HousingWire recently launched HousingStack, a dynamic visualization of rapid technological changes in the real estate industry. Our first vertical to launch was Lead Generation, and I almost choked when I saw all the companies attempting to generate leads for real estate agents.
How does a real estate agent wade through all of these lead generation options? It turns out they are having a really tough time. I asked readers of our OpenHouse newsletter to write to me about their interaction with lead generation companies, and here are a sampling of the quotes:
- “Get so many companies trying to get my business to pay for leads. Don’t know who to trust or go with if any. I delete them.” – Realtor in South Bend, Indiana
- “I cant wade through lead solicitations. I am frozen.” – Real estate agent in Orlando, Florida
- “Real estate is a contact sport and technology, while necessary to help streamline the homebuying process, has also created a false narrative that you must buy your business in order to be successful in real estate sales. It is a distraction to the daily boring long term business building routines that will create a predictable business.” – Real estate agent in Phoenix
- “Every lead gen company claims to get the best leads. Some promise to qualify them (they only ask a question or two and call that qualifying…smh). Referral companies want a cut if the lead buys or sells. Problem is most are several months if not a year or more away from buying or selling. They are handing off leads that are so green you can’t even call them shoots yet. How do I wade through these companies? I don’t anymore.” – Realtor in Jackson, New Jersey
- “There seem to be more lead gen companies than homes. All with spectacular promises, so good they should have run for Congress.” – Real estate broker in Portland
Yikes! If you’re a real estate lead generation company, I hope you want to clear the record and prove that your product delivers real ROI. HousingWire is planning a Real Estate Virtual Demo Day for July 27.
Lead generation company CEOs, come set the record straight!
The post Real estate lead generation overload appeared first on HousingWire.
This article was written for FinLedger, HW Media’s new fintech-focused news brand designed specifically for financial services professionals in banking, insurance and real estate. Stay tuned for updates.
If you’ve refinanced or purchased a home digitally lately, you may or may not have noticed the company powering the software behind it.
There’s a good chance it’s Blend. Founded in 2012, the startup (which was one of HousingWire’s 2020 Tech 100 winners) has steadily grown to be a powerhouse in the mortgage tech industry. Blend’s white label technology is what powers mortgage applications on the site of banks such as Wells Fargo and U.S. Bank with the goal of making the process faster, simpler and more transparent.
The San Francisco-based startup’s SaaS (software-as-a-service) platform currently processes over $3 billion in mortgages and consumer loans per day in partnership with over 250 financial institutions, up from nearly $2 billion and over 150 lender customers last June. Blend’s customer base accounts for more than 25% of the $2.1 trillion U.S. mortgage market by origination volume, according to HMDA data. In 2019, Blend processed a total of $538 billion in loans, more than double the $211 billion worth it processed in 2018.
Just as many others in the mortgage industry, the startup has seen a big jump in business since the COVID-19 pandemic began. Refinance applications for the second week in March were up more than 1600% compared to the prior year. In both April and May, refi apps were up more than 600%, according to the company.
And let’s not forget that former Fannie Mae CEO Tim Mayopoulos joined Blend as president in January of 2019, running all the administrative and go-to-market functions for the company
With so much going on in the mortgage industry, we thought it would be a good time to talk to its CEO, Nima Ghamsari, to hear more about what’s been happening at Blend and to get his thoughts on the fintech space as a whole.
HW: This broader macroenvironment of low interest rates is no doubt fueling demand in the mortgage industry. Do you see this as being a temporary thing?
NG: I believe this is all going to last a bit longer than people initially thought. It is estimated that there is $4.5 trillion worth of loans that should be refinanced given the current rate environment. Lenders may only get through $1.5 trillion of those over the next 12 months. That is a lot of dollars that consumers are leaving on the table. That’s money that should be back in their pockets, and it’s not. So we plan to keep investing over the next 12 to 18 months at least as we don’t imagine that consumers are suddenly going to be dealing with a turnaround or amazing, perfect economy in the very short term.
