Sep. 19 aarrgh: DSCR, DPA, lien release, CRM, insurance, qualification tools; training & events this week; role of AI; rates slide higher

“Why’d the pirate go to the Apple store? He needed a new ipatch.” Technology marches on, and people who’ve been around for many years remember NASA’s space efforts with the Mercury, Gemini, and Apollo programs. The Apollo Guidance Computer could perform around 40,000 instructions per second versus the 10 billion per second of a typical laptop now. And the software itself… Powered by algorithms and AI, a growing number of consumer industries are adjusting prices in response to supply and demand. There is more below on AI & mortgages below, but for example, it is even touching doorstep package delivery. “The transformative power of Artificial Intelligence (AI) and Machine Learning (ML) is poised to address pain points in the delivery process. Arrive stands at the forefront of this AI-driven revolution in the last mile logistics industry… Our smart and secure Mailbox-as-a-Service (MaaS) platform has the power to leverage AI and ML to reshape the entire industry.” Change is inevitable. (Today’s podcast can be found here and this week’s is sponsored by the Trade-In Mortgage powered by Calque. Homeowners can buy before they sell, make non-contingent offers, and tap their home equity to fund the down payment on their next home. Lenders can help their clients negotiate a lower purchase price, reduce their interest payments, and eliminate PMI. Hear an interview with Calque’s Jeremy Foster on new and innovative mortgage products that can help both buyers and sellers.)

Lender and broker software and services

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When your customers are hit by a natural disaster, they can find themselves face-to-face with financial challenges they never would have expected. And since the number and intensity of natural disasters is predicted to grow, servicers need to rethink how they help homeowners before the next crisis hits. In a new blog post, the servicing technology experts at Black Knight, now part of ICE, explore the unmatched flexibility of self-service technology (SST), which can increase borrower engagement during times of high stress, paving the way for homeowners and servicers to work together during financial hardship. Plus, the team discusses the encouraging findings about the efficacy of SST during the COVID-19 pandemic. Read the blog or see the full case study.

“Turn fixed costs into variable costs on a dime. When the market zigs, lenders need the flexibility to zag. Richey May Advisory brings the mortgage industry expertise and agility you need to convert fixed costs into variable costs. Our difference maker is your ability to outsource services to highly trained experts in a model that fits your needs. Whether that means loan-level accounting, advisory, business intelligence, compliance support, cyber services, internal audits, or underwriting automation, we have the tools, knowledge, and experience to deliver value and improve your financial performance unlike any competitor, anywhere. You’ll feel it almost immediately in your day-to-day operations. Even better, you’ll notice the difference in your bottom line. Reach out or visit our website to learn more about how we can help your operation.”

Back in the day, we used to give borrowers paper slide-calculators so that they could figure out mortgage payments on their own. The modern version of that is QuickQual by LenderLogix. Right from within Encompass® by ICE Mortgage Technology™, loan officers send borrowers a customized calculator so they can run accurate payment and closing cost scenarios and reissue pre-approval letters within boundaries set by the loan officer. It’s a conversion machine. Check it out here and they’ll text a demo to your phone.

Matic, a home insurance platform built for the mortgage industry, recently announced a new partnership with Dart Bank to integrate their marketplace of 50 A-Rated carriers into Dart Bank’s customer offerings. Dart Bank joins over 100 mortgage lenders, servicers and banks that partner with Matic to integrate the insurance shopping experience into the homeownership journey. Now more than ever, mortgage leaders are turning to Matic to help them generate revenue and reduce costs in a tough housing market. If you’re a mortgage leader, don’t miss out. Book a demo with Matic to learn how to add an ancillary revenue stream that removes friction from the insurance process and keeps customers within your existing systems.

In case you missed it: eNotes have been taking a backseat on the priority list for many lenders as the mortgage industry slows. However, the ability to adapt and offer convenience to busy borrowers can open new avenues for lenders struggling to close in a highly competitive marketplace. Kevin Wilzbach, Director of Product Management at Wolters Kluwer, recently shared insights into the impact of the slowing market on eNote adoption. He examined the growing importance of home equity lines of business, and the importance of adaptive technology that can support all styles of closing while remaining compliant with shifting industry regulations. Gain more insight from the full article today.

