Sep. 14: Transferring Agency risk, LIBOR/SOFR news, and a primer on VA cash out refi pricing

Call this edition a “capital markets issue” about pricing, the move away from LIBOR, and risk. Hopefully it gives readers a sense of what is going on with mortgage rates and playing some catchup over the last several months with the way Agencies (today the focus is on Freddie Mac) transfer risk. And if you’re hoping mortgage rates will go to 0%, here are some thoughts: “Mortgage Rates: Thinking the Unthinkable.”

FHA & VA pricing

I received this note. “Rob, we’ve recently had our high LTV VA cash-out loans (+90% LTV), go away briefly and then this week Capital Markets came out with new pricing that’s about 3 points worse than ‘normal’ pricing. I know they are doing it in response the notice from Ginnie on liquidity issues for these types of loans, etc. and how they are going to be changing things after October 1st. Do you have any ideas, or does the market for that matter, on what’s going to happen with pricing on these going forward. I’m pretty sure that the pricing they are providing has a huge hedge in it. I think they’d rather offer something rather than nothing.”

I asked Michael Ehrlich with Refinitiv (parent of Tradeweb) for his thoughts on GNMA APM 19-05. “High-LTV VA cash out refinance loans have been experiencing extremely high prepayment speeds as they are often streamlined within 7-9 months of first payment. These early payoffs have upset MBS investors who paid a premium to own the bond. From a time value of money perspective, this behavior is similar to a borrower paying points to buy down their mortgage rate only to refinance the loan before breaking even on the upfront cost. Investors have put a great deal of pressure on GNMA to find a solution that slows down prepay speeds related to ‘churning’.

“Given the importance of VA lending programs, Ginnie Mae had to find an approach that isolates VA churning without significantly reducing broader liquidity in the MBS market. Tough ask! GNMA hopes to accomplish this by forcing lenders to pool high-LTV VA cash out loans in single-issuer GNMII30C MBS (‘Customs’). This is a double negative in terms of pricing because GNMII30C MBS are not TBA eligible which means they trade behind the GNMII30M TBA MBS indication you see on the screen (large, multi-issuer GNMA pools).

“Furthermore, because these loans have been isolated in single-issuer pools, it is now much easier for investors to monitor churning behavior at the MBS issuer level. That results in an additional price discounts on the bond when the lender/issuer has a proven track record of churning (potentially 2 to 3 points behind the same coupon GNMII TBA). This new rule goes into effect with GNMA securities guaranteed on or after November 1st which is why lenders have added adjusters to rate sheets.

“Unfortunately for secondary marketing desks, it’s impossible to pinpoint a consistent rate sheet adjustment on these loans. This is a function of how non-TBA eligible MBS trade, essentially as stipulated forwards (via BWIC). That means the takeout price can fluctuate greatly in between, especially in between monthly delivery cycles or when prepay speeds have been rising or even just generally volatile. Also, the dealer could decide they don’t want to bid the product all together.

“This much uncertainly forces pipeline hedgers to take a defensive position when it comes to the pricing they show on rate sheets. While higher mortgage rates will help slow prepayment speeds and thus lessen the discount applied to GNMA Customs with high-LTV VA cash outs, we wouldn’t expect VA churning to slow proportionality given an IRRRL is still likely to make sense to a VA borrower after six payments have been made.  The relative discount will persist until churning stops.” Thank you, Michael!

LIBOR/SOFR

Members of a Commodity Futures Trading Commission advisory committee have urged CME Group and LCH to resolve a three-month difference in the date for adopting Secured Overnight Financing Rate discounting. Some participants disagree on whether adoption should occur on CME’s July date or LCH’s October 2020 date.

As part of the Financial Accounting Standards Board’s (FASB) efforts to ease the potential burden and effects of the LIBOR transition, the board issued a proposed Accounting Standards Update (ASU) that provides temporary accounting guidance intended to help companies navigate the challenges of the forthcoming elimination of LIBOR as a reference rate for many financial instruments. FASB reiterated its commitment “to providing stakeholders with the guidance they need to ease the process of migrating away from LIBOR and other interbank offered rates to new reference rates.” The proposal provides guidance on how companies should address any operational challenges arising from the transition, and addresses how companies can simplify the transition process while reducing costs. FASB is requesting that stakeholders review the proposal and provide comments by October 7, 2019.

Transferring risk

Since the financial crisis, mortgage giants Fannie Mae and Freddie Mac have wound down their retained portfolios, reduced risk, and returned more than $300 billion to the government. Let’s see what Freddie’s been up to in the capital markets. As a reminder, K-Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds. K Certificates typically feature a wide range of investor options with stable cash flows and structured credit enhancement.

Freddie announced it would go to market with a new “KG-deal” designed to meet the needs of investors seeking “green” bonds by exclusively securitizing workforce housing loans made through the company’s Green Advantage program, which requires borrowers to make energy and water efficiency improvements to their properties (borrowers must reduce energy or water consumption by a total of 30 percent with a minimum of 15 percent of those efficiencies found through energy improvements). Freddie Mac has purchased more than $44.7 billion in green loans since the inception of the program in 2016. The improvements initiated thus far to the more than 1,600 properties financed through the Green Advantage program are projected to save 4.7 billion gallons of water per year and nearly 1.8 billion kBtu per year in energy per year. Nearly 86% of the units financed are affordable to tenants with incomes equal to or less than area median income, with tenants benefitting through lower utility costs.

In a K-Deal, multifamily loans purchased by Freddie Mac from its Optigo lender network are sold to a third-party depositor, who then deposits the multifamily loans in a trust that issues securities backed by the multifamily loans and privately sells subordinate and mezzanine bonds to investors. The trust sells the senior, guaranteed bonds to Freddie Mac, who in turn securitizes the senior bonds and publicly offers structured pass-through certificates to investors via placement agents. Freddie Mac securitized $72.8 billion in loans in 2018, with $61.6 billion of that total spread across 63 K-Deals. To date, Freddie Mac has not realized any credit losses on K-Deal guaranteed classes and 99.98 percent of K-Deal loans are current as of 2018.

The pricing for the K-G01 deal is as follows. Class A-SB has principal of $27.14 million, a weighted average life of 6.80 years, a coupon of 2.738 percent, a yield of 2.400 percent, and a dollar price of $101.9995. Class A-7 has principal of $210.05 million, a weighted average life of 6.56 years, a coupon of 2.875 percent, a yield of 2.362 percent, and a dollar price of $102.9961. Class A-10 has principal of $198.14 million, a weighted average life of 9.63 years, a coupon of 2.939 percent, a yield of 2.578 percent, and a dollar price of $102.9985.

Freddie Mac recently priced a new $718 million offering of Structured Pass-Through K-Certificates (K-F67) backed by floating-rate multifamily mortgages with ten-year terms. The deal is expected to settle on or about September 24, 2019. The K-F67 Certificates will not be rated, and will include one senior principal and interest class, one interest-only class, and one class entitled to static prepayment premiums. The KF67 Trust will also issue certificates consisting of the Class B, C and R Certificates, which will be subordinate to the classes backing the K-F67 Certificates and will not be guaranteed by Freddie Mac. Class A, the only offered class, has principal of $718.533 million, a weighted average life of 9.57 years, a coupon of 1-month LIBOR + 52, and a $100.00 dollar price.

Freddie Mac also priced K-097, a $1.2 billion deal backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 10-year terms, expected to settle on or about September 24, 2019. There are five offered classes. Class A-1 has principal of $114.372 million, a weighted average life of 7.01 years, a 2.16 percent coupon, a 2.07 percent yield, and a $100.4976 dollar price. Class A-2 has principal of $1,083.053 million, a weighted average life of 9.80 years, a 2.51 percent coupon, a 2.16 percent yield, and a $102.9958 dollar price. Class A-M has principal of $66.115 million, a weighted average life of 9.84 years, a 2.22 percent coupon, a 2.21 percent yield, and a $99.9932 dollar price. Class X1 has principal of $1,197.425 million, a weighted average life of 9.30 years, a 1.09 percent coupon, a 2.293 percent yield, and a $9.1774 dollar price. Finally, Class X3 has principal of $205.693 million, a weighted average life of 9.68 years, a 2.02 percent coupon, a 4.34 percent yield, and a $16.1836 dollar price.

Freddie Mac recently priced a $1.2 billion offering of new K-Certificates (K-736), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 7-year terms. The deal should settle on or about September 17, 2019. K-Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds, and typically feature a wide range of investor options with stable cash flows and structured credit enhancement. K-736 pricing is as follows. Class A-1 has principal of $110.482 million, a weighted average life of 3.56 years, a coupon of 1.895 percent, a yield of 1.719 percent, and a $100.500 dollar price. Class A-2 has principal of $1,093.460 million, a weighted average life of 6.64 years, a coupon of 2.282 percent, a yield of 1.785 percent, and a dollar price of $102.998. Class A-M has principal of $68.427 million, a weighted average life of 6.86 years, a coupon of 1.849 percent, a yield of 1.838 percent, and a dollar price of $99.995. Class X1 has principal of $1,203.942 million, a weighted average life of 6.06 years, a coupon of 1.312 percent, a yield of 2.347 percent, and a dollar price of $7.536. And Class X3 has principal of $207.130 million, a weighted average life of 6.62 years, a coupon of 2.013 percent, a yield of 3.419 percent, and a dollar price of $12.055.

Freddie Mac has been busy recently announcing a series of K-Deals, which are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds. K Certificates typically feature a wide range of investor options with stable cash flows and structured credit enhancement. K-F65, a $748 million deal comprised of multifamily mortgages with 10-year terms, settled on August 15. There was only one offered class, Class A, which had principal of $748.733 million, a weighted average life of 9.55 years, a coupon of 1-month LIBOR + 52, and an even $100.00 dollar price.

Freddie’s K-Deal featuring multifamily mortgages with 10-year terms the next week (K-096), which settled on August 22, was a $1.1 billion offering with five offered classes for investors. Class A-1 had principal of $106.048 million, a weighted average life of 6.89 years, a coupon of 2.143 percent, a yield of 2.05132 percent, and a dollar price of $100.4994. Class A-2 had principal of $1,019.000 million, a weighted average life of 9.83 years, a coupon of 2.519 percent, a yield of 2.17089 percent, and a dollar price of 102.9990. Class A-M had principal of $58.489 million, a weighted average life of 9.93 years, a coupon of 2.219 percent, a yield of 2.21351 percent, and a dollar price of $99.9913. Class X1 had principal of $1,125.048 million, a weighted average life of 9.29 years, a coupon of 1.25697 percent, a yield of 2.82854 percent, and a dollar price of $9.499. Finally, Class X3 had principal of $192.669 million, a weighted average life of 9.68 years, a coupon of 2.11101 percent, a yield of 4.33499 percent, and a dollar price of $16.2504.

Freddie’s $768 million K-Deal (K-F66) backed by multifamily mortgages with 10-year terms that is scheduled to settle on or about August 30, contained only one offered class. Class A has a principal of $768.258 million, a weighted average life of 9.61 years, a coupon of 1-month LIBOR + 52, and an even $100.00 dollar price. Class X1 and XP, each $853.621 million, are not offered.

Additionally, Freddie announced a $394 million K-Deal earlier this month backed by multifamily mortgages on senior housing properties (K-S11). This marks the eleventh senior family offering, and is comprised of two loans, each with fixed and floating rate components. Class AFL had principal of $158.893 million, a weighted average life of 9.29 years, a coupon of 1-month LIBOR + 62, and an even dollar price of 100.00. Class AFX-1 had principal of $20.849 million, a weighted average life of 7.01 years, a coupon of 2.154 percent, and a dollar price of $99.9988. Class AFX-2 had principal of $214.554 million, a weighted average life of 9.40 years, a coupon of 2.654 percent, and a dollar price of 102.9938. Class XFX had principal of $235.404 million, a weighted average life of 9.19 years, a coupon of 1.7589 percent, and a dollar price of 12.5024. The transaction settled August 16.

Freddie priced its eighth SB transaction in 2019 (SB65), which was a multifamily mortgage backed securitization backed by small balance loans underwritten by Freddie and issued by a third-party trust. Individual SBLs generally range from $1 million to $6 million and are backed by properties with five or more units. The $555 million transaction, which settled August 23, had five offered classes. Class A-5F had principal of $62.005 million, a weighted average life of 3.91 years, a coupon of 1.99 percent, a yield of 1.83407 percent, and a dollar price of $100.48. Class A-5H had principal of $191.866 million, a weighted average life of 4.06 years, a coupon of 2.13 percent, a yield of 1.97978 percent, and a dollar price of $100.47. Class A-7H had principal of $70.847 million, a weighted average life of 5.45 years, a coupon of 2.16 percent, a yield of 2.04811 percent, and a dollar price of $100.47. Class A-10F had principal of $102.072 million, a weighted average life of 7.30 years, a coupon of 2.16 percent, a yield of 2.07742 percent, and a dollar price of $100.47. Class A-10H had principal of $128.706 million, a weighted average life of 7.24 years, a coupon of 2.30 percent, a yield of 2.21652 percent, and a dollar price of $100.46. Class X1 will not be offered.

Freddie Mac priced a new K Certificate offering last week, $693 million in K-F64 certificates backed by floating-rate multifamily mortgages with ten-year terms, expected to settle on or about July 31, 2019. The K-F64 Certificates will not be rated, and will include one senior principal and interest class, one interest-only class, and one class entitled to static prepayment premiums. Class A, which was the only offered class, has a principal of $693.77 million, a weighted average life of 6.70 years, a discount margin of 44 bps, and an even 100.00 dollar price.

Freddie Mac also announced its first execution using the new structure with San Francisco-based IMPACT Community Capital, an impact investment manager investing in underserved communities. IMPACT swapped 77 loans for $141 million in Freddie Mac guaranteed Multi PCs. All the properties involved in the transaction received financing through 9% Low-Income Housing Tax Credits, and approximately 3,400 of the units financed are affordable to low-income residents, earning 50 percent or less of area median income. IMPACT can sell the Multi PCs to investors to acquire additional liquidity for future affordable housing investments, providing more efficient access to capital for the affordable housing space. This transaction ensures that IMPACT has the funding it needs to make more mission-driven investments, encouraging investment in underserved markets. The transaction continues a long history of innovation between IMPACT and Freddie Mac that included partnering on the first two Q-Series transactions in 2014 and 2015. Freddie Mac Multifamily is the nation’s multifamily housing finance leader.

A while back Freddie also announced a newly created Private Placement PC Swap execution (PPP) to help financial institutions with less than $10 billion in assets access additional liquidity for the financing of affordable housing to swap a pool of loans backed by affordable properties for Freddie Mac Multifamily PCs backed by the loans. The Multi PCs, which are guaranteed by Freddie Mac, can then be sold to investors, returning liquidity to the financial institution. The new structure is a variant of Freddie Mac’s 55-Day Multifamily PC Swap and will allow small financial institutions to access additional liquidity. Many affordable housing lenders generally lack the scale to access capital markets in a cost-effective manner, but by swapping Freddie Mac PCs through a low-cost execution, Freddie provides more liquidity for affordable housing.

On May 7, Freddie commenced its offer to exchange certain eligible Freddie Mac securities for To-Be-Announced (TBA)-eligible Uniform Mortgage Backed Securities Mirror Certificates (UMBS) as part of the Single Security Initiative. Opening the exchange offer represents the final step before the Single Security Initiative goes live on June 3 (freddiemac.com/MBS/legal/). The Single Security Initiative is expected to create a single, $5 trillion agency TBA mortgage-backed securities market, the second largest bond market in the world, with the goal of providing greater liquidity in the U.S. housing market and reducing costs for borrowers. Freddie Mac Gold PC investors who want the benefit of the new single security, or UMBS, should find the exchange frictionless.

The goal is a larger, more fungible secondary mortgage market, with greater liquidity for investors, better returns to U.S. taxpayers, and lower costs for homebuyers. Specifically, Freddie Mac is offering to exchange its 45-day payment delay TBA-eligible and non-TBA-eligible Gold Mortgage Participation Certificates (Gold PCs) securities for Freddie Mac 55-day payment delay, TBA-eligible UMBS Mirror Certificates (UMBS) and non-TBA-eligible Mortgage-Backed Securities Mirror Certificates (MBS), respectively. Freddie Mac is also offering to exchange its 45-day payment delay TBA-eligible and non-TBA-eligible Giant PCs for Freddie Mac 55-day payment delay, TBA-eligible Supers Mirror Certificates and non-TBA-eligible Giant Mortgage-Backed Securities Mirror Certificates, respectively.

Holders who participate in the exchange offer also will receive “float compensation,” a one-time payment, which is primarily intended to compensate holders for the difference in payment delay between eligible Gold PCs and Giant PCs (which have a 45-day payment delay) and the related Mirror Certificates (which have a 55-day payment delay). Investors should read the Exchange Offer Circular for the terms and conditions pertaining to Freddie Mac’s exchange offer. Freddie Mac offers investors two alternative exchange paths to complete exchanges: through dealers using Freddie Mac’s Dealer Direct portal, or directly with Freddie Mac as facilitated through Tradeweb. An overview of both paths and considerations for investors is available on Freddie Mac’s website.

Investors began booking exchange transactions through the two exchange paths on May 7 for settlement dates beginning on May 17. Freddie Mac is now planning for a transition period to help all market participants understand and prepare for exchanges, during which exchanges will settle T+2, and overall capacity will be limited to 10,000 exchanges per business day. Investors who prefer to hold their Freddie Mac Gold PC or Giant PC securities are not required to make an exchange. Freddie Mac expects to cease issuing Gold PCs after May 31, 2019. Certificates disclosed through the Cumulative 45-Day to 55-Day Exchange Activity File can be found on the Exchange Data Files webpage. Freddie Mac is also now publishing the Daily 45-Day to 55-Day Exchange Activity and the Aggregate Level 1 Collateral Exchange Activity data files on the Exchange Data Files webpage.