HW: Last June, Blend raised $130 million at a near-unicorn ($1 billion) valuation. Any plans to raise more venture capital?
NG: We are investing in the product so much right now so that’s something we are always considering. As a company, we’ve grown a lot. But it’s important to keep investing if we want to continue on that path. As part of that, we plan to hire another 50 to 100 people by the end of the year on top of the 100 people we’ve onboarded since March 4.
HW: Can you share your thoughts on the overall fintech landscape (especially in light of Quicken’s recent S-1 filing and nCino’s plans to file for IPO)?
NG: The remote world that we’re moving toward is accelerating the pace of fintech adoption, which will naturally benefit companies like Quicken and nCino, who are digitally powering things.
HW: How has Blend been navigating doing business amid a global pandemic?
NG: We can help our customers take on more business than they otherwise would if doing everything manually. Blend was building out some things over the past three to nine months, and we’ve suddenly had a ton of accelerations, such as now offering digital closings. We rolled something out on that a couple of months ago, which was six to seven months ahead of schedule.
We have heard from loan teams and banks that they need better tools to qualify and quotes. So one of the things we’ve rolled out is the ability to pull soft credit pulls for loan teams. By starting out with a soft credit pull, they can get a sense of where they stand with a consumer. Plus, it won’t affect the consumer’s credit. It’s easier for the loan officer and cheaper for the lender since they won’t have to pay for a credit pull for someone who might not turn out to be a customer. They’re dealing with a ton of volume so anything that can help save time and money is welcome.
We’ve also worked to make sure our customers have access to an entire set of data metrics they can use to run their businesses. We can either transport their data to them or they can access it on our app. It helps them to quickly visualize things like changes from month to month, and where business may be dropping off.
HW: Where do you see Blend headed in the future?
NG: We see additional opportunities in creating a new kind of home-buying journey that’s oriented toward consumers and their goals. We want to streamline the home-buying process with a suite of services that will assist a consumer through the whole process.
Are you a financial services professional hungry for better fintech news and info? HW Media is proud to introduce FinLedger, a fintech media brand that will cover the critical news impacting financial services professionals — from SaaS to big data, and cybersecurity to regtech. Want to be notified when we launch? Enter your email here and follow us on Twitter.
The post How Blend fuels the trillion dollar mortgage market appeared first on HousingWire.
The housing market has seen its ups and downs as a result of COVID-19, and now, summer homebuying season is in full force.
The National Association of Realtors released its Market Recovery Survey on Thursday, revealing that 45% of its members had reported that their market has slowly entered recovery mode.
Still, as states reopen, many Realtors are hesitant due to fears of a second wave of COVID-19, NAR said.
Only 39% of members reported being somewhat prepared for a second wave of COVID-19, and just 19% said they expect to be very prepared.
The housing market is rebounding in some regions – 28% of those surveyed said their market is coming back hotter than normal, 19% said their respective market is back to normal and 9% don’t feel like they have entered recovery yet.
Trends show that more apartment dwellers want to move to rural areas with bigger space. In fact, 28% who live in a small town or rural area reported that their market is actually hotter than normal.
And it’s not just apartment dwellers. Since stay-at-home orders went into effect and more workers are telecommuting, an increased number of people in general are fleeing the big cities to more rural areas and larger spaces in a home.
The report also showed that some renters have been disregarded in terms of government assistance and rent payments.
As such, 16% of property managers reported tenants had terminated their lease, compared to 6% among individual landlords.
However, property managers with residential tenants said that 42% of property managers had no issues with their tenants paying rent, compared to 63% of individual landlords, NAR said.
Despite no assistance, 40% of property managers reported being able to accommodate their tenants who cannot pay rent, but 27% reported it being difficult to do so.
Locations have been shifted by 24% of homeowners because they intend to buy a home as a result of the pandemic. Specifically, 47% of NAR members said their clients wanted to purchase in the suburbs, 39% planned to go rural and 25% said they were looking to move to a smaller town.
Meanwhile, 22% said they are less concerned about their commute. This is not surprising considering more companies are working remotely since the pandemic began.
