July 14: Readers address the yield curve’s relevance, the single security platform, and ATR vs. subprime

The primary and the secondary markets…

Fun with categorizing loans

Daniel M. Shlufman, Esq., with Classic Mortgage LLC, wrote, “Lenders have rolled out with a slew of No Income, Asset Verification type products. But, before you think that this is a return to the days of No Income and Sub-Prime Lending, the loans being made now are not that. Due to Dodd Frank and other recent federal regulations, lenders are required to make sure that a borrower has the ‘Ability to Repay’ before making a loan.

 

“The first type is an Asset Qualifier which is designed for retired folks or those who have a lot of assets but little or no income. They are generally available for up to 75% of the purchase price. Various lenders have slightly different qualifying guidelines, but all require that you have enough assets to pay off the loan entirely and have enough for reserves.

 

“Another type of loan that is available is a Bank Statement loan. This type of asset-based loan allows lenders qualify a borrower using either personal or business bank account statements. Generally, they require either 12 months of personal bank statements or 24 months of business bank statements. Using these bank statements, the lenders create a monthly income and then apply their housing and debt ratios to this income in the same way they would with employment income. Thus, ensuring a borrower has both enough assets to close on the purchase as well as reserves after closing.

“There are 2 types of reserves that are needed.  The first type requires that the purchaser has a certain number (2-6 months depending) of monthly mortgage payments in assets. The other requires that the purchaser has enough assets to make a certain number of payments on ALL their debt. These reserves will need to be from 6 months to 60 months of all debt payments. Though these Asset Based loans are available, they are very fact specific.”

Capital markets

Originators should remember that anything that roils the secondary markets (uncertainty, higher rates, lack of demand, etc.) impacts the primary market – the rates borrowers see.

John Ardy, CEO of the recently acquired Resitrader, has some thoughts on the secondary mortgage market. “We’ve seen CRA trades occurring earlier this year and the overall trend seems to continue to favor bulk mandatory executions. With the rise in mortgage rates and a potential further increase in rates this year, there is an increasing interest from buyers for mortgage servicing rights. We, of course, expected that and we expect that trend to continue during the second half of 2018.

“We’re also seeing a trend in technology within the secondary market speeding up trades between buyers and sellers. Digital trading platforms, for example, are picking up interest for loan traders. Anecdotally, our volume grew 400% since January due to new clients and hedge-advisor relationships. We also see some aggregators buy loans and then turnaround and sell to Fannie/Freddie on our platform. We plan to see more of that during the second half of the year as well.”

Contracts for interest-rate derivatives need to add provisions to account for the possibility of Libor’s demise, said Federal Reserve adviser David Bowman. About $350 trillion worth of financial products worldwide have Libor (London Interbank Offered Rate, aka LIBOR) exposure spanning multiple currencies. Regulators set LIBOR to be phased out in 2021 and have encouraged alternatives to take its place.

Certainly, mortgage bankers are concerned about the coming phaseout of a global interest rate benchmark because, they said at a conference, the transition will entail costs and administrative burdens and the replacement rate is not an ideal substitute. LIBOR’s reputation is deservedly tarnished due to scandals from trader manipulation. LIBOR is based on a survey of banks on what they charge each other for dollars. But it’s the existing benchmark for $200 trillion in dollar-denominated financial products, mostly in interest rate swap contracts.

Mortgage bankers and loan servicers care because roughly $1.2 trillion in mortgages and another $1 trillion in mortgage-backed securities are set against LIBOR, according to the Alternative Reference Rates Committee. A complicated move away from LIBOR could prove disruptive for the mortgage market and perhaps result in a jump in late mortgage payments due to confusion among homeowners because of the change in their interest rate resets. And overhauling computer and accounting systems won’t be cheap.

Alternatives? We need more acronyms in our lives, so the New York Federal Reserve, together with the Office of Financial Research, a government agency, developed the Secured Overnight Funding Rate (SOFR) as a LIBOR alternative. But critics claim that one of SOFR’s shortcomings is that it is not a measure of what banks charge each other to borrow dollars, which LIBOR does, so it is a risk-free rate. SOFR is derived from daily trades in the repurchase agreement market where traders use their Treasuries holdings as collateral to obtain overnight cash. The absence of a liquid futures market for SOFR makes it tough for traders and lenders to extrapolate a longer-term rate to hedge their interest rate risks – but that will change.

Switching gears mildly to mortgage-backed securities, we have less that a year until single securities hit (combining Freddie and Fannie loans). Bill Berliner with MCT wrote, “I attended the conference that Freddie and Fannie co-sponsored and put out a summary to our clients.

“Implementation plans were discussed and issues addressed to help mortgage and MBS market participants prepare for the changes associated with the SSI. This change is scheduled to go live on June 3rd of 2019, although the changes will impact trading as early as March of next year. It is good for the industry to know the basics (about the Single Securitization), how pools, trading, and delivery will be affected, loose-ends to tie up and concerns about the switch, and the main preparatory tasks for lenders.

“Fannie Mae and Freddie Mac will remain separate companies but issue MBS under a single platform. Once the changes go live, Fannie and Freddie pools will be called Uniform Mortgage-Backed Securities (UMBS). The new securities will have the main characteristics of Fannie Mae pools; most importantly, they will have 55 delay days. Pools may be backed by loans guaranteed by both Fannie and Freddie.

“The new securities will be issued by Fannie and Freddie through an entity called the Common Securitization Platform (CSP). Early in the process, the GSEs concluded that the existing systems could not handle the commingling of the two enterprise’s loans in the same securities, necessitating the new platform. The CSP is being built, and will be managed, by a joint venture between Fannie and Freddie called Common Securitization Solutions LLC (CSS). The initiative only impacts conventional fixed-rate MBS. Conventional ARMs and all Ginnie Mae pools are not impacted.

“The objective is to create a level playing field where securitized execution for loan sales is the same irrespective of which GSE provides the guaranty. Previously, the concessions at which Freddie Gold TBAs trade to Fannies (despite their shorter delay) put Freddie Mac at a competitive disadvantage, in that they had to compensate originators to securitize loans as Golds (through the “MAP” adjustment) instead of Fannies.

“Importantly, this is not a merger of Fannie and Freddie. They will continue to operate independently and have their own underwriting and pricing systems while issuing pools through the CSP.”

His note continued, addressing pools, trading, and delivery. “Older (i.e., ‘legacy’) Fannie Mae pools will be deliverable into UMBS TBAs, as will new UMBS pools. Legacy Freddie Gold pools that have a 45-day delay will need to be converted (“exchanged”) into new securities to be delivered into UBMS TBAs. For every existing Gold pool, Freddie Mac will create a deliverable ‘mirror pool’ that will have a new CUSIP and pool number and be backed by the same loans as the legacy pool. Holders of legacy Gold pools will have the option of exchanging them for the mirror pools in whole or in part. Investors exchanging legacy pools for mirror pools will be compensated for receiving a security with 10 extra delay days at the time of the exchange. Investors that own the mirror securities and want to examine the historical performance of the legacy Gold pools will be able to access that information through either Bloomberg or other data sources (e.g., eMBS).

“UMBS will adopt the ticker symbols currently used by Fannie Mae. For example, a deliverable 30-year UMBS pool will be labeled as an FNCL pool. There will be different formats for non-deliverable UMBS; for example, 30-year Gold pools with 105-125% LTVs that are now labeled as FGHLU6 pools will be RHLU6 (basically retiring the ‘G’ and replacing it with an ‘L’) when issued through the UMBS platform.

“Assuming the go-live date is met, TBA trading will transition to the UMBS platform starting in March 2019. Trading in UMBS TBAs will commence after March 2019 Class A notification, as the third month TBA will be settled by delivering new UMBS pools. It’s unclear how the screens will ultimately look, and it’s possible that Tradeweb and Bloomberg screens will look somewhat different. (Tradeweb, for example, plans to display ‘Fannie/UMBS’ and ‘PCGld’ on their screens up to 30 days prior to the change; at that point, the screens will only show ‘UMBS.’)