On May 21, Freddie Mac priced a new $801 million offering of Structured Pass-Through K-Certificates (K-F62 Certificates), backed by floating-rate multifamily mortgages with ten-year terms, expected to settle on or about May 31, 2019. The K-F62 Certificates will not be rated, and will include one senior principal and interest class, one interest-only class, and one class entitled to static prepayment premiums. The KF62 Trust will also issue certificates consisting of the Class B, C and R Certificates, which will be subordinate to the classes backing the K-F62 Certificates and will not be guaranteed by Freddie Mac. Pricing for Class A is as follows. $801.509 million in principal, a weighted average life of 6.62 years, a coupon of 1-month LIBOR + 48, and an even dollar price of 100.00. The K-F62 preliminary offering circular supplement can be found at http://www.freddiemac.com/mbs/data/kf62oc.pdf.

On May 16, Freddie Mac announced the pricing of the $561 million SB62 offering, a multifamily mortgage-backed securitization backed by small balance loans underwritten by Freddie Mac and issued by a third-party trust, anticipated to settle on or about May 24, 2019. Freddie Mac Small Balance Loans generally range from $1 million to $6 million and are generally backed by properties with five or more units. This is the fifth SB Certificate transaction in 2019.Freddie Mac is guaranteeing five senior principal and interest classes and one interest only class of securities issued by the FRESB 2019-SB62 Mortgage Trust. Freddie Mac is also acting as mortgage loan seller and master servicer to the trust. In addition to the six classes of securities guaranteed by Freddie Mac, the trust will issue certificates consisting of Class B and Class R Certificates, which will not be guaranteed by Freddie Mac and will be sold to private investors. Pricing for the deal is as follows. Class A-5H has principal of $134.729 million, a weighted average life of 4.11 years, a coupon of 2.83 percent, a yield of 2.6711 percent, and a dollar price of 100.48. Class A-7F has principal of $46.789 million, a weighted average life of 5.46 years, a coupon of 2.85 percent, a yield of 2.7371 percent, and a dollar price of 100.45. Class A-7H has principal of $67.206 million, a weighted average life of 5.53 years, a coupon of 2.98 percent, a yield of 2.8592 percent, and a dollar price of 100.50. Class A-10F has principal of $180.040 million, a weighted average life of 7.22 years, a coupon of 3.07 percent, a yield of 2.9789 percent, and a dollar price of 100.49. Class A-10H has principal of $132.311 million, a weighted average life of 7.26 years, a coupon of 3.20 percent, a yield of 3.1103 percent, and a dollar price of 100.48.

On May 14, Freddie Mac announced it sold 1,789 non-performing residential first lien loans (NPLs) from its mortgage-related investments portfolio via auction, totaling approximately $307 million. The loans are currently serviced by NewRez LLC, doing business as Shellpoint Mortgage Servicing, and the transaction is expected to settle in July 2019. The sale is part of Freddie Mac’s Standard Pool Offerings (SPO).  Bids for the upcoming Extended Timeline Pool Offering (EXPO), which is a smaller sized pool of loans, are due from qualified bidders by May 21, 2019. Freddie Mac, through its advisors, began marketing the transaction on April 11, 2019. For the SPO offerings, the loans were offered as three separate pools of mortgage loans. The three pools consist of mortgage loans secured by geographically diverse properties.

Investors had the flexibility to bid on each pool individually and/or any combination of pools. Mortgages that were previously modified and subsequently became delinquent comprise approximately 57 percent of the aggregate pool balance. Additionally, purchasers are required to solicit distressed borrowers for additional assistance except in limited cases and ensure all pending loss mitigation actions are completed. The SPO pools and winning bidders are summarized below: pool #1 had unpaid principal of $93.5 million, 512 loans with an average delinquency of 20 months, and was won by InSolve Global Credit Fund. Pool #2 has unpaid principal of $127.8 million, 857 loans with an average delinquency of 28 months, and a winning bid by Elkhorn Depositor. Pool #3 has an unpaid principal of $86.1 million, 420 loans with an average delinquency of 28 months, and a winning bid by Elkhorn Depositor. To date, Freddie Mac has sold $8 billion of NPLs and securitized more than $50 billion of RPLs consisting of $29 billion via fully guaranteed PCs, $18 billion via Seasoned Credit Risk Transfer (SCRT) senior/sub securitizations, and $3 billion via Seasoned Loans Structured Transaction (SLST) offerings.

Freddie announced its Q2 2019 results for its Single-Family Credit Risk Transfer STACR and ACIS offerings, with three on-the-run transactions (DNA and HQA), and two seasoned transactions (FTR and HRP) issued. These transactions raised $1.4 billion in private investment, transferring credit risk away from U.S. taxpayers to the private sector. STACR and ACIS DNA series (60 percent-80 percent LTV) deals reduced conservatorship capital required for credit risk by 90 percent, while STACR and ACIS HQA series (80 percent-97 percent LTV) deals reduced conservatorship capital required for credit risk by 80 percent. Year to date, Freddie Mac’s single-family CRT programs, as a whole, have raised $5 billion in private investment providing protection on $135 billion in single-family mortgages. Since the first CRT transaction in 2013, Freddie Mac has transferred credit risk on more than $1.3 trillion in mortgages and raised $49 billion in private investment.

The second Freddie announcement was the pricing of the $398 million SB64 offering, a multifamily mortgage-backed securitization backed by small balance loans underwritten by Freddie Mac and issued by a third-party trust anticipated to settle on or about July 19, 2019. Freddie Mac Small Balance Loans generally range from $1 million to $6 million and are backed by properties with five or more units. In the seventh SB Certificate transaction in 2019, Freddie Mac is guaranteeing two senior principal and interest classes and one interest only class of securities issued by the FRESB 2019-SB64 Mortgage Trust. Freddie Mac is also acting as mortgage loan seller and master servicer to the trust. The $225.060 million class A-5H priced at a $100.48 dollar price includes a weighted average life of 4.05 years, a spread of 54 bps, a coupon of 2.52 percent, and a yield of 2.36338 percent. Class A-10F, which has a principal amount of $173.301 million and a dollar price of $100.46, has a weighted average life of 7.30 years, a spread of 70 bps, a coupon of 2.71 percent, and a yield of 2.62541 percent.

The final announcement was the pricing of a new $1.1 billion offering of Structured Pass-Through K-Certificates (K-094), multifamily mortgage-backed securities which settled on July 18. Class A-1 has principal of $96.189 million, a weighted average life of 6.98 years, a coupon of 2.701, a yield of 2.37189, and a dollar price of 101.9974. Class A-2 has principal of $984.665 million, a weighted average life of 9.85 years, a coupon of 2.903, a yield of 2.55050, and a dollar price of $102.9942. Class A-M has principal of $63.189 million, a weighted average life of 9.94 years, a coupon of 2.618, a yield of 2.61303, and a dollar price of $99.9925.

Freddie Mac priced two new K-deals this past week. K-735 issued approximately $1.2 billion in certificates backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 7-year terms. Pricing for the deal, which is expected to settle on or about July 25, is as follows. Class A-1 has principal of $69.13 million, a weighted average life of 4.23 years, a coupon of 2.742 percent, a yield of 2.20875 percent, and a dollar price of 101.9993. Class A-2 has principal of $1.073733 billion, a weighted average life of 6.65 years, a coupon of 2.862 percent, a yield of 2.35551 percent, and a dollar price of 102.9940. Class A-M has principal of $70.55 million, a weighted average life of 6.83 years, a coupon of 2.455 percent, a yield of 2.44158 percent, and a dollar price of 99.9983.

K-1512, a $679 million transaction expected to settle on or about July 26, contains the following pricing. Class A-1 has principal of $60.78 million, a weighted average life of 7.95 years, a coupon of 2.770 percent, a yield of 2.4770 percent, and a dollar price of 101.9994. Class A-2 has principal of $330.05 million, a weighted average life of 11.60 years, a coupon of 2.9880 percent, a yield of 2.6828 percent, and a dollar price of 102.9902. And Class A-3 has principal of $288.388 million, a weighted average life of 14.63 years, a coupon of 3.059 percent, a yield of 2.8084 percent, and a dollar price of 102.9987.

Freddie Mac priced a new $1 billion offering of Structured Pass-Through K-Certificates (K-095), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominately 10-year terms, expected to settle on or about August 9, 2019. Class A-1 has principal of $98.879 million, a weighted average life of 6.67 years, a coupon of 2.631 percent, a yield of 2.2887 percent, and a $101.9958 dollar price. Class A-2 has principal of $933.354 million, a weighted average life of 9.77 years, a coupon of 2.785 percent, a yield of 2.4313, and a $102.9948 dollar price. Class A-M has principal of $56.994 million, a weighted average life of 9.88 years, a coupon of 2.481 percent, a yield of 2.4749 percent, and a $99.9991 dollar price. Class X1 has principal of $1,032.233 million, a weighted average life of 9.16 years, a coupon of 1.0825 percent, a yield of 2.9778 percent, and a $7.8991 dollar price. Class X3 has principal of $177.317 million, a weighted average life of 9.73 years, a coupon of 2.1711 percent, a yield of 4.4487 percent, and a $16.8181 dollar price.

On June 17, Freddie Mac priced a new $1.2 billion offering of Structured Pass-Through K-093 Certificates, comprised of multifamily mortgage-backed securities expected to settle on or about June 20, 2019. Class A-1 has principal of $88.75 million, a weighted average life of 6.50 years, a coupon of 2.758 percent, a yield of 2.404 percent, and a dollar price of 101.9992. Class A-2 has principal of $1,093.42 million, a weighted average life of 9.78 years, a coupon of 2.982 percent, a yield of 2.626 percent, and a dollar price of 102.9991. Class A-M has principal of $55.78 million, a weighted average life of 9.93 years, a coupon of 2.726 percent, a yield of 2.721 percent, and a dollar price of 99.9978. The K-093 Certificates are backed by corresponding classes issued by the FREMF 2019-K93 Mortgage Trust and guaranteed by Freddie Mac. The K-93 Trust will also issue certificates consisting of the Class X2-A, Class X2-B, Class B, Class C, Class D and Class R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of K-093 Certificates. K-Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds featuring a wide range of investor options with stable cash flows and structured credit enhancement.

Freddie Mac announced the settlement of the first Seasoned Loans Structured Transaction Trust (SLST) offering of 2019—a securitization of approximately $1.2 billion including both guaranteed senior and non-guaranteed subordinate securities backed by a pool of seasoned re-performing loans. The SLST program is part of Freddie Mac’s seasoned loan offerings to reduce less-liquid assets in its mortgage-related investments portfolio and shed credit and market risk via economically reasonable transactions. Series 2019-1 includes approximately $942 million in guaranteed senior certificates and approximately $276 million in non-guaranteed subordinate certificates, with the guaranteed senior certificates already priced on May 21 through a syndicated process. The right to purchase the subordinate certificates was awarded through a competitive auction in March to Hains Point LLC. The underlying collateral backing the certificates consists of 7,604 fixed- and step-rate modified seasoned re-performing and moderately delinquent loans, modified to assist borrowers who were at risk of foreclosure to help them keep their homes. To date, Freddie Mac has sold $8 billion of non-performing loans and securitized more than $53 billion of RPLs. Additional information about the company’s seasoned loan offerings can be found at: http://www.freddiemac.com/seasonedloanofferings/.

Part 5 of 5 of “Books Never Written.” (Yes, my mind spends a lot of time in 3rd grade. Warning: Rated PG for bawdy humor.)

Interesting Places Around The World by Ben There & Don That

Paris Monuments by I. Phil Taurer

Text Editing by E. Max and Vi

The Bearded Chinaman by Harry Chin

How to Exercise by Eileen and Ben Dover

100 Ways to Diet by I. M. Hungry

Getting Fired by Anita Job

Crossing a Man with a Duck by Willie Waddle

A Sailor’s Adventure by Ron A. Ground

Green Vegetables by Brock Ali

Never Shave Again by Harry Pitts

Long Walk Home by Miss. D. Bus

Sitting on the Beach by Sandy Baum

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, “Mortgage Rates: Thinking the Unthinkable.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Sep. 13: CFO, AE jobs; sales, DPA, HELOC, non-QM products; lender flood news; what is driving rates

Any
month that starts on a Sunday contains a Friday the 13th.
The superstitious sufferers of “triskaidekaphobia” try to avoid bad luck
by keeping away from anything numbered or labelled thirteen, while
others, such as some attorneys for whatever reason,
believe it to be lucky. But some companies and manufacturers often use
another way of numbering or labelling to avoid the number: see if your
airplane has a 13th row or your building a 13th
floor. (Who says you don’t learn anything from
reading this commentary?) Wells Fargo, which has managed to stay out of
lawsuit headlines as of late, didn’t have any luck yesterday when
California filed support for Oakland in
a
Wells Fargo mortgage suit
for discriminating against, or giving higher cost mortgages to, minorities. Lawyer up! The fun never ends.

Jobs

A
lender experiencing massive growth headquartered in Scottsdale AZ, is
looking to add to its’ executive team by hiring a CFO by the end of the
year
. The
company started in August of 2017 with 4 loan officers and no outside
funding, and in August funded over $200,000,000 in volume; with
projections crossing $275,000,000 funded by December. Licensed in over
30 states, it is primed to continue its explosive growth
and needs a candidate with exceptional leadership and accounting acumen
to elevate the organization to the next level. The candidate should
have extensive knowledge of mortgage specifics, warehouse lending, and
the ability to operate in a fast-paced environment. “Our
culture is one built around being elite at everything from client
service to production to accountability; all while keeping team members
positive and loving their careers.” Please email all resumes to Chrisman
LLC’s
Anjelica
Nixt
for forwarding; specify opportunity

NewRez
Wholesale
,
a nationwide and heavily capitalized lender, is looking for experienced
Account Executives with an entrepreneurial spirit to join its growing
team.
 Opportunities
are available in the following areas under their respective Regional
Managers: Arizona, Florida, Nevada, San Jose and San Diego, California (John
McElhone),
Western PA (Shawn
Crowley),
Wisconsin, Minnesota, Tennessee, and Houston, Texas (Tony
Hale).
“We are excited to expand the team with new talent in new territories,”
says Mark Melini, VP National Wholesale Sales Manager. “Our growing
product suite, flexible lending guidelines and fast broker onboarding
process makes NewRez a great place to take your
career to the next level.” To learn more about available opportunities,
contact Mark
Melini.

 Lender
products & services

“Are
you going to the NAMB National 2019 at Caesar’s Palace this weekend. If
so, stop by booth 1111 and meet James Hooper and his team from NMSI
Wholesale to learn more about one of the fastest growing wholesale
lenders in America. Learn first-hand how NMSI is
positioned for growth and prepared to serve the Mortgage Broker
community with our aggressive product offering featuring everything from
Agency, Jumbo, Non QM and even 2nd liens, Not to mention our competitive pricing, and our propriety technology
called that brokers are raving about with how easy and transparent it is.
Visit
us for
more details or email sales@nmsigroup.com.”

Brokers –
now’s the time to go in(to) reverse…mortgages, that is.
 Regulatory
changes to the reverse/HECM program have made this once-maligned
product safer than ever for senior borrowers to leverage as part of
their overall retirement strategy. What’s more,
it’s even easier for brokers to add this product to their mix thanks to SimpleReverse
by Mid America Mortgage
.
With SimpleReverse, brokers have access to Mid America’s team of
reverse mortgage experts, ensuring brokers can offer this highly complex
and heavily regulated product with confidence. In just 5 easy steps,
brokers can get from inquiry to closing while still earning
their normal commission. For more information on the
SimpleReverse program, call 833-765-LOAN or contact
simple.reverse@midamericamortgage.com

Caliber
Home Loans,
Inc.
has become the first lender outside of Figure Technologies to originate
home equity lines of credit directly on the Provenance blockchain
platform
.
By originating, servicing and financing loans on Provenance, Caliber
looks to deliver an outstanding consumer experience, while lowering
costs, reducing risk and improving financing execution throughout the
entire loan process. Sanjiv Das, Chief Executive
Officer of Caliber said of the new HELOC platform, “We think the ease
and speed of this process is truly unique. Unlike traditional home
equity lending timeframes which often stretch out for weeks, our
borrowers can now complete the entire process digitally
and access their funds in days. We think that’s a great solution and
gives our customers tremendous flexibility.”

Non-QM
origination volume continues to grow exponentially even in the face of
historically low rates, and as we near the finish line for 3Q 19’, the
velocity of growth, interest in the product, and capital investment are
at an all-time high. Deephaven Mortgage is
committed to helping the industry continue its upward trajectory. To
help originators & executives learn more about the Non-QM
marketplace & how to make it a part of their business plan,
Deephaven co-hosted a webinar recently with LoanScorecard; visit
https://vimeo.com/355325583
to catch up on the market and continue building your Non-QM knowledge
.
Deephaven has a diverse array of products, technology, and 7+ years of
Non-QM expertise to aid the originator at the point of sale. Non-QM is
the 100% focus at Deephaven, get in touch with us today by contacting us
at
brokerinfo@deephavenmortgage.com
(Wholesale) or sales@deephavenmortgage.com
(Correspondent).

Homeownership
remains a cornerstone of the American dream, but the rising cost of
originating mortgages is pushing that dream out of reach for more and
more Americans. Lenders are drinking from a firehose right now thanks to
low-interest rates, but the underlying problems
– high costs and inefficient systems – haven’t gone away. When the
euphoria calms down, those problems will still exist and lenders will
have to deal with them. This is a problem specific to mortgage
production: mortgage origination costs have been climbing
for more than a decade, and everyone involved is starting to feel the
strain. Rather than focusing solely on the customer-facing portions of
the process, mortgage tech must streamlinethe back-end components that account for the biggest delays. Cloudvirga Co-founder Kyle
Kamrooz
 explores the the
current state of the cost of mortgage origination costs and the vision to reduce costs while making borrowing more accessible
. 

101%
Conventional Financing, Down Payment Assistance, and No Mortgage Insurance.

Lakeview
Wholesale is offering a conventional first up to 97% LTV with no
mortgage insurance, plus an interest only DPA community second of up to
4% for down payment, and closing costs (lesser of purchase price or
appraised value).

Finish the year strong by increasing your high LTV and first-time buyer business. Currently available in select states.
Click
here to learn more.

