Sep. 30: Vendor news; secondary market deals; real estate snapshot; crypto takes down a bank; “bimonthly” primer

As we wrap up the 3rd quarter and New York City floods, decimating the rat population, 2,500 miles away congratulations to Barry Manilow, who either reads or doesn’t read this daily Commentary, who played his 637th show in Las Vegas, surpassing Elvis Presley’s 636 shows. (The longest-ever residency still belongs to Donny and Marie Osmond at 1,730 shows.) Keeping on with non-mortgage news, I only know what I read in the newspapers. Or on the internet. The federal government will conduct a nationwide alert test on Wednesday, October 4, at 2:20PM ET, 11:20 AM PT. The Federal Emergency Management Agency (FEMA) and the Federal Communications Commission (FCC) will send notifications to cell phones (as well as radios and TVs) to test the National Wireless Emergency Alert System and ensure the system (including the public’s familiarity with it) is ready for a real crisis. It is not a signal indicating that rates are going down, or Baby Boomers are releasing tons of inventory of houses up for sale.

Who’s in your wallet?


A crypto scam brought down an entire bank in Kansas in July, after the CEO of Heartland Tri-State Bank sought a $12 million loan from a client to get him out of what was described as a crypto investment, promising a 10-day return period with an offer of $1 million in interest. This was, in retrospect, an obvious scam and information about the transaction made its way to the state bank commissioner which immediately shut the bank down and declared it insolvent, and it expects that the insurance fund will have to take a loss of $54 million to protect depositors; it had $139 million in assets!

Don’t ask your borrower what a bimonthly mortgage is


Bimonthly may mean either “every two months” or “twice a month.” Big difference when you’re talking to a borrower and educating them: 12 versus 24 versus 26 payments per year.

The Oxford American Dictionary defines biannual as “appearing or happening twice a year,” then notes: “‘Biannual’ and ‘biannually’ do not mean ‘every two years.’” Yet it defines bimonthly as “happening every second month” and also as “happening twice a month,” but warns that “careful writers” use semimonthly instead of bimonthly to mean “twice a month.” Semi is defined as “a prefix meaning half.”

Webster’s New Dictionary of Synonyms states, “The chief source of confusion is biannual, which is used to mean either twice a year or every two years.”

Theodore Bernstein in The Careful Writer holds, “Bimonthly means every two months, and nothing else.” But biweekly can mean “every two weeks,” or “twice a week.” He concludes, “Without question, man’s communication with his fellow man would be improved if semi- were used to mean half and bi- were reserved to mean two.”

Not one reference tries to explain how bi can mean “two” and semi can mean “half,” yet biannual and semiannual have somehow become synonymous. For lenders and real estate agents, bimonthly usually means “twice a month,” and biweekly means “every two weeks,” but buyers don’t know that and rightly assume that bimonthly can mean “once every two months.”

What to do? Never entrust to your borrowers the interpretation of any statement containing the prefix bi or semi coupled with “weekly,” “monthly,” or “annually.” What is in your head will not be in theirs. We could stop using bi or semi with “weekly,” “monthly,” “annual,” “annually,” “ennially,” or “centennial,” at all, ever. We just write what we mean (what a concept!), like: every other week, on Friday, for a total of 26 payments each year. Or: twice a month, on the 1st and the 15th, for a total of 24 payments each year.

Real estate snapshot as we enter the autumn


Just north of San Francisco, Bob Ravasio with Coldwell Banker Realty observed, “The Marin County real estate market has been trending downwards for the past several months, and that downward trend seems to have accelerated recently. This is normally the time of year when the market starts to slow down, and it is definitely slowing down.

“But it is more than seasonal. Interest rates are really starting to hurt buyers, as mortgages are now over 7 percent. That should make you feel pretty good if you are currently paying 3% – unless you were hoping to sell and move on! To put that in real terms, a $750,000 mortgage payment before property taxes, at 3 percent is $3,162. But at 7.25 percent, that same payment is $5,091. That is nearly $2000 a month more for the same amount of debt, which is crippling many buyers right now.

“Inventory in this county is actually pretty good and is as high as it has been all year. However, only 26 percent of those homes are under contract, well below the 40 and 50 percent numbers we saw earlier this year. So, there are homes available, they just cost more than buyers want to pay.

“And remember, this is Marin County. It is not a normal real estate market. We also checked all of the closings in the last week. There were 31 closed sales, and of those, 15 had multiple offers! More surprisingly, 13 of the 31 went over the asking price. So, despite the high rates, and surprising amounts of inventory, it is clear that buyers will figure out a way to make it work, for the right house, if it is priced right.” Thank you, Bob!

