Oct. 30: HUD & operating losses, forbearance agreements; vendor news; Fannie deals; Saturday Spotlight: First Federal Bank

It’s already the kind of day where I wish tequila came out of my shower. To be blunt, are people becoming dumber? We’re reminded of how MLOs earn their money when some of their clients don’t even understand fractions. For instance, in the 1980s, McDonald’s Quarter Pounder was ascending in popularity, and rival A&W released a 1/3 Pound Burger to beat McDonald’s 1/4 Pounder. The plan seemed unbeatable: more meat, more burger, bigger size, can’t lose. But the burger flopped, in part, because many people were unable to discern, at first pass, that 1/3 of a pound was more than 1/4 of a pound, and as a result were unable to grasp the value. Focus groups after the failed launch were clear on that fact: 4 is, after all, bigger than 3… but not in the denominator. This is one reason that A&W announced the relaunch the 1/3 pound burger, instead billing it as the 3/9 lb. Burger, at its 525 locations while supplies last.

Saturday Spotlight: First Federal Bank, lending solutions in 50 states


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).

First Federal Bank helps creates bright futures by providing home loan and banking services since 1962. We have remained stable and committed to serving our customers and employees. During 2020, the Residential Lending Team assisted with financing or refinancing more than 21,000 homes. We provide our lenders with a competitive edge. As a nationally licensed mutual bank lending in 50 states, our team can finance customers’ futures by offering a large variety of products with first-class solutions including: FNMA/Freddie Mac, FHA/VA/USDA, Jumbo, HELOC 2nd Mortgages, Construction-to-Permanent (FHLMC, FHA, VA), Bank Portfolio, Bank Portfolio Construction-to-Permanent, Lot Loans, and Escrow Hold Back.

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?

We have an in-house Residential Lending training team, Title Company, an underwriting group, plus an in-house marketing team. We offer our Loan Officers access to state-of-the-art digital application tools.

Tell us how your company maintains its culture in the office, or in a work-from-home environment if applicable.

For the past 18 months, we enabled our employees to work remotely with the tools provided to help them thrive throughout recent challenges. Our First Federal Culture Ambassadors ensure all employees regardless of their location feel valued and part of the team. During morning “Showtime” meetings, they highlight the various facets of our company culture, and core values.

Philanthropy is top of mind within First Federal Bank. More than thirty nonprofits receive donations through our matching employee contribution program.

In addition to not having to lay anyone off during the pandemic, in 2020 we were voted as one of the Jacksonville Business Journal’s ‘Best Places to Work.’ Recently, Newsweek magazine named First Federal Bank ‘Best Small Bank in Florida’ for the second year in a row.

Fun fact about First Federal Bank.

First Federal Bank offers a generous 12.5% 401k match to its employees.

As we continue to evolve, we are seeking motivated talent to join our team. Available positions include Director of TPO Sales, Residential Lending Support Analyst, Senior Underwriter, and Director of TPO Loan Fulfillment.

Equal Housing Lender

(For more information on having your firm, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)

Why I can’t pick stocks & why I don’t know what bankruptcy means


Hertz declared bankruptcy in May of 2020. This summer it emerged from bankruptcy. When I was a kid playing Monopoly, going bankrupt meant you were out of the game. Monday of this week, Hertz announced it would order 100,000 vehicles from Tesla at a cost of about $42,000 per car. My math shows that this is a $4.2 billion purchase. Let’s say the profit on this was an incredible 50 percent, or $2.1 billion. But something very interesting happened: Tesla stock rose 12 percent, which added $118 billion to the company’s valuation, and Hertz stock rose $1.17 billion in value, which is phenomenal for a company previously valued at $8 billion that announced its intention to spend $4.2 billion. Nevertheless, a $4.2 billion transaction created approximately $119 billion in value, or about 28 times the value of the sale. “Multiplier?”

Vendor morsels


StoicLane, a long-term growth platform making controlling and strategic minority investments in the Finance, Insurance & Real Estate (“FIRE”) verticals, today announced that it has closed on a majority stake in appraisal management company Lender’s Valuation Services (“LVS”). StoicLane and LVS intend to work together to drive innovation and growth in the appraisal industry. Berkery Noyes represented Lender’s Valuation Services in its acquisition by StoicLane. This acquisition is the first of StoicLane’s mortgage services platform, which seeks to serve mortgage originators with tech-enabled, customer-centric mortgage closing solutions.

MISMO® is seeking participants for a new initiative focused on automating homeowner insurance (HOI) requests. Standardizing HOI data exchange requests and responses will decrease transaction processing time, increase data accuracy, encourage uniformity across the industry and increase the security around non-public information. A new development workgroup (DWG) is forming to lead the initiative and standardize the data transmission procedure used when processing HOI requests. The HOI Workgroup will conduct regular meetings via conference call and will meet in person at MISMO Summits. This DWG is expected to exist for approximately one year or until it completes its mandate. Interested participants should visit MISMO’s Link for more information.