Where
can you get 11X return on every dollar you spend?
 There
is only one place smart lenders go to get these returns consistently: Sales Boomerang. Why
would you say no to 11X or better ROI? You can’t, and you shouldn’t.
Believe me, your stake holders will thank you. “Now, we don’t let
opportunities walk out the door thanks to timely notifications,” Michael
Guidotti from American Pacific Mortgage. Lenders
get on average an 11X return but many are posting 15X, 20X, 25X and all
the way up to 60X returns from every dollar invested into
Sales Boomerang. “Sales Boomerang is a game changer for us, because
we’ve never had access to such information before,” Stephen
Barton from Eustis Mortgage. If volume is not your problem today then
profit and customer retention need to be at the top of your list. Check
out the long list lenders already using Sales Boomerang
 and then
schedule your demo

Flood
& disaster news

In
the U.S., the number of National Flood Insurance Program policies
has fallen from 5.65 million in 2011 to 5.2 million flood insurance
policies in 2018
. In the 59 counties that saw evacuation orders
related to Hurricane Dorian, the number of flood insurance
policies drop 31 percent over the period, from 734,445 policies to
508,731 last year. In Palm Beach County, the number of federal policies
fell
37 percent over the period.
Yet the Federal Emergency Management Agency has set a goal of doubling
the number of Americans with flood insurance by 2023. Good luck.

On
September 18th, learn about PRMG’s FHA
203h product,
the mortgage insurance for Disaster Victims program, which allows for
up to 100% financing for the purchase of a new home for borrowers who
owned or rented a home in a Presidentially-Declared Major Disaster Area
(PDMDA) that was destroyed or damaged to such
an extent that replacement is necessary.

FHA
is providing a
free, online webinar
covering ML 2019-14: Updates to FHA’s Loss Mitigation Options for Borrowers in Presidentially Declared Major Disaster Areas (PDMDA).This webinar is offered on Thursday, Sept 26th.

Previously,
AmeriHome suspended fundings due to the National Weather Service
predictions for Hurricane Dorian along the Eastern Coastline. AmeriHome
is lifting the remaining funding suspensions for the Florida, Georgia,
and South Carolina counties.

loanDepot
Wholesale

is monitoring Hurricane Dorian and will be providing updates and
guidance as the impact of the hurricane becomes clear. All previous
restrictions for counties in Florida, Georgia and North Carolina
have been removed. South Carolina counties still impacted include Berkeley, Charleston, Dorchester, Georgetown and Horry.

Hurricane
Dorian has moved north up the coast and Plaza Home Mortgage® has
resumed funding throughout Florida and Georgia. The pause in funding remains in place for the Carolinas and Virginia during the continued monitoring of the storm path.

loanDepot
Wholesale/Correspondent’s
Weekly
Announcement
includes information on FHA’s Mortgagee Letter 2019-11 / FHA Fixed and
ARM Matrix, FHA’s Mortgagee Letter 2019-13 Condominium Project Approval
Requirements and Nebraska’s Disaster Announcement Update.

Capital
markets

NewDay
USA

has been approved as a Ginnie Mae Servicer Seller for VA loan
production in addition to being approved to issue Ginnie Mae I and II
securities for FHA multi-issuer securities. “The Ginnie Mae
single-family program provides critical mortgage financing for our
nation’s veterans and active duty military, after Ginnie Mae’s review
showed NewDay USA’s prepayment reduced speeds, meeting Ginnie Mae
guidelines. Based on current origination volume, NewDay USA is projected
to be a top five VA lender in the U.S. in 2019.”

It
has been nearly a year that markets have been dealing with the
increasingly escalating trade war between the US and China. The next
round of talks between the countries will take place in October in
Washington and while the markets hope for a deal (yeah, right)
at the conclusion of those meetings, both sides have large demands from
one another. In the manufacturing sector, more firms reported
contraction in the latest ISM survey which fell below the demarcation
level of 50 between expansion and contraction for the
first time since 2016. Services, which are a larger part of the
economy, rose to 56.4. Should new tariffs go into effect, however, it
may erode consumer purchasing power and therefore consumer spending.
Last week we learned that nonfarm payrolls declined in
August to +130,000 with 25,000 the result of temporary hiring for the
2020 census. Despite a general slowdown in hiring that has persisted
throughout the year, hourly earnings increased 0.4 percent and are up
3.6 percent over the last three months. The Fed
will have to weigh slowing business conditions with good consumer data
when they meet next week to update monetary policy. Most market
participants expect a 25bps reduction to the Fed Funds Rate as they
expect the committee to continue to support the current
expansion. 

So
U.S. economic data continues to be mixed with consumer data remaining
positive and business and manufacturing data eroding. While not all
industries reported contraction, those that did included: apparel,
fabricated metals, transportation equipment, primary
metals, plastics and rubber, paper and electrical equipment. Business
productivity has been increasing throughout the year and was up at an
annual rate of 2.3 percent during the second quarter as labor market
remain tight. The trade gap narrowed slightly in
July to -$54.0 billion although at the current level it might still be a
drag on Q3 GDP. All this as well as the escalating trade uncertainty
between the US and China will be on the minds of Fed officials when they
meet next to discuss monetary policy.
The markets have priced in a greater than 90 percent likelihood of
another 25bps rate cut following the conclusion of the FOMC meeting.
  

Looking
at yesterday, U.S. Treasuries experienced a volatile Thursday session,
first facing some selling pressure after President Trump indicated that a
5 percent tariff increase on imports from China will be postponed for
two weeks and reports Chinese officials are
considering a removal of restrictions on imports of American farm goods
like soybeans and pork. Then, the latest policy statement from the
European Central Bank called for a reduction to the deposit facility
rate that will exempt some bank reserves from negative
rates and a resumption of monthly asset purchases in the amount of
EUR20 billion.

European
Central Bank President Draghi called on fiscal authorities in the
eurozone to commit to more spending in order to lift long-term yields.
His press conference was partially responsible for the reversal in bonds
when he highlighted the limits of monetary policy
(and the negative implications of negative rates for pensions) and said
that fiscal policy could speed up the effects of monetary policy so
rates could go higher. The ECB lowered its outlook for 2019 growth in
the eurozone. And thus Treasuries reversed course
after the euro nearly hit a fresh 2019 low which wasn’t helped by a
tepid $16 billion 30-year bond reopening, and the 10-year closed the day
+6 bps to 1.79 percent.

Today’s
calendar began with August Retail Sales (+.4%) and Import/Export Prices
(-.5%, -.6%), and later July business inventories, preliminary August
Michigan sentiment.
We begin the day with Agency MBS prices worse a solid .125 and the 10-year yielding 1.82%.

Part
4 of 5 of “Books Never Written.” (Yes, my mind spends a lot of time in 3rd grade. Warning: Rated PG for bawdy humor.)

Antlers
in the Tree Top by Hugh Goostamooce

Tiger
in the Bathroom by Heidi Ingthe Tub

How
to Eat Cereal by Poor A. Bowl

Smelly
Stuff by Anita Bath

Being
Lonely by Shenita Mann.

Technology
in the 21st century by Rob Ott

A
Hitchiker’s Guide To Not Getting Killed by Ren Tacar

Gotta
Go To The Bathroom by Think L. Maket, Illustrated by Betty Went, Published by Doris Laukt

Can’t
Sit Still by Ivan Auflitch

Negotiating
with Terrorists by Eve Hill

I
Must Go Again by D. I. Aria

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, “Mortgage
Rates: Thinking the Unthinkable.”
If you have both the time and inclination, make a comment on what I
have written, or on other comments so that folks can learn what’s going
on out there from the other readers.

Rob

(Market
data provided in partnership with MBS
Live.
For free job postings and to view candidate resumes visit LenderNews.
Currently there are hundreds of mortgage professionals looking for
operations, secondary and management roles. For up-to-date mortgage news
visit
Mortgage
News Daily.
For archived commentaries, or to subscribe, go to www.robchrisman.com.
Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job
listings do appear. This report or any portion hereof may not be
reprinted, sold or redistributed without the written consent of Rob
Chrisman.)

Sep. 12: LO jobs; sales, LOS, capital markets products; lots of events, even today; Stearns’ rumblings

I apologize in advance for the length of today’s commentary, but there’s a lot going on! Ask any economist if rent control works, and they’ll say, “No.” But that didn’t stop California’s Assembly from voting in state-wide rent control which the Governor is expected to sign. In terms of pure supply and demand, wanna buy a church? Go ahead and deny that attendance of religious activities is down, but the decline in parts of the U.S. has led to a glut of religious buildings hitting the market as churches and religious schools fold, move, or attempt to offload underused facilities. In the past five years, 6,800 religious buildings have changed hands, and currently there are roughly 1,400 for sale. Some will go private, becoming coffee shops, apartments or homes with ridiculous heating bills. Some will change hands between religious institutions, others to remodelers or developers.

Jobs & personnel moves

NOVA® Home Loans is excited to announce that John Blanks will join its team as the Regional Manager for Maricopa County, Arizona. John has over 28 years of mortgage experience, including, but not limited to, originating, managing, and running secondary marketing departments. His impressive skills will allow him to encourage growth, promote unity, and take advantage of many new opportunities in the Maricopa County Region. John will work with NOVA®’s National Sales Manager, Dave Heuermann, who says, “NOVA® Home Loans is looking to return to the top spot in market share and achieve total production of $2 billion annually in the Phoenix metro area. John has what it takes to step into this big role and help the company exceed these goals.” If you’re interested in joining the NOVA® team in Maricopa County, you can learn more here or contact John Blanks.

“If you’re in the market for a new workplace to build the career you deserve, the PrimeLending Midwest region is the place to do it. In Kansas City, nobody is funding more retail loans and helping more homebuyers achieve their dreams. In Colorado, there “ain’t no mountain high enough” to stop our consistent growth year over year. What about St. Louis? Our branches and loan officers are experiencing more success than ever before. That’s what having the best support, products, technology and origination team can do for you. Just ask Midwest Regional Production Recruiter, Brent Lubahn, and Midwest Regional Manager, Brian Chick. When you’re ready to build your business the way you want with people who always have your back, PrimeLending is the way to make it happen. The first step is contacting Brent for a confidential conversation to discuss your goals.”

Insellerate announced that Tami Von Tour has joined the company as director of enterprise sales responsible for growing Insellerate’s client base of mortgage companies and financial institutions as well as leading efforts to increase awareness and market acceptance of the company’s state-of-the-art client engagement platform. Congratulations!

And Total Expert added three new executives to its leadership team: Steve Sovik, Chief Revenue Officer, Deanna Swanson, VP of People Operations, and Peggy McGillis, SVP of Marketing.

And a nod to Texas oil tycoon and corporate raider T. Boone Pickens who died at age 91 of natural causes, and James Challenger, Founder of Outplacement and Chair of Challenger, Gray & Christmas, who was 93.

Lender products & services

The National Association of Mortgage Field Services (NAMFS) welcomed its 2020 leadership team last week at their annual conference in Fort Worth, Texas. Among the newly appointed officers includes Altisource® Field Services product lead, Jim Vaca. Jim will be serving as Vice President for NAMFS and is committed to promoting the mission of the organization, growing membership and continuing to provide value to existing members. Altisource Field Services provides comprehensive property inspection and maintenance services on a national scale with local expertise and presence to help mitigate risk and reduce holding costs. Email Jim Vaca to learn more.

What are your turn times right now? Do you know how they’re trending? How about granularly by area, department or program? How quickly can you compare one period to another? If your BI tool can’t tell you within seconds, it’s time to start reevaluating. Richey May Technology Solutions has a lender-focused BI Solution that can connect to all your crucial systems to bring you actionable insights to help you grow intelligently. If your BI tool doesn’t serve you, check out our approach to these 4 common reports that have massive impact for mortgage leaders and contact us for a demo today.”

Happening today … National Mortgage Professional Magazine is presenting their Valuation Innovation: Be Prepared for the Future webinar today, Thursday, September 12 at 2 pm ET / 11 am PT. With pressure to modernize real estate valuations, find out why the role of technology and the roles of the appraiser, lender, home buyer, and governing bodies must all be a part of the conversation to ensure thoughtful change. We will also discuss what modernization efforts have been done to date and what is to come, including how technologies like machine learning and computer vision will play a role. Walk away with ideas on how you can take advantage of early efforts to stay ahead. Get ready for the new era of valuation by attending this webinar. You can register for today’s webinar here.

Connect with AmeriHome at the NAMB National ’19 conference this weekend in Las Vegas to find out more about its Non-Delegated offerings! AmeriHome offers Conventional, FHA and Non-Agency Jumbo products and a Close-on-Time Commitment to help you grow your business with confidence. As one of the top correspondent investors in the country, AmeriHome has the strength, scale, systems and people you should be looking for in a Non-Delegated Investor. Email CLsales@amerihome.com to schedule a meeting, or stop by Booth 1033 for conversation, cocktails, and a chance to win one of their raffles. Don’t miss their sponsored panel on Sunday at 10 am in Emperors Ballrooms 2: Increase Your Profitability by Leveraging the Non-Delegated Channel!

“’I love LOS downtime,’ said no one ever! Path is the cloud-based, data-driven, fully configurable LOS from Calyx that boasts 99.95% consistent uptime— in fact, we even offer an uptime guarantee. Designed to truly simplify the loan process, Path provides the flexibility and controls you need to monitor and run your business your way. In addition, Path’s professional services team is committed to delivering the fastest implementation timing in the industry and ensuring your long-term success. For more information, contact a Path Consultant today!”

Tune in tomorrow, September 13th at 12pm PT for a live video broadcast from this year’s MCT Exchange conference to hear from leading correspondent investors as they discuss “What’s Next for Secondary Marketing Executions & Technology”. Although sadly I will not be hosting this year’s lunch session, if anyone could fill my shoes it would be Phil “Relentless Innovation” Rasori, COO of MCT. Panelists to be featured include Mike Quinn of Penny Mac, Amy Creason of Freddie Mac, Greg Vacura of Wells Fargo, and Giuseppe Grieci of Fannie Mae. This session will discuss the future of the secondary market and how innovations from leading investors will continue to expand the depth of technology and diversity of executions available to lenders. Don’t miss out, register to view the live broadcast from MCT Exchange tomorrow, September 13th at 12pm PT.

Production Managers, we’re talking to YOU! Since the beginning of time you’ve wondered “How can I get all my originators working more like my top producers?” You’ve been looking for the holy grail: habit duplication. Usherpa has been researching habits of highly successful LOs for 25 years. We’ve helped literally thousands of LOs increase production using habit duplication…and we’ve done that through every conceivable market condition! How? Using data analysis technology (and our lengthy history in the industry), we identified the most powerful habits of successful producers. Leveraging those trends coupled with Usherpa’s technology and commitment to customized training, you can ensure your team is primed to operate like the big hitters. Make your life a little bit easier and give your LOs the tools to duplicate top producers’ habits here.  While you’re at it download the Usherpa eGuide “3 Habits of Top Producing Loan Officers (You Can Duplicate).”

Working from home?

Are you considering the benefits of having staff work from home? According to STRATMOR’s 2018 Compensation Connection Study, 30 percent of lenders already have remote underwriters working offsite. Compensating your people is about more than giving them a market average salary. Incentives and benefits, like bonuses, educational allowances, time off and work-from-home opportunities, count. STRATMOR’s Compensation Connection study provides compensation information for all roles unique to the mortgage industry, from sales to post closing for both Independent and Bank-owned lenders and details on incentives and benefits paid. Get the most mortgage-specific compensation information available. Sign up to participate in the 2019 Compensation Connection Study today!

Stearns: bankruptcy progress & Glenn weighs in

After the news below was released, I spoke to Glenn Stearns who told me that he is re-entering the residential lending business with “old-school, loyal, innovative, responsible, and caring independent mortgage banking principles.” Go get ‘em! Given Glenn’s penchant for the biz, that should come as a surprise to no one.

Yes, Stearns Holdings, LLC, the parent company of Stearns Lending, LLC (wholesale, retail and “strategic alliances”) reached an agreement with its largest noteholders under which the noteholders will support the Company’s modified Plan of Reorganization. “The Noteholders and/or funds that they advise and manage collectively hold almost two-thirds of the face amount of the Company’s notes. With the Noteholders’ support, Blackstone will serve as the plan sponsor and will contribute in new capital of $65 million plus additional cash to pay certain claims on the Effective Date to Stearns in return for 100% of the ownership of the reorganized Company. This contribution is in addition to, among other things, debtor-in-possession financing in the amount of up to $30 million that Blackstone has agreed to refinance under the Plan.”

Stearns has canceled the auction previously scheduled to take place on September 16 and will seek confirmation of the plan at a hearing scheduled for October 24. If you’d like to dig into it, check out www.stearnsrestructuring.com, and court filings and other documents related to the court proceedings are available on a separate website administered by the Company’s claims agent, Prime Clerk.

Training and events in the next two weeks, many today!

I am in Newport, Rhode Island at the NEMBC annual gala. It is well attended! There is a lot more going on in the near future!

Are you going to the NAMB National 2019 at Caesar’s Palace, Las Vegas schedule for September 14th-16th? Meet the Stearns Wholesale leadership team and learn more about its “Strong History and Bold Future”. Learn first-hand how Stearns is poised for growth and prepared to serve the Mortgage Broker with new product offerings, new pricing specials, and great technology enhancements. If you would like to set-up a time to speak with the Stearns Wholesale team while at the NAMB 2019 conference, email wholesaleleadership@stearns.com.

The ninth episode of the Affordable Housing Podcast is now available. In this episode, Kathryn Driver, Executive Director of the Housing Finance Authority of Pinellas County, joins Jonathan Paine to discuss the Palms of Pinellas, which was awarded the Multifamily Excellence award at the 2019 NALHFA Annual Conference. Kathryn describes how public and private organizations came together to provide much needed affordable workforce housing in Pinellas County.

Today:

With the mortgage industry primed for improvement through automation, now is the time to adopt new technologies which will drive significant business transformation and provide key competitive advantages. Join Chief Business Officer, Phil Shoemaker from Home Point Financial and Steve Viarengo, Capsilon’s SVP of Digital Mortgage Solutions as they discuss the ins and out of the Mortgage Back Office of the Future via webinar.

