bigger conversations with some of my great business partners. We’re strategizing on data/content/messaging. Taking facts about numbers, comparisons to year over year, quarter over quarter, rate comparisons vs. new loan amounts, impact of values dropping and what that looks like in a payment. Understanding the needs of our clients, the questions that need to be asked to identify their ‘why’ for buying now.
“I was having a conversation last week with one of my favorite partners about numbers she’d like to see, and in what format, then she jokingly said, ‘Hunter, help me, help you, help me.’ As soon as she said it, I thought, ‘GENIUS! Help me, help you, help me?” What does this mean? It means for me to think bigger, to ask better questions to provide more intel, to help her provide content to her clients, to help her be better. She was asking me to keep asking questions that drill down into details that help her uncover numbers and info to help her clients make decisions based on more data than more emotions.
“Our team is now having more fun working to be better. Dialing in our P & L, dialing in our new CRM, simplifying our messaging for our clients, easy to use calculators for our clients (2/1 buy down costs etc…). There will be two camps in six months from now, those that got better and those that wish they had. I fully recognize what got me the last two years of business is not going to get me the next two years of business (I know ‘got’ isn’t a real word but I like it, MOM).
“Right now requires being better. This market requires all of us to be better. My favorite quote of the year is from Dave Savage, saying, ‘Hunter, lenders have never been this out of shape,’ and I agree. Question is, what are we all doing to get back in shape? Me having bigger conversations w/ business partners who are pros and plan to be here two years out and beyond, holding me accountable to execute on being better, is helping me get back in shape. I don’t take it as a criticism, I take it as a wakeup call ‘help me, help you, help me’ is my business partner saying, ‘Be better for me.’” Thank you, Hunter.
Thoughts on life at a conference
Sure, conferences have quieted down. (The next big event I attend will be the MBA’s Independent Mortgage Banker conference in San Diego.)
A while back, the founder and CEO of Lodestar Jim Paolino, wrote me, saying, “I appreciate that you list upcoming events and conferences. I think it is very necessary, however, for the industry to believe, as I do, that these conferences need to be more inclusive.
“As a millennial who founded LodeStar in 2013 when I was 26 years old, industry conferences have been both an uphill battle and one of the most reliable ways for me to build my business. Early on, an older mortgage guy bemoaned to me, ‘I remember when we used to have strippers at these things.’ However, I have made countless friends and connections with folks I would not have if I did not attend, ultimately benefiting LodeStar.
“At this point, I have adopted a ‘nothing good happens after 9PM’ approach to conferences and bow out after I have gone to my meetings. As a vendor, there are only a few conferences I feel are worthwhile to be an exhibitor.
“I find myself nervous to send younger female employees alone to conferences due to the personal experiences they have come back with regarding inappropriate behavior. Headlines like conference fist fights between mortgage professionals below that definitely do not reflect well on the industry.”
“I constantly wonder what the role of conferences will be moving forward now that the pandemic has wound down (in the United States). I recognize this is all not an easy problem to solve but I do feel it is vital to the long-term health of this industry, one that I have grown up in and care deeply about. A more welcoming conference environment for all types of people is better for everyone: companies, vendors and especially the conference organizers. I do hope there is more thought put into how to create value in conferences for all.”
Vendor and third-party morsels
There are some great programming and software out there from vendors. Meanwhile, owners of vendors and third-party providers are taking a look at middle layers of management, or ridding themselves of unproductive sales people. That aside, let’s take a random look at who’s doing what.
docutech Compliance and Document News posted information on multiple topics. Recent posts include docutech’s configuration update to FNMA Homestyle Renovation Loan Rider’s. FNMA and FHLMC continued use of the FHA notes and mortgages. Maryland’s Department of Housing and Community Development update to the Important Notice Regarding Housing Counseling form.