Meanwhile, 49% of those in urban areas told NAR that their market is slowly entering recovery, compared to 40% in a small town or rural area.
On the other hand, 92% of respondents indicated that some of their buyers had returned to the market or just never left and 8% said that no buyers returned to the market.
For some buyers, the pandemic has left their timelines the same – 54% in fact. 27% of buyers felt more urgency to buy a home, while 18% reported less urgency.
In terms of agent and client communication, teleconferencing and virtual home tours have been utilized now more than ever.
Agents reported they expect the use of video technology to communicate with clients will increase 67%, while 24% expect the usage to remain the same and 8% expect a decrease.
The post NAR: Nearly half of members say their market is slowly recovering appeared first on HousingWire.
Another 1.3 million people filed for jobless benefits last week amid a resurgence of the COVID-19 virus while the overall number of unemployed Americans dipped.
So-called initial claims fell for the 14th consecutive week since reaching the all-time high of 6.8 million at the end of March when states first started closing businesses and issuing stay-at-home orders to stem the spread of COVID-19. A rush to reopen in June has led to a resurgence of the virus in some of the nation’s biggest states, setting daily records for new infections.
Continuing claims, measuring the total number of people receiving unemployment benefits, dipped by 700,000 during the week ended June 27 to 18.1 million, the Labor Department said on Thursday. In May’s first week, the number reached a record 24.9 million, almost four times the previous high set during the 2008 financial crisis.
“While full employment is a long way off, the labor market is clearly improving.” Wells Fargo economists said in a note to clients. “The resurgence in COVID-19 cases throughout the Sunbelt has, so far, not resulted in higher state unemployment claims.”
The U.S. set another record for new coronavirus cases on Wednesday, with more than 59,400 infections. Five states, including Texas and Tennessee, reached new highs for single-day infections.
Texas had the biggest jump in initial claims, with 20,651 people requesting unemployment benefits, according to the Labor Department report. New Jersey was No. 2, with an increase of 18,719.
There have been 3.03 million COVID-19 infections reported in the U.S., more than double the number seen in Brazil, the nation with the second-highest rate. While the U.S. has about 4.2% of the world’s population, it has 25% of the globe’s reported infections and 24% of the fatalities, according to Johns Hopkins University data.
The post 1.3 million Americans file for jobless benefits as virus surges appeared first on HousingWire.
The Pandemic and Changes to Relocation
Rates for a 30-year and 15-year fixed mortgage fell to all-time lows this week as a resurgence in the pandemic caused investors to buy more bonds, including mortgage-backed securities.
The average rate for a 30-year fixed mortgage was 3.03%, down from 3.07% last week. That marks the lowest in a data series that goes back to 1971, Freddie Mac said in a statement Thursday. The average 15-year rate fell to 2.51%, the lowest in almost 30 years of data, according to the mortgage financier.
Mortgage rates fell as investors reacted to news of a record-setting COVID-19 resurgence in some of the nation’s biggest states. The surges erased optimism from last month’s economic reports showing the jobs market recovering quickly from the virus-induced recession.
The low mortgage rates will boost demand for housing, but it’s a delicate balance, said Sam Khater, chief economist of Freddie Mac. Bad economic news pushes mortgage rates down. However, if states are forced to close businesses again and job losses mount, it will eat into the reservoir of people eligible to purchase properties.
“The summer is heating up as record low mortgage rates continue to spur homebuyer demand,” Khater said. “However, it remains to be seen whether the demand will continue if COVID cases rise to the point that it hinders economic growth.”
The resurgence in the pandemic has “already been much worse than we anticipated, and further restrictions will likely be required in some states to bring the virus under control,” the economists led by Goldman Sachs Chief Economist Jan Hatzius said in a report issued on Saturday.
Mortgage rates have fallen as bond investors’ concerns about a surge in forbearances in April and May has subsided. If layoffs spike, those numbers will mount again, said Joel Naroff, president of Naroff Economics.