The webinar A Step Ahead: Advances in FHA Modeling will take place at 2 p.m. Eastern. Conducting the webinar will be Jarad Bernotavicz, director, product marketing, at Altisource-subsidiary Equator. The event will present a deep dive into the topic of modeling and servicing FHA loans and feature additional insights from subject-matter experts at BSI Financial, RoundPoint Mortgage Servicing and LoanCare.

Join the MCPAOA’s webinar featuring Tammy Butler, CEO of Fair Lending Diversity. Tammy will cover the new 2018 HMDA requirements and their impact on present and future fair lending analysis, what your monitoring protocols should be, and techniques to ensure your organization is compliant.

At 3PM ET, a lender webinar on finding the right down payment programs for your organization. If you struggling to figure out what down payment assistance (DPA) programs are right for your organization, join Down Payment Resources on September 12th for a live webinar; 6 factors you should consider about DPA programs.

There’s the MBA of Metropolitan Washington’s CREF Fall Seminar today.

Do you have questions about the latest LO Compensation Laws? Attend the MMLA’s September 17th meeting to get answers to your questions.

Join Fannie Mae and the Urban Institute for an event on Sept. 18th in Washington D.C. Unlocking the Market: Big Ideas for Local Housing Challenges. This robust conversation will highlight how cities and businesses are exploring innovations and new approaches to tackle today’s critical housing challenges.

Register for “Bank-Owned Mortgage Division: What Bankers Need to Know” webinar offered by MBA on Wednesday, September 18th.

Do you know how to read, understand, and explain Japanese Candlestick charts? If not, join Mortgage Market Guide Chief Market Analyst Bill Bodnar for a fast-paced live call on Wednesday, September 18 from 2:00-2:30 p.m. ET. Click here to save your seat.

The MBA of Southwest Pennsylvania Fall Kickoff in Pittsburgh (LeMont Restaurant) will be held September 18th. Say hello if you come!

Make compliance your priority by educating yourself on the latest actions taken by federal regulators, including the Consumer Financial Protection Bureau (CFPB). Join Richard Horn on the Regulatory and CFPB Update webinar September 18th to ensure you are prepared for the road ahead. He will educate you on the GSEs’ recent revised URLA announcements, TRID FAQs, the GSE patch expiration and the CFPB’s regulatory agenda.

Register for the MBA NJ September 18th Webinar Series. Wire Fraud: The Cyber Threat to the Mortgage Industry and How to Prevent It.

Register for the MBA NJ Webinar Series on Wednesday, September 18th from 10:00-11:00. Wire Fraud: The Cyber Threat to the Mortgage Industry and How to Prevent It.

This webinar is free to members and $25 for non-members.

FHA is offering a Free, Onsite training in Chicago, IL. on September 18th, 8:30 AM to 12:00 PM (Central). This hands-on training session is designed to allow attendees to apply certain underwriting policies outlined in FHA’s Single-Family Housing Policy Handbook 4000.1 to fictional scenarios. Topics to be covered include rate and term refinance; cash-out refinance; streamline refinance; simple refinance; and purchase transactions. Registration for this training will open on August 28th.

On Friday, September 20thregister to attend the CoAMP Luncheon presenting speaker Bronwyn Morrissey. “Embrace your brilliance through the application of the 7 levels of leadership. Develop skills and behaviors that will lead to more effective, productive and consistent action to hit your desired goals. Learn about client and team collaboration, communication and interaction to ensure total success.”

Capital markets

Compass Analytics clients and partners enjoyed the company’s annual user conference in San Francisco on September 9 and 10.  In addition to educational sessions about industry trends, leading-edge capital markets practices, and the Compass suite of products (CompassPoint and CompassPPE), Compass announced two exciting new capabilities now being offered to the mortgage industry:  Compass Community and CompassCapture. Compass Community offers analysis, insights and commentary enriched by current market data accumulated by Compass. CompassCapture is an exciting new technology that provides lead qualification, deal scenarios, and servicing retention analytics. By modeling data about a current or former prospect, CompassCapture determines if a consumer is a good target for multiple loan offers, providing payment, cost, and cash-out/equity information. Contact

sales@compass-analytics.com for more information, and enroll in Compass Community here!

Interest rates? Blah blah blah China. Blah blah blah tariffs. President Trump repeated his call for more rate cuts, saying “The Federal Reserve should get our interest rates down to ZERO, or less” via a tweet. Really? Nothing every other president hasn’t wanted. The 10-year ended the day little-changed yielding 1.73 percent.

But it’s a new day, and moves from the European Central Bank, with its new bond-buying program attempting to stimulate the economy and corresponding rate cut, have pushed U.S. rates lower. We’ve also had weekly jobless claims (204k) and the Consumer Price Index (+.1%, core +.3%). Thursday begins with rates lower due to the ECB moves: Agency MBS prices are up .250-.375 and the U.S. 10-year yielding 1.70%.

Part 3 of 5 of “Books Never Written.” (Yes, my mind spends a lot of time in 3rd grade. Warning: Rated PG for bawdy humor.)

Blazing! by Lotta Heat

Computer Memory by Meg A. Byte

Gotta Go by C. U. Leiter

Can’t Go There by Hans Off

Checking Your Homework by R.U. Wright

The Membership List by Ross Terr

Manwich by “Slop” E. Joe

The Giant Clock Tower by Big Ben

All About Flowers by Chris Anthymum

Boy Scout Brigade by Pat Troll

The Lost Scout by Werram Eye

Kitty’s Revenge by Claude Balls

Brown Streaks Across the Desert by Who Flung Dung

Ten Years in the Bathtub by Rink Lee Prune

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, “Mortgage Rates: Thinking the Unthinkable.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Sep. 11: LO, AE, sales jobs; non-QM, branding, correspondent products; origination channels 101

Is our housing system a “dumpster fire?” (I don’t think so; we have hundreds of thousands helping millions every year although F&F would be better off if all their profits didn’t go straight to the government.) And now the CFPB is allowing housing counseling agencies that offer advice and assistance to struggling home buyers to receive fees from mortgage lenders. And how ‘bout those credit unions, notching another difference between them and other financial institutions (especially those lenders that sell loans to banks or any Agency under federal regulation). NCUA released interim guidance allowing federally insured credit unions to service hemp businesses. Remember that hemp is no longer a controlled substance at the federal level although it may not be produced lawfully under federal law, beyond a 2014 pilot program, until the USDA promulgates regulations and guidelines to implement the hemp production provisions of the 2018 Farm Bill. Buckley reminds companies that, “The guidance emphasizes that lending to lawfully operating hemp-related businesses is permissible, but that the lending must be done in accordance with NCUA’s regulations for lending, and appropriate underwriting standards must be considered.”

Jobs

“Spruce, a digital title & closing startup with national reach that was recently named to the 2019 HousingWire Tech100, is looking for experienced and driven Sales Executives to join our fast-growing team. Our platform enables fast, frictionless, and transparent real estate transactions – and we’re seeking creative self-starters, who have sales experience in the mortgage or title industries, to introduce our innovative services to more lenders. If you have a track-record of success in institutional-level sales to mortgage lenders and you thrive in a dynamic entrepreneurial environment, send your resume to sales@spruce.co. The role can be based out of our NYC or Dallas offices, or remote. For a detailed job description visit the Spruce careers page.”

String Real Estate Information Services, the #1 title process optimization firm in the country, is seeking experienced Account Managers in 7 US cities: Tampa, St. Petersburg, Washington DC, Des Moines, Denver, New York and Southfield (MI). For the right candidate, we will consider other cities. The Account Managers will report directly to the President of String and will play an integral role in String’s continued growth. The Account Manager role will be the primary client interface focused on helping clients improve margins, optimize workflows and creating a shared roadmap for success.  For a detailed job description and to apply visit the String careers page or send your resume to Prashant Kothari.

Looking for a Rocking and Roiling good time at the upcoming NAMB National in Las Vegas? Plan to join mortgage technology CEOs and industry leaders for a panel discussion entitled, “Mortgage Technology – Right Here, Right Now!” on September 14 at 10am in the Julius Ballroom (sponsored by Freedom Mortgage). This session will cover the current and near future state of origination technology featuring Dawar Alimi, CEO, LenderPrice, Brent Chandler, CEO, FormFree, Ben Wu, Executive Director, Calyx Technology, Wes Yuan, CEO, Lending Pad / WEI Technology and Allen Middleman, SVP, Freedom Mortgage Corporation. Freedom Mortgage Wholesale is Growing – Join the Best! Freedom Mortgage Wholesale maintains its status as the best in business by seeking out the top talent in the industry. We are hiring Closers, Underwriting Specialists and Account Executives at our Fishers, IN, Altamonte Springs, FL and Phoenix, AZ locations as well as ‘remotely’. Visit Job Openings to learn more.”

Lender services and products

Join National Mortgage Professional Magazine for its webinar, Valuation Innovation: Be Prepared for the Future, being held on Thursday, September 12 at 2 pm ET / 11 am PT. With pressure to modernize real estate valuations, find out why the role of technology and the roles of the appraiser, lender, home buyer, and governing bodies must all be a part of the conversation to ensure thoughtful change. We will also discuss what modernization efforts have been done to date and what is to come, including how technologies like machine learning and computer vision will play a role. Walk away with ideas on how you can take advantage of early efforts to stay ahead. Get ready for the new era of valuation by attending this webinar. You can register here.

Finance of America Mortgage is pleased to announce the Two-X Flex Product Suite. Flex Bank Statements and Flex 1-Year are now available! Flex Bank Statements is a Non-QM product allowing borrowers to qualify on 12- or 24-month’s business or personal bank statements, own up to 3 businesses, and use co-borrower wage earner income. Flex 1-Year allows wage earners and self-employed borrowers to qualify based on 1 year of income documentation, including rental and commission income. With our 3 new credit classes, Elite, VIP and Insider, Finance of America Mortgage gives you more options for borrowers even if they have less than perfect credit. Two-X Flex Product Suite is available to Finance of America Mortgage’s Retail, Direct and Wholesale business channels. Please visit FOAmortgage.com or FAMwholesale.com to learn more.

U.S. Bank, Freddie Mac and MGIC are joining forces to deliver an educational morning for Correspondent lenders in Bellevue, WA. Join this exclusive event on Wednesday, October 9, featuring collaboration by industry leaders to discover “Options for Today’s Homebuyers.” Presentations will include, “How Today’s Economy Impacts First -Time Homebuyers; How to Help Today’s Homebuyers: Jumbo/Portfolio Advantages, High LTV Jumbos, Extended Locks for New Construction, RSU Income and Other Products, and How to Use Technology to Streamline Your Process and Improve Your Homebuyer’s Experience.” Find out how you can help more first-time homebuyers get closer to move-in day. Correspondent Lenders in the Bellevue, WA area can register to attend here.

Floify’s recently released co-brandable landing pages, mortgage calculators, and lead capture forms have become wildly popular among tech-savvy loan originators. These powerful new marketing features, which are included with all of Floify’s fixed-pricing plans, are helping lenders nurture their valuable referral partner relationships and become more profitable than ever. Now, every lender who uses the Floify point-of-sale system to automate their origination process can implement these powerful landing pages in minutes. Once enabled, lenders can easily customize the look and feel of their pages, ensuring mutual clients receive a familiar and comfortable homebuying experience from start to finish. For lenders looking to improve their marketing and referral-partner relationships, Floify’s co-brandable landing pages are the perfect complement to an all-digital lending solution. Check out how these exciting new features can take your lending to the next level – request a live demo of Floify.

Channel primer

Explaining the residential lending business to someone outside of the biz can be a challenge. But it has always puzzled me, at sales conferences, why retail LOs don’t know anything about the correspondent or wholesale division of their own company, despite the correspondent channel often accounting for more than 50% of the volume, other than griping, “We buy loans from competitors of our branches?” And their eyes grow wide when a retail LO learns that a top correspondent rep can do more than a billion of volume in one month versus their good month of $3 million. (There are different pay scales, of course.) Yes, of the most confusing parts of the mortgage process can be figuring out all the different kinds of lenders that deal in home loans and refinancing. There are three main channels: retail (which tends to include direct-to-consumer or call centers), wholesale, and correspondent. But what sets each apart from one another?

Retail lenders are exactly what they sound like: Lenders who issue mortgages directly to individual consumers. They may either lend their own money (via deposits for banks) or use a warehouse line with the intent of either placing the loan in portfolio or selling it into the secondary market. They work directly with a homeowner and usually underwrite their product in-house, with no need for a middleman or broker. Retail lenders often service the loans they originate, or sell the servicing directly. Retail lenders may include national, regional, and community banks and credit unions of all sizes. And they are responsible for the “reps and warrants,” and the financial burden of a loan goes bad.

Wholesale lenders are similar to retail lenders in that they originate and sometimes service loans, and also sell them on the secondary market, but they do not deal directly with consumers. Rather, they offer their products & pricing to third parties such as mortgage brokers, credit unions, other banks, etc. Usually, wholesale lenders work directly with mortgage brokers by providing them with loan programs the broker can resell, or offer, directly to borrowers, and those brokers submit loan applications to the wholesale lender for approval and funding.

A wholesale mortgage lender is distinct because it works primarily with independent mortgage brokers, who are client-facing, working on the retail end with borrowers, handling all correspondence, while simultaneously working with the wholesale mortgage lender to carry out processing, underwriting, and loan funding. The borrower never actually interacts with the wholesale mortgage lender, only the broker does. In wholesale, the wholesale lender is the one that is making the loan and whose name typically appears on loan documents. The third party – bank, credit union, or mortgage broker is, in most cases, simply acting as an agent in return for a fee. Mortgage brokers make up most of the customer base for the wholesale lenders. And since the wholesale investor does the underwriting, draws the docs, and so on, they bear the financial responsibility if the loan goes bad, not the broker. Think United Wholesale, Freedom, Quicken, loanDepot, Caliber…

Lastly, correspondent lenders make loans using other lenders’ loan programs, but can underwrite in-house and fund them, typically using warehouse lines, in their own name, then sell them off to larger mortgage lenders, who in turn service or sell them on the secondary market. Correspondents usually have an array of products, and act as an undisclosed extension for those larger lenders (e.g., a correspondent mortgage lender may resell PennyMac products under their own name to borrowers). Whereas some types of lenders are distinguished by the process leading up to the loan, correspondent lenders are defined by what happens after the loan is originated.

Correspondent lenders work with investors who purchase mortgages that meet certain criteria, and earn their money by collecting a point or two (fee?) when the mortgage is issued, since immediately selling the loan usually guarantees they’ll make money and no longer carry the risk for a default. The buyer of the loan, however, whether it Freddie or Fannie, Wells Fargo, Chase, AmeriHome, and so on, may decline the loan if it turns out not to meet certain standards. In which case the correspondent must either find another investor or carry the loan itself. In the past ten years – the correspondent lender has been the fastest growing channel in mortgage lending.

(Along those lines, correspondent investors such as Wells, Chase, AmeriHome, PennyMac, etc., will purchase loans (the asset and the servicing rights) from lenders of all sizes, if the lender goes through the approval process and if the loan meets the criteria for that investor. Remember that Fannie and Freddie do not service loans, but will buy the asset. F&F will purchase loans from any lender that is approved, and the loan passes through DU or LP, with the servicing rights either being retained by the lender or sold separately. And the correspondent investor will hold the lender from whom they’ve purchased the loan accountable for reps and warrants, as often the lender is the one doing the underwriting and funding the loan.)

Hopefully the basics clear up some confusion regarding the three basic channels. There are dozens of nuances regarding business models, approvals, compensation, legal liability, underwriting, servicing, customer support, and marketing. And the same lender may retain servicing, broker some loans out, and sell some to a correspondent investor. But with thousands of retail lenders, hundreds of wholesalers, and roughly 100 correspondent investors around the nation, it’s good to have an idea about what channels your company is in, and why.

Capital markets

Why did rates go up Tuesday? The 10-year closed +8 bps to 1.70 percent, its highest level in a month despite an intraday low of 1.43 percent just last Tuesday, as U.S. Treasuries started the week with back to back days of selling. The European Central Bank may announce a delayed resumption of asset purchases based upon further weakness in the eurozone, though a disagreement among policymakers may prevent the announcement of aggressive easing measures tomorrow. And Fed Chairman Powell downplayed talk last week of America and the world heading for a recession, despite September’s mixed jobs report giving the Fed more ammunition to cut interest rates this month. Additionally, the day’s $38 billion 3-year note auction didn’t receive much demand with treasuries crowded out by a surge in spread product issuance, as the high yield trailed the when-issued yield by 0.3 bps while the bid-to-cover ratio was below average.

In Europe, Germany’s Finance Minister presented a draft 2020 budget that does not call for increased debt issuance, Italy’s Prime Minister survived his confidence vote in the Senate after winning yesterday’s vote in the Chamber of Deputies, and after Parliament blocked a no deal-Brexit and a snap election as part of a growing list of defeats for UK prime minister Johnson, he promised to work for a deal with the European Union. In China, inflation figures for August showed the largest decrease in producer prices in two years while consumer prices grew more than expected due to surging pork prices.

The summary of yesterday’s Senate Banking hearing on the administration’s housing and GSE reform plan? Don’t look for legislation, look for the Trump administration to act alone where it can. The plan calls for an end to the profit sweep with a third-party capital raise of around $100 billion before the GSEs are released from conservatorship. The plan would also like to have the GSEs pay a fee for an explicit guarantee as well as having any unfair advantages like the expiring QM patch removed to facilitate further competition. Democrats say the plan will limit mortgage availability and increase costs for lower income borrowers, likely leaving the administration to have the final say in what to do and how to protect all stakeholders.

The MBA reported that mortgage applications for last week increased 2.0 percent from one week earlier after being down 3.1 percent previously. And this morning we’ve had the August Producer Price Index numbers: +.1% and core +.3% versus expectations of both being +.1%. Later this morning we have July Wholesale Inventories, and reopening results of a $24 billion 10-year Treasury note auction. We begin the day with agency MBS prices better .125-.250 and the 10-year yielding 1.73%.

Eighteen years. Take a few moments to think about those that we lost, the chaos that we went through that day, and the friends and families that were impacted forever.