“It’s unclear how long Gold TBAs will continue trading after UMBS trading goes live. It’s also unclear whether legacy Gold pools will continue trade in their current form (i.e., as Golds) or will be converted to UMBS prior to trading, or whether two parallel markets will develop. Several data providers will supply information on conversions for industry participants to track metrics such as issuance and float. (E.g., investors will need to know how many Gold pools have been exchanged on a particular day, what are the balances of unexchanged Gold pools, etc.)”

At the time Bill wrote this there are still some things that are unclear and/or need to be addressed by regulators and government. For example, the tax treatment of the exchange (particularly the delay-day compensation). How long Gold TBAs will continue to trade after the go-live date. How the prefixes for new non-deliverable UMBS pools will look. And whether legacy Gold pools will trade in their current form or must be exchanged before trading.

“The main tasks for lenders at this point are: Make sure that provisions are made to calculate and/or access the correct durations and pricing for the UMBS on the go-live date. MCT will be involved with the testing leading up to the rollout and will be ready when the CSP goes live.

Lenders that create pools should be aware of the changes and can create and deliver the new UMBS securities without disruptions. Be flexible and prepared to deal with issues as they arise. Remember the adage, ‘you don’t know what you don’t know.’ Make sure that all broker/dealer counterparties are aware of the big changes coming to the MBS market. More information can be accessed here.” Thanks Bill!

The use of the yield curve is becoming more and more questionable as a measure of future economic conditions. Brent Nyitray scribes, “As the 2s-10s spread decreases, many in the financial press are worrying whether the slope of the yield curve is signaling a recession. We already have some strategists calling for the yield curve to invert sometime in 2019. An inverted yield curve (where short-term rates are higher than long term rates) has historically been a strong recessionary signal. Generally, the yield curve flattens during tightening cycles. In fact, it did invert in the late 90s (before the stock market bubble burst) and during the real estate bubble (before the Great Recession). Recent Fed research indicates the 2s-10s spread may not be the best signal of an upcoming recession. It suggests the spread between the 3-month T bills and 18-month Treasuries could be more predictive. Another signal is the Eurodollar futures market. The idea is that the Fed would use these indicators as a yellow signal and stop tightening before they risk a recession.

“Of course, all bets are off when it comes to this yield curve versus the past. The size of the Fed’s balance sheet relative to the economy is vastly different this time around. Pre-Great Recession, the Fed had about $800 billion worth of assets. Now it is about $4.4 trillion. To draw comparisons, you would have to estimate where the 10-year would have been without Operation Twist, QE1, QE2, and QE3. Punch line, the yield curve may in fact invert if the Fed continues to tighten and inflation remains under control. The signal-to-noise ratio of the yield curve is extremely low, so take it with a grain of salt.”

An 80-year old man was arrested for shop lifting.

When he went before the judge in Cincinnati he asked him, “What did you steal?”

He replied, “A can of peaches.”

The judge then asked him why he had stolen the can of peaches, and he replied that he was hungry.

The judge then asked him how many peaches were in the can.

He replied, “6.”

The judge said, “Then I will give you 6 days in jail.”

Before the judge could conclude the trial, the man’s wife spoke up and asked the judge if she could say something.

The judge said, “What is it?”

The wife said, “He also stole a can of peas.”

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, “With Regulations, Be Careful What You Wish For.” 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 over 300 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 2018 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.)

 

July 13: LO jobs; construction, warehouse products; free LO comp webinar; shifting UW criteria

Here’s a quiz. The demand demographics for housing in the U.S. aren’t letting up – people want a roof over their head. But, in this market, figure out (a) and (b) where a huge pipeline of new condos, a dwindling number of foreigner buyers, volatile stock markets, and tax changes that make ___a___ less attractive may be hurting ____b____ real estate sales. 1) California, San Francisco, 2) Washington, Seattle, 3) Florida, Miami, 4) New York, Manhattan. Here’s your answer. Yes, lumber, labor, and regulations continue to provide hurdles for builders in many places around the U.S. – even where lumber isn’t used much.

Jobs & personnel moves

Caliber Home Loans, Inc. is excited to welcome back Danny Horanyi, who will join its production team as SVP of Retail Innovation. In this role, he’ll focus on implementing systems that increase retail sales volume and improve our borrowers’ experience. On his return to the leading national lender, Horanyi said, “Caliber is by far the best-positioned company in the retail space. Caliber has been open to doing what it will take to win the retail purchase game by committing to get behind critical initiatives while others pull back. I’m so excited to be back!” His background as a nationally ranked Loan Officer will be an asset to Caliber. Loan Consultants interested in joining Danny and the national network of producers can contact Jeremy DeRosa.

National MI is excited to introduce our newest team member in the South-Central Sales Region, Beverly Kerbow. Beverly brings a wealth of mortgage lending and mortgage insurance experience to National MI. Most recently Beverly worked in the Pittsburgh area for Citizens Bank.  Prior to moving to Pittsburgh, Beverly achieved much success as an Account Executive with PMI covering Austin and San Antonio. Additionally, she was very involved in the National APMW and the local MBAs in both Austin and San Antonio. In 2011 Beverly was the recipient of the TMBA James Wooten Scholarship. Beverly will be working with Adam Isbell covering Austin, San Antonio, West Texas, and New Mexico. She should be a familiar face to many as she has spent most of her mortgage career in the territory she will now be covering. Please feel free to reach out to Beverly Kerbow (512.663.3579).”

More Retail growth for PRMG as they expand their national footprint by opening 2 new branch locations during the month of June!  Along with the drive and ambition to bring the American Dream of Homeownership to all cities across the country, PRMG has now opened its doors in Berwyn, IL and Orlando, FL. Built by Originators for Originators PRMG is devoted to growing their retail platform and is always looking for Motivated Loan Originators to support the mission to being “Progressively Better in All that They Do”. Voted TOP 5 of the 50 Best Companies to Work for in America, No. 2 Best in the Desert 2018, OC Register Top Workplace 2017, NMP Visionary Organization 2017, CAMP Corporate Affiliate of the Year 2017 and TOP 25 of 100 Mortgage Companies in America!  PRMG employs over 1,800 people! If you’re ready to join a top-tier team and company, then it’s time to talk! Contact Chris Sorensen at 909.262.0452.

Movement Mortgage, a top 10 retail mortgage lender, is expanding in New York with its first branch on Long Island. The new branch in Huntington is led by New York mortgage veteran Quentin Hardy, a top producer and purchase and renovation specialist. The licensed office on Long Island is part of a concentrated effort to expand Movement’s origination presence in the Northeast. Movement’s Northeast expansion has included record growth in New York, New Jersey, Pennsylvania and surrounding areas. Learn more about opportunities to join Movement in the Northeast by emailing Regional Director Mike Brennan.

Lender products

Bank of Hope Mortgage Warehouse Lending is looking forward to the upcoming 46th Annual CMBA Western Secondary at the Westin St. Francis Hotel in San Francisco! Bank of Hope lends nationwide to mortgage bankers of all size. For more information on our competitive warehouse terms, please contact Louis Politi or Nicole Thomsen.

Industry-leading multi-channel LOS and mortgage fintech provider, OpenClose®, announced the release of DecisionAssist™ Mobile, placing the power of its proprietary product and pricing engine (PPE) at your fingertips. With DecisionAssist™ Mobile, Originators can compare eligible products, pricing and deliver results directly to their borrowers from anywhere and from any device.  The company’s ability to implement and maintain custom non-QM programs and instantly decision them provides immediate insight on sellable loans under agency or non-agency guidelines. OpenClose’s DecisionAssist™ PPE is leveraged by direct lenders, investors and portfolio lenders using the OpenClose LenderAssist™ LOS or as a standalone web-based solution. Custom rate sheets are also generated and distributed. Learn more about the full suite of OpenClose® products and services at the Western Secondary conference on July 16th-18th. OpenClose provides a unique, boutique-style, hands-on approach to LOS and software implementations, training, and support. For more information on the OpenClose difference, visit the company’s website www.openclose.com.