When thinking about effective approaches for succeeding in this market, two ideas come to mind. First, understand prospective homebuyers within the context of their economic uncertainty and get back to the basics of why homeownership still makes sense. Highlight building equity, and consider discussing the framework of creating generational wealth, especially for first-time buyers! Also, underscore the emotional aspects of ownership, like pride, stability, and better family environments. Next, articulate secure tactics to make purchasing more affordable: things like down payment strategies, interest buydowns, and ARMs offering lower payments as the market steadies. (Keep in mind buyer bias against ARMs; counter with education on their contemporary framework). Usherpa, the #1 ranked Mortgage CRM in both customer satisfaction and loyalty, is here to help you through this and every challenge. Download this free, informative PDF with facts about ARMs for homebuyers.

To deliver the best borrower experience and remain compliant, servicers and investors must release liens in a narrow window after payoff. NTC, the leader in lien and assignment release services for 35 years, now offers lenders two options: their traditional full-service offering, and a self-serve, “share-the-work” option: PerfectDocs. The first, complete web-based lien solution, PerfectDocs enables the creation and tracking of all documents needed to complete a lien release and mortgage assignment including reviewing, executing, and notarizing documents and sending them to counties for e-recording for non-MERS and MERS loans. It also features intuitive queues for exceptions, downstream mailings to borrowers or custodians, recording confirmations and fee reconciliations. The platform allows users to share the work with NTC’s team during volume fluctuations or request assistance on complex “cures.” Interested in 100% client control with on-demand integration to full service to cure exceptions? Request a PerfectDocs demo to learn more and see how we can share the work!

Broker & correspondent products

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“Mortgage Brokers Earn Up to 125bps Bonus on DSCR Loans! LendingOne is offering a Volume Incentive Bonus available until December 31st, 2023. Join the Preferred Broker Pricing Program and have access to Bronze, Silver, and Gold tiers with volume incentive bonuses based on funded loan production or number of loans funded. Earn 50bps, 100bps, or 125bps at each production level on DSCR Loans. LendingOne’s Third-Party Originations Channel is committed to providing mortgage brokers opportunities to increase their revenue and grow their bottom line in the DSCR market. Call us today to learn more: 866-794-0937 or visit our website.”

Not many lenders know this, but you can buy down points with down payment assistance (DPA). DPA has evolved over the years, and there are 2,373 to choose from today according to Down Payment Resource’s Q2 HPI report. What’s more, consumer interest in DPA is savage, and lenders who offer it have a competitive edge. Just ask anyone who originated one of the 2,300 CalHFA programs that disappeared in just 11 days. DPA is one of the best tools lenders have in today’s market and for the foreseeable future. Want to know how many homebuyer assistance programs are offered in your markets or to learn more about how Down Payment Resource makes it easy to support DPA? Schedule a demo with the Down Payment Resource team today.

The role of AI

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Powered by algorithms and AI, a growing number of consumer industries are adjusting prices in response to supply and demand. From out west, The Knowledge Coop’s Ken Perry sent, “The entrance of AI into the mortgage world is fascinating. I was speaking on a panel with Eric Post at the Pacific Northwest Mortgage Conference last week and we were surprised to find that it was the first time some people had thought about the potential AI has to enable us to save time by having AI manage some of our tasks. Here is just a small way you can see the power of AI… Go to Google Bard and ask it what bank charges the highest rates for Hispanic borrowers. Then ask it which bank charges the lowest. This data used to be so difficult to extract, but it has already been ingested into Bard and we can get it for free. Just think about how many other things we can do. Now think about how much data the regulators will be able to access in less than 5 seconds. The world is definitely changing…”

As leaders in industry trends and innovation, MBA and MISMO are hosting a new forum on Artificial Intelligence (AI). Kicking off with a can’t-miss welcome reception on the evening of Thursday, September 21, at Amazon’s new headquarters (HQ2), this event will provide a unique opportunity to hear from a mix of leading AI companies, lenders, mortgage vendors, legislators, and regulators.