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, “Mortgage Rates: Thinking the Unthinkable.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Sep. 10: LO jobs; CRM, QC, warehouse, reverse, broker products; current economic picture

The gap between the haves and have-nots continues to widen. Though the wealth of U.S. households has eclipsed $100 trillion, the wealthy have primarily accrued the post-recession gains. Those in the top 1 percent of U.S. households have seen their wealth double and now hold over $30 trillion of that. The next 9 percent of households hold about $40 trillion. As for the half of households outside of the top 50 percent, things are worse than they were before the recession. In 2002, the bottom 50 percent of households held $2 trillion in wealth, in 2006 was $1.2 trillion, went negative from 2010 to about 2013, and today is just at $1.3 trillion. “Fortunately” the share of families in the bottom half fell to 37 percent in 2016, from 43 percent in 2007.

Employment

Your smartphone could be the most powerful origination and marketing tool that you have. Academy Mortgage is leveraging the prevalence and power of mobile technology to deliver the ultimate mortgage experience. Customers can now apply for a loan and get pre-approved in just minutes from their mobile device with Academy’s My Mortgage app, AI pre-approval bot (AMY), and online 1003 which can be quickly accessed from the lender’s mobile-optimized website. The Academy Marketing Platform (AMP) gives Loan Officers the ability to communicate with customers by text message for loan progress updates, birthdays, loan anniversaries, etc. AMP and nearly every Academy business management resource can be easily used on the web or through apps, providing originators with on-the-go flexibility. Are you using the power of your phone to its fullest? Contact Chad Melin, VP of National Business Development, to join a company that is committed to staying ahead of the technology curve to help you achieve your potential.

Lender products & services

Digital mortgage platform provider Maxwell announced its strategic partnership with Integra to offer seamless, bi-directional integration with Integra’s EPIC Loan Origination System. Maxwell has been announced as the preferred partner for Integra, and this blossoming partnership is tightly focused on providing an innovative Digital Mortgage Platform-LOS integration with features not previously seen in any other integration in the industry. Lindsay Hunt, Maxwell’s Head of Product said, “We’ve worked tirelessly to build a strong partnership so we can provide something efficient and beautiful to fill that void and empower lenders that rely on Integra to streamline their process and focus on the relationships at the core of the mortgage experience.” To learn more about Maxwell’s empowering features of their digital mortgage platform, click here or request a demo today.

Top of Mind Networks’ Surefire platform is now the industry’s only CRM to offer Power Calls, a tool that allows loan officers to segment a contact list and make consecutive calls automatically. Scripts for phone conversations and pre-recorded voicemails guide the messaging, while integration with the loan officer’s Surefire contact database makes follow up and documentation a breeze. The company has seen clients triple their call volume with implementation of the new Power Call system. Click here to get started: http://bit.ly/2kABOso

PlainsCapital Bank National Warehouse Lending, a subsidiary of Hilltop Holdings (NYSE: HTH), is looking for mortgage bankers and lenders that offer renovation products and programs. “PlainsCapital Bank National Warehouse Lending currently funds multiple renovation programs and products with little to no additional requirements. Whether it is a FNMA HomeStyle, FHA 203K Full, Limited or even a USDA Rural Housing renovation loan, PlainsCapital Bank National Warehouse Lending wants to be your preferred warehouse provider for these programs and products. Please ask us about our competitive rates, utilization and deposit incentives, and other ways that we can reduce costs and time to exceed your loan funding needs in 2018. If you are interested in learning more about PlainsCapital Bank National Warehouse Lending, please contact Deric Barnett, EVP National Warehouse Lending.”

The financial services landscape isn’t what it used to be. Loan officers must go to new lengths to build meaningful relationships with their customers and anticipate their needs. And, to do this (at scale) loan officers need a technology solution that supports their efforts to get to know their customers on a human level. The good news? Once you build the foundation, your customers will be motivated to stay with their loan officer for all their future lending needs. Read the Total Expert blog to learn how to restore the human touch and inspire loyalty among the people you serve.

While the speed, reach and ease of social media make the platforms a powerful instrument in a lender’s marketing toolbox, organizations must also be cognizant of the industry-specific risks social media poses and act accordingly. By being aware of the most common social media “sins,” lenders can avoid many of the pitfalls that come with social media use and develop appropriate policies and procedures to mitigate risk and ensure safe, compliant social media use for marketing purposes. To learn more about the “The 7 Deadly Social Media Sins,” and which ones you may be unknowingly committing, download MQMR’s free white paper today.

Supporting its Customer For Life approach, Home Point Financial’s Home Point Edge suite of loan products is designed to help brokers widen their reach to more areas of the market. Home Point has a Near Prime tier for near misses, and an Expanded Access tier for more challenging loan files, as well as a dedicated underwriting team to help brokers make the most of this exclusive offering. There’s even a pricing special going on through the end of September: The elimination of the 24 month bank statement price adjustment (LLPA) on the Tier 2 product; for a limited time HPFC Edge 24 month bank statement program is the same as full doc; and reduced Doc-1Yr (W2 or Tax Return) also removed LLPA adjustments. To become an approved broker with Home Point, click here and take advantage of this offer while it lasts.

Half of America’s retirees and pre-retirees lack enough retirement savings, but have accumulated over $7 trillion in home equity. Reverse mortgages provide a financial cushion that have enabled over 1.2 million seniors to live more secure lives. Adding reverse mortgages to your product line makes sense. Chrisman blog subscribers have been extended a special promotional rate to attend the National Reverse Mortgage Lenders Association’s Annual Meeting in Nashville, November 18-20. While FHA insures most reverse mortgages made in the U.S., the market is growing for proprietary reverse mortgages with fewer restrictions, lower upfront costs and the ability to draw down more money that may appeal to your older clients. NRMLA’s Annual Meeting will introduce you to the key concepts and contacts that you need to succeed in the business. Enter the promo code CHRISMAN2019 to receive $330 off the current non-member registration rate. For questions contact Darryl Hicks.

Evaluation Checklist: 20 Sign You Need to Upgrade Your QC Process. As a best practice, it is important to conduct an annual self-evaluation of your current quality control and compliance process to ensure you are utilizing the most efficient methods to best meet the needs of your organization. This checklist was designed to help mortgage quality control professionals assess their current QC process, identify areas of improvement and determine if it is time for an upgrade. Access the checklist here.

One warehouse lending organization gets noticed in the marketplace for doing things the right way. ResX Warehouse Lending is a division of Connecticut-based United Bank, a respected commercial lender with a long track record of building long-term relationships with its clients. They’re not new to the warehouse lending business, but if you haven’t heard the name yet, it’s only because they’re not promoting themselves with every new trend or fad to hit the market.  These are serious experts looking to build relationships with clients like you who are focused on sustainable growth…one relationship at a time. ResX Warehouse’s clients rave about the lender’s proactive approach. And that expertise is provided by seasoned, top-level professionals. Customers also love their commitment to delivering more effective and efficient processes. Combined with United Bank’s full-service array of products and resources, ResX is the ideal platform for the correspondent focused on real growth. Learn More.

Despite being called the closing table, it’s really the beginning of a customer relationship…for potentially 30 years or more. Make sure you cement that relationship the day the homeowner takes the keys. Learn how in this new episode of Open Mic with The Mortgage List. TMS CEO Darius Mirshahzadeh shares how a customer love starts by creating a core values driven organization. Listen to the full podcast episode here.

Capital markets

Per Fed Chairman Powell, the Federal Reserve doesn’t expect a recession for the US or the global economy. The central bank is monitoring uncertainty caused by trade tensions and is prepared to “act as appropriate to sustain the expansion.” And on Friday we learned that employers in the US hired 130,000 people in August, a smaller number than the average for the past six months, and included census workers, and there were back-month revisions downward. But unemployment held at 3.7% for the third consecutive month. Hourly wages increased, indicating employers have decided they must pay more to attract and retain employees. What’s not to like?

That said, a slowdown is obvious. Let’s turn to Treasury markets. JPMorgan’s “Volfefe Index,” (named after the covefe tweet) suggests that Trump’s twitter musings are having a statistically significant impact on Treasury yields and are becoming “increasingly relevant’ to global markets. And despite his thoughts on the resounding strength of the American economy, after two boom years the picture has changed for America’s factories. Hurt by rising uncertainty and the damper that has put on capital expenditures, slowing export markets, a stronger dollar, and higher input costs due to tariffs, U.S. manufacturers are making less than they did a year ago, as evidenced by last week’s ISM contractionary reading, the first since 2016.

That data release sent U.S. stock prices and bond yields tumbling as it confirmed Federal Reserve data from the summer that showed factory output falling for a second consecutive quarter. The surge in industrial jobs seen in the first two years of the Trump presidency has also gone into reverse in some parts of the country. Nationally, the U.S. has added 44,000 manufacturing jobs so far this year, according to data released on Friday, but that’s way down from the 170,000 added in the same period last year. In 22 states—including electorally important ones like Wisconsin and Pennsylvania—the number of people working in factories actually fell in the first seven months of this year (including a loss of 8,000 in Pennsylvania alone), after the president unraveled trade deals such as Nafta, and deployed tariffs on China and others.

The inescapable irony is that Trump’s trade wars have helped create a scenario similar to one that helped get him elected in 2016, when he benefitted from both the grinding and uneven recovery from the last recession, and a manufacturing slowdown that struck the Rust Belt just as he hit the stump promising a new era of protectionism. The last time the U.S. logged two consecutive contractions in quarterly industrial production before this year was the first half of 2016, when the country lost almost 30,000 manufacturing jobs during the year as a collapse in oil prices hit the energy sector and filtered through manufacturing. Yet none of those 2016 quarters saw as large a slump as the 3.1 percent fall in output recorded in Q2 of this year.

All that being said, U.S. Treasuries retreated to begin the new week, including the 10-year closing +7 bps to 1.62 percent (its highest level in two weeks), with the long bond setting the pace. China reported a smaller than expected trade surplus for August during the overnight session, but that was not enough to change risk tolerance. Additionally, the People’s Bank of China was expected to refinance loans issued through a medium-term lending facility, but it did not make that move. And finally, more ECB officials spoke out against renewed QE ahead of its meeting this week, which aided the pullback in Treasuries as it was seen as being a sentiment shared by several global banks.

Today’s calendar got under way before the open with NFIB small business optimism (down to 103.1). Next up will be Redbook same-store sales for the week ending September 7, followed by JOLTS job openings for July. At the same time as the JOLTS release, the Senate Banking Committee will hold a hearing that will discuss the administration’s housing reform plan where Treasury Secretary Mnuchin, HUD Secretary Carson, and FHFA Director Calabria will testify. We begin the day with agency MBS prices roughly unchanged from last night and the 10-year yielding 1.65%.

Part 2 of 5 of “Books Never Written.” (Yes, my mind spends a lot of time in 3rd grade. Warning: Rated PG for bawdy humor.)

Small Treasures in the Toilet Bowl by I.P. Nickels

What Makes a Good Thief by Ian Yerhous

Waiting in Line for the Bathroom by Ivana Tinkle

Practical proctology by Bea Hind

The future of robotics by Cy Borg and Anne Droid

What to do if you’re in a car accident by Rhea Ender

How Things Work by Wyatt Dunne

Breathing Lessons by Hal E. Tosis

Why Should I Walk? by Iona Carr

Deep in Debt by Owen A. Lott

The Most and the Least by Maxi & Minnie Mum

How to Get Good Grades by B.A. Wiseman

The Sun by Sol Ar

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, “Mortgage Rates: Thinking the Unthinkable.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Sep. 9: AE jobs; LOS, sales, automation products; Fed tool Quantitative Easing is alive and well

The United States is filled with historical and geographic trivia. Reno, Nevada, is farther west than San Diego, California. Johnson City, Tennessee is closer to Canada than it is to Memphis. General Robert E. Lee had a surveying role in “The Toledo War” between Ohio and Michigan, fought over a 450 square mile strip, which included the present-day city of Toledo. (The area was disputed by Ohio and Michigan Territory until Michigan agreed to a land settlement and was granted statehood in 1837 but a 1973 US Supreme Court decision was needed to finalize the actual boundary line.) Kansas and Missouri have a complicated history, but recently completed a truce over the Kansas City metropolitan area. For the past decade, the states have given out an estimated $335 million in giveaways to companies in attempts to persuade them to move from one side of town to the other, all for the purposes of wooing business and potential tax benefits from one state to the other, pretty much a zero-sum game. But the truce established tax incentives that are limited to the four Missouri counties and three Kansas counties that constitute the metro area. So simmer down!

Jobs

CALCAP Lending, a private money direct lender based out of southern California, continues to expand its business and is seeking experienced wholesale account executives for the company’s new Phoenix, Arizona location as well as its production platforms in Irvine and Roseville California. “CALCAP offers competitive terms for proven producers who can drive business through an extensive array of bridge lending programs covering a variety of property types; from SFR and Residential 2-4 units to Multi-Family, and Small Balance commercial to SFR ground up construction. If you would like to learn more about career opportunities with CALCAP please email HR@calcapadvisors.com and attach your resume for confidential consideration! To obtain information on the flexible financing programs available, you are invited to meet with the team at the upcoming NAMB National Conference (Booth #1013), or by calling 855-372-0960 or visiting online.”

JOIN PRMG at the OMNIA Terrace following the mortgage event of the year, NAMB National on Saturday, September 14th from 7 PM – 10:30 PM!  Enjoy an extraordinary view of the strip, exquisite drinks and never-ending camaraderie as we celebrate our 18th Anniversary! Make sure to RSVP HERE or pick up tickets at PRMG’s booth #506! This is an evening you don’t want to miss! After all, PRMG knows how to Party!

Lender products & services

In wholesale news, Nations Direct Mortgage celebrated its best Non-QM funding month in August. “I couldn’t be happier with the dramatic increase in our volume and even more excited about our recently released enhanced products. Our Non-QM volume has doubled since the release of DirectQual,” says Director of Lending, Martin Warren. “Our expansive proprietary products, coupled with our DirectQual AUS and dedicated Help Team, have solidified NDM as a Non-QM leader by providing immense support to our brokers.” Join us for a quick 30-minute webinar to showcase our new Non-QM products as well as our AUS, DirectQual. Click here to register for Thursday, 9/12 or Wednesday, 9/25.

At the recent Lenders One Summit in Seattle, the cooperative announced a new benefit exclusively for members that leverages the collective size of the cooperative to decrease and stabilize healthcare spending through a third-party provider. As one of the biggest expense items on a lender’s profit and loss statement, the cooperative’s executive team addressed the issue at the March Summit. Following a series of formal proposals, Lenders One found a solution with significant savings for members. One of the proposals that had 100 employees on the insurance showed a first-year savings of over $175,000 and annual savings of over $350,000 in the third year. Lenders One members are now able to learn more about next steps and obtain a quote. For more information on the solution or becoming a member of Lenders One, contact Justin Demola, CMB, Vice President of Sales.

How many times have you found out that a past client bought a house and got a new mortgage without your help? You don’t have to answer that. We know it stings. Best case scenario, you keep in touch with your clients, and they remember to call you when they need new loans. But, we know, that’s not always how things go: people are forgetful. Take the guesswork out of client follow-up with Jungo, the Salesforce-based, mortgage optimized CRM and its newest product: Listing Alerts, the 30-second pipeline filler. Listing Alerts provides you with instant notifications when anyone in your database lists a property on the MLS. You’ll be able to follow-up at just the right time to generate new business. To learn more, click here.

 

“Are you struggling to optimize your marketing automation efforts? If so, you are not alone. Only 21% of companies use their marketing automation system to its fullest potential. That’s why Seroka, a leading branding, digital and strategic communications agency for the mortgage industry, just launched its new Marketing Automation Optimizer. The program helps companies maximize their marketing automation technology with three levels of support that create more streamlined, targeted and personalized content for your marketing campaigns. To learn more, click here, email Seroka, or call 414-899-3536. Going to Digital Mortgage in Las Vegas Sept. 23-24? Schedule a meeting with us there.”

How can you stop your competition from taking new applicants and crippling your bottom line? One of the biggest concerns in the industry right now is losing applicants to competitors early in the loan process. And relationship is key. Failing to establish that lender-customer relationship at the beginning can make or break your yearend goals – and a lot of earnings can slip through your fingers. Start by getting a solution that will shield your leads from your competitors so your quality applicants can stay YOURS. By working with Informative Research and utilizing one of their key tools, you’ll buy yourself enough time to pre-qualify your applicants for a loan and start building that crucial customer relationship. Which means money will stay in your pocket.  Reach out now and start building a strong defense for your top applicants.

Flagstar recently launched Loantrac 2.0, its enhanced proprietary LOS system, to broker and non-delegated correspondent customers. It’s faster and more user-friendly, while the redesigned system provides a more streamlined process for submitting and delivering loans. Loantrac 2.0 delivers an exceptional, customized user experience. The process for uploading and viewing multiple documents has been upgraded as well. Other enhancements include a new dashboard that offers a customizable aggregate view of the customers’ active pipeline, intuitive navigation throughout the site, and an updated sellers guide. Flagstar really pays close attention to the needs and problems brokers and correspondents face on a daily basis and have come up with a great solution in Loantrac 2.0. Learn more and sign up for Loantrac 2.0.

Capital markets

The question comes up, is the Fed still buying agency mortgage-backed securities (MBS) as part of its Quantitative Easing (QE) effort? The short answer is yes, QE is definitely alive and well, though volume has been scaled back in recent months. The Federal Open Market Committee (FOMC) trading desk (the desk) is based at the Federal Reserve Bank of New York, and the desk is authorized by the FOMC to buy and sell agency MBS securities to the extent necessary to carry out the most recent directive.

Purchases of agency MBS from primary dealers increase the quantity of reserve balances in the banking system, and principal payments from agency debt and agency MBS holdings are then reinvested in the portfolio through newly issued MBS securities backed by Fannie Mae, Freddie Mac, or Ginnie Mae. It does not purchase jumbo or non-QM securities. Agency MBS purchases are concentrated in newly issued agency MBS in the To-Be-Announced (TBA) market, as these securities have greater liquidity and are closely tied to primary mortgage rates.