According to the ARMCO Mortgage QC Trends Report, in 2017, the majority of critical defects centered around issues associated with core underwriting and eligibility issues, which is reflective of the deeper complexity of purchase transactions, as compared to refinances. The fourth quarter 2017 critical defect rate increased slightly, from 1.65% to 1.68% while the percentage of purchase transactions declined for the second consecutive quarter. The latest report provides loan quality findings for mortgages reviewed by ACES Audit Technology™ during the fourth quarter of 2017 as well as the 2017 calendar year. “When you see how much the issues that impact quality can change quarter to quarter and year over year, it becomes apparent why lenders should use the most current data for strategies going forward,” said Phil McCall, president of ARMCO.

Olympia Federal Savings (Oly Fed) has chosen Built Technologies to bring its construction loan administration process online and into the digital age. Oly Fed has received a 5-star rating from Bauer Financial for over 30 years and is known for providing modern online banking and innovative lending programs. The portfolio lender is migrating its manual construction loan administration process to Built’s cloud-based platform for real-time collaboration, faster disbursements, risk mitigation, and more efficient processing. “The transition to a digital construction lending experience gives us the ability to provide even more customers with personal service,” said Richard Pitts, EVP, Chief Lending Officer, Oly Fed. Built allows Oly Fed customers to apply for construction loans online and monitor project inspection and draw process with a digital, consistent experience. “We’re excited to welcome Olympia Federal Savings,” said Chase Gilbert, CEO, Built. “With its 110-year history and status as a leading portfolio lender, it’s a great compliment to be chosen as part of its customer service mission.”

Events and learning

Don’t miss out on the Lenders One 2018 Summer Conference in Salt Lake City, Utah, August 5-8, at The Grand America. In an age of disruption, it’s never been more important to learn from peers and industry leaders. Keynote speakers Alison Levine and David Robertson will share ways to get ahead in a tough market, and attendees will be able to select from 16 curated education sessions led by industry experts. Topics include:  improving margins, generating business through MarTech, rethinking your compliance strategy and five Secondary Market panels. Touted as the most valuable part of conference, Lenders One has expanded networking opportunities for members to connect with peers and explore best practices. Reserve your spot by this Friday, July 13, or contact Lauren Ketchum to learn more about becoming a member.

James Brody, Chair of Johnston Thomas’s Mortgage Banking Practice Group, is hosting a complimentary webinar at 10:30 AM PST, on Thursday July 26, titled “Loan Officer Compensation Tips and Trends: How to Gain a Competitive Edge While Remaining Compliant”. Per Mr. Brody, given companies ever shrinking margins and the always present pressure being placed on them to maximize profits, this webinar is meant to provide all such companies with invaluable tips on how to ensure their LO Comp packages remain both highly competitive and defensibly compliant. In addition, if you were not able to attend and would like to access a complimentary recording of Johnston Thomas’s most recent webinar program, click on “Repurchase and Indemnification Claims in 2018 and Beyond: A Comprehensive Update on the RMBS Wave, Significant Rulings from the Courts, and Successful Resolution Strategies”. Qquestions regarding either of these two programs? Contact Mr. Brody or, if possible, meet with him and his colleagues in person at the CMBA’s upcoming Western Secondary Market Conference in San Francisco on July 16-18.

As a giant of our industry plans for retirement next month, Mortgage Bankers Association (MBA) President Dave Stevens sat down to discuss his view of the future of mortgage lending with XINNIX CEO Casey Cunningham on a very special episode of Inside the Mortgage Mind, a XINNIX podcast. With the perspective of a 30+ year career in housing finance and 7 years at the helm of the MBA, Dave’s insights are relevant, direct, and vital—covering everything from government to technology to his ideas on how loan officers will succeed in the future. To hear this podcast, CLICK HERE. Inside the Mortgage Mind is produced by XINNIX, a sales and leadership development company dedicated to “Energizing People and Elevating Results” for the mortgage industry.

Lenders, how do you take advantage of strategic data while avoiding the risk of abuse? Register for October Research’s upcoming webinar, Title Data: Opportunities and Risks to learn the building blocks for big data thinking using tax, deed, mortgage and foreclosure data and how to use it to assess borrower risk. Ensure your vendors and partners are maintaining control of the information responsibly. ATTOM Data Solutions’ Daren Blomquist and compliance expert Marx Sterbcow will discuss the compliant applications for and management of data Thursday, July 19th.

A sampling of changes to various underwriting criteria

Excelerate Capital is now offering a new program feature: NonQM 3-Month Bank statement Option. Only 3 months of business bank statements is needed to support 24-month P&L. (P&L preparation requirements apply). For more information contact rto@exceleratecapital.com. And it has added a new NonQM VOE feature to its Platinum Shake Up. Call 844-432-3685 for details.

Land Home Financial Services Elite Jumbo Product provides a unique option for borrowers. Conforming High Balance loan amounts are accepted using Elite guidelines. Contact Mark Sheridan with questions.

PRMG posted product updates for its Platinum Jumbo and TCF HELOC.

HomeXpress is now accepting Borrower Prepared P&L on its Bank Statement Programs.

Angel Oak has announced its New Commercial Lending Unit. Angel Oak Commercial Lending will provide both short- and long-term financing for projects across the commercial sector, including multifamily, industrial, mixed use, retail, office, self-storage and other specialized segments.

Citadel Servicing Corp. is offering a VOE Only Qualification Program. Qualify your W2 Borrowers with Only a Verification of Employment Form Executed by the Employer. You can qualify your borrowers with only ONE Year of W2s or ONE Year of Tax Returns if Self-Employed with loan amounts to $3 million.

Caliber Home Loans offers a Physician Loan Program. Newly licensed medical residents or physicians, both permanent and non-permanent resident aliens may qualify. Contact Caliber for qualification details.

United Wholesale Mortgage has increased the maximum allowance on cash-out refinances from 80% LTV to 85% LTV. The program also offers reduced mortgage insurance premiums and is available for borrowers with a 740+ FICO, only applicable on primary loans.

Capital markets

I am not going to waste your time. Rates are been flatlining for some time now, and, aside from a little intra-coupon and maturity changes of a few ticks (32nds) – not enough to move rate sheets, Thursday was a snoozer. There just isn’t much going on out there.

The highlight of today’s session might be the release of Fed Chair Powell’s prepared remarks, that will be read at next week semiannual monetary policy testimony which kicks off on Tuesday before the Senate Banking Committee at 10:00am. We’ve had the June import / export

prices (-.4%, +.3% respectively) – hardly market movers. The University of Michigan Sentiment Index (pJuly) will be released at 10AM ET. Chase released its earnings – impressive, and more next week. Friday the 13th starts with the 10-year yielding 2.83% and agency MBS a couple ticks better than last night’s close. Once again, probably another snoozer of a day for rates.

For you country music lovers! (A repeat; unrated, but don’t read if you’re offended by anything.)

TOP 10 COUNTRY WESTERN SONG TITLES

10. I Hate Every Bone in Her Body but Mine.

9. I Ain’t Never Gone to Bed with an Ugly Woman but I Woke Up With a Few.

8. If the Phone Don’t Ring, You’ll Know It’s Me.

7. I’ve Missed You, But My Aim’s Improvin’.

6. Wouldn’t Take Her to A Dogfight ‘Cause I’m Scared She’d Win.

5. I’m So Miserable Without You It’s Like You’re Still Here.

4. My Wife Ran Off with My Best Friend and I Miss Him.

3. She Took My Ring and Gave Me the Finger.

2. He’s Lookin’ Better with Every Beer.

And the Number One Country & Western song is:

1. It’s Hard to Kiss the Lips at Night That Chewed My Ass All Day

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, “With Regulations, Be Careful What You Wish For.” 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 over 300 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 2018 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.)