The beefed-up unemployment provision in the CARES Act, which adds $600 a week to state payouts in an effort to fully replace salaries, is set to expire on July 31.
“If you’re a middle-income household with a job loss, that $600 a week could mean the ability to pay your mortgage and if it goes away it could put pressure on the housing market in terms of either mortgages or rents,” Naroff said.
The Federal Reserve, which rescued the bond markets in March and April by restarting a fixed-asset-buying program used during the 2008 financial crisis, is still purchasing about $4.5 billion of mortgage-backed securities a day, said Walt Schmidt, FTN Financial’s head of mortgage strategy.
“If it weren’t for the Fed, mortgage rates would be a lot higher,” Schmidt said. “The Fed buying MBS is keeping rates low. The Fed can’t control Fannie Mae and Freddie Mac, but it’s controlling what it can.”
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In the digital age of real estate sales, the process of successfully converting prospects to leads and closed business has become a fine art. No matter how refined a process becomes, losing a lead is inevitable.
This article aims to discuss some common problems that may lead to sales loss and how you can correct them. We’ll be doing a deep-dive into the world of real estate lead generation best practices and how to help ensure a lead is not lost after you generate it. Although we’ll dive in specifically to boosting conversion within the real estate industry here, the concepts explored in this article can be used for sales leads in any industry.
Lack of Presence on Social Media
Think about your favorite brands. Regardless of industry, you’ll notice that some of the best brands have clear, concise, and dedicated social media strategies. According to Hootsuite, there are approximately 3.2 billion (42%) social media users across the globe; Clients today expect a sophisticated social media presence. If your online presence is unprofessional or weak, it certainly won’t build credibility with buyers, and you may even lose the lead before you have a chance to introduce yourself.
Having a social media presence is excellent, but unless you’re able to come up with a precise and measurable plan of action, there’s a strong likelihood of getting lost in the noise. We suggest real estate agents follow these five best practices to grow your social media presence and keep your business organized:
1. Identify the social channels you want a presence on (master a few as opposed to delving into many)
2. Develop a social media calendar to organize your social strategy
3. Follow the 4:1:1 rule, depending on the platform
4. Add your social media channels to all marketing material (online and offline)
5. Encourage your clients to interact with you on social to build a powerful, core audience
6. Respond to all sales inquiries through social promptly
Calls-to-Action That Lead to Nothing
We’re seeing a lot of real estate agents take their business online with stunning websites. However, even the most beautiful websites can have a low conversion rate if the calls to action (CTA) are not working as they’re supposed to.
Whether you’re an accomplished Realtor or someone new to the field, it’s essential to capture all potential prospects into sales leads. Here are some common CTAs that we see advertised through real estate marketing websites and collateral:
•Free Home Evaluation
•Free List of Homes Under $$$,$$$
One of the toughest aspects of real estate marketing is getting a customer to become aware of your brand and to visit your website. That’s why it’s important to optimize to ensure that you are converting as many visitors into sales leads as possible. One way to turn a potential sale off is to have CTAs that don’t lead anywhere.
For example, your “Contact Us” button leads to a 401 error, your “Free List of Homes Under $$$,$$$” offering yields nothing. Empty offers and CTAs such as these are sure to sour any prospect, so ensure that you have your bases covered by testing your website often to ensure it’s functioning as needed.
Go through your online presence (website, emails, etc.) with a fine-toothed comb and intentionally look for problems – you may save yourself a lead!
Not Implementing Face-to-Face Interactions
Although we’re living in an age consumed by digital media, face-to-face interactions are still crucial to closing a sales lead. There’s nothing better when it comes to rapport building than face-to-face interaction. It provides an added sense of personalization and allows agents to understand their clients and their needs on a personal level.
According to the Harvard Business Review, face-to-face requests are 34 times more successful than ones sent via email.
Ignoring Customer Expectations
There’s an old saying that is as true as any in the world of real estate sales, “Underpromise and overdeliver.” Signing a client on to work with you is just the beginning of what one hopes is a long-term business relationship.