The goal to put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. At the heyday, the desk was buying billions of dollars a week. Despite those purchase figures being markedly less currently, originators have been setting volume records this summer, and many of those sales are now going to private investors or foreign government to cover the gap.

With all that being said, here is what the desk has been up to lately, which should provide a sense of prevailing rates in the mortgage market. For reference, a 3.0 coupon fits securities anywhere from 3.25 percent up to 4.0 percent due to the servicing strip and buy-up buy-down grids. From August 15-21, the desk purchased $1.195 billion of 3.0 coupon 30-year and $328 million of 3.5 coupon 30-year FNMA uniform MBS TBA contracts settling in the month of September. Additionally, it purchased $440 million of 3.0 coupon 30-year GNMA2 (a much more prevalent security now than GNMA due to the wider range of coupons it can accommodate) and $242 million of 3.5 coupon 30-year GNMA2, all settling in September. As far as 15-year purchases, the desk purchased $148 million of 2.5 coupon FNMA settling in the month of September.

The following week, August 22-28, saw fewer purchases ahead of the Labor Day weekend. The $363 million total for the week was all GNMA2 September settle, $120 million concentrated in the 3.0 coupon and $243 million concentrated in the 3.5 coupon. This past week, things picked back up, with $1.530 billion of gross purchases. FNMA MBS ($696 million 3.0 coupon; $225 million 3.5 coupon) were all for a September settle, while GNMA2 MBS ($220 million 3.0 coupon; $214 million 3.5 coupon) was all scheduled for an October settle. The desk also purchased $175 million of 2.5 coupon 15-year GNMA2 for an October settle.

Keeping on with the bond markets, Friday brought a mixed payrolls report, an expansion-supporting Fed Chair Powell, and the People’s Bank of China confirming recent rumors of a 50 bps upcoming reserve requirement ratio cut on September 15, all of which let Treasuries to close the week on a slight rally, including the 10-year closing yielding 1.55 percent. For those who still put their recession prediction faith in the shape of the yield curve, the 10-year currently sits +3 bps above the 2-year. Sighs of relief abound.

Fed Chair Powell’s appearance to close the week may have been the most interesting piece of news for markets, as the Fed Chairman noted that an imminent recession is not expected while inflation measures are moving toward the Fed’s target. He added that U.S. consumers and the overall economy are in a good place, though the fed funds futures market remains priced for a near certainty of a 25-bps rate cut on September 18, followed by another cut in December. Chair Powell indicated the Fed was ready and willing to ease when he said that the Fed would act “as appropriate” to sustain the current expansion while highlighting risks that could lower their forecast of moderate growth. No Fed speakers are scheduled this week as the Fed enters its blackout period.

Speaking of this week, kicking off today’s calendar is the Employment Trends Index for August later this morning. Next up will be a FedTrade purchase operation in TIPS ($1.625 billion max 0 to 7.5-years) followed by $45 billion 3- and $42 billion 6-month T-bill auctions, before July consumer credit later this afternoon. Tomorrow brings August NFIB Small Business Optimism Index, the July Job Openings and Labor Turnover Survey, and the results of a $38 billion 3-year Treasury note auction. The midweek session sees August PPI and Core PPI in addition to July Wholesale Inventories, before Thursday reveals August CPI and Core CPI. The week’s lone central bank decision comes on Thursday when the ECB is expected to deliver further accommodation while ECB head Draghi will conduct his second to last press conference. The week closes with August Retail Sales, August Import/Export Prices, July Business Inventories, and preliminary September Michigan Consumer Sentiment Survey.

With regards to MBS, the NY Fed will conduct FedTrade operations today and Thursday when they purchase up to $917 million UMBS30 2.5 percent ($220 million) and 3 percent ($697 million) then $438 million GNII 3 percent ($224 million) and 3.5 percent ($214 million). Class A and B 48-hours are tomorrow and Friday, while the NY Fed will announce tentative four-week MBS reinvestments along with a new two-week FedTrade schedule both for Friday release. We begin the day with rates up a tad: Agency MBS prices are worse .125 and the 10-year is yielding 1.60%.

Part 1 of 5 of “Books Never Written.” (Yes, my mind spends a lot of time in 3rd grade. Warning: Rated PG for bawdy humor.)

The Yellow River by I.P. Daily

The Numbers Game by Cal Q. Later

Under the Bleachers by Seymour Butts

Rusty Bed Springs by I.P. Freeley

Twenty Yards to the Outhouse by Willie Makit, illustrated by Betty Wont and published by Andy Dint

Spots on the Wall by Hugh Flung Poo

Falling Off a Cliff by Eileen Dover

The Complete Proctologist’s Handbook by Ben Dover

The Joys of Drinking by Al Coholic

My Life with Igor by Frank N. Stein

Supporting Athletes by Jacques Strappe

Things That Itch by Mike Rotch

I Was Prepared by Justin Case

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, “Mortgage Rates: Thinking the Unthinkable.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Sep. 7: Letters about GSE reform, HFAs & affordable housing, and appraisal waiver drama

Everyone is watching overall applications drop, despite low rates, as the “pig in the python” of refis makes its way through funding departments. Winter is coming, and lenders, after a spate of good months, are wondering what October and onward will look like due to “refi burnout.” So I continue to be asked about programs to help buyers. For example, here is a mortgage buy down program in Oklahoma for those inside tribal jurisdiction. What about those not on Indian lands, or needing down payment assistance?

I received this timely note from Greg Zagorski who, being a Senior Legislative and Policy Associate, focuses on homeownership issues for the National Council of State Housing Agencies (NCSHA), which represents state housing finance agencies (HFAs). “You should remind your readers that state housing finance agencies (HFAs) are the premier source for down payment assistance.  In 2018 alone, HFAs provided down payment assistance to nearly 120,000 low-and moderate-income borrowers throughout the country.

“As state-charted entities with clear public missions and jurisdictions, HFAs are able to structure their down payment assistance programs to best meet the needs of their constituents. HFAs are run by politically appointed leadership and/or boards of directors and are subject to regular oversight from their governors and state legislatures to ensure they are effectively fulfilling their affordable housing missions. HFAs have proven over many years that affordable lending, including with down payment assistance, is responsible lending when done right. Data collected by NCSHA shows that HFA DPA loans insured by FHA have a serious delinquency rate notably lower than the rate for all FHA loans that included DPA from a government program.

NCSHA looks forward to working with FHA on its forthcoming rulemaking on down payment assistance to ensure that proven, publicly accountable governmental entities can continue to provide assistance to buyers who need it. Lenders can learn more about the state HFA programs in their states here.” Thanks Greg!

Property Inspection Waiver drama?

“Rob, are you hearing that Freddie bifurcation programs are not accepting DU PIWs (Property Inspection Waiver), that Fannie is going to tweak its program, and that it’s going to get worse? I’ve heard from others in the business that there are rumors about how, in the primary markets with borrowers, the PIW or Freddie’s ACE (Automated Collateral Evaluation) are great things but are discriminatory, and that roughly 10% of loans are receiving them. Some receive it and some don’t. One of our MLOs had two great borrowers with high income and high credit going for $400,000 loans. One was a 79.9% LTV loan. The MLO did not expect to receive a PIW and received it via DU. The other loan was a 40% LTV but received no PIW. It made no sense. There is hearsay that PIWs are based off of other appraisals in the area.

For example, UWM launched Easy Valuation in 13 key areas as its findings showed that more than half of the loans eligible for Easy Valuation received a waiver and then rolled this out across the nation. “Not only does Easy Valuation give your borrower a 50% chance at an appraisal waiver, it saves them time and money — even if they don’t get one. The entire process can take as few as two business days and doesn’t cost more than $290 — that’s hundreds less than a typical appraisal.” This cheaper, streamlined appraisal is advertised to cut the price and turn times. “With Easy Valuation worst case cost for appraisal is $290 and max time frame is 4 business days!” The appraisal is done in two parts (worst case) which involves the AMC sending out an inspector to the property to collect data and inspect, after which the results are sent back to UWM where DU is re-run.

“There is confusion at our company, however, about what is happening in the secondary markets. We realize that Fannie & Freddie are proud of their PIW technology. And we understand their demand for data on all types of loans. But Wells Fargo, Chase, AmeriHome, PennyMac, and others seem to be jockeying for position regarding bifurcated execution, PIW fees, not accepting PIWs for some products. There are rumors about wholesaler Provident Funding charging .250 on loans with PIWs, and that Freddie’s ACE program is going to change.

“We’ve heard that Freddie has never accepted PIW waivers but I understand it is under consideration only on loans that also receive a Freddie ACE waiver. Freddie is rumored to be about to expand its ACE waiver requirements and more loans including even higher LTVs will be getting waivers. We’ve been told that PIW and ACE waivers are based on value information that they both have, and all Lenders have been uploading that information for years. It does not matter what your LTV is if they don’t have that information.

“We’ve also heard that Freddie Mac is taking the ‘waterfall’ approach to appraisals, and both Fannie and Freddie have pilots underway. It would work something like this. The first level is ACE, the second level is Freddie has value information but needs condition information (drive by? 2075?), the third level might be desktop review by an appraiser but allowing someone like the home inspector to do measurements and pictures (bi-furcated pilot model), and 4th level would be the full appraisal. What have you heard?”

Wow, that is quite some note. You should ask each of your sales reps at the investors and Agencies about the latest. And if anyone wants to shoot me over what they’re seeing or their thoughts, happy to publish anonymously or with your name.

Government Sponsored Enterprise (GSE) reform

Everyone, and their brother, weighed in with general thoughts (without opining too much, most pointing to their previous efforts toward reform) on the Administration’s Housing Finance Reform reports to address the nation’s housing finance system, including FHA’s, Freddie’s, and Fannie’s status going forward.

MBA President Bob Broeksmit sent, “MBA will be doing a deep analysis of each report and how the proposals could impact our industry. In the meantime, here is a link to our press statement, as well as links to the HUD and Treasury housing finance reform plans.”

“USMI applauds the U.S. Treasury Department (Treasury) and the Department of Housing and Urban Development (HUD) for releasing their comprehensive Housing Reform Plan and Housing Finance Reform Plan (“Plans”) that together outline needed reforms to the housing finance system. While USMI looks forward to reviewing the Plans in greater detail, we particularly appreciate Treasury and HUD identifying specific areas where the Administration can focus its efforts to put the housing finance system on a more sustainable path ahead of comprehensive legislative reform. Many of the actions proposed by the Administration’s Plans align with USMI’s principles for Administrative Reform, including our position that these actions could further reduce taxpayer risk by increasing private capital within the financial system, level the playing field between the GSEs and private market participants, provide greater transparency regarding GSE pricing and practices, and ensure that consumers have access to affordable and sustainable mortgage finance credit.

“The Milken Institute Housing Finance Program team earlier this year released A Blueprint for Administrative Reform of the Housing Finance System in anticipation of the reform efforts. Similar to the newly released plans, the team recommended administrative measures to strengthen the housing finance system in the near-term and pave the way for bipartisan congressional action to finish the task. Like Treasury, the team also noted that the administration could undertake significant reforms in the absence of legislation. The team previously set forth principles for legislative housing finance reform in its 2018 paper, Bringing Housing Finance Reform over the Finish Line. We are poring through the plans and will spend the coming weeks and months collaborating with industry and government stakeholders…”

CEI senior fellow John Berlau said, “The Trump administration’s housing finance reform plan contains many positive steps to both reduce the government’s role in the housing market and to help ensure a vibrant and competitive housing sector, including some that I recommended in my 2017 paper on GSE reform. These steps include ending the ‘Third Amendment’ that drains capital from GSEs and puts them at risk of another taxpayer bailout. The plan also recommends reducing red tape encumbering the non-GSE mortgage market, such as the Dodd-Frank financial law’s ‘qualified mortgage’ and ‘qualified residential mortgage’ provisions, which give Fannie and Freddie an unfair advantage and hold back the housing sector overall. The plan’s call for creating explicit guarantees is problematic, though, as they would likely become a floor, rather than a ceiling, for government housing support. We look forward to productive discussions with the administration and members of Congress about much-needed housing market reforms.”

The National Association of Federally-Insured Credit Unions (NAFCU) President and CEO Dan Berger sent, “We appreciate the Trump Administration’s commitment to reforming our housing finance system by working to promote competition and putting an end to taxpayer bailouts. Moving forward, NAFCU will continue to work with the administration, Treasury and Congress to ensure guaranteed access to the secondary mortgage market for lenders of all sizes, loan pricing at the GSEs that is based on quality not quantity, and the establishment of an explicit government guarantee at the GSEs to provide certainty in the marketplace.”

“The National Association of Realtors® thanks President Trump and his administration for initiating thoughtful, genuine effort toward housing finance reform. We look forward to reviewing the proposal in more detail and are optimistic that, at a minimum, the White House’s efforts will shed light on the remaining mile markers on the path to reform, along with the critical role the GSEs and Federal Housing Administration play in America’s housing market.”

Compass Point Research & Trading, LLC’s Isaac Boltansky observed, “At the highest level, the reports outline policies that would benefit private capital providers in the mortgage market, modestly reduce the government’s market footprint, and ultimately end the GSE conservatorships. The reports should be viewed as directionally positive for private capital operators – from mortgage insurers to mortgage REITs – and as a meaningful mile marker on the road to ending the GSE conservatorships.

“The Trump administration is clearly committed to recapitalizing the GSEs and ultimately ending the conservatorships, but there are still political and practical potholes on the road to resolving this issue. On the bearish front, this report did not signal the immediate end of the Net Worth Sweep, was purposefully amorphous regarding the recapitalization process, and left many key questions unanswered. On the bullish front, the Trump administration stated its commitment to action, referenced reducing or eliminating the senior preferred’s liquidation preference, avoided overly onerous footprint reduction proposals, and signaled an imminent change to the PSPAs that would start recapitalizing the GSEs via retained earnings.

“The reports should be viewed as directionally positive for mortgage insurers. At the highest level, we note that: (1) the UST report included language that we considered a head nod toward deeper cover mortgage insurance; (2) the HUD report focused intently on defining the FHA’s role in the market; (3) the UST report included a proposal calling for a “policy and process” relating to GSE pilot programs; and (4) there were references to conventional-to-FHA refinances. These proposals should be viewed favorably for the mortgage insurance industry, but we caution that action is necessary at both the FHFA and FHA to turn these talking points into action.

“Ultimately, the heavy lifting in this particular effort will be done behind closed doors with the formulation of recapitalization plans for each GSE and then PSPA negotiations between the UST and FHFA.” Good job, Isaac!

(Warning: Don’t read if easily offended. And don’t send me an email saying that you read it anyway and you were offended.)

There were 3 good arguments that Jesus was Black:

1. He called everyone brother.

2. He liked Gospel.

3. He didn’t get a fair trial.

But then there were 3 equally good arguments that Jesus was Jewish:

1. He went into His Father’s business.

2. He lived at home until he was 33.

3. He was sure his Mother was a virgin and his Mother was sure He was God.

But then there were 3 equally good arguments that Jesus was Italian:

1. He talked with His hands.

2. He had wine with His meals.

3. He used olive oil.

But then there were 3 equally good arguments that Jesus was a Californian:

1. He never cut His hair.

2. He walked around barefoot all the time.

3. He started a new religion.

But then there were 3 equally good arguments that Jesus was an American Indian:

1. He was at peace with nature.

2. He ate a lot of fish.

3. He talked about the Great Spirit.

But then there were 3 equally good arguments that Jesus was Irish:

1. He never got married.

2. He was always telling stories.

3. He loved green pastures.

But the most compelling evidence of all – 3 proofs that Jesus was a woman:

1. He fed a crowd at a moment’s notice when there was virtually no food.

2. He kept trying to get a message across to a bunch of men who just didn’t get it.

3. And even when He was dead, He had to get up because there was still work to do.

Can I get an AMEN?!!

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, “Mortgage Rates: Thinking the Unthinkable.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Sep. 6: LO, U/W jobs; sales, broker products; Associated’s LIBOR shift; Freddie, Fannie, FHA’s future

Yesterday the industry reacted to the topic of housing finance reform. HUD presented its plan for FHA. But, like news of Michael Jackson’s death overshadowing Farrah Fawcett’s who passed away on the same day more than ten years ago, the headlines were dominated by the plan for Freddie and Fannie, and U.S. Treasury Secretary Steven Mnuchin also presenting President Trump with a housing finance reform plan. Yup, the Trump Administration aims to privatize Fannie Mae and Freddie Mac and much of it doesn’t require Congressional approval. There are 49 recommendations to overhaul America’s housing finance system, focused on F&F which account for about half the $11 trillion outstanding residential mortgages. Affordable housing advocates have warned that returning the firms to the private market could threaten those mortgages or make them more expensive and more difficult to obtain for low-income home buyers. The administration said it would support an effort by Congress to provide an explicit, but limited, federal guarantee for mortgage-backed securities, which underpin banks’ lending to home buyers. Lots more below.

Jobs

Kurt Reisig, Chairman of American Pacific Mortgage, announces the Total Experience theme for the 2019 Fall Sales Symposium: Engage. Connect. Amaze. “The two-day event is crafted specifically for Mortgage Originators and Branch Managers so they can interact and collaborate with leadership, top producers and other industry leaders. We’ve got an amazing line up of keynote speakers including Daymond John, Sally Hogshead and Elliot Eisenberg. Plus, we will have breakout sessions that will help you distinguish yourself and capture market share in 2020! The Total Experience is happening at L.A. Live this October 10th and 11th. For qualified candidates that want to take a serious look, we will cover the cost to get you to the Symposium. Click here to register or contact Dustin Block (303.378.3166).”

GSF Mortgage Corporation (GSF) is offering USDA Single Close Construction to Perm loans as a part of its portfolio of specialty construction products. All one-time close tasks are performed by GSF in-house, not by a third-party vendor. This is important when it comes to the handling the unique rules for USDA Construction lending. Stick-built, modular, and manufactured homes qualify for GSF’s USDA Single Close Construction loans. If you are interested in learning more on growing your USDA volume, contact Robert Stevens, SVP of Construction Sales.