July 12: MI, AE, LO, sales mgt. jobs; UW & API products; FHA/VA/Ginnie updates – incl. EAD/DACA policy

Chris Whalen notes, “The failure of Bear Stearns & Co a decade ago illustrates the key lesson of financial markets, namely that non-banks are dependent upon 1) banks and 2) clients for liquidity. And no amount of capital will save a non-bank that has a deficit in terms of confidence. In times of market stress, credibility and character are far more important than capital.” On the flip side, Angelo Mozilo famously observed that a liquidity crisis will take a company down faster than anything. Any questions? IndyMac’s Mike Perry had a statement on his blog yesterday titled, “Not Too Big To Fail: Mike Perry talks about IndyMac Bank and the financial crisis ten years on.”

Career possibilities

National MI is expanding its sales team and adding an additional Sales Account Representative who will reside in greater Chicago area. Responsibilities include to promote the sale of National MI products, services, and programs to clients through a consultative selling approach via personal sales calls and email/phone contact. This individual will also assist in sourcing new business from originators and will manage the relationships of specific clients by serving as a customer advocate, educator, and loan issue problem-solver. Experience in client relationship management and training is imperative, and strong research, process improvement, and presentation skills are required. Headquartered in the San Francisco Bay Area, National MI is a U.S.-based, private mortgage insurer enabling low down payment borrowers to realize homeownership. National MI has a GREAT culture, compensation and benefits. For the complete job posting, see National MI’s careers page.

A mid-size independent mortgage banker with all GSE approvals in place and $4 billion in annual production conducting business in the Southwest is seeking a dynamic, enthusiastic, experienced National Sales Leader to recruit and retain a national sales force that delivers extraordinary results. This position is responsible for planning, organizing and directing company-wide strategic initiatives, sales development, leadership and management of loan production throughout the organization with a proven production platform. Send confidential resumes to me for forwarding.

First Savings Mortgage Corporation is a mortgage lender based out of the DC metro area licensed in DC, MD, VA, FL, DE, NC and SC. “First Savings has been consistently recognized as a top lender by Scotsman Guide and the Washington Business Journal. The average tenure for a First Savings mortgage loan officer is more than 13 years, largely due to the ‘LO-centric’ culture. Collectively, a First Savings mortgage loan officer averages over $40 million in annual production volume, due to the unique, purchase-market driven solutions like bridge financing and the constant emphasis on providing superior service to both clients and referral partners. Year to date, 51% of our loans have closed in less than 30 days! As a consistent, top lender, First Savings Mortgage Corporation continues to grow our market share in those markets mentioned above. Contact Managing Director Mark Deitz (240-223-1556; First Savings Mortgage) today to learn more about our team and our story!”

In wholesale expansion news, Village Mortgage has hired industry veteran Bob Germano as Director of Wholesale and AJ Capece as Wholesale Operations Manager. Bob has successfully launched two wholesale channels over the past 10 years and “Is a seasoned and trusted leader who has brought a tremendous team of talented associates to Village Mortgage’s already experienced wholesale lending department,” said Laurel Caliendo, President of Village Mortgage. As Ops Manager, AJ Capece will focus on running a customer-centric and service obsessed operation. Bob notes, “Ultimately, regardless of how good our technology and price offerings are, people do business with people. We are here to serve our customers and have assembled an all-star team to exceed their expectations. We are looking forward to the opportunities ahead of us.” Village Mortgage is adding Account Executives in the Northeast and in Florida, and resumes should be sent to Bob.

In retail news, AmeriFirst Home Mortgage continues to build its Southeast Region with the announcement that Christopher Arbogast has joined the Southeast Regional team as Area Manager of the Wilmington, N.C. area. For over a decade he has successfully managed high producing teams and will work to continue to expand AmeriFirst’s footprint in this region. AmeriFirst’s recent growth in the Southeast Region includes the 2017 opening of new branches in Winter Park and Tampa, Florida, for a total of six full-service branches in the state. Contact Chris for a confidential discussion.

Lender products

Spruce, the leading digital title & escrow company, has announced the launch of its end-to-end title & closing API. Lenders can use the API to fully integrate Spruce’s services into their own LOS or POS, and realize significant efficiency and productivity gains. “We already have a number of first mortgage and HELOC lenders using the platform with great success,” said Patrick Burns, CEO of Spruce. “It’s flexible enough that a lender can craft the right solution for their use case, but always backed by Spruce’s team of title and closing experts”. To find out more or schedule a demo, click here.”

Calculating and underwriting income is time consuming, especially for a self-employed borrower. It often requires significant work before the complexity of a file is understood. LoanCraft’s Virtual Panel SM provides a solution. Part of every Income Report, it provides three income estimates tailored by varying assumptions. The biggest benefit is that the Virtual Panel gives you an immediate view of how complex a file is. When all the estimates are close or the same, the file is not complicated, even if it has several businesses. But when the estimates differ, it’s likely that a little additional analysis is warranted. If three different underwriters, with different points of view, gave you the same answer, how much more research would you need to do? Visit LoanCraft.net for a White Paper on the Virtual Panel or contact Lindsey Fougeorusse (248-897-0604).

FHA/VA/Ginnie news

First off, anyone hoping for a mortgage insurance premium cut this year will probably be disappointed. Per Brian Montgomery, the health of the Mutual Mortgage Insurance Fund just isn’t where it needs to be.

Joan Timm with Summit Mortgage and several others have asked me about government guidelines regarding DACA borrowers. Looking briefly and Freddie and Fannie, Joan wrote, “From my correspondence with FNMA and FHLMC, they too are classifying DACA Borrowers as ‘Non-U.S. Citizen, not lawfully in the U.S.’; therefore, not eligible for financing.”

This commentary discussed DACA borrowers in the autumn of 2016 and it probably still aligns with HUD’s current position on DACA borrowers. “There are millions of these people here in the US and many of them are trying to apply for loans. Many of these loans are closing even though most lenders agree they should not. Our company had a private call with some individuals at HUD who understood the issue and confirmed that borrowers with deferred action status are not eligible for FHA financing because they are not on a pathway to residency and do not meet the guidelines printed in the manual. Additionally, these loans are clearly not eligible for USDA financing as GUS requires you to enter information that identifies their status in the US. When you do so, GUS will tell you that the borrower is ineligible. If you are a lender who currently accepts borrowers with a deferred action status, you may want to consult your attorney for legal advice.”

And the esteemed Potomac Partners had a call saying that DACA borrowers are not eligible for FHA financing.

Perhaps most DACA borrowers have probably closed undetected under FHA financing because HUD has nothing published regarding the ‘Category’ a Borrower’s EAD card is issued under (few were monitoring the “Category” of the Borrower’s EAD card on FHA loans and only recently became aware of Category C-33 being an identification of a DACA Borrower). Although they are a small percentage of originations, many feel HUD has left FHA Lenders very exposed by not publishing that EAD cards issued under Category C-33 need to be underwritten under paragraph (c) of Section (9) for Residency Requirement.

Ms. Timm wrote, “I have not discussed DACA Borrowers with the VA, but a DACA applicant under VA financing would be rare and would also need to be underwritten directly by the VA (e.g. Veteran purchasing with a non-Veteran they are not married to). And really, all the government agencies should define eligibility of DACA Borrowers the same.”

Since HUD published Handbook 4000.1, lenders have been told to “follow what is published in the 4000.1”. Some believe that a DACA borrower holding a valid EAD card should be eligible for FHA financing until HUD publishes that EAD cards issued under Category C-33 are not eligible for FHA financing. Because without that detail most DACA Borrowers will meet all of HUD’s published requirements under HUD Handbook 4000.1 Section II.A.1.b.ii. (A).(9).(b) for a ‘Non-Permanent Resident Aliens’.

