Nov. 27: Password trivia; manufactured housing news; crypto marches on; vendor news; deals in the secondary markets

If someone produces a study on passwords, that must mean they can see yours, right? “Myrtleis1Apexpredator” probably isn’t high on the popularity list. But a new analysis from Nordpass of password usage found that the most commonly used password is “123456,” used 103,170,552 times. Other popular passwords include “123456789” and “password” and “qwerty.” Do you think your passwords can stump password cracking software such as CrackStation, Password Cracker, Brutus Aircrack, RainbowCrack, THC Hydra, Cain and Abel, Medusa, John The Ripper, ophCrack, Hashcat, Brutus, Wfuzz, DaveGrohl, or ElcomSoft? Dear reader, please create a sentence and throw in a number: Nordpass calculated that 73 percent of the most common 200 passwords of 2020 could be cracked in less than one second, a figure that in 2021 stands at 84.5 percent of the list. The data was drawn from a 4-terabyte database covering around 50 countries, which also helped them determine a bit of local flavor to the easily-guessed passwords, including “steelers” in the U.S., “liverpool” in the U.K., “marseille” in France and “guinness” in Ireland. The Cybersecurity and Infrastructure Security Agency (CISA) and the Federal Bureau of Investigation (FBI) issued a reminder and best practices for organizations to take appropriate precautions to reduce their risk of cyberattacks around the holiday season. Training your staff is critical!

Manufactured housing: a treatment for lack of affordable housing?


Earlier this month the Commentary noted nimble lenders are looking at other products to help support their mortgage manufacturing factories. “Rob, would you happen to have a suggestion as to where I can find information as to the number of HUD loans done on manufactured housing last year, or by month?” Yes, as margins and volumes come down, nimble lenders are looking at products that they haven’t offered previously. For Title I activity queries take a look at these monthly production reports from HUD. For example, Table 3 tracks Title I activity.

And then, “Manufactured houses hit their numerical peak in the late 1990s, with 390,000 shipments in January of 1999. Things bottomed out in December of 2010 with 40,000 shipments in December of 2010. Two months ago, in September, there were 104,000 manufactured homes shipped. These houses, not necessarily the single-wide or double-wide variety which are the butt of underwriting jokes, are constructed efficiently in a factory and then trucked out to the actual location, and are seen as a potential solution to the growing housing affordability crisis. Excluding the cost of land, the average site-built home cost $308,597 in 2020, compared to $87,000 for manufactured.”

The information prompted John M. to send, “Nice to see the inquiry on manufactured housing, and mentioning Title 1. The challenge with this market is that the HUD numbers do not represent the true activity in the space. Non land owned “chattel lending” makes up a large portion of the MH units and is still considered personal property lending in most states. There is only a small subset of lenders that offer these products and these lenders do a very good job for their borrowers. Having attended numerous MH tradeshows these homes are truly amazing!

“MH Housing is a great opportunity for lenders to consider and can expand the type of products that they offer but it is an education process to move into the non-land owned arena. There is discussion that HUD and the GSE’s will open these types of loans to their qualifications in the future. Here is a great resource on the MH industry.”

The briefest history of money


The way money works at any given moment feels like part of the natural order. Are you upset with bitcoin? Any alternative to the way money currently works seems absurd. Roosevelt prompted moving the U.S. away from the gold standard, and some thought it would lead to chaos and unbridled inflation. Metal coins began in Greece around 650 BC. Paper, and then banking with paper money in 1000 AD, came out of China: the ability to trade a piece of paper for coins was revolutionary. Charge cards came along in 1950, bitcoins in 2009. “Money market” mutual funds were new in the 1970s. Put money in, take money out with interest, but they’re not insured by the federal government. These days technology allows us to move money using computers in our pockets.

Up until the mid-1800s any bank could print its own paper money. At one-point, private banks were printing more than 8,000 different kinds of money, and paper money was a claim check for gold or silver. If a particular bank went bust, oh well. Remember, though, that banks create new money out of thin air every time they make a loan. This money, stored as balances in checking and savings accounts, is not so different from the paper money banks used to printed. In the 1930s the federal government started insuring most bank deposits.

The original dream of cryptocurrency was purely private money, a currency that needed neither governments nor banks. That is already changing. Are “stablecoins” an answer? Perhaps.