Finance of America Mortgage (FAM), a national mortgage company headquartered in Horsham PA, has several opportunities for Underwriters in our very busy TPO Division. Remote positions are acceptable and we have many locations throughout the company for those that prefer to work in an office. Conventional, DE, SAR and Jumbo, and experience in any or all will be considered. Great opportunity for career growth in this quickly growing channel. Come join the FAM! Send your resume to: HumanResources@Financeofamerica.com

Thrive Mortgage has added another rock star production team to the fold. Thrive recently announced top producing originator, Tristan Sherrill, has joined Thrive’s list of nationally recognized producers in the DFW market. “As a long-time veteran of the industry, and former co-host on local radio, my team’s goal is to educate our clients and provide them with exceptional service,” Sherrill stated. “In order to serve that mission, we must have solid leadership, a culture of success, and a community of professionals providing legendary lending experiences. Thrive has demonstrated those attributes, and to now be able to witness their amazing growth firsthand is very exciting.” Alana Dorbandt, Regional Manager for Thrive, remarked, “This is incredibly exciting for us as we continue to expand. Tristan’s team is simply a natural fit for our culture. We couldn’t be happier!” To learn more about available growth opportunities, please reach out to us at info@thrivemortgage.com.”

PRMG’s Retail Division continues to experience steady growth across the nation with the opening of 3 new branches in the month of August! Along with the drive and ambition to bring the American Dream of Homeownership to all cities across the country, PRMG opened doors in Alpharetta, GA, Atlanta, GA, and Columbus, OH. PRMG is Built by Originators for OriginatorsTM and is devoted to continuously growing their retail platform.  Ranked within the Top 25 of the Best 100 Mortgage Companies, PRMG is on its way to becoming a billion dollar a month company with over $840 million funded in the month of July! If you are a Motivated Loan Originator who wants to be Progressively Better, contact Chris Sorensen (909.262.0452).

Caliber Home Loans, Inc. is having an awesome 2019! In July we funded over $6 billion overall and prior to that reported originations 13% over our sales plan for the first half of the year. Our business is growing, and we’re hiring nationwide for several in-demand positions for all sales channels. Caliber is having an Employee Referral Bonus Bonanza! Caliber employees can earn $500 by referring qualified candidates to our Operations department. Eligible candidates can apply online, or if you know a Caliber employee, let them refer you to us – it’s a win-win!”

Lender services and products

Join National Mortgage Professional Magazine for another Unit Busters webinar, Don’t Fear a Down Market; Do These 3 Things Instead” on Tuesday, September 10 at 2 pm ET / 11 am PT.

“When is the best time to gather water? When it’s raining. While it’s pouring down deals, now is the time to build lasting relationships for when the market turns to drought. In this webinar we’ll cover three things you should be doing right now to bullet-proof your business with relationships that last, pay off later and create clients for life: 1. Become the Trusted Expert, 2. Leverage your database, and 3. Have a retention plan. With these three mechanisms to stay in front of your audience, you’ll be closing deals in any market even while the competition struggles (or worse). Register here.

“Refinances have dominated the end of the summer. But you can’t compete on rate alone. What tools do YOU have to show your clients they should get their low rates from you? To fulfill your role as the financial expert they are looking for, you need to discuss saving money AND meeting their financial goals. YOURgage – exclusively from QLMS – can help your clients reach their goals faster and easier by letting you and your client chose any loan term from 8 to 30 years. Is your client 7 years into their term? There’s no need to start over. They can take a 23-year term. With YOURgage, QLMS helps you provide value, in addition to the savings. Call your AE now to run through a few more scenarios where your clients can benefit from a YOURgage, or you can connect with QLMS here if you don’t work with it already.”

 

Homebot is a dynamic financial dashboard for the home that empowers homeowners to build wealth with the largest asset they may ever own. As a client engagement tool for loan officers and real estate agents, Homebot keeps past clients engaged, driving client retention and more transactions in the future. How are you reducing the 7-year cycle it takes for a homeowner to do another mortgage or real estate transaction with you? “Homebot gives me more conversations. Conversations equal transactions… It has been instrumental in giving us better, more personalized opportunity for conversation,” said Nicole Reuth, Branch Manager at Fairway Independent Mortgage and Homebot user. LOs! Book a 1:1 demo with Homebot’s team and learn more about this awesome platform.

Where can you get 11X return on every dollar you spend? There is only one place smart lenders go to get these returns consistently: Sales Boomerang. Why would you say no to 11X or better ROI? You can’t, and you shouldn’t. Believe me, your stake holders will thank you. ‘Now we don’t let opportunities walk out the door thanks to timely notifications,’ said Michael Guidotti from American Pacific Mortgage. Lenders get on average an 11X return but many are posting 15X, 20X, 25X and all the way up to 60X returns from every dollar invested into Sales Boomerang. ‘Sales Boomerang is a game changer for us, because we’ve never had access to such information before,’ said Stephen Barton from Eustis Mortgage. If volume is not your problem today then profit and customer retention need to be at the top of your list. Check out the long list lenders already using Sales Boomerang.

LIBOR shift

“In anticipation of the LIBOR index being discontinued in 2021, Associated Bank will be transitioning our ARM products from LIBOR to the One-Year Treasury Index. We expect to initiate the transition by mid fourth quarter of this year. We will continue to offer fixed terms of 3, 5, 7, and 10 years. The cap structure will remain the same as current products. The margin will be 2.750%. You can locate the one-year CMT on the Federal Reserve Board in the Federal Reserve Statistical Release H.15. located on the web. In forthcoming announcements, we will provide more information, including a live date, transition period, and job aid to assist you in your preparation…”

QM patch worries & government policy changes?

More than five years after the CFPB enacted the QM rule (setting the characteristics a mortgage must hold for lenders to gain certain liability protection automatically) the U.S. mortgage market still has relatively strong liquidity. This is in part due to the so-called QM patch: a temporary measure that confers QM status automatically on mortgages as long as they meet certain requirements and are eligible for purchase or guarantee by the GSEs Fannie Mae and Freddie Mac. The CFPB recently proposed allowing the QM patch to expire as scheduled in January 2021, or shortly after, and is seeking comment on several potential changes to the QM rule. The expiration of the QM patch and concurrent changes to the QM rule could have significant implications for the U.S. housing and mortgage market. It will also affect Fannie Mae and Freddie Mac (which account for more than 60% of single-family mortgage-related securities issuance) mortgage originating and servicing banks and other companies, and CRT securitizations. S&P put out, “The Credit Effects Of The Temporary QM Patch Expiration On The U.S. Mortgage Market.”

The industry is abuzz about the future of FHA, Fannie, and Freddie. Know that FHA currently insures 8.1 million single-family forward mortgages, nearly 500,000 reverse mortgages, and 15,500 multifamily and healthcare properties. In addition, the Government National Mortgage Association (Ginnie Mae) guarantees more than $2 trillion in mortgage-backed securities. So it is not exactly an after-thought. HUD’s reform plan accomplishes four objectives: (1) Refocuses FHA to its core mission; (2) Protects American taxpayers; (3) Provides FHA and Ginnie Mae the tools to appropriately manage risk; and (4) Provides liquidity to the housing finance system.

Privatizing Fannie Mae and Freddie Mac without making it harder or more costly to obtain home financing by “backstopping” F&F with lines of credit in return for fees? Probably not It doesn’t really change much. Digging into the reports, the plan for F&F lacks meaningful details. Chances for legislation are remote, so the experts are focused on the reports’ administrative recommendations. Neither report (HUD nor F&F) includes specific timelines to implement the recommendations. Like turning aircraft carriers these things will take time: some of the regulatory processes could be lengthy and last beyond 2020, in which case a change in power following the 2020 election could put the implementation of these recommendations in doubt.

The Treasury report recommends the end of the conservatorship of Fannie Mae and Freddie Mac as well as the net profit sweep that was established in the 2012 amendments to the Preferred Stock Purchase Agreements (PSPAs). While Treasury recommended an end to the sweep, it set no date and absent Congress’s creating an explicit guarantee, per Treasury’s recommendation, Treasury suggested that the PSPAs remain in place and the government be compensated for its support of the companies. Freddie and Fannie need to be recapitalized before the sweeps can end.

Treasury recommended that FHFA should reexamine the GSEs’ businesses to make sure they all fall within the charter, consistent with past statements from FHFA Director Mark Calabria. As expected, Treasury recommended additional protections for the taxpayers via expanded use of credit risk transfers which caused optimism among the private mortgage insurers like Radian, Genworth, Arch, Essent…

Brian Gardner with KBW wrote, “The reports contained little new information. Regarding the GSEs, while Treasury recommended ending the conservatorship and the net profit sweep, there is no clear timelines for doing so and we can envision a scenario where the sweep and the conservatorships last into 2020 and possibly beyond.”

Capital markets

Want to know how much your kids are going to make after college? Folks who love stats know that the U.S. Census Bureau updated the Post-Secondary Employment Outcomes (PSEO) statistics, which examine college degree attainment and graduate earnings, with the release of earnings tabulations for the University of Michigan-Ann Arbor and the University of Wisconsin-Madison. PSEO tabulations show earnings and employment outcomes for graduates of post-secondary institutions in the United States by linking graduate transcript records to Longitudinal Employer-Household Dynamics (LEHD) data. There’s a PSEO visualization tool, which allows for filtering by degree level. The pilot release of earnings outcomes was broken out by institution, degree field, degree level, and graduation cohort (1, 5, 10 years after graduation). The Census Bureau hopes to offer prospective students a comprehensive assessment tool to see how much money they might make by degree and institution nationwide. Additional higher education institutions will be added to the database in the coming months.

Looking at rates, know that the Federal Reserve’s Beige Book, which compiles anecdotal statements from the US business community, recorded continued optimism on the near-term outlook, along with modest growth in economic activity, employment and salaries. Some concerns over tariffs and ongoing trade disputes were also noted.

U.S. Treasuries retreated on Thursday, lifting yields on longer tenors to their highest levels in nearly two weeks, including the 10-year closing +11 bps to 1.57 percent after China’s Ministry of Commerce announced that trade negotiators from China and the U.S. will meet again in October, giving a boost to overall risk tolerance ahead of today’s payrolls report and agency prepayments. There were a host of other eased geopolitical tensions including lowered odds of a hard Brexit and some calm in Hong Kong. Maybe most importantly, markets received a dose of stronger than expected U.S. economic data, including ADP employment and ISM nonmanufacturing PMI. Finally, there was some dampened optimism regarding ECB easing, when ECB Governing Council members refuted a recent source story citing aggressive easing at next week’s meeting.

The August payrolls report kicked off this morning’s calendar. Payrolls increased (+130k versus expectations of +160k), the unemployment rate held steady (3.7%), and average hourly earnings were +.4%, strong. The only other notable event today will be an appearance by Fed Chair Powell in Zurich at 12:30 ET. We begin the day with agency MBS prices unchanged and the 10-year yielding 1.57%.

Yesterday marked the anniversary of the death of England’s Sir Douglas Bader. Never heard of him? First off, he has quite the obituary given that he was a legless WWII ace. But he is best known for this tale:

Many of the pilots got through the ordeal with their sense of humor.

The most famous pilot of all, Douglas Bader, showed just how wicked that humor could be after the war, when he gave a talk at a posh girls’ school.

He said: “So there were two of the f***ers behind me, three f***ers to my right, another f***er on the left…”

At this point the headmistress panicked. She interrupted, “I think you should know, girls, that the Fokker was a type of German plane.”

Bader replied: “Don’t know about that. These chaps were flying Messerschmitts.”

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, “Mortgage Rates: Thinking the Unthinkable.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Sep. 5: Prod. Dev., sales, u/w jobs; CRA, MI, sec. mkt., HMDA dashboard products; Freddie & Fannie changes

Do you know what is picking up steam out there? Credit unions are on a “bank buying spree.” The numbers aren’t huge, but these not-for-profit financial firms have acquired a record number of banks since last year, acquiring 21 U.S. banks since 2018, according to S&P Global Market Intelligence, compared with 12 purchases in the prior five years. For every buyer there’s a seller, right? Lots of people look at the same thing two different ways. (Tennis balls, for example: yellow or green?) The challenge confronting Federal Reserve Chairman Jerome Powell in guiding the US central bank’s monetary policy is becoming complicated with board members publicly arguing about future interest-rate cuts. Federal Reserve Bank of St. Louis President James Bullard says the economy needs a half-percentage-point rate cut, while Federal Reserve Bank of Boston President Eric Rosengren says he doesn’t see any immediate need to change interest rates. Stay tuned!

Employment

Rushmore Loan Management Services continues to build out it’s Nashville based Capital Markets team and is looking for an AVP of Product Development. The candidate will be responsible for monitoring agency guidelines, maintaining Rushmore’s seller guide, and developing new products. This posting is in addition to the Trader position which it is also looking to fill. You may recall that Rushmore recently acquired the Correspondent channel of FirstBank and has started to really grow the business. Interested candidates should send their resume to Carla Holliman.

“String Real Estate Information Services, a division of SitusAMC, continues its fifth straight year of strong growth. String seeks experienced Account Managers in 6 US cities: Tampa, St. Petersburg, Des Moines, Denver, New York and Southfield (MI). For the right candidate, we will consider other cities. The Account Managers will report directly to the President of String and will play an integral role in String’s continued growth. As part of the #1 title process optimization firm in the country, the String Account Managers will be the primary client interface focused on helping clients improve margins, optimize workflows and creating a shared roadmap for success.” For a detailed job description and to apply visit the String careers page or send your resume to Prashant Kothari.

Finance of America Mortgage (FAM), a national mortgage company headquartered in Horsham PA, has several opportunities for Underwriters in our very busy TPO Division. Remote positions are acceptable and we have many locations throughout the company for those that prefer to work in an office. Conventional, DE, SAR and Jumbo – experience in any or all will be considered. Great opportunity for career growth in this quickly growing channel. Come join the FAM! Send your resume to: HumanResources@Financeofamerica.com.”

Lender products & services

Effective today, September 5, MGIC is approved to support the private MI needs for California Housing Finance Agency (CalHFA) approved lenders. Since 1975, CalHFA’s single family lending division has helped more than 185,000 people buy their first home with an affordable mortgage. “We are excited to be an eligible CalHFA MI provider and we’re looking forward to helping more California homebuyers become homeowners,” says Jay Hughes, MGIC’s EVP of Sales and Business Development. CalHFA approved lenders can take advantage of MGIC’s competitive pricing through MiQ. Exclusive for CalHFA lenders are these two customized webinars: How to Reach Hispanic Homebuyers in Your Community, September 11 at 10 a.m. and Down Payment Assistance University, September 18 at 10 a.m. Contact your MGIC account manager today for more information.

The threat of an impending recession has been a popular topic in the news lately, and while the timeline of when the economy will slow is hotly contested, the question seems to be when, not if, we’ll see our next fiscal downturn. As a mortgage lender, having a game plan—and understanding how to adapt to stay successful—is imperative with a recession on the horizon. A new Quick Guide,9 Ways to Prepare for an Economic Recession,” provides a great starting point to evaluate where your business stands today and what you can do to weather the storm, regardless of length or intensity. A must-read for all lending managers and professionals, and an exclusive to Rob Chrisman subscribers today, download your free copy here (no form required).

Citibank, N.A., is strategically adding new Correspondent Sellers for delegated and non-delegated delivery. Citi offers competitive pricing with premiums for CRA eligible loans, blended commitments for Agency Conforming / High Balance and other delivery incentives including Specified Pool pay-ups through Best Efforts execution. Citi Correspondent is a relationship-centric organization, with our clients benefiting from the expertise, support and resources that only Citi has to offer. For new seller consideration please complete Citi’s Prospective Mortgage Correspondent Questionnaire or contact our National Client Services Team at 800-967-2205 with any questions.”

American Advisors Group (AAG) (NMLS# 9392), a leader in senior home equity solutions, is hosting a live learning and networking session focused on utilizing the data behind America’s “retirement crisis” to explore the opportunity that awaits. Last year, AAG moved from a monoline product company, selling only reverse mortgage loans, to a home equity solutions business offering a full suite of products and services, putting AAG in a “category of one.” The market is more ready than ever before for senior home equity solutions. Are you interested in learning how you can start scaling your book of business? Register now for our September 11 networking session!

Tune in September 13th at 12pm PT for a live video broadcast from this year’s MCT Exchange conference to hear from leading correspondent investors as they discuss, “What’s Next for Secondary Marketing Executions & Technology”. Although sadly I will not be hosting this year’s lunch session, if anyone could fill my shoes it would be Phil “Relentless Innovation” Rasori, COO of MCT. Panelists to be featured include Mike Quinn of Penny Mac, Amy Creason of Freddie Mac, Greg Vacura of Wells Fargo, and Giuseppe Grieci of Fannie Mae. This session will discuss the future of the secondary market and how innovations from leading investors will continue to expand the depth of technology and diversity of executions available to lenders. Don’t miss out, register today to view the live broadcast from MCT Exchange on September 13th at 12pm PT.

HMDA-rama!

Again this year, the mortgage industry experts at Richey May are offering free access to their dynamic, interactive HMDA Market Share Dashboards, now updated with the 2018 origination data that was just released. As Q3 comes to a close and you look towards strategic planning for Q4 and 2020, lenders and other industry professionals will find these dashboards valuable for identifying new markets for expansion, seeking out M&A opportunities, measuring the success of sales efforts and more. Visit these free dashboards on the Richey May website, and contact Tyler House for more information.

Conventional conforming news

Some lenders are wondering about how LP/DU findings could vary when run with FHA TOTAL Scorecard? They report it’s typical for findings to vary when running DU or LP, but HUD is saying they shouldn’t vary when leveraging TOTAL Scorecard implying that there will be buy backs if lenders deliver FHA loans with LP findings that varied from DU. Yes, in theory, Fannie and Freddie AUS findings should mirror each other when they both pass through TOTAL Scorecard. Lenders report that they can run DU with TOTAL and receive a “refer” and then run LP with TOTAL and receive an “approve/eligible”.