Events, webinars, and podcasts this week

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Did you know September is National Mortgage Professional Month? In recognition of our hardworking industry, the New York Stock Exchange recently welcomed ICE Mortgage Technology featuring Lennar Mortgage to ring the Closing Bell. The live event touched on ICE’s recent acquisition of Black Knight, showcased how ICE solutions help more people get into homes and highlighted President of Lennar Mortgage, Laura Escobar, who discussed Lennar’s mission to help borrowers achieve the simplest path to homeownership, their excitement for ICE Experience 2024 and more. Click here to view the live show on-demand.

A good place to start is here, and click on “events.”

Today, Tuesday the 19^th, is the next Mortgages with Millennials with Kristin Messerli and Robbie Chrisman, and sponsored by National MI. Tune in every Tuesday at 10AM PT to the weekly video show designed to empower mortgage professionals to tap into the millennial market. This show demystifies the psychology of first-time homebuyers and offers strategies to win more market share with a key segment of the market. Sign up for a weekly reminder with the link to join and a sneak peek into the next episode. Today features James Wong, CEO of Maxa Designs, discussing mortgage and real estate digital brands.

Looking for more in-depth commentary on weekly mortgage news? Register here for “Mortgage Matters: The Weekly Roundup” presented by Lenders One. Every Wednesday at 2:00 PM EST/11:00 AM PT is a dive into a range of mortgage-related topics, including market trends, interest rate fluctuations, innovative mortgage products, and industry advancements. Listen to a unique mix of age perspective, expertise, and charisma to the screen, ensuring that the information is not only educational but also entertaining. Tomorrow hear from Mike Larssen, SVP of Business Development at Homestar.

Join MMLA Southeast Chapter for its first joint WIN/Southeast Chapter Event for some networking and celebrate that 2023, one of the most challenging years in our industry, is almost over. September 20^th at Granite City in Troy, 5:30 pm – 7:30 pm. Discussions will also include what’s new with the Southeast Chapter and give more info about our new WIN (Women’s Inspirational Network) Committee.

FHA free, in-person, Underwriting Training September 20, 9:00 AM – 4:30 PM (Central) in Metairie, L.A. Provides an overview of FHA underwriting procedures as outlined in FHA’s Single Family Housing Policy Handbook 4000.1 and addresses several industry-related frequently asked questions (FAQs).

This week brings the Southeast Credit Union Real Estate Network conference (SECUREN) in Savannah, Georgia. Yes, the Southeast Credit Union Real Estate Network Fall Conference begins on Wednesday, September 20^th – Friday, September 22^nd at The Hyatt Regency Hotel.

FHA free, in-person, Appraisal Training September 21, 9:00 AM – 4:30 PM (Central) in Metairie, L.A. will provide an overview of FHA appraisal protocol and updates to FHA appraisal policy as outlined in FHA’s Single Family Housing Policy Handbook 4000.1.

Dodd Frank Update, an October Research publication, has brought together Alston & Bird’s Nanci Weissgold and Garris Horn’s John Levonick to share their insights on the upcoming Compliant Marketing Tactics webinar. Regulators are increasing their oversight on the marketing tactics of those in the mortgage lending and title insurance industries. On Sept. 21^st, they will discuss the compliant use of consumer data, the use of targeted marketing, recent case law, fair lending and marketing, appropriate monitoring of your marketing efforts and more. Register today.

On Thursday, Sept. 21 at 3 p.m. ET/Noon PT, join a Complimentary Housing Update webinar with HaMMR℠ Digest authors Parker Ross (Arch’s Global Chief Economist) and Leonidas Mourelatos (Director of Real Estate Economics). Topics addressed include Did the recession get canceled? Are consumers tapped out? Is this the new normal for mortgage rates? Why is the housing market so tight if no one wants to buy? When will home prices come back down?

Join Chance A. Mann of Black, Mann & Graham, LLP, and Kristin Messerli, Co-Founder of FirstHome IQ, as they take a deep dive into homebuying strategies for millennial and Gen Z. In a market defined by digital transformation and information overload, generating and retaining business has never been more difficult. Register for TMBA’s next webinar, The New Era of Homebuying: Strategies to Reach Millennial and Gen Z Homebuyers on Thursday, September 21, 2023, 11:30 am – 12:30 pm (CST)

“Thursday, September 21 at 11:00 am PT / 2:00 pm ET for the next National Mortgage Professional Non-QM Townhall presented by ACC Mortgage, Deephaven, and NewFi Wholesale. This invaluable series is moderated by Andrew Berman and features insights from non-QM mavens like Tom Davis, Robert Senko, and John Wise. In this edition, we’ll cover the state of non-QM, the total market size right now and the biggest opportunities in non-QM. Register here.”