Getting a little more into the weeds, a Borrower meeting all of HUD’s published requirements under HUD Handbook 4000.1 Section II.A.1.b.ii.(A).(9).(b) for a ‘Non-Permanent Resident Aliens’ is no longer eligible for FHA financing because HUD is stating a Borrower holding a valid EAD (Employment Authorization Document) card under a Category C-33 (Which is the EAD code for an alien who has been granted Deferred Action for Childhood Arrivals – DACA) pushes them out of Section II.A.1.b.ii.(A).(9).(b) and into Section II.A.1.b.ii.(A).(9).(c) for ‘Non-U.S. Citizens without Lawful Residency’; which have never been eligible for FHA financing. Give HUD a shout with questions.

The industry continues to incorporate Ginnie’s seasoning requirements.

Pacific Union has posted a clarification on the VA Cash-Out and IRRRL. Previously announced updates to the seasoning requirements for all VA refinances have been updated to align with the more restrictive guidelines from Ginnie Mae’s APM 18-04 and VA Circular 26-18-13 regardless of the loan amount.

FHA published in the Federal Register, a final rule (Docket No. FR-5457-F-02) that streamlines the inspection requirements for FHA single family mortgage insurance by eliminating the regulations for the FHA Inspector Roster. FHA acknowledged there is no longer a need to maintain and administer its own standardization process for inspectors. This final rule becomes effective August 2.

PRMG has updated product profiles for its VA Products and CalHFA ECTP and MyHome Assistance.

Mortgage Solutions Financial offers a 65% DTI VA program, call for details 719-283-9558.

M&T Bank requires Correspondent Lenders to evidence compliance in issuing accurate initial and closing versions of the VA IRRL Comparison Statement disclosure as explicitly outlined in both VA Circular and FAQ Circular 26-18-1, Change 1. Reminders include: the initial IRRL Comparison Statement must be issued to the Veteran within 3 days of the application date. The Lender certification language where the underwriter certifies to borrower qualifications (required when the PITI increases more than 20%) is only required on the losing version of the disclosure. Both documents must be present for M&T review at the time of whole loan purchase.

Site Condominium properties in Michigan do not require a VA Condominium Project ID number indicating review and approval by the VA. This is a regional variance that only applies to the state of Michigan. Ditech will be updating its Client Guidelines accordingly.

Movement Mortgage has launched a new mortgage product designed to help more U.S. military veterans purchase and renovate their homes. The VA Renovation Loan, offered in partnership with the Department of Veterans Affairs, is designed to help veterans purchase and renovate a new home or make necessary repairs through the refinance of an existing home. Borrowers may access up to $35,000 in funds to complete repairs and renovations, plus the benefits of a traditional VA loan, such as 100% financing.

Mortgage Solutions Financial posted a revised clarification regarding 6 Month Seasoning Requirement on VA Cash Out and IRRR. This announcement is effective with loan funded on and after February 16, 2018.

Ginnie Mae has posted a new bulletin: “Updated MBS Pool Consolidated and Loan-Level Data Dictionaries.”

Capital markets

Hey, if your company does a lot of purchase business, you’ll be okay, right? Rates are certainly cooperating and are nearly stuck in the mud. But they fell yesterday slightly as heightened geopolitical tensions from U.S. – Sino trade relations grinding to a halt caused the 10-year to close at 2.84%, narrowing the 2s10s spread. Few think that a trade war will benefit us much, and in fact can have a negative impact on our gross domestic product, but here we are. There are now few signs of the “Trade War” abating, after the office of U.S. Trade Rep Robert Lighthizer was ordered to prepare to impose a 10.0% tariff on $200 billion worth of imports from China. With no immediate plans to restart formal trade discussions, and China viewing the tariffs as “totally unacceptable,” about seven weeks remain before the $200 billion of tariffs take effect after August 30.

As far as economic releases went, the Producer Price Index and Wholesale Inventories didn’t move the market much. Looking to today, we have June CPI and Core CPI (+.1% and +.2%, respectively, near or at Fed target), weekly Initial Claims (lower than forecast at 214k), and a $14 billion 30-year Treasury auction. Additionally, we have some Fed speak, with both Minneapolis Fed President Neel Kashkari and Philadelphia Fed President Patrick Harker on the docket. The day starts with the 10-year yielding 2.86% and agency MBS prices worse about .125.

“I hear the bank is looking for a cashier.”
“Thought they just hired one a week ago?”
“That’s the one they’re looking for.”

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, “With Regulations, Be Careful What You Wish For.” 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 over 300 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 2018 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.)

July 11: Non-QM, lead conversion, & TPO products; Home Point/Northpointe, OB/Resitrader deals

Us capital markets folks have a way with words. Henry Jonas writes, “I started in this business in a Secondary Marketing in ‘86. Outside of maybe 1994 I cannot remember margins this thin. I went to Kroger and bought the jumbo economy pack of toilet paper with sheets thicker than my margins. The old saying is, ‘If watermelons cost 50 cents to produce, selling them for a quarter and just getting a bigger truck, won’t solve your problems.’ Companies are still making it, but it is tougher than a truck stop steak right now.” Regarding volume, business bank lending is beginning to pick up – banks have suffered through several quarters of tepid loan growth, but signs suggest trends may now be improving. The Fed suggests bank lending rose over 5% in CQ2. It helps that U.S. Treasury yields are falling, and traders expect the unfolding US-Chinese trade dispute to keep the bond-market rally going. The yield on 10-year Treasury debt fell from 3.13% around the middle of May to 2.82% as the US and China threatened, and then imposed, tariffs on each other.

Lender products

Deephaven Mortgage, a leading Non-QM lender, continues to shine the light on Non-QM through its offering of loan programs & technology aimed at making loans responsibly to the millions of Americans that have been locked out of the market. The primary mortgage origination market continues to experience challenges in the form of margin compression, low inventory, and declining volumes. Lenders are actively evaluating the introduction of Non-QM products to help offset some portion of the market dynamics. Deephaven constantly evaluates its products knowing that the target market is significant. Studies show 16+ million self-employed Americans (Bank Statement Loans), 83 million Millennials (Non-Warrantable Condos), 75 million Baby Boomers (Asset Depletion), and 57 million Americans earned more in 17’ than 16’ (1 Year Alt Doc). And these are just a few segments that have gone underserved but represent a significant opportunity for lenders, such as Deephaven, to diversify and change the course of their 2018 production and beyond. To find out more about how Non-QM can grow your business, contact Deephaven at brokerinfo@deephavenmortgage.com (Wholesale) or sales@deephavenmortgage.com (Correspondent). (Sources: Bureau of Labor Statistics, CNN.)

Smart Start from Stearns Wholesale is now available with HomeReady, FNMA Conforming & High-Balance Loans and FHA Standard & High-Balance Loans*. Stearns Smart Start is a Lender Paid Buydown Program with awesome features! Give your borrowers the peace of mind of having a fixed rate mortgage with option of keeping monthly mortgage payments lower for the first 24 months. First year, rates drop by 1.5%; second year rates drop by 0.5%; at the end of 24 months, borrowers start paying a monthly amount based on the full rate on the note rate. From the very first payment borrowers are building their equity in their homes because money is going toward principal and interest on the loan. Qualify more borrowers with the Stearns Smart Start Program today! *Coming July 14th.

Never lose another preapproved customer again! HomeScout®-HBM understands the challenges that lenders face when trying to service and retain preapproved borrowers who need to find a house. A local branch manager recently revealed that they estimate they are losing up to 25% to 30% of their preapproved buyers to the competition via public search sites. Siting the lack of monitoring and timely communications as being the culprit. HomeScout provides the only lead conversion solution that features an online back office that gathers business intelligence, indicating to loan officers when to communicate with buyers, without them feeling the pressure they would from strangers who bought their information from public search sites. Listen as national project consultant Mitch King explains how to engage and retain leads and preapproved borrowers using HomeScout. Find out more by contacting them here and scheduling a demo, or give them a call at 952-831-0623.