Build-A-Broker™️: The Journey is a Mortgage News Network production, airing every 2nd and 4th Wednesday, in collaboration with Originator Connect Network, and sponsored by Rocket Pro TPO. In this episode, listen to Fernando Escaffi, MBA, The Mortgage Broker And Conversion Master, Co-Founder and COO at PrimeLine Capital, Inc. Fernando talks about his tech stack, the power of working with a partner that compliments your skills and abilities, and some scripting ideas from the top-performing scripts that Fernando’s originators use to hold their place as LendingTree’s highest converting lender.
MeridianLink recently completed its acquisition of OpenClose, a fintech company specializing in residential mortgage software solutions allowing MeridianLink customers to offer a competitive, best-in-class digital lending experience that makes the process less costly and more efficient for consumers. As part of this integration, MeridianLink will continue developing both OpenClose’s loan origination (LenderAssist) and point-of-sale (ConsumerAssist) software solutions. Additionally, MeridianLink and OpenClose customers will gain access to relevant software products provided by the other organization. View the MeridianLink press release for more information.
Redfin now displays localized, real-time information about the number of area down payment assistance (DPA) programs available on each eligible for-sale listing page in the United States. The new feature is powered by Down Payment Resource, the nation’s leading provider of down payment assistance and affordable lending program data. interested homebuyers can input basic information and immediately receive a tailored list of programs they may qualify for, the amount of assistance potentially available to them, and links to the program pages for more information.
For the first time, FormFree’s Residual Income Knowledge Index, or RIKI™ for short, is available to lenders nationwide. First piloted by Guild Mortgage, RIKI supplements traditional credit scoring (i.e., a FICO score) to give lenders a more complete understanding of a loan applicant’s creditworthiness. Using rule-based algorithms to analyze a consumer’s income and spending and determine how much residual income remains after accounting for mandatory monthly expenses such as rent, utilities and loan payments. Its cash-flow analysis is engineered without “black box” machine learning to ensure RIKI cannot develop unintended prejudices. By giving lenders an alternative way of assessing credit invisibles’ ability to pay, RIKI creates opportunities for lenders to extend lower interest rates and/or fees to consumers with little to no credit history.
Doma announced the launch of its new, digital-first home equity financing offering built for lenders, leveraging its Doma Intelligence platform to accelerate the title search for home equity loans and home equity lines of credit (HELOC). Doma’s proprietary machine intelligence-powered solutions expedite the title and escrow process to lenders offering home equity financing products to help borrowers receive their funds faster, with up to 80% of title decisions delivered in minutes and commitment packages delivered in hours, Doma’s home equity financing solutions offers a range of fully insured and uninsured services to meet lenders’ needs, which include the ALTA® Short Form Loan Policy, ALTA® Junior Loan Policy, Ownership and Encumbrance (O&E) Report, and Legal and Vesting (L&V) Report and includes a dedicated Service Team for Lenders.
CBC Mortgage Agency (CBCMA), a nationally chartered housing finance agency and a leading source of down payment assistance for first-time homebuyers, announced its CRA Note Exchange platform has completed the sale of mortgage notes on behalf of Habitat for Humanity Affiliates in Florida and South Carolina, supplying much needed liquidity to enable them to build more affordable homes. The CRA Note Exchange is a secondary market platform that makes it possible for non-profit homebuilders and other Community Housing Development Organizations (CHDOs) to generate capital by selling their affordable mortgages. CRA Note Exchange enables the sale of Community Reinvestment Act (CRA) eligible loans through an online portal to free up capital for additional affordable home construction.
LodeStar Software Solutions, national provider of closing fee-related compliance tools for mortgage lenders, announced an integration with Stewart (NYSE – STC), a global real estate services company, which includes one of the nation’s largest title underwriting operations. The new integration will allow all users of LodeStar’s closing fee calculator to access the title and settlement fees of any Stewart-related company, including those of independent title agencies issuing Stewart policies. In so doing, users can streamline and accelerate cost estimates and documents mandated by the TILA-RESPA Integrated Disclosure Rule (TRID) such as the Loan Estimate (LE) with guaranteed accuracy.