Citigroup has announced plans to add 100 new staffers with digital-assets expertise to its roster, along with the appointment of Puneet Singhvi as new head of digital assets. The announcement is seen as part of a move by several leading banks to develop presence and capacity in the cryptocurrency sector for institutional clients.

Many supermarkets, along with retailers like Walmart, are indirectly accommodating cryptocurrency through Coinstar. Coinstar machines offer consumers the ability to convert loose coins into cash or e-gift cards and now, bitcoins. Coinstar’s foray into crypto not only provides an easy avenue for people to access digital currencies, but it also opens up a new way to store and send money.

Third party vendor news


A new initiative to help renters build credit by encouraging operators of multifamily properties to report on-time rental payments to the three major credit-reporting bureaus was announced by Freddie Mac. Presently, less than 10% of renters see their on-time rental payment history reflected in their credit scores, inhibiting their ability to access credit or obtain competitive rates for a range of financial products. The initiative, which incentivizes rent reporting via technology created by Esusu Financial Inc., will seamlessly deliver on-time rental payment data from property management software platforms to the credit bureaus. It will automatically unenroll renters when missed payments occur, preventing harm to those who struggle financially.

Mortgage Fintech Maxwell raised $52.5MN to modernize the industry for small and midsize mortgage lenders. The company’s fintech solutions make mortgages faster, cheaper, and more efficient for local lenders and their borrowers. The company closed a $16mn Series B just 7 months ago and its revenue grew by 2,752% over the past three years, making it the 15th fastest-growing software company in the U.S. They currently work with 200 + lenders.
Local lenders are the only banking presence for  almost one in five U.S. counties, originating 50% of loans for the $4 trillion U.S. market, this company is helping those lenders take on big banks and online lenders, etc.

Valon raises $43.9 million for an investment in a residential mortgage servicing platform, “offering borrowers a better way to navigate homeownership. Valon has partnered with Starwood Capital Group and Freedom Mortgage, and secured Freddie Mac and Federal Housing Administration approval, to service government-backed loans. Valon, a tech-enabled residential mortgage servicer, today announced a $43.9 million investment, to continue fueling the company’s rapid growth through hiring, the development of a loan originations and property insurance business, and potential future strategic acquisitions. The investment includes participation from an affiliate of Starwood Capital Group, an affiliate of Freedom Mortgage, Human Capital Management, and independent investor and CEO of SoftBank Group International Marcelo Claure, alongside previous investors Andreessen Horowitz, New Residential Investment Corporation (NRZ), an affiliate of Fortress Investment Group LLC, and 166 2nd LLC. The deal follows a $50 million Series A round, closed in February 2021.

Polly™, provider of innovative SaaS solutions, announced an integration partnership with Blend, provider of cloud banking and mortgage software, pairing  Polly’s™ Polly’s Pricing Engine with the Blend POS, via API. Together, they enable Loan Officers to swiftly and efficiently capture necessary financial data to determine mortgage pricing and terms.

Pairing Blend’s platform with Polly’s Pricing Engine enables the entire information collection and loan qualification process to be completed digitally with tremendous speed and accuracy.

Sagent, a fintech company modernizing mortgage and consumer loan servicing for America’s top banks and lenders, today announced a new seven-year partnership with Servion Mortgage to power its entire consumer and enterprise experience across performing and non-performing loans. Servion, a Minnesota-based credit union servicing organization that partners with nearly 500 institutions nationwide, will use Sagent servicing platforms to offer a bank-on-your-phone experience to consumers so they can manage their entire homeownership lifecycle anytime, from any device.

In mortgage tech news, Mortgage Coach has partnered with home management platform HomeBinder to engage homeowners in actively managing home financing across the homeownership lifecycle. Powered by Mortgage Coach’s Total Cost Analysis (TCA) loan comparison presentations, the integration enables homeowners to compare refinance and home equity scenarios directly from the HomeBinder home management portal. Partnering mortgage lenders can provide homeowners with a complimentary digital home management platform, or HomeBinder, upon closing of the loan. Mortgage Coach powered lenders and individual members can learn more about activating the HomeBinder integration on the website.