You’ve proven to them that you’re capable of delivering results, now it’s time to achieve them. But what happens when you have promised them the world and set them up with unrealistic expectations? In most cases, it will yield negative sentiment on the client’s behalf, and they’ll share that negative experience with their inner circle as well, you don’t want that.
The best way to avoid this experience is to sit down with your client and have an open discussion with them in regards to their expectations. Not only does communication help create a more productive workplace, but it also helps build more sustainable client-realtor relationships. If you feel as though they’re unreasonable, be open, and communicate that before proceeding. It’s important to get the lay of the land when working with a client to ensure that they’re satisfied with your service and retain you as their agent for life.
Networking is a critical part of real estate sales leads generation strategy. You can be the most efficient, results-oriented agent in the nation, but if you’re not putting yourself out there and speaking with other agents and clients, you’re doing yourself a disservice.
Sales leads can be generated anywhere, and at any time, so it’s necessary to keep the following points in mind:
• Always have a business card on you, you never know when a lead will present itself.
• Build a network of tradespeople who you refer contracting leads to, and in return, they will refer real estate leads back to you.
• Do not make all conversations about you and your business, read the room and if the conversation doesn’t warrant bringing up your job, don’t. Building relationships is more important than dominating the conversation.
• Give your clients a Holiday gift. It’s an opportunity to get in front of them at the end of the year and get an update on their needs without being too sale-oriented.
Not Updating Your CRM
CRMs have been a game-changer for the real estate industry. By utilizing a CRM, you’re able to effectively manage the entire client journey from prospecting to post-sales all in one centralized dashboard.
Now, more than ever, businesses need a solid CRM to run successfully (especially in real estate). It gives you a look at what lead generating tools are most useful, what are the biggest reasons that you’re losing sales leads, and best of all, it houses all prospect and client information in one area to keep you organized and focused on what you do best, closing deals. If you haven’t done so already, check out this list of the best real estate CRMs.
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The post Lost Sales Leads: Common Problems and How to Correct Them appeared first on BoomTown!.
July 9: QC, LO, reverse opportunities; sec. mktg., marketing products; compliance news: is a “like” a “thing of value”?
United Airlines may lay off 36,000? Bed, Bath, and Beyond closing 200 stores? Walgreen’s cutting 4,000? Yup. Lower rates won’t save those jobs, but we’ll have low rates for a long time. Things are different for residential lenders. When we began 2020, who thought things would be where they are now in our biz to the point of me receiving this note from the CEO of a well-known retail lender: “We’re seeing crazy volumes and profits. Controlling overhead and making money is not our problem. My LOs have been working twelve hours a day, seven days a week, as have processors and many of my Ops staff. Burnout is the problem. The days of aggregators pricing servicing at zero are gone, although few want low credit score product, spec pool bids have come roaring back, fears of escalating forbearance problems have temporarily subsided, our margin-related cash crunch has gone away, our strategy of retaining the servicing on a certain portion of our loans is paying off. There is worry about pools of servicing hitting the market later in the year, but for now, let the good times roll!” What has also caught the attention of the biz is the release of mortgage companies who took advantage of the PPP (click here for a link to the story, which has a link to the spreadsheet). Times were different a few months ago, when chaos was the norm, margin calls reigned, investors were bailing, pricing was all over the map, and cheap, well-intended money was being offered.
Employment & transitions
In August of 2019, Caliber Home Loans revealed its fully digital and secure online loan application, BOLT. Our enhanced digital loan application provides the ultimate homebuying experience for customers. BOLT is faster and simpler than competitor’s digital platforms, operates across all devices, and involves an intuitive and seamless experience. Since launching BOLT, Caliber’s new digital loan application platform has attracted over 100,000 loan applications! Reaching this milestone is an example of Caliber’s commitment to building innovative and cutting-edge technology. Don’t have FOMO; join team Caliber and support the optimization of the mortgage lending experience for borrowers and loan officers!