As a LO, your top priorities are to create an efficient loan process for your borrowers and to generate a healthy ROI for your mortgage operation. Wouldn’t it be great if there was a solution that helped you accomplish these goals and more? Well, look no further than Floify, the mortgage industry’s leading point-of-sale system. From its interview-style 1003 application to brand-focused landing pages, Floify is the ideal solution to streamline your loan process. Just ask Calum Ross, Canada’s $2.5 Billion Dollar Man, who recently said, “I signed up for Floify in 2015. In the last two years, I’ve averaged over $165 million in personal production and never email a client for documentation. The $50 monthly subscription cost contributed to my revenue of over $100,000 per month.” Now, what are you waiting for? To experience the ROI-generating power of Floify, request a demo today!

Non-QM webinar. JMAC Lending, a leader in innovative Non-QM lending products, is hosting a free webinar on the company’s dynamic Venice Non-QM program. Offering 6- and 12-month bank statements, one-year seasoning on BK, foreclosures and short sales, non-warrantable condos, plus incredible options for Foreign Nationals. The webinar is on Tuesday, July 24 at 11:00 a.m. PST. Learn more and register today here! All webinar attendees will be entered to win a $100 Amazon Gift Card.

LoanStream Mortgage, currently focused on growing all production channels, is pleased to announce that Greg Armstrong has joined as EVP of TPO Production. Greg’s responsibility will be to expand the TPO sales team nationally. “I’m excited to join Loan Stream Mortgage because it’s executive management team is committed to supporting wholesale brokers and correspondent lending, it’s expansive product offering including Non-QM and non-prime jumbo products, as well as its commitment to provide the best possible service to its clients”, says Armstrong. If you are an experienced AE and you are frustrated because you are restricted by a lack of products to offer your clients or you struggle getting loans closed on time, please contact Greg (916.792.6554). LoanStream Mortgage has been a leader in the new NonQM/Non-Prime products since 2013 and is pleased to announce its new Correspondent offering.

Personnel moves

Weiner Brodsky Kider PC announced today that Ken Markison has joined the firm as Of Counsel in its regulatory compliance practice. Congrats to Ken who has more than 40 years of experience in the housing and mortgage industry, including 32 years at the U.S. Department of Housing and Urban Development, and more than a decade at the Mortgage Bankers Association, where he served as Vice President and Regulatory Counsel. (Obviously he has trouble keeping a job for any length of time.)

Equity Prime Mortgage has added Keith Webster as its SVP, and the Legacy Division. “The primary focus of the initiative is to crush disparity in mortgage lending in underserved markets.”

Did someone say, “buying and selling, M&A?”

STRATMOR Group Senior Partner Jeff Babcock writes: “Market timing is becoming a critically important consideration for prospective M&A sellers. In a recent conversation with a STRATMOR client who sold their company in 2016, the CEO commented on their propitious timing. This was an entity that was enjoying profitable growth when they elected to put themselves ‘in play.’ Had they not executed a transaction in 2016 and remained independent, the CEO speculated that, as a standalone entity, his company would be struggling to survive under the adverse 2018 market conditions. Under the favorable markets of 2015 through mid-2017, the rising tide was indeed raising all boats. Fast forward to 2018 YTD when the market outlook offers no near-term relief from housing inventory shortages, unrelenting margin compression, flat market volume and prospects for losing money in the first and fourth quarters. Insufficient capital and the prospects for a cash crunch are now realities for some lenders. From STRATMOR’s perspective, it’s still an M&A seller’s market with motivated, qualified buyers offering a range of strategic solutions to acquire well-managed Retail organizations. Now is the time to explore your strategic options before the M&A market becomes crowded with necessitous sellers.” Thanks Jeff!

Although not necessarily a merger or acquisition in the strict sense of the term, Home Point Financial Corporation announced today that it will transition its east coast retail branches to Northpointe Bank. “Home Point has been focused on simplifying activities to enable a greater focus on segments where we see the greatest opportunity for growth,” said Willie Newman, Home Point Financial President and CEO. “At the same time, it was important for us to find the right partnership that would provide the support and structure our retail sales teams deserve to be successful. Over the next few months, we will be working with Northpointe to ensure a smooth transfer.” “Northpointe is excited to welcome the Home Point retail sales and operations employees to our team,” said Chuck Williams, President and CEO, Northpointe Bank. “In cases of industry consolidation, Northpointe Bank continues to leverage its strong products, pricing and superior customer experience to attract transactions that are accretive to the bank’s earnings.”

Vendor excitement

There are scores of vendors out there, and not all of them will remain independent, or in business, as time goes on. The latest news is that Optimal Blue has acquired Resitrader, a mortgage loan trading platform. “The Resitrader platform is an excellent complement to Optimal Blue’s secondary services solution and will soon replace our method of selling loans via emailed bid tapes. By integrating technology and combining our trading volume, this merger will create the largest platform for bulk loan auctions in the industry. We are pleased that the entire Resitrader team will be joining Optimal Blue…Resitrader has created a portal which allows sellers to obtain competitive bids from investors and replaces the process of exchanging bid tapes via email. In addition to providing a full-featured interactive trading environment, the system enables traders to optimize executions by supporting shadow-bidding, the posting of axes, chat-based communication, and color reports.” Questions should be addressed to OB’s Scott Happ.

First American Mortgage Solutions LLC announced a while back the expansion of the application programming interfaces (APIs) available through its Digital Gateway, giving users greater flexibility to create modern, consumer-friendly applications and workflows. First American APIs and datasets available through Digital Gateway include: Multiple Identity APIs for comprehensive searches of applicants’ Social Security numbers with identity and occupancy validation.

First Allegiance, a woman-owned national field services company, performs BPOs across the country for both residential and commercial properties. Individual or bulk orders are accepted.

Broker Price Opinion Product List includes Residential BPO, Residential: Single Family, Multi- Family: 2 -4 units, Vacant Land, Commercial BPO, Commercial BOV: Sales Comparable and income approach, Commercial sales comparison only report and Vacant Land. For more information contact Brian Daily, Chief Strategy Officer.

Accurate Group announced the next-gen release of its mobile app for property inspections. The GroundWorks app combines a crowdsourcing model, localized expertise and mobile technology to accelerate the delivery of more accurate interior and exterior property condition reports. The application connects Accurate Group’s nationwide network of pre-screened real estate property inspectors with lenders and servicers requesting property inspections.

Capital markets

A flattening yield curve isn’t the only bond-market benchmark suggesting the US economy is nearing a downturn. Pricing of Eurodollar futures indicates traders think major central banks will stop interest-rate increases in late 2019 or early 2020 to prop up their economies.

With fewer trade-war headlines rattling markets since Friday’s rollout of U.S. and Chinese tariffs, investors turn their attention to earnings season in the hope that strong results can complement a recent run of positive economic data. Stocks rose, and Treasuries fell (that doesn’t always happen!) as a lull in the trade war gave investors room to focus on the start of the earnings season ahead of JPMorgan Chase and Citigroup results Friday. The 10-year closed +1 bp to 2.87% despite the $33 billion 3-year note auction drawing the lowest bid-cover ratio since 2009. The soft demand for shorter-term paper comes as the Federal Reserve remains intent on raising rates and continuing the balance sheet run-off. Other releases from yesterday included the NFIB Small Business Optimism Index decreasing in June from May and the May Job Openings and Labor Turnover Survey showing that job opening decreased to 6.638 million in May from a revised 6.840 million in April.

This morning we’ve already had the reaction to the potential retaliation from China in response to the most recent announcement from the US on new tariffs that will be levied on an additional $200 billion in goods. The holiday-impacted weekly MBA mortgage applications for the week ending July 6 were +2.5% although refi biz hit its lowest level since 2000. Next up was June’s Producer Price Index where increases were expected after flat readings in May and they were +.3%, core +.3%, year over year +3.4% – heating up. May wholesale inventories and sales, at 10AM ET, are seen increasing and decreasing, respectively, versus prior figures. Then we have the Treasury completing a mini-Refunding when $22 billion reopened 10-year notes are auctioned. The day begins with the 10-year yielding 2.85% and agency MBS prices roughly flat versus last night’s close.