Friday the 22^nd is The Mortgage Collaborative’s Rundown covering current events in the mortgage market for 30-45 minutes starting at noon PT in “The Rundown”. Join co-host Mike Kull from MGIC in discussing current events!

Capital markets: rates driven by actual & expected inflation

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As investors looked ahead to tomorrow’s Federal Open Market Committee interest rate decision, we had some further yield curve flattening to open the week as risk off themes were present. Even though the FOMC is not expected to announce another rate hike, the Committee will release its updated economic projections, which could reinforce the thinking that the fed funds rate range will remain at a higher level for longer. “Soft landing” rhetoric is quickly being replaced by “sticky inflation” whispers. The question is now how long rates will stay elevated by the Fed to ensure it has won the inflation battle. Fed fund futures are pricing in three rate cuts by the end of next year, which is quite hopeful in the face of that “sticky” slog back to the Fed’s 2 percent inflation target.

Last week’s economic data was the last chance for Fed officials to get a reading on inflation prior to this week’s FOMC meeting. Consumer prices rose 0.6 percent in August and 3.7 percent over the prior twelve months. Core prices, which exclude energy and food components, were up 4.3 percent from one year ago. This marks an improvement from July’s annual reading of 4.7 percent. A spike in energy prices accounted for almost half of the monthly increase in inflation for both consumer and producer prices. Services inflation continues to run hotter than the Fed would prefer and increased by 0.4 percent in August. Consumer spending outpaced analysts’ forecasts at retail and food services establishments in August, rising 0.6 percent compared to expectations for 0.2 percent. The data has done little to change expectations that the FOMC will keep the fed funds rate steady following this week’s meeting as the markets are pricing in a 98 percent probability of no change.

Prior to the pandemic, year-ahead inflationary expectations were in the 2.3 percent to 3.0 percent range and long-run inflationary expectations were in the 2.2 percent to 2.6 percent range. In early September, inflation expectations fell to the lowest levels in more than two years as consumers grew more optimistic about the economic outlook. Consumers expect prices will climb at an annual rate of 3.1 percent over the next year, down from the 3.5 percent expected in August. That marked the lowest reading since early 2021. Inflationary expectations for the next year declined from 3.5 percent in August to 3.1 percent. Long-run inflationary expectations also fell to 2.7 percent, which is below the 2.9 percent to 3.1 percent range we have been stuck in.

The University of Michigan Consumer Sentiment Survey also reported that consumer sentiment fell in September. Since consumer sentiment surveys are highly influenced by gasoline prices, this isn’t much of a surprise. As a reminder, rallying oil prices in recent weeks have ramped up pressure on global central bankers looking to tame inflation.

Today’s calendar is under way with August housing starts and building permits: -11.3 percent and +6.9 percent, respectively, weak. Expectations were for 1.425 million starts and 1.445 million permits versus 1.452 million and 1.443 million previously. Redbook same store sales for the week ending September 15 are up next, before a $13 billion reopened 20-year bond auction. We begin the day with Agency MBS prices roughly unchanged from Monday, the 10-year yielding 4.33, the highest yields in 16 years, after closing yesterday at 4.32 percent, and the 2-year at 5.01.

For today’s “Talk like a Pirate Day.”

What is a pirate’s favorite letter of the alphabet?

Rookie answer – That would be the Rrrrrr.

Pirate answer – That would be the Sea!

How much does it cost for a pirate to get his ears pierced?

A buccaneer.

Why couldn’t the pirate crew play cards?

Because the captain was standing on the deck!

A pirate walks into a bar with a big ship’s wheel down his pants. The bartender says, “Excuse me, sir, but do you know you have a ship’s wheel down the front of your pants?” The pirate replies, “Aaargh, it’s driving me nuts!!”

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. STRATMOR’s current blog is titled, “Knowing CRA Developments is Critical.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

qoɹ

(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 2023 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.)