Two industry veterans with existing highly profitable reverse mortgage group are looking to relocate the group to large branch lender. “Do you have a large loan officer sales force? If so, we can provide you with the reverse volume/solution. Reverse volume at huge documented net profits. Our system works extremely well in the branch lender environment. Our model is completely unique to the industry. This is not a referral model. Small group (team of 5) originating high quality, high revenue reverse loans with to no risk and with very little upfront expense. Please email Chrisman LLC’s Angela Nixt to receive more detailed information on this very profitable opportunity.”
“At Home Point Financial, the key to success is our people. We believe that our associates are the driving force in creating a better borrower experience. We had a record first half of 2020, and we couldn’t have done it without our talented team. To continue hitting our targets, we’re hiring hundreds of underwriters and operations positions at every experience level. When we take care of our associates, they take care of our customers. Join our team, get involved, and reap the rewards! For immediate consideration, please send your resume directly to John Eite.”
Agility 360, a mortgage-centric recruiting and project staffing firm, continues to see unprecedented need for qualified originations and servicing staff. With the pressure of historically low rates, re-bounding demand for purchases, and increasing delinquencies, finding qualified mortgage personnel can be difficult, but finding great talent can seem almost impossible. This is when Agility’s nationwide candidate database and our proprietary methodology can deliver results and find that unique fit between employer and employee. Whether you need immediate direct hires or temporary contract personnel, Agility always finds “the right person for the job”. Leveraging over a decade of industry experience, Agility has created the most sophisticated recruiting and talent management network in the mortgage industry. If you’d like to learn how we can help, please contact Raj Sharma at 469-208-6337.
Highlands Residential Mortgage announced Scott Brown has joined the company as Sr Vice President and will be a part of the National Production leadership team. For over 25 years, Scott has served in a broad range of positions with some of the top lenders in the country with his extensive experience in sales, operations, and construction lending. Scott is a frequent guest speaker at industry seminars and conferences and has always been passionate about helping those around him succeed at the highest of levels. “Scott Brown has been a well-respected, versatile leader in our industry for many years. We are extremely excited to add his outstanding talent and skills to our growing team at Highlands Residential Mortgage.” said Danny Deaton, EVP-National Production Manager. Highlands has experienced tremendous growth for seven consecutive years and Scott will play a key role in supporting continued expansion efforts.
Coming off of their third straight month of record volume, AmeriHome Mortgage continues to staff up, and is hosting weekly virtual career fairs! AmeriHome is looking for a Training and Development Manager and an In-Line Quality Assurance Analyst Manager in either Westlake Village, CA or Dallas, TX. It also has many more opportunities available in mortgage operations, loan review, underwriting, and more, both full time and part-time in Southern California, Texas, and remote! Visit its careers page to view all open positions, and submit resumes to email@example.com to schedule an interview. You can also follow AmeriHome Correspondent on LinkedIn to keep up with the latest updates, resources, job openings, and more, including its Clients & Communities series! This series highlights AmeriHome clients finding amazing ways to help out in their local communities during these challenging times. If you’re not already signed up to do business with AmeriHome and you’re interested in more information email CLsales@amerihome.com.
myCUmortgage announced that Michael Christians has joined the organization as its VP of Mortgage Risk Management to lead the development and execution of comprehensive mortgage risk management strategies that “deliver on the vision, mission and brand promise of myCUmortgage” and drive the mortgage risk management framework for the CUSO.
Sagent appointed Tim Von Kaenel as Chief Innovation Officer and Shawn Stroud as Director of Information Security. Tim will drive Sagent’s product vision and M&A to continue to bring push-button, phone-based simplicity to mortgage servicing. Shawn will join Sagent’s innovation, engineering, and policy teams.
Lender & broker products & services
Staying compliant is hard, but it doesn’t have to be. The makers of AcuClix have developed AcuAuditor, a groundbreaking cloud software optimized to manage Marketing Service Agreements, Desk Rentals, and other co-marketing agreements. If you have marketing relationships with realtors, builders, or others, how are you monitoring compliance? If your co-marketing partner is not performing those services, this could be a violation, because RESPA Section 8 requires payment for services actually rendered. And if you’re not using marketing agreements because of risk concerns, AcuAuditor can now let you use these with confidence! AcuAuditor’s automated features help you make money and be audit-ready, whether you have just a few or hundreds of agreements. Take advantage of AcuAuditor’s limited-time promotion for Rob Chrisman readers, and click here to schedule a demo or for more information contact firstname.lastname@example.org.