(Thank you to Steve R. for this one.)

Given all the trade issues we now have, clear communication is critical – as shown by this short video.

 

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, “With Regulations, Be Careful What You Wish For.” 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 over 300 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 2018 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.)

July 10: AE jobs; LO events, training & recruiting products; banking news and M&A; loan financing needed

Pesky technology… it just won’t go away. Online lending platform fintech player (including mortgages) SoFi has launched a banking app (SoFi Money) in beta testing and expects it to be ready later this year. It includes a debit card that allows P2P payments and accepts mobile check deposits, offers combined checking and saving accounts for 1.1% interest, and up to 6 ATM withdrawals per month. The product will allow it to be both a financial hub and recommendation engine for its members. JPMorgan Chase has launched an all mobile bank called Finn targeting millennials and allows customers to do all their banking from their phone like opening accounts, making deposits, sending money, using Zelle, and accessing ATMs across the US. And Ellie Mae launched Encompass Consumer Connect allowing borrowers to complete the mortgage application process online, will provide lenders access to credit, assets and income-to-mortgage ratio, among other qualifying information.

Jobs & personnel moves

REMN Wholesale’s highly anticipated VA Renovation webinar on Thursday is filling up quickly, but that’s not the only high-profile event they’re staging this month. REMN will be hosting two additional webinars to give deeper insight into lesser-known renovation products, and ways to leverage them in the face of rising rates. On July 18, REMN’s Winning Sales Strategies in a Rising Rates Environment will share tactics for teaching clients how to combat the affordability crisis, and how to think outside the box with HomeReady. On July 24, REMN’s HomeStyle Lending Decoded webinar will focus on the key benefits associated with this loan, including its suitability for second homes and investment properties. More information on both webinars can be found at www.remnwholesale.com/upcoming-events/. REMN continues to grow and is looking for entrepreneurial account executives in all territories. If you know someone looking to join a thriving wholesale lender, have them email REMN’s recruiting team at aerecruiting@remn.com.

Congrats to Michael Rago who is the new National Sales Manager for Alta Mortgage Bankers. He brings over 28 years of wholesale mortgage sales experience to the company and will be building a sales team to “deliver the AMB core value of offering the lowest rates on non-QM products.”

Lender products

Correspondent lenders: Heading to the Western Secondary Market Conference July 16-18? Expand your borrower base. Here’s your opportunity to learn more about non-QM products that help creditworthy applicants who don’t fit into conventional programs. Today’s non-QM loans feature solid underwriting, strong performance—and powerful earning potential. Connect with Verus Mortgage Capital at our booth, contact us to schedule a meeting or catch Verus President Dane Smith speaking on the Non-Agency panel July 16. Verus has purchased over $2.4 billion in expanded, non-QM loans and completed five rated securitizations. Learn more about how Verus is committed to your success in non-QM.

First-time homebuyers represent an ever-important market to win over, especially in our purchase-heavy market. These are digitally savvy borrowers that expect a superior mortgage experience compared to what is typically offered by many lenders today. The good news is, this digital evolution makes loan officers more indispensable than ever. An extremely informative eBook from Maxwell, “Winning in the Digital Age” provides best practices to deliver impeccable service to the digitally savvy borrower. An exclusive to Rob Chrisman subscribers today (and a must-read for all lending professionals), Download your complimentary copy here.

The rapid pace of innovation in the industry has changed how modern lenders market to consumers. Yet, many lenders today are trying to build their marketing and sales growth engine on outdated technology and practices. To position your salespeople for success – and your company for growth – you need the right tools, processes and support. Prioritizing your marketing technology requires commitment across your organization. Join Total Expert, Movement Mortgage, and HW on Wednesday, July 11th for a live webinar, Leading Digital Transformation in Marketing: The Success PlaybookThese digital transformation leaders will explore the framework of the modern marketing stack and cover best practices for executing your marketing strategy across your entire organization at scale.

Leaders, training is an investment, not an expense. Would you spend $1 to make $10 in profit? That’s what you can expect when you engage with XINNIX. And that’s why they are launching the XINNIX 10X Challenge. When you put 10 of your MVPs in any role—loan officer, producing manager, sales leader or recruiter—through XINNIX training, you will receive 10 times the return on investment. How do they know? The XINNIX process is proven. Recently, a top national lender engaged XINNIX to train 10 loan officers. Their investment was $13,000. The return on that investment? In 2 months, they saw a net profit of $134,376, and their projected net profit for 12 months is $806,256! Results like this are waiting for you. Your team’s success is absolutely worth the investment. CLICK HERE to begin the XINNIX 10X Challenge!

Stearns Lending, LLC, has entered into an agreement to acquire an equity interest in Certainty Home Loans, LLC, as part of the Stearns Preferred Partnership Program. This move will broaden Stearns market presence and geographical footprint resulting in accelerated growth in the Stearns retail channel. “These types of partnerships bring together complementary businesses with similar cultures, values and a joint commitment to delivering exceptional service,” said Stearns CEO David Schneider. Combining Stearns industry leading technology, direct access to capital market expertise, and operational excellence with Certainty’s retail platform will result in a partnership beneficial to both companies. This structure leverages the experience Stearns has with its current Joint Venture business model which currently operates under ten different brands nationwide. As many struggle to adapt to the changing market, Stearns is taking bold steps to build a stronger business model in the industry. Don’t just watch us, join us.

Todd Duncan’s Sales Mastery Event on October 10-13th in San Diego is fast approaching! Leadership LIVE kicks off the event and was standing room only last year. Over 500 leaders gathered to hear the best practices of becoming a leader of purpose, passion, and profit. This year they are raising the bar. New York Times Bestselling Author, Todd Duncan, along with futurist, author, strategic thinker, and former chief evangelist at Intel Corporation, Steve Brown, and Regional President and former $100M Top Producer, Brian Bomar will share insights to increasing trust as a leader, building high-performance sales teams, and creating a winning culture. This session also includes an “open mic” environment so that your pressing questions are addressed. It’s a “not to be missed” opportunity for you to learn, lead, and live a more rewarding life as a leader! Book your flight to arrive on time for Leadership LIVE on Wednesday, October 10th at 1 PM.

 

PlainsCapital Bank National Warehouse Lending, a subsidiary of Hilltop Holdings (NYSE: HTH), understands the importance of efficiency when it comes to meeting our customers funding requests.  That is why we make the funding process simple; “Express Funding” is how we help our customers reduce time needed to get their loans funded.  Express Funding allows our customers to submit multiple loans for funding in one simple data upload. Whether it is 1 loan or 100 loans, Express Funding is an easy and efficient way to get the funds they need quickly. In addition, we offer a growing list of 2,000+ closing agents with No Doc funding requirements and funding turn times averaging under 30 minutes. We believe in consistently providing service to exceed our customers’ expectations. If you are interested in having a conversation about PlainsCapital Bank National Warehouse Lending please contact Pamela Robinson, SVP National Sales or Deric Barnett, EVP National Warehouse Lending.

Bank news

Although not directly related to home loans, four months after the company announced it would reimburse customers overcharged interest on their credit cards, the Consumer Financial Protection Bureau revealed that it had settled with Citibank for $335 million in connection with the improper interest charges. The bank’s decision to self-report the issue was rewarded, with the bureau electing not to include a civil money penalty requirement in its consent order.

Many observers fret about the risk presented by nonbanks, yet the dependence of these institutions on bank financing means that the credit and market risk remain “in the bank.” If a large nonbank financial firm, in the future, experiences liquidity or solvency problems, the lender banks would almost certainly be compelled to acquire the nonbank. Non-banks, at the end of the day, are the customers of the big banks.