Maxwell, a startup that operates an online platform catering to mortgage loan officers and smaller lenders, raised $28.5 million in equity funding from investors led by venture firm Fin VC and Wells Fargo Strategic Capital, valuing Maxwell at $450 million.

PennyMac Loan Services LLC integrated with ICE Mortgage TechnologyTM Encompass® Investor Connect making PennyMac the largest correspondent aggregator within a network of correspondent investors available on one platform. The partnership will enable a more streamlined loan delivery, at no additional cost to Encompass customers. PennyMac is further digitizing loan review and the purchase process by leveraging Encompass Investor Connect’s digital loan delivery. The process also enhances two-way communication to enable sellers to both receive and clear conditions from within their loan pipeline. Find the press release

linked here

LBA Ware, provider of incentive compensation management (ICM) and business intelligence (BI) software solutions has partnered with Experience.com, home of Experience Management Platform (XMP), to provide customers with a dynamic way to track customer satisfaction as a key performance indicator (KPI) in LBA Ware’s LimeGear™ BI platform. The customer satisfaction KPI allows lenders to measure the customer experience as rated by borrowers, co-borrowers, real estate agents and other parties to a loan across the home financing journey and incorporate it into the performance evaluations of branch locations and individuals across the lending organization.

a la mode’s upcoming product, QuickSource, is a fast and easy way to import all the best data from multiple sources into a single side-by-side view. You can quickly compare and address any data discrepancies and avoid those annoying revision requests. Sign up to receive a launch notification of launch from a la mode and get a discount.

A unique technology partnership between Mortgage Coach and LoanSense  equips mortgage lenders to help homebuyers with high monthly federal student loan payments lower DTI and achieve better home financing outcomes. Mortgage Coach gives lenders access to a purchasing power calculator that determines how much borrowers’ monthly student loan payments can be reduced and how much their home purchasing power can be increased through enrollment in an IDR plan. Once borrower eligibility is determined, loan originators can electronically refer borrowers who would benefit from enrolling in a federal income driven repayment (IDR) plan to LoanSense.  Borrowers also get a Mortgage Coach Rent vs. Own Total Cost Analysis (TCA), which compares the costs and equity gains of renting, owning, and owning a more valuable home with increased purchase power over time.

Sales Boomerang, automated borrower intelligence and retention system, released its Q3 2021 Mortgage Market Opportunities Report. Despite market-wide declines in loan volume, Sales Boomerang’s report identified several fertile opportunities for mortgage lenders, including a high frequency of borrowers who are well positioned to refinance for a better rate, remove FHA mortgage insurance or tap into home equity.

Redwood Trust announced its investment in pioneering rental ownership platform, Flock Homes, a real estate technology startup. Through an integrated platform, rental owners are converted into passive investors seamlessly and tax-efficiently. The investment was completed through Redwood’s RWT Horizons venture arm, which targets early and mid-stage companies transforming sectors like financial and real-estate technology.

Compliance nibbles


Mortgage Quality Management and Research (MQMR) recently published a Compliance Hot Topic letter on if a Forbearance Agreement needs to be sent to the customer. While not all investors require forbearance agreements to be sent to a customer, certain investors such as Fannie Mae and Freddie Mac have issued statements, requiring the forbearance agreement to be sent to the customer. See Freddie Mac Bulletin 2020-10 and Freddie Mac Guide Section 9203.13(c) and Guide Exhibit 93; Fannie Mae LL-2020-02. The announcement distributed by the CFPB on April 5, 2021, specifically states borrowers should be informed of their options and receive key information about those options.

It’s also worth mentioning the announcement from the CFPB on April 1, 2021, warns Mortgage Servicers “Unprepared is Unacceptable.” This bulletin includes points such as ensuring borrowers have all necessary information for assistance and they will be looking at how servicers manage communications with borrowers. A best practice of always sending the forbearance agreement to the borrower can’t hurt, even in instances when it may not be required. Due to many complaints from borrowers, servicers can take a proactive approach by sending information to notify and educate the borrower of their options, provide what steps must be taken next by the borrower, and any details regarding forbearance and/or modifications agreed upon.

Mortgage Quality Management and Research (MQMR) also recently published a Compliance Hot Topic letter on how HUD recently updated the self-reporting requirements for a Material Event pertaining to operating losses. HUD updated its Handbook with regard to an approved HUD Mortgagee’s reporting requirements for operating losses. The update is effective September 20, 2021. A Notice of Material Event must be submitted to FHA within 30 business days of the end of each fiscal quarter in which a Mortgagee experiences an operating loss of 20 percent or more of its net worth.

Following the initial notification, the Mortgagee must submit financial statements every quarter until it demonstrates an operating profit for two consecutive quarters or submits its financial reports as part of its recertification, whichever period is longer (emphasis added to updated language). Additionally, if at any time a Mortgagee’s adjusted net worth or liquidity falls below the required minimum, the Mortgagee must submit a Notice of Material Event to FHA within 30 business days of the deficiency. The Mortgagee must also submit a Corrective Action Plan that outlines the steps to mitigate the deficiency and includes relevant information, such as contributions and efforts to obtain additional capital.