Maxwell’s digital mortgage platform continues to make waves in the industry for small to midsize lenders doing $300M or $3B. Their point-of-sale technology has expanded quickly, providing meaningful benefits for the 200 lenders who have partnered with them. “Yes, we’re a point-of-sale and now, with our scale, our technology allows us to leverage the power of our community of lenders to offer access to value previously only accessible by the largest lenders,” says John Paasonen, the founder and CEO. “As we continue to invest millions in our technology, we’re committed for the long-term to making our lender partners successful.” With over billions facilitated through the platform every month, Maxwell’s growth has been a testament to their commitment to partnership. Learn more about Maxwell’s unique offering in the digital mortgage space.
Ever heard the saying, “Give a man a fish and he’ll eat for a day, but teach a man advanced hedging strategies and he’ll eat for a lifetime?” Now lenders can tap into a lifetime supply of secondary marketing education with MCT’s Learning Center. Improve your secondary operations and understanding of the mortgage industry with information compiled in the form of webinars, whitepapers, market commentaries, and more! New content is regularly emerging as quickly as new insights and industry trends. Most recently, MCT’s latest whitepaper The Links Between MBS Markets and Loan Prices addresses misconceptions on how mortgage prices are generated. Join MCT on July 16th at 11AM PT for a webinar on Advanced Hedging Strategies. MCT’s Director of Analytics, Bill Berliner, will discuss the use of human intuition as a hedging model, the implications of current securitization practices on hedging/trading, and how to address current market quandaries.
Is it true that some RESPA enforcement regulators are finding RESPA violations, claiming that a “like” on social media post is “a thing of value”? Under the proposal, the high-cost mortgage escrow exemption would be expanded to banks and credit unions with assets of $10 billion or less. In addition, these institutions must have originated 1,000 or fewer first mortgages on owner-occupied properties in the preceding calendar year. At the same time, this new exemption, which comes under the Truth-in-Lending Act, is narrower than the existing one in several ways, the CFPB’s notice said. It is limited to insured banks and credit unions, while the existing exemption applies to any creditor (including a non-insured lender) that meets its criteria.
The CFPB has published its Spring 2020 rulemaking agenda: it is pushing forward on activity during the pandemic, although it does not appear to expect to have much finalized before the end of the year. It issued a final rule revoking the mandatory underwriting provisions of the 2017 Payday Lending Rule.
With new coronavirus outbreaks across the Sun Belt in June and July, the logical question for mortgage companies to ask is how to prepare for a second wave of the virus. Jonathan Foxx, Chairman and Managing Director of Lenders Compliance Group, recently weighed in. In addition to publishing a Business Continuity Plan earlier during the pandemic, his most recent writing includes a ten-step plan. I’ll list his ten recommendations, but advise you visit the above link for the in-depth discussion. Preparation, proactivity, the business continuity plan, internal communication, external communication, absenteeism, crisis management, geography, drills, and recovery. Being prepared as a company can make or break this next stage of response and recovery.
Is it possible to send out Closing Disclosures (CDs) prior to loan approval from underwriting since this may help borrowers to cooperate in providing any remaining documents needed and retain them through closing? The thought is that sending a CD before final underwriting approval could mislead borrowers into believing their loan has been approved when it has not, but not sending could presumably put loan officers at a disadvantage. The truth is that there are fundamental risk management issues associated with implementing such a procedure, even if legally permissible to issue the CD before a “clear to close.” TILA-RESPA Integrated Disclosure Rule (“TRID”) contains extremely complex disclosure rules, based on the model that CDs are normally not going to be issued until after “clear to close.”
