Oct. 24: LO comp & MSAs; LIBOR to SOFR investor changes; vendor news; Saturday Spotlight: Orion Lending

Busker: a person who performs music or other entertainment in public places for monetary donations. There was the Scottish busker who lost his guitar, only to have Jack White pay for a replacement. U2 busking in disguise with Jimmy Fallon. They take cash & coins. This year’s World Series does not accept either! The Texas Rangers host team at Globe Life Field have chosen Reverse ATM to provide a cash-free experience for fans during the 2020 World Series and NLCS. To accommodate cash paying fans during both events, Reverse ATM installed several of their Cash-2-Card self-service kiosks within the stadium which operate like a “reverse ATM,” receiving cash and in exchange dispensing a card that can be used at concessions and retail locations throughout the venue to shorten line wait times and reduce the risk of transmission of germs through paper currency. Times are a changin’.

Saturday Company Spotlight

This week we highlight Orion Lending, “Exceeding the expectations of our broker partners while meeting the needs of their clients and referral sources.”

In 3-5 sentences, describe your company (when was it founded and why, what it does, where, recent growth, and plans for near-term future growth). Founded six years ago, Orion Lending was a shared idea between Jeremy Stewart and Curtis Edwards, our founders, on building a wholesale lending company that focuses on unparalleled quality in customer service and innovative technology that makes doing business easy and efficient. “Orion” symbolizes the entrepreneurial qualities of our brand: innovation, determination, and perspective. With our focus on satisfying our brokers, our mission and core pledge have become part of the D.N.A. of all team members. Established in Orange, California, our growth in the Eastern market has recently seen an expansion to an additional fulfillment center in Charlotte, North Carolina.


Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why. Orion team members lead with heart, and our passionate associates find ways to give back throughout the year. We encourage our team members to participate in the Susan G. Komen Virtual Walks in their local areas (next year we plan to build an Orion Team!) and have contributed to local children’s shelters and camps to support children battling cancer with donations in our annual fundraisers. Our team shares their philanthropic spirit by sharing their efforts in volunteering at animal shelters, orphanages, and local food drives and Orion provides other opportunities for team members to give back with Orion support. The challenges of the pandemic this year has been a reminder that now, more than ever, we should share in our good fortune.


What does your company do to help elevate your employees’ growth? Describe any mentoring programs, outside classes or training, in-house training. How does the company help people develop? New team members at Orion immediately get swept into our culture with a Day 1 orientation, balancing critical information with culture identification and participation from Orion’s Executive Team. Comprehensive, role-specific onboarding kicks into gear with formal training, mentoring, on-the-job learning, and test cases.


This year, we held an annual Leadership conference where our managers collaborated on the key points of elevating the Orion experience from workflows to skill development. Formal leadership training has evolved both in-house and with a third-party coaching vendor, and certain leaders are in a year-long process of evaluating personal opportunities and practicing the development of these skills. 360 Feedback, personalized coaching, traction plans, and accountability partners have been game changers in how we interact with our associates, and Orion managers attend formal training developed and facilitated by our talented Learning and Engagement Team. Sessions culminate with a 90-day implementation and coaching plan to guide new behaviors.


Employees love the “Personality and Adaptive Communication” course exploring an individual’s personality through a self-assessment, and then expanding it to include what the results mean in daily interaction, and adapting our personal communication styles others to build meaningful relationships.


Tell us how your company maintains its culture in the office, or in a work-from-home environment if applicable. We value each and every team member at Orion Lending, hiring the best in the industry and providing them an opportunity to thrive and contribute to a growing, innovative mortgage company. We implemented digital soft phone technology to make working from home even easier and by providing all team members with webcams to connect with their managers and team face-to-face. Eye contact and the ability to read our reactions is pivotal to maintaining and building relevant relationships, so we created new opportunities for employee interactions, from virtual happy hours and events like our upcoming pumpkin carving contest.


Orion team members thrive in our monthly contests, and we send quarterly appreciation boxes full of fun and useful items, including a food delivery gift card, reusable water bottle, and a cozy throw.


What things you are most proud of that don’t have to do with sales? All Orion team members collaborated in the development and implementation of the core pledge that we all commit to fulfilling and holding each other accountable daily to delivering the excellence it demands. This pledge has evolved to a daily behavior and discussion, where our communications, coaching, interviewing, fulfillment, and technology all tie back to these core ideals. Our One Team mentality means we do not point the finger or pass responsibility. We collectively work together to provide solutions. The fact that our employees have taken charge of the pledge and culture is the greatest indication that they believe in what we are building at Orion Lending.