Agency & secondary market deals


Every originator should know that the secondary markets, which include putting loans into a portfolio, determine the rates their borrowers see. So obviously Fannie & Freddie’s activities in the secondary markets help determine the rates borrowers see in the primary market. What are some typical deals involving Fannie?

Fannie Mae announced its intention to enter into new credit risk transfer (CRT) transactions in the fourth quarter of 2021. The company expects to transfer mortgage credit risk via its Connecticut Avenue Securities and Credit Insurance Risk Transfer programs. For additional details about potential CRT issuance plans, visit Credit Risk Transfer Update Frequently Asked Questions.

This week Fannie Mae announced the winning bidder for its eighteenth Community Impact Pool of non-performing loans. The transaction is expected to close on December 10, 2021, and includes approximately 140 loans totaling $44.6 million in unpaid principal balance (UPB). The loans are mostly in the New York area, and the winning bidder was Residential Credit Opportunities VI, LLC (AMIP). The pool was marketed with BofA Securities, Inc. and First Financial Network, Inc. as advisors. The Community Impact Pool awarded in this most recent transaction includes 139 loans with an aggregate UPB of $44,642,352; average loan size of $321,168; weighted average note rate of 5.0 percent and weighted average broker’s price opinion (BPO) loan-to-value ratio of 52 percent. The cover bid, which was the second highest bid, for the Community Impact Pool was 96.2 percent of UPB (39.9 percent of BPO).

Fannie Mae priced a $796 million Green Multifamily DUS REMIC under its Fannie Mae Guaranteed Multifamily Structures (GeMS) program. FNA 2021-M3G marks the tenth Fannie Mae GeMS issuance of 2021. M3G represented a diverse pool of green multifamily MBS collateral for the market, providing investors with solid credit performance and quantifiable environmental impact across 14 different states. All classes of FNA 2021-M3G are guaranteed by Fannie Mae with respect to the full and timely payment of interest and principal. The structure details for the multi-tranche offered classes are as follows. Class A1 had an original face of $38.5 million, a weighted average life of 6.17 years, a 1.18 percent fixed coupon, a spread of S+10 bps, and a 100 offered price. Class A2 had an original face of $757.8 million, a weighted average life of 9.18 years, a 1.25 percent weighted average coupon, a spread of S+21 bps, and a 97.85 offered price.

Fannie Mae began marketing its twenty-second sale of reperforming loans as part of the company’s ongoing effort to reduce the size of its retained mortgage portfolio. Reperforming loans are loans that have been or are currently delinquent but have reperformed for a period of time. The sale consists of approximately 19,100 loans, having an unpaid principal balance of approximately $2.2 billion, and is available for purchase by qualified bidders. The terms of Fannie Mae’s reperforming loan sale require the buyer to offer loss mitigation options to any borrower who may re-default within five years following the closing of the reperforming loan sale. Bids are due on September 9. Interested bidders can register here. Fannie Mae will also post information about specific pools available for purchase on that page.


Fannie Mae priced a $736 million Multifamily DUS REMIC (FNA 2021-M19) under its Fannie Mae Guaranteed Multifamily Structures (GeMS) program, marking the eleventh Fannie Mae GeMS issuance of 2021. The deal features 10-year, call-protected collateral with a weighted average 2.08 debt service coverage ratio (DSCR) across 52 Fannie Mae DUS MBS. The deal has a weighted average LTV of 60.4 percent and primary geographic distribution in CA (15.4 percent), FL (14.8 percent), and TN (10.8 percent). All classes of FNA 2021-M19 are guaranteed by Fannie Mae with respect to the full and timely payment of interest and principal. For additional information, including the structure details for the multi-tranche offering, please refer to the Fannie Mae GeMS REMIC Term Sheet (FNA 2021-M19) available on the Fannie Mae GeMS Archive page.

When Beethoven passed away, he was buried in a churchyard. A couple days later, the town drunk was walking through the cemetery and heard some strange noise coming from the area where Beethoven was buried. Terrified, the drunk ran and got the priest to come and listen to it.

The priest bent close to the grave and heard some faint, unrecognizable music coming from the grave. Frightened, the priest ran and got the town magistrate.

When the magistrate arrived, he bent his ear to the grave, listened for a moment, and said, “Ah, yes, that’s Beethoven’s Ninth Symphony, being played backwards.”

He listened a while longer, and said, “There’s the Eighth Symphony, and it’s backwards, too. Most puzzling.” So the magistrate kept listening; “There’s the Seventh… the Sixth… the Fifth…”

Suddenly the realization of what was happening dawned on the magistrate. He stood up and announced to the crowd that had gathered in the cemetery, “My fellow citizens, there’s nothing to worry about. It’s just Beethoven decomposing.”

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, “Grow Your Business But Don’t Step Over a Dollar to Save a Dime.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).


(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 2021 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.)


Rob Chrisman