Altering that model pushes the envelope on applicable compliance rules and consumer expectations and therefore definitely increases the risk that consumers may be misled. Remember, underwriting may necessitate changes in the loan product or interest rate, which may require not only a revised CD but also a delay in closing to permit the required three-day waiting period to elapse. Additionally, issuance of the CD cuts off a lender’s ability to issue a revised Loan Estimate (“LE”). Thus, issuing the CD before “clear to close” means that you may not be able to issue a revised LE to reflect any increased loan costs that come up during underwriting, exposing you company to greater risk of penalties for incorrect initial disclosures. Some lenders attempt to address this situation by creating specialized procedures linked to the underwriting process which make it virtually certain that any loan that does qualify for an early CD will in fact be approved by underwriting without changes.
Finally, the disclosures associated with adjustable rate loan transactions are going to be much more complex and time sensitive than those for simple fixed rate transactions, and purchase transactions usually have much tighter time frame requirements that can be impacted by additional waiting periods resulting from the necessity of issuing a revised CD versus a refinance transaction.
Mortgage Sentinel is a Philadelphia-based partnership between LodeStar Software Solutions and RDAssociates, Inc., that delivers “secret shopping” services that empower mortgage lenders to self-monitor their services to prevent compliance infractions. The service utilizes proprietary research techniques, in-depth analyses, and hands-on training to improve the interactions between mortgage originators and potential borrowers. Mortgage Sentinel specialists will work with mortgage lenders in advance of quality assurance or “secret shopper” audits to understand all policies and procedures in place to support compliance efforts.
Dog days of summer… Considering the big news yesterday, as far as MBS were concerned, was a well-received 10-year Treasury auction which came at a record low yield, that should tell you there wasn’t much news of note for markets to digest. Atlanta Fed President Bostic said softening data may warrant more action. Today’s economic calendar began with initial jobless claims for the week ending July 4 (-99k to 1.314 million). Later this morning brings May wholesale inventories and sales and a $19 billion 30-year Treasury bond auction. The NY Fed will conduct two FedTrade purchase operations totaling up to $4.4 billion starting with $1.5 billion UMBS15 2 percent and 2.5 percent followed by $2.9 billion UMBS30 2 percent through 3 percent. We begin the day with Agency MBS prices unchanged and the 10-year yielding .65 after closing yesterday unchanged… at 0.65 percent.
Thank you to STRATMOR’s Mike Seminari who sent, “I think we need to stop calling it ‘working from home’ and start calling it ‘living at work’.”
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Purchase applications bounced back last week to the highest level in almost a month with a 5% gain from the week prior, according to a report by the Mortgage Bankers Association.
The Market Composite Index, a measure of mortgage loan application volume, also increased 2.2% on a seasonally adjusted basis from one week earlier as mortgage rates continued to drop across the country.
“Mortgage rates declined to another record low as renewed fears of a coronavirus resurgence offset the impacts from a week of mostly positive economic data, such as June factory orders and payroll employment,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
As borrowers contended with limited supply and higher home prices, the average purchase loan size rose to a survey high of $365,700, the report said.
Refinance applications gained 0.4% and overall refinance activity was up 111% from last year. The slight increase in refinancing was most likely driven by a 2% gain in conventional refinances, Kan said.
The refinance share of mortgage activity decreased to 60.1% of total applications while adjustable-rate mortgage share of activity increased to 3.4% of total applications.
“The 30-year fixed-rate slipped to 3.26% – down 53 basis points since late March,” Kan said. “Borrowers acted in response to these lower rates, after accounting for the July 4th holiday,”
Here is a more detailed breakdown of this week’s mortgage application data:
- The FHA’s share of mortgage apps fell to 10.9% from 11.7%.
- The VA share of applications fell to 10.4% from 10.8%
- The USDA share of total applications increased from 0.6% to 0.7%
- The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) fell to 3.52% from 3.59%.
- The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell to 3.31% from 3.43%.
- The average contract interest rate for 15-year fixed-rate mortgages fell to 2.77% from 2.81%
- The average contract interest rate for 5/1 ARMs fell to 2.98% from 3.04%
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