Vendor/third-party providers: always up to something


In LOS news, there’s the formation of Mortgage Machine Services™ and the launch of its namesake LOS platform Mortgage Machine, an out-of-the-box, all-in-one loan origination system (LOS) designed to accelerate lenders’ operational velocity and support an end-to-end digital origination process. The platform includes intelligent automation, configurable business workflows, a cloud-based infrastructure, AI-powered task automation, flexible APIs, pre-configured workflows for retail and TPO channels, integrated document management, POS functionality, all-in-one eClosing capabilities, including an eClose room, eNotes, eVault and RON, and MISMO SMART Doc® data and security standards.

A survey of 100 top mortgage lenders found, among other things, that global and national banks are more likely to offer hybrid and eNote closings. But credit unions, smaller banks, and independent mortgage bankers are more likely to require all documents to be printed and signed in person at closing, according to the study. New research reveals large gap between EClose technology investment and adoption.

While borrowers in default have a wealth of programs available to help them find a path out of delinquency, knowing which options they qualify for can be a cumbersome process for consumers and servicers alike. WaterfallCalc, trusted provider of accurate loss mitigation technology for small- and mid-sized mortgage servicers, has launched WaterfallCalc+, an affordable cloud-based version of its popular loss mitigation analysis tool that enables distressed borrowers to easily apply for assistance through their phone, tablet, or PC. Supplementing the company’s flagship technology, WaterfallCalc gives servicers the technology to calculate the appropriate loss mitigation option, based on insurer and agency requirements. View the WaterfallCalc announcement for complete story.

Land Gorilla, the leading provider of construction loan management software, has launched the Land Gorilla Compliance Library, an online guide designed to help construction lenders navigate statutory requirements in different U.S. states. The Compliance Library debuted with compliance resources in 16 of the most popular U.S. states, including California, Texas, and Florida, with resources for all 50 states expected by the end of the year. Featuring an interactive map, the Land Gorilla Compliance Library lets you access state lien laws, contractor licensing information, title practices, and forms for specific states.  In addition to launching the Compliance Library, Land Gorilla will host a series of free, one-hour training webinars on state construction requirements, each focused on a specific state.

Real estate wire fraud, a form of business email compromise (BEC), represents one of the most financially damaging fraud schemes, causing upwards of several billion dollars in losses every year according to the FBI. Secure Insight announced its acquisition of Uverified LLC, an early stage, electronic payment fraud (EPF) prevention vendor and is working to retool and rebrand its main product for a beta test in October and full product re-launch in November 2023. Secure Insight, the industry’s first vendor risk management and wire fraud prevention firm through its ClosingGuard technology platform, has protected more than 20 million residential closing transactions and saved lenders trillions in potential wire fraud losses since 2012.

Westlake Origination Center is turning leads into sales for mortgage companies and creating a buzz among loan officers struggling to find new clients on their own with little success. WOC creates exclusive leads using custom tailored data algorithms and verified fail-proof tactics to identify and engage with targeted clients, ensuring a steady stream of high-potential leads for businesses. Every exclusive live transfer is a potential client that is qualified and truly looking to buy a home in the LO’s specific area! With a combined 30 years in the industry, WOC’s team works closely with clients to ensure leads convert to sales. Seasoned LOs are currently at a 62 percent application rate after the initial call from a generated WOC live transfer. “Our platform is the result of years of research and development and is designed to be flexible and scalable, so it can adapt to the changing needs of our clients,” said EVP Matt Matsuda. “This has proven to be a game-changer for businesses looking to sell and succeed in today’s highly competitive marketplace.” Connect with Justin Clark at Westlake Origination Center to capture your market share.

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Gallus, is revolutionizing Business Intelligence with its cutting-edge solutions. Powered by AWS and Snowflake, Gallus empowers mortgage lenders and servicers to unleash the full potential of their data. But what sets Gallus apart is its user-friendly approach: if you can use Google, you can use Gallus. Watch this quick video to see how effortlessly it works. Moreover, Gallus has just released their highly anticipated second version of the HMDA tool, now equipped with comprehensive 2022 data. Experience the unparalleled power of Gallus by scheduling a call with their Co-founder and CEO, Augie Del Rio. Discover how Gallus can transform your financial results by seamlessly turning data into actionable intelligence.

Deals from the capital markets from Ginnie, Fannie, and Freddie


Deals in the secondary markets have a direct impact on the rates borrowers see in the primary markets. Who’s doing what.