Fun fact about Orion? Orion Lending was founded on Halloween, which was a subconscious forethought to hiring a playful team who enjoys everything from ping pong tournaments to Halloween costuming. Our team members all receive personalized bobble heads on one of their landmark anniversaries, another quirky element of our dynamic culture.

LO Comp Reminder

I recently received an email asking about the various risk strategies around allowing different branches within a state or MSA to offer different rate sheets, as well as understanding how companies large and small can allow loan officers within the same office to sell different rates. “It seems to be more common than not yet goes against the logic most of us have with regards to compliance and fair lending practices.” I ran it up the flagpole with the compliance training firm Knowledge Coop’s Ken Perry. “The choice to let different LOs have different rate sheets tied to their different comp plans has not been determined to be a violation of the LO comp rule. The giant risk any company runs with this type of plan is a fair lending issue. If LOs in the MSA have a higher rate sheet and higher corresponding comp plans than other MLOs, it could have an adverse impact on people who do loans with those higher rate LOs. If that community receiving higher rates has a large population of people from a protected class, a lender can face a pretty big discrimination lawsuit. It just isn’t worth it in my opinion.”

Catch the LIBOR to SOFR Train

Not that MLOs or lenders are doing a lot of ARM volume these days. But there are still trillions of dollars of various securities tied to the London Interbank Offered Rate, many that are either composed of adjustable rate residential mortgages, or that are somehow related. The LIBOR index is likely to be discontinued or deemed non-representative at or near the end of 2021. The real estate finance industry continues to move forward with plans to sunset the use of LIBOR in new originations and transition existing LIBOR-indexed products to new indices. Many lenders with whom I have spoken have already moved to indices based on U.S. Treasury rates and are waiting on the “index dust to settle.”

In late September we learned that the deadline for adopting documentation required to shift from Libor to alternative reference rates has been postponed to January, but the date for terminating Libor remains at the end of 2021. The amended protocol for derivatives contracts, prepared by the International Swaps and Derivatives Association, is expected be ready within weeks but needs approval from the US Justice Department and other authorities.

Ginnie Mae released APM 20-12, which provides details on the phase-out of LIBOR-indexed loans from Ginnie Mae single-class securities. The APM specifies that LIBOR-indexed adjustable-rate mortgages will become ineligible for pooling effective for securities issued on or after January 1, 2021, and LIBOR-indexed reverse mortgages that are not securitized as of January 1, 2021 will be ineligible for Ginnie Mae pooling as well.

The Alternative Reference Rates Committee (ARRC) released the SOFR Starter Kit, a set of factsheets to inform the public about the transition away from LIBOR to the Secured Overnight Financing Rate (SOFR), the ARRC’s recommended alternative reference rate. The SOFR Starter Kit includes three factsheets: History and Background, Key Facts About SOFR, and SOFR Next Steps. These factsheets follow the conclusion of the ARRC’s SOFR Summer Series, a collection of educational panel discussions with representatives across various ARRC member institutions for industry professionals, media, and the general public. The Summer Series and the Starter Kit aim to ensure market readiness for the transition to SOFR as USD LIBOR’s end-2021 deadline rapidly approaches.

Not to be left out, the conservator FHFA worked with Fannie Mae and Freddie Mac to develop the parameters of a SOFR-based adjustable rate mortgage (ARM) and to develop more robust “fallback language” for ARMs that describe how a replacement rate would be selected in the event of the cessation of an ARM’s reference rate. Fannie Mae and Freddie Mac have already stopped purchasing seasoned LIBOR-based ARMs maturing after 2021, and effective January 1, 2020, FHFA has prohibited the FHLBanks from investing in products with maturities beyond December 31, 2021. Effective June 30, 2020, the FHLBanks will pretty much cease entering into all other LIBOR transactions with maturities that extend beyond December 31, 2021.

Fannie Mae and Freddie Mac have launched LIBOR transition websites that provide key resources for lenders and investors as the Enterprises transition away from LIBOR.

The Financial Stability Board released a “Global Transition Roadmap for LIBOR” listing the steps financial firms and their clients should take in order to ensure a smooth LIBOR transition from now through 2021. Firms should adhere to the International Swaps and Derivatives Association’s (ISDA) IBOR Fallback Protocol and IBOR Fallback Supplement, launched yesterday to take effect on January 25, 2021. By the end of 2020 lenders should be able to offer non-LIBOR products to customers. By mid-2021 firms should have identified which contracts can be amended and make contact with other parties to prepare for the use of alternative rates, and by the end of 2021 all new business should be conducted in, or capable of switching immediately to, alternative rates.