California issued Senate Bill No. 633, taking effect January 1, 2023, amending requirements for consumer credit contracts particularly those regarding the Notice to Cosigner. View
docutech Compliance News Alert for additional information.
Agency (Freddie & Fannie) deals
Although things have been somewhat quiet lately, the “deals” done by Freddie Mac, Fannie Mae, and others help determine the rates that borrowers see. These securitizations “test the waters” for demand for mortgages with an implied government backing, especially given how strong F&F’s market share is in residential lending. Let’s play catch up and take a random look at some Fannie deals to see what investors are interested in.
A week or two ago Fannie Mae priced a $392 million Multifamily Social DUS REMIC (FNA 2022-M2S) under its Fannie Mae Guaranteed Multifamily Structures program, marking the eighth Fannie Mae GeMS issuance of 2022. The structuring of an A3 tranche in the M2S offered a more call-protected option for those investors requiring a more predictable maturity window. The M2S issuance aligns with Fannie Mae’s Sustainable Bond Framework, which governs Fannie Mae’s commitment to adhering to international standards in its issuance of green, social, and sustainable bonds. In 2020, Fannie Mae received a second party opinion on its Sustainable Bond Framework from independent third-party Sustainalytics. The framework builds on Fannie Mae’s 32-year history of supporting multifamily affordable housing, 10-year history of multifamily green financing, and its expansion into single-family green MBS issuance in 2020. For additional information, please refer to the Fannie Mae GeMS REMIC Term Sheet available on the Fannie Mae GeMS Archive page.
Freddie Mac priced a new $1.2 billion offering of Structured Pass-Through K Certificates (K-133 Certificates), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 10-year terms. Class A-1 ($93.0 million) had a weighted average life of 6.87 years, a spread of S+7 bps, a 1.508 percent coupon, a yield of 1.498 percent, and a $99.9976 price. Class A-2 ($929.6 million) had a weighted average life of 9.84 years, a spread of S+18 bps, a 2.096 percent coupon, a yield of 1.755 percent, and a $102.9985 price. Class A-M was sold via the WI-K133 offering. For more information on Freddie Mac’s When-Issued K-Deal, WI-K133, click here.
Freddie Mac priced a new $185 million offering of Multifamily WI K-Deal Certificates, which are initially backed by cash assets that will be used to purchase the A-M class of a to-be-issued reference K-Deal. Once the reference K-Deal class is issued and purchased by the WI trust, the WI Certificates will be indirectly backed by a pool of fixed-rate multifamily mortgages with predominantly 10-year terms. The company issued approximately $185 million in WI Certificates (Series WI-K136). Class A-M ($185.0 million) had a weighted average life of 10.29 years, a spread of S+28 bps, a 1.858 percent coupon, a yield of 1.852 percent, and a $99.9954 price.
An elderly woman hurried to the pharmacy to get medication, got back to her car, and found that she had locked her keys inside. She found an old rusty coat hanger left on the ground. She looked at it and said, “I don’t know how to use this.” She bowed her head and asked God to send her some help.
Within 5 minutes a beat-up old motorcycle pulled up, driven by a bearded man who was wearing an old biker skull rag. He got off of his cycle and asked if he could help. She said, “Yes, my daughter is sick, and I’ve locked my keys in my car. I must get home. Please, can you use this hanger to unlock my car?”
He said, “Sure.” He walked over to the car, and in less than a minute, the car door was open.
She hugged the man and through tears, softly said, “Thank you, God, for sending me such a very nice man.”
The biker heard her little prayer and replied, “Lady, I am not a nice man. I just got out of prison yesterday; I was in prison for car theft.”
The woman hugged the man again, sobbing, “Oh, thank you, God! You even sent me a professional.”
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