My guess is that, if you were to ask someone at one of the Agencies, they would say that FHA has a standard set of information that integrated vendors such as Fannie Mae and Freddie Mac pass through to the TOTAL scorecard on FHA submissions. Fannie & Freddie work with FHA on any rules or calculations provided in their submissions. Neither will speak to how other vendors provide that data, nor will they speak to how TOTAL uses it, or is viewing different submissions. If the lender is seeing different results and needs additional information on how different submissions are being viewed by TOTAL, the lender should work directly with FHA (1-800-CALL FHA). As always, you should check with your representative at whatever Agency you work with in order to obtain an answer for your firm.

As a reminder, the FHFA has directed Freddie Mac and Fannie Mae to make specific modifications to the redesigned Uniform Residential Loan Application (URLA)/Form 1003. To allow time to make the necessary changes, deadlines for implementation of the redesigned Form 1003 and DU Specification will be postponed.

During the weekend of Oct. 19, Desktop Underwriter® (DU®) for government loans will be updated to support the Maximum Loan-To-Value and Combined Loan-To-Value Percentages for Cash-out Refinance Mortgages announced by FHA in Mortgagee Letter 2019-11. Fannie Mae’s Release Notes are also available for viewing.

Fannie Mae has updated its AMI Lookup to show whether a searched area or address is in a rural or high-needs rural region, providing helpful information at a glance.

In Guide Bulletin 2019-15, Freddie Mac announced an update to Home Possible® mortgage eligibility requirements to state that the borrower’s qualifying income must not exceed 80% of the area median income (AMI) for the area where the property is located. This revised requirement will apply to all Home Possible mortgages, including those secured by properties in low-income census tracts.

Fannie Mae Selling Guide update, SEL 2019-07, implements changes to lender quality control (QC) requirements, introduces construction-to-permanent (C-to-P) financing for manufactured homes (MH), clarifies appraisal waiver eligibility for refinance transactions, and more.

The PennyMac Correspondent Group posted 19-47: Updates to Conventional Base Pricing Grids

Wells Fargo Funding is updating its cash-out refinance policy for conventional Conforming, FHA, and VA Loans. If the loan application or other documentation shows the purpose of the funds from the cash-out refinance is to purchase cryptocurrency or other virtual currency, the Loan is ineligible for purchase.

The Freddie Mac’s CHOICERenovationSM is now a part of Plaza’s complete suite of renovation loan options. Great for correspondent lenders as loans may be delivered prior to completion of the renovation, and Plaza is including the advantages of Freddie Mac’s Home Possible® program for qualified borrowers in conjunction with CHOICERenovation.

In conjunction with Freddie Mac’s Home Possible boarder income changes, FAMC Correspondent will require the person providing the rental income to meet the following requirements: not be obligated on the mortgage loan or have any ownership interest in the property, to have resided with the borrower for at least one year, and continue residing with the borrower in the new residence, provide appropriate documentation to evidence residency with the borrower that shows the address of that person to be the same as the borrower’s address and cannot be the borrower’s spouse or domestic partner.

Capital markets

There wasn’t a lot of economic data over the last week, but the data we did get continues to support moderate economic expansion. Real personal income inched up in July as inflation was up a scant 1.4 percent over the last twelve months. Consumer spending increased slightly during the month and the saving rate declined slightly to 7.7 percent. Real GDP growth for the second quarter was revised from 2.1 percent to 2.0 percent according to the “second” release from the Bureau of Economic Analysis. Unemployment claims were low, and mortgage applications eased for the week ending August 23 with purchase app down 0.4 percent and refinance apps down 7.6 percent. Meanwhile home values increased 3.1 percent in June’s Case-Shiller National House Price Index which was the slowest pace since September 2012. Finally manufacturing data was mixed as new orders for durable goods increased 2.1 percent in July, but shipments of durable goods declined 1.1 percent.

Yesterday U.S. Treasuries ended the midweek session on a mostly higher note, including the 10-year closing -1 bp to 1.46 percent, after an overnight improvement in global risk tolerance from early reports that Hong Kong’s Chief Executive Lam will withdraw the extradition bill, which had been the catalyst for months of protests. But Ms. Lam said, she will “put forward the motion to withdraw the bill” when Hong Kong’s legislature returns from break in October. That news overshadowed other troubling developments out of China, including hints at more impending fiscal and monetary stimulus and reports the People’s Bank of China is expected to cut the reserve requirement ratio again.

In Europe, British parliament voted in favor of blocking a no-deal Brexit, meaning MPs will vote on Theresa May’s withdrawal bill for the fourth time despite Prime Minister Johnson indicating that he will push for a snap election on October 15. And Eurozone’s July Retail Sales decreased from June, but met expectations, while August Services PMI rose beyond expectations.

Domestic data revealed the trade deficit narrowed in July but the goods and services deficit on a year-to-date basis still increased, meaning that the tariff actions have yet to have their intended effect of reducing the overall trade deficit. And the Federal Reserve’s September Beige Book described overall economic activity as expanding at a modest pace. Most surveyed businesses remained optimistic about the near-term outlook, though concerns about tariffs and trade policy remained in place. In conjunction with the Beige Book, markets also received more dovish Fedspeak, which further ramped the odds of a September rate cut.

Today’s heavy calendar is already underway before the August Nonfarm Payrolls report tomorrow. Challenger job cuts for August (53,480, highest since May). ADP employment for August (+195k, strong). Initial jobless claims for the week ending August 31 (217k, nearly unchanged). Revised Q2 productivity (2.3%) and unit labor costs (+2.6%). Coming up are final August Markit Services PMI, August ISM nonmanufacturing PMI and business activity, and July factory orders. We begin the day with agency MBS prices worse .125-.250 and the 10-year yielding 1.52%.

Two weeks ago, while I was visiting New Mexico, a cowboy asked me if I could help him round up 18 cows.

I said, “Yes, of course, that’s 20 cows.”

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, “Mortgage Rates: Thinking the Unthinkable.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Sep. 4: Underwriter jobs; broker, HELOC, warehouse, non-QM products; LOS survey; vendor news

Would you transfer a quarter million smackers if your boss told you to? Let’s just remind every lender, and every bank: you have the money and others want it. Here a scammer successfully “deep faked” a CEO’s voice to fool an underling into transferring $243,000. Yes, rates are great (Fed Funds are 2.25%, but the 2 year T-Bill yield is about the same as the 10-year T-Note, and the 30-year Treasury bond is yielding 1.95%), and pipelines (e.g., future income) are brimming, but all it takes is one mis-sent wire to wipe out a lot of profit. And speaking of profit, the 2nd quarter was a good one for independent mortgage banks and mortgage subsidiaries of chartered banks: they reported a net gain of $1,675 on each loan originated in the second quarter.

Jobs & moves

Finance of America Mortgage (FAM), a national mortgage company headquartered in Horsham PA, has several opportunities for Underwriters in our very busy TPO DivisionRemote positions are acceptable and we have many locations throughout the company for those that prefer to work in an office. Conventional, DE, SAR and Jumbo – experience in any or all will be considered! Great opportunity for career growth in this quickly growing channel. Come join the FAM! Send your confidential resume to us to start the conversation.”

WEST, a Williston Financial Group Company, has appointed Darcy Patch as VP of Marketing, Lender Services. “In this newly created role, Darcy will lead the marketing and communications strategies for WFG’s Enterprise Solutions group.” Congratulations!

Lender products & services

Spring EQ Wholesale, the industry’s premier second lien lender, offers 95% combo, 100% CLTV stand-alone and pays Lender Paid Compensation (LPC) up to $10,000. Spring EQ is excited to announce added flexibility for approved broker partners and is now offering LPC to 2% of the loan amount, and Borrower Paid Compensation (BPC) for those partners who wish to originate at par. Spring EQ is now offering fixed rates that are below the prime rate, which is the HELOC rates index, a fiscally responsible, budget friendly way for clients with needs to tap their available equity. And Spring EQ, a specialty lending company focused on home equity solutions, last month announced a Series B funding round led by Tilden Park Capital Management, an alternative asset manager. The funds will drive growth in Spring EQ’s wholesale division to better serve brokers, add a correspondent lending channel, and expand product offerings. For more information, or to partner, please contact your Account Executive or visit Spring EQ Wholesale here.

When reviewing vendor contracts, you don’t want to feel like you’re betting on a losing hand. After all, these documents are critical to mitigating the risks lenders face in their vendor relationships. The first step to reducing your risk and ensuring a winning relationship is obvious but often overlooked – make sure all vendor contracts are fully executed AND on file. Don’t gamble with your contract reviews! Learn more about the 14 most critical vendor contract provisions. Download MQMR’s free white paper, “Rolling Sevens: The Top 14 Provisions Every Lender Should Examine When Reviewing Vendor Contracts” today.

“You know us for our rates and programs, you love us for our service, now get to know our Renovation programs. loanDepot Wholesale makes Renovation lending easy. Our Renovation Lending Suite includes programs designed to accommodate both large and small home improvement and repair projects. Giving you more options for your real estate partners and clients to meet their homeownership needs. Flexible solutions that include FHA 203k Limited and Standard as well as FNMA HomeStyle®. loanDepot Wholesale – proud sponsor of improving homes across America. Contact us today to learn more. Rates, terms, and availability of programs are subject to change without notice – www.nmlsconsumeraccess.org.”

One warehouse lending organization gets noticed in the marketplace for doing things the right way. ResX Warehouse Lending is a division of Connecticut-based United Bank, a respected commercial lender with a long track record of building long-term relationships with its clients. They’re not new to the warehouse lending business, but if you haven’t heard the name yet, it’s only because they’re not promoting themselves with every new trend or fad to hit the market. These are serious experts looking to build relationships with clients like you who are focused on sustainable growth…one relationship at a time. ResX Warehouse’s clients rave about the lender’s proactive approach. And that expertise is provided by seasoned, top-level professionals. Customers also love their commitment to delivering more effective and efficient processes. Combined with United Bank’s full-service array of products and resources, ResX is the ideal platform for the correspondent focused on real growth. Learn More.

If other industries can boast amazing customer satisfaction, who says the servicing industry can’t too? 2019 HousingWire Insider Award winner, TMS’s Johnny Spagnola, has redefined the mortgage customer service experience post-closing, setting chart-topping records of 98% Customer Satisfaction, a level that surpasses any industry. It’s time to put the “customer service” back into “servicing.” Learn more about TMS subservicing here.

“Vacation Rental or Long-term Rental? Visio Lending is the nation’s leader in Non-QM loans for buy and hold SFR rentals. No income verification or tax documentation. 30-year terms (no balloons), buy ups and buy downs on rates and pre-pays, I/O available. Through our top-notch Broker Program, brokers earn up to 3 points per closed loan; Visio always pays the broker the first 1%. Additionally, Visio Brokers can count on a designated Account Executive, in-house processing, and one-year broker protection.”

Last September, HousingWire reported that America’s 44 million homeowners have more home equity than ever before. This $6 Trillion of untapped equity could lead to a surge in HELOC originations, but when? New investors in the market have been preparing quietly for a HELOC surge yet the demand appears to be marginal. Lenders that offer home-equity loans need servicers with sophisticated customer access tools. According to Randy Lightbody, Chief Revenue Officer of Computershare Loan Services, “The goal for any asset owner is to optimize the draws on the HELOC. This requires multiple points of access and tools that exceed consumer expectations. SLS has experienced an average usage rate of 13 transactions per month and one ATM withdrawal per month. For the HELOC market to fully function, it requires a cheap and effective origination process, liquidity for the mortgage banker, and a servicer that provides the functionality to support the product.”

Stearns Lending Wholesale is excited to invite you to connect at the NAMB 2019 at Caesar’s Palace in Las Vegas, September 14-16. Meet the Stearns Wholesale leadership team and learn more about our “Strong History and Bold Future” and how our Account Executives create a “Personal Touch” and put our brokers first. Learn first-hand how we are poised for growth and prepared to serve the Mortgage Broker with new product offerings, new pricing specials and great technology enhancements. If you would like to set-up a time to speak with the Stearns Wholesale team while at the NAMB 2019 conference, please email us.

Lender M&A

Yes, there were more sellers than buyers at the beginning of 2019, and now there are more buyers than sellers. But deals still happen, the latest being New York’s Syracuse Securities, Inc., founded in 1963 by the Smith family, “handing over the reins” to Premium Mortgage Corp. (Syracuse Securities closed more than $4 billion in residential mortgages during that time and is currently servicing over $800 million.) “Syracuse Securities will complete all loans in its pipeline, maintaining its long-standing commitment to customer service…. Current Syracuse Securities loan officers, as well as some staff will transition to Premium Mortgage, and continue to operate out of a few locations.” (Premium does over $800 million per year in annual mortgage loan originations, including conventional, FHA, VA, USDA, SONYMA and portfolio lending.)

Vendor & tech tidbits

Lenders, the Loan Origination System (LOS) Survey in STRATMOR Group’s 2019 Technology Insight Study is now open. If you want insight into the functionality and resource requirements for the LOS available in the market today, participate in this survey and get the answers you need. It takes just five minutes to complete and lenders who participate receive the survey report for FREE. Complete all the surveys in the study and you’ll have the entire 2019 Technology Insight Study for the investment of your time! Take the LOS survey now and rate the LOS you’re using.

Want a new vendor name to track? A group has “recognized the potential value of a solution to streamline access and information sharing” by creating Elphi, a financial services startup for the mortgage industry. “Elphi provides a front-facing customer interface and a back-office workflow system for borrowers and lenders, respectively, to send and receive the information needed to create and monitor a mortgage throughout its life cycle in a regulatory compliant manner.”

Flagstar Bank and Detroit FinTech Bay announced the first startups to participate in the Flagstar Mortgage Tech Accelerator Program. The three companies are Brace, which focuses on servicing nonperforming loans, boost.ai, which develops A1-based chatbots for the banking sector, and Home Captain, a real estate SAAS technology company that acts as a conversion optimization system. The program focuses on startups active in developing innovative technology solutions for the mortgage industry. It is the first and only accelerator program in the United States exclusively dedicated to mortgage technology. Business plans for the start-ups will be developed at an official gathering at the Detroit hub in TechTown this September to kick off the program.

Recently MCT announced the industry’s first client-wide rollout of new functionality that delivers real-time pricing and automates loan commitment for PennyMac clients. “MCTlive! Rapid Commit, which was previously limited to agency executions, speeds up the committing process, ensured data integrity and optimizes best execution for all commitments. After completing best execution analysis and determining loans to be sold to PennyMac, RapidCommit intelligently selects products and delivers commits for all loans with a single click including execution of the tri-party agreement required for AOT transactions.”

Simplifile announced that the Town of Westerly has joined its e-recording network following the passage of a law authorizing e-recording statewide in Rhode Island. Rhode Island joins 47 other U.S. states that have authorized e-recording of deeds, mortgages, and other documents to enable faster and more cost-effective land record transactions. Only Kentucky and Vermont have yet to begin e-recording.

First Allegiance announced its latest new product: Valuation Occupancy Inspection. First Allegiance has combined the best of two services: Drive-by BPO’s and Occupancy Inspections. Get the latest value of a property and determine occupancy with one order request. Geared toward early stage delinquency borrowers, foreclosure, and REO situations.

Capital markets

Consumers consumption makes up the largest portion of GDP and consumers continue to support the current economic expansion. Despite a downward revision in second quarter GDP from 2.1 to 2.0 percent, personal consumption expenditures increased from 4.3 percent to 4.7 percent; the highest quarterly level in almost five years. July’s personal consumption data showed a 0.6 percent increase, suggesting the third quarter is off to a good start as well. Additionally, consumer confidence remains strong despite volatility in the financial markets, uncertainty surrounding trade and recession chatter. On the flip side, residential construction continues its decline and business fixed investment was down for the first time since the third quarter 2016. A new round of tariffs went into effect over the last weekend that will more directly expose consumers to rising prices. The ongoing trade uncertainty is expected to be a headwind to capital expenditures in the near-term. Manufacturing has been on a downward decline this year, which is likely to continue given the current global environment. Given these conditions, markets expect another 25-basis point rate cut following the upcoming FOMC meeting later this month.

It was a volatile start to a short week Tuesday, including the 10-year closing yielding 1.47 percent, the same level at the 2-year, in what was another day with reminder of global trade tensions and disappointing data points. Domestically, the ISM Manufacturing Index for August registered a contractionary figure, its lowest print since early 2016, which will engender economic slowdown concerns, as well as worries about the impact of tariff actions on business investment. Internationally, China’s August Manufacturing PMI, Japan’s August Manufacturing PMI, Germany’s August Manufacturing PMI and the U.K.’s August Construction PMI all fell beyond expectations. Separately, ECB policymaker Muller, said he does not support a resumption of asset purchases at this time amid reports ECB policymakers are considering a tiered rate cut and reinforced guidance. And British Prime Minister Johnson lost his party’s parliamentary majority, with MPs now expected to attempt to pass a bill that will block a no-deal Brexit on October 31. Finally, a 15 percent tariff on $110 billion worth of imports from China went into effect on Monday. China retaliated with a tariff hike of its own. The market had little reason to be hopeful that the U.S.-China relationship can improve in short order, considering trade negotiators from both sides have yet to even agree on the specifics of their next meeting.

Winter is coming. Although pipelines are full, the Mortgage Bankers Association reported that mortgage applications for the week ending August 30 decreased about 3 percent from one week earlier after dropping over 6% the week before. We’ve had some non-critical trade numbers ($54 billion deficit), and later this morning are the Redbook same store sales for the week ending August 31, the ISM NY Business Conditions Index for August, and a long list of Fed speakers (NY Fed President Williams, Dallas’ Kaplan, Fed Governor Bowman, St. Louis’ Bullard, Minneapolis’ Kashkari, and Chicago’s Evans). In the afternoon, the latest Beige Book will be released ahead of the September 17/18 FOMC meeting. Additionally, the Fed will conduct two FedTrade operations in which they will purchase up to $1.425 billion 7- to 20-year treasury coupon securities followed by up to $178 million UMBS15 2.5 percent. We begin the day with Agency MBS prices worse a few ticks and the 10-year yielding 1.50% based on Hong Kong’s leader withdrawing legislation that potentially allowed extraditions to China and easing political tensions in the U.K and Italy.

I regret rubbing ketchup in my eyes, but that’s Heinz sight.

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, “Mortgage Rates: Thinking the Unthinkable.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)