Lenders, investors, and Agencies are reacting. For example…

Ginnie Mae sent out “MPM 20-03: Adoption of ARRC LIBOR Fallback Recommendations for LIBOR Classes of Ginnie Mae Multiclass Securities Issued Before March 2020″. Ginnie Mae adopted recommendations of the Alternative Rates Reference Committee (ARRC) for fallback language for LIBOR floating rate securities issued in March 2020 or later (the “ARRC Recommendations”.

On August 3, Fannie Mae started accepting whole loan and MBS deliveries of single-family adjustable-rate mortgage (ARM) loans indexed to the SOFR.​

Last month Wells Fargo Funding let correspondents know that the last day to deliver London Interbank Offered Rate (LIBOR) adjustable-rate mortgages (ARMs) was October 1, and that the LIBOR ARM purchase deadline was October 15.

loanDepot’s Announcement covers the Freddie Mac – LIBOR to SOFR transition.

Effective with Best Effort Commitment Confirmations issued on and after Sept. 14, SOFR ARMs will be an eligible product for Caliber. Rate sheets will be updated to reflect the availability of 3/6M, 5/6M, 7/6M and 10/6M ARMs, conforming and high balance loan limits. Conventional Program Summaries will also be updated to reflect the change to SOFR.

Effective Thursday, October 1, 2020, Flagstar announced that all agency and jumbo LIBOR ARM programs will be transitioned to SOFR ARM programs.

Vendor news

The other morning my cat Myrtle, who normally seems to take an interest in news stories on the CFPB, was staring at the microwave this morning. Don’t ask me why (demons?), but it reminded me that as our houses fill with the “Internet of Things,” sensors will tell us whether we left the stove on or that we’re out of paper towels. But critics worry these devices won’t be secure and will spy on us. Meanwhile, technology companies continue to make news in the residential lending space.

Optimal Blue announced the launch of Market Analytics solutions designed to provide the industry extreme market visibility. Powered by Microsoft® PowerBI®, Market Analytics is preconfigured with several intuitive visualizations that help the user quickly identify important data points. Produced daily, Market Analytics provides a comprehensive array of transaction-specific data points that support several practical use cases, including: Benchmarking, Valuation and Performance Tools; Market Research, Proprietary Forecasting.

QuestSoft introduced its latest enhancement to its Fair Lending RELIEF tool is a new module that allows lenders to analyze non-HMDA consumer lending activity. This update compliments the QuestSoft Compliance RELIEF which provides lenders with Home Mortgage Disclosure Act (HMDA), Community Reinvestment Act (CRA), and NMLS Mortgage Call report modules that include geocoding mapping, analysis tools, and market data for a complete mortgage compliance solution.

Finastra, via its Canadian mortgage business Filogix, has acquired Doorr, a provider of cloud-based point-of-sale mortgage application software used by brokers to improve the mortgage experience. “The deal is part of Finastra’s strategic investment in its Filogix mortgage marketplace, connecting consumers to brokers, lenders and many supporting partners to enable a secure mortgage application process. It will enhance Filogix capabilities in support of delivering next generation solutions to the Canadian mortgage market and deliver benefits to consumers, brokers and lenders.” The jury is still out on Finastra’s United States MortgageBOT investment.

TransUnion now has an equity investment in FinLocker’s approximately $20M Series A-1 financing round, as well as entrance into a commercial partnership agreement. “The partnership will allow consumers to collect and permission their financial information needed to secure a mortgage, among other loans. This can allow consumers to receive a loan decision much faster and even make a home-buying offer equipped with a loan commitment from their lender ahead of time. Consumers are able to maintain control of their information throughout the process. They can tap educational resources to help prepare them for the mortgage application process as well as take advantage of a personalized financial health dashboard, something that can be particularly appealing to first-time homebuyers… Consumers will collect their information through FinLocker’s next-gen transactional personal financial management tool. FinLocker is available to consumers through their financial institution via desktop or mobile application, and stores and manages information within a personal data and document vault or ‘locker.’”


Black Knight launched a new digital Customer Service solution to help enhance servicers’ ability to deliver efficient and superior one-call resolutions. “The new solution, seamlessly integrated with Black Knight’s industry-leading MSP servicing system, gives customer service representatives highly personalized information about customers’ loans, homes and neighborhoods through an intuitive, easy-to-use graphical user interface.”

Phyllis Diller reminded us, “Housework can’t kill you, but why take a chance? And the best way to get rid of kitchen odors? Eat out.”

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, “Do Lenders Care About Forecasts or Predictions?”


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Rob Chrisman