LoanNEX, a newly approved pricing and eligibility platform, integrated with Ice Mortgage Technology’s Encompass® TPO Connect creating simplified access to more loan products for users. Featuring an intuitive and collaborative web interface, LoanNEX combines innovative pricing and eligibility technology with secondary marketing services to streamline the discovery and decisioning process between borrowers, lenders, and investors. Additionally, it screens more than 100 borrower attributes, providing third party originators with access to many non-QM loan options not available with traditional product and pricing engines (PPEs).

Don’t forget that over the summer 2021, Truework, the automated income verification platform, announced it is a fully integrated partner with Encompass® by ICE Mortgage Technology, the leading loan origination platform for mortgage lenders. Loan processing teams can now automatically verify any U.S. employee through Truework without leaving the Encompass® environment.

Deals in the secondary markets


Sure, Freddie and Fannie are the most active in taking the production from the primary markets and turning it into secondary marketing deals. But others are busy as well, and “private label securities” of residential mortgage-backed securities (RMBS) help add liquidity, which helps rates for borrowers.

Ginnie Mae reported that mortgage-backed securities (MBS) issuance volume for October 2021 was $69.36 billion. Ginnie Mae MBS issuance reflects the liquidity of the program and its value in meeting the mortgage needs of homebuyers and rental property owners. Approximately 253,996 homes and apartment units were financed by Ginnie Mae guaranteed MBS in October. A breakdown of October 2021 issuance of $69.36 billion includes $65.84 billion of Ginnie Mae II MBS and $3.52 billion of Ginnie Mae I MBS, which in turn includes approximately $3.4 billion of loans for multifamily housing. Ginnie Mae’s total outstanding principal balance as of September 30 was $2.135 trillion, up from $2.126 trillion in the prior month, and up slightly from $2.114 trillion in October 2020. For more information on monthly MBS issuance, UPB balance, REMIC monthly issuance and global market analysis visit Ginnie Mae Disclosure.

The Palisades Group, LLC, an alternative asset manager in the global residential credit markets, announced the closing of its residential construction and property rehabilitation loan securitization. This transaction represents a significant development in the capital markets as a majority of the collateral is comprised of residential construction loans with no cap on that cohort during the 2-year reinvestment period. The emergence of construction loans as securitization collateral comes at a critical time in the housing market as high consumer demand is being met with historically low levels of inventory and rapidly increasing home values. Palisades sources construction and property rehabilitation loans through a national network of lending partners. The transaction included two classes of securities, a $175 million Class A1 and $25 million Class A2 and featured a two-year revolving period during which time principal collections may be reinvested in additional construction and rehab loans. Nomura Securities International, Inc. acted as sole lead structuring agent for the transaction.

Redwood Trust announced it has priced a securitization that leverages the power of blockchain technology, a first in the non-Agency RMBS market. The securitization, SEMT 2021-6, had an initial notional balance of $449 million and is backed by 497 jumbo residential loans. Redwood worked with Liquid Mortgage, a patented digital asset and data platform in which Redwood previously acquired a minority interest through its RWT Horizons initiative, to act as distributed ledger agent for the transaction. In this role, Liquid Mortgage will leverage its blockchain-based technology to provide end users with more timely reporting of loan level payments of principal and interest on the underlying residential mortgages. Whereas the traditional reporting cycle for remittance data on a RMBS transaction is monthly, Liquid Mortgage is expected to report this payment data to users of its proprietary platform on a daily basis. Redwood claims this is the first step on a path to putting an entire RMBS transaction on the blockchain, which could increase transparency and reduce the points of friction in the life of a residential mortgage loan, including legal documents and contracts, diligence, reporting and data.

Kroll Bond Rating Agency (KBRA) assigned preliminary ratings to 21 classes of mortgage pass-through certificates from J.P. Morgan Mortgage Trust 2021-INV5, a prime RMBS transaction comprising 2,086 residential mortgages with an aggregate principal balance of approximately $339 million. The underlying collateral includes prime conforming (100 percent) loans and is secured entirely by investment properties. The pool is characterized by substantial borrower equity in each mortgaged property, as evidenced by the WA original CLTV of 65.9 percent. The weighted average original credit score is 766, which is well within the prime mortgage range. Here are ratings and relevant documents (with a login).

I wanted to get a jump on Christmas shopping yesterday. I went to the toy store and asked the assistant where the Arnold Schwarzenegger dolls are and he replied, “Aisle B, back.”

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Rob Chrisman