Freddie Mac announced an approximate $628 million non-performing loan (NPL) sale, via an auction of seasoned non-performing residential first lien loans held in Freddie Mac’s mortgage-related investments portfolio. The NPLs are being marketed via four pools: two Standard Pool Offerings (SPO) and two Extended Timeline Pool Offerings (EXPO), which target participation by smaller investors, including non-profits and Minority, Women, Disabled, LGBTQ+, Veteran or Service-Disabled Veteran-Owned Businesses (MWDOBs). Bids are due from qualified bidders by September 21, 2023, for the SPO pools, and October 19, 2023, for the EXPO pools. All eligible bidders, including private investors, MWDOBs, nonprofits and neighborhood advocacy organizations are encouraged to bid. To participate, all potential bidders must be approved by Freddie Mac and successfully complete a qualification package to access the secure data room containing information about the NPLs and to bid on the NPL pool(s). The bids are to be made on an all-or-none basis for any pool separately or for any combination of SPO pools together. The winning bidder for each pool will be determined on the basis of the economics of the bids, subject to meeting Freddie Mac’s internal reserve levels, at Freddie Mac’s sole discretion. Freddie Mac’s seasoned loan offerings focus on reducing less-liquid assets in the company’s mortgage-related investments portfolio in an economically sensible way. This includes sales of NPLs, securitizations of re-performing loans (RPLs) and structured RPL transactions. Since 2011, Freddie Mac has sold $9.7 billion of NPLs and securitized approximately $77.4 billion of RPLs consisting of $30.4 billion via fully guaranteed MBS, $34.9 billion via the Seasoned Credit Risk Transfer (SCRT) program, and $12.1 billion via the Seasoned Loans Structured Transaction (SLST) program. Requirements guiding the servicing of these transactions are focused on improving borrower outcomes and stabilizing communities.

Fannie Mae announced the results of its twenty-first non-performing loan sale transaction. The deal, announced on August 10, 2023, included the sale of approximately 1,371 loans totaling $225.4 million in unpaid principal balance (UPB), offered in one pool. The loan pool awarded in this most recent transaction also includes an average loan size of $164,383, a weighted average note rate of 4.70 percent, and weighted average broker’s price opinion (BPO) loan-to-value ratio of 41 percent. The winning bidder of the pool for the transaction was RCAF Loan Acquisition, LP (Pretium). Bids are due on Fannie Mae’s Community Impact Pool on September 20, 2023. All purchasers are required to honor any approved or in-process loss mitigation efforts at the time of sale, including forbearance arrangements and loan modifications. In addition, purchasers must offer delinquent borrowers a waterfall of loss mitigation options, including loan modifications, which may include principal forgiveness, prior to initiating foreclosure on any loan. Interested bidders can register for ongoing announcements, training, and other information here. Fannie Mae will also post information about specific pools available for purchase on that page.

Ginnie Mae announced the launch of its “Social Bond” label for Single-Family Forward Mortgage-Backed Securities (MBS) prospectuses and released the Social Impact and Sustainability Framework. Together, these updates support Ginnie Mae’s mission-oriented work and communicate the positive social impact of its programs to investors. The launch will help increase investor awareness of the value proposition in Ginnie Mae securities, increasing opportunities to attract new sources of capital in support of lenders and borrowers Ginnie Mae ultimately serves. Effective October 1, 2023, Ginnie Mae will revise its prospectuses for Single-Family Forward MBS contained in the Ginnie Mae MBS Guide, HUD Handbook 5500.3, REV-1 Appendices to include a Social Bond Label section. Learn more by reading the APM 23-10 here and the Social Impact and Sustainability Framework here. The prospectus revisions highlight structural aspects of Ginnie Mae’s programs that have a significant social impact by promoting broader access to mortgage financing for historically underserved communities. With the revision to the prospectus, investors will have the choice, along with MBS pool level disclosure data, to independently determine Ginnie Mae MBS as “Social Bonds,” meaning the underlying collateral is designed to support a positive social and affordable housing outcome. The new Social Impact and Sustainability Framework outlines the characteristics of Ginnie Mae’s Social Bonds and broader portfolio.

Fannie Mae announced its latest sale of non-performing loans as part of the company’s ongoing effort to reduce the size of its retained mortgage portfolio, including the company’s twenty-first Community Impact Pool. Community Impact Pools are typically smaller pools of loans that are geographically focused and marketed to encourage participation by non-profit organizations, minority- and women-owned businesses, and smaller investors. The one large pool includes approximately 1,460 loans totaling $236.5 million in unpaid principal balance, and the pool includes approximately 25 loans totaling $6.6 million in unpaid principal balance. The pool consists of loans geographically located in the Miami-Dade area. All pools are available for purchase by qualified bidders. This sale of non-performing loans is being marketed in collaboration with BofA Securities, Inc. and First Financial Network, Inc., a woman-owned and -controlled business, as advisors. Bids are due on the one large pool by September 7, 2023, and on the CIP by September 20, 2023.

Scientifically, a raven has 17 primary wing feathers, the big ones at the end of the wing. They are called pinion feathers. A crow has 16. So, the difference between a raven and a crow is only a matter of a pinion.

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Rob Chrisman