The Fed is limiting credit exposure between the largest banks. Going forward, the Fed will limit counterparty exposure the 8 “systemically important” US banks have with each other to 15% of capital and all banks with $250B or more in assets are limited to 25% of capital. The move was taken to limit the chance of spillover risk in the financial system during times of crisis.

Isaac Boltanksy with Compass Point Research and Trading points out that on July 6, the prudential bank regulators (OCC, FDIC, and Federal Reserve) released statements addressing certain operational and procedural matters following the enactment of the bank regulatory relief legislation (S.2155). Following our review of the statements, we were left with the following takeaways: (1) this is a mild disappointment for banks in the $100B-$250B asset band as there was no explicit signal of relief prior to the 18 month clock elapsing, but the push for early relief will continue; (2) the statement provides a modicum of clarity regarding HVCRE, but substantive questions remain; (3) the liquidity and capital off-ramp for banks under $10B in assets was not explicitly addressed, but the FDIC event on Wednesday could provide some guidance; (4) although there is practical relief for covered banks, the prudential regulators explicitly warn that “capital planning and risk management practices” will still be reviewed through normal supervisory process; and (5) given the already overburdened deregulatory agenda, our sense is that many – if not all – of the S.2155 rulemaking efforts will bleed into 2019. We continue to believe S.2155 will meaningfully reduce compliance costs for community banks, modestly lessen the compliance burden on regional banks, and will bolster M&A tailwinds.

Speaking of M&A, in the last week or so it was announced that Peapack-Gladstone Bank ($4.3B, NJ) will acquire wealth management firm Lassus Wherley & Associates PC. (Lassus manages about $500mm in assets.) In Tennessee SmartBank ($1.7B) will acquire Foothills Bank & Trust ($215mm) for about $36.2mm in stock (100%) or about 1.68x tangible book. Forcht Bank ($1.1B, KY) will acquire Watch Hill Bank ($163mm, OH). Border State Bank ($511mm, MN) will acquire Union State Bank of Fargo ($99mm, ND). FNB Bank ($526mm, AL) will acquire Capital Bank ($122mm, GA) in an all cash deal. First-Citizens Bank & Trust Co ($34B, NC) will acquire Securant Bank & Trust ($217mm, WI) for $28.1mm in cash (100%) or about 1.44x tangible book. Old National Bank ($17.4B, IN) will acquire KleinBank ($2.0B, MN) for about $433.8mm in stock (100%) or about 2.36x tangible book.

Capital markets

MIAC’s capital markets group invites financing proposals for a small-balance, multifamily, acquisition and renovation loan. The request is based upon a $1mm down payment with acquisition debt of $5.5mm and renovation financing of $1.4mm to be distributed on a draw basis. Requested terms are a 2-year financing or a 1-year loan with extensions available and an 85% LTV. The collateral is a class B multifamily apartment complex located in Tennessee. Please contact your MIAC sales person or Steve Harris for details.

Looking at bonds, rates bounced up slightly yesterday as investor’s attention shifted from the pressures of a trade war, towards this week’s start of earning season. If you are looking for less subdued headlines, the U.K.’s Foreign Minister Boris Johnson, Brexit Minister David Davis, and Parliamentary Private Secretary to the Department of Transportation Chris Green resigned from government due to ideological differences with Prime Minister Theresa May. Back domestically, total outstanding consumer credit increased expanded in May at its largest clip since November 2017, fed by sizable increases in both revolving and nonrevolving credit, undoubtedly a catalyst for a strong pickup in consumer spending that should help Q2 GDP.

Today’s calendar kicked off with the NFIB Small Business Activity Index for June (.6 lower). The Redbook Same-Store Sales Index for the week ending July 7 is next up at 8:55am (previously -0.4% MoM, 4.4% YoY) followed by May job openings from JOLTS at 10:00am (previously 6.698 million). Finally, Treasury will auction $35 billion 1-month T-bills at 11:30am followed by the first leg of this week’s mini-Refunding when $33 billion 3-year notes are auctioned at 1:00pm. The 10-year is yielding 2.86% and agency MBS prices are a shade worse compared to last night’s close.

 

Seen on Facebook:

“I live in constant fear that President Trump will deport my undocumented Latina mother-in-law, who lives at 1837 Third Street, Los Angeles, California, 90023 (blue house). She gets off work at 6PM weekdays.

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, “With Regulations, Be Careful What You Wish For.” 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 over 300 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 2018 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.)

July 9: LO, mgt. jobs; HECM, JV products; events & webinars for lenders; BFCP/CFPB updates – lawsuit dropped

As a loan officer, how would you like the borrower’s first contact to be with your CEO or head of mortgage? A Wells borrower is greeted by Michael DeVito, Freedom by Stan Middleman, Quicken by Dan Gilbert, and so on? Or, least, an avatar of them? UBS has created a digital clone of Daniel Kalt, chief investment officer for Switzerland, to greet clients and to offer financial advice on-screen, along with a digital assistant that conducts transactions. (Just looking at the photo in the article gives me the willies. Just because IT says we can do it, does it mean we should?)

Employment & hires

Compass Analytics continues its expansion by growing its management team with two strategic hires, a Chief Revenue Office (CRO) and a Chief Technology Officer (CTO), for its San Francisco, CA or Chevy Chase, MD officeCompass is looking for proven leadership experience from energetic, passionate candidates to realize its industry vision of automating capital markets through robust and streamlined integrations and forward-thinking technology. The CRO will be responsible for driving continued revenue growth and expanding partner relationships while coordinating with sales, marketing, product and client implementation departments. The CTO will be responsible for owning and evolving Compass’ strategy for using technology and infrastructure to support our product success and to ensure high availability and performance. Postings for each position can be found here. Interested candidates should send a comprehensive resume and cover letter to compass-analytics@jobs.workablemail.com.

Angel Oak Home Loans is branching out and experiencing rapid growth in both volume and headcount, especially during the first six months of 2018. Angel Oak is currently seeking experienced loan officers, processors, underwriters and numerous other positions in the states of Texas, Louisiana, Mississippi, Alabama and Florida. With Richard LaNasa recently being promoted to President, AOHL provides traditional mortgage products as well as a suite of Non-QM product. An affiliation with Angel Oak’s $8.5 billion asset-management platform provides the ability to create unique mortgage products such as our Private Label Prime JUMBO loans, and offers the flexibility to strengthen initiatives to support growth such as our Builder Services Group. If you are interested in a career opportunity with Angel Oak, please visit www.joinangeloak.com or for more information, please contact: Lee Williamson, Business Development.

In personnel news, TCF Relationship Lending Unit (RLU), a division of TCF National Bank, a subsidiary of TCF Financial Corporation, announced that it added new leaders to its team. The five new hires will help grow the company’s mortgage business: Mike Petersen (director, secondary marketing and capital markets, TCF Consumer Lending), Mark Zierott (director, relationship lending sales, TCF RLU), Dee Dee Emmert (business development manager, TCF RLU), Bob Brenseke (business development manager, TCF RLU), and Rick Mangone (business development manager, TCF RLU).

Lender products

TMS Wholesale continues to Grow Happiness for their broker partners by creating a unique digital mortgage experience. The latest from TMS is a new online LE feature that allows brokers to generate and disclose an LE in a matter of minutes – and in just a couple of clicks – inside their proprietary LOS system KISS (Keep It Super Simple) for all new submissions starting July 2, 2018. As an added benefit, TMS has announced they will continue to accept external LEs, generated in the broker’s LOS. According to James Hooper, TMS SVP of Wholesale Sales, “We understand some clients like that control and, in today’s market, it’s all about ease of use. We also love to give clients options to keep them happy.” Visit wholesale.themoneysource.com to learn more or contact James Hooper, SVP of Wholesale, to learn more.

Thinking of starting a mortgage joint venture? Already have one in place? Want to ensure your investment remains viable and compliant? Good news! Strategic Compliance Partners has launched its new premier compliance management system, JVerify, to meet the challenges of real estate and mortgage joint ventures at start-up and throughout the life of the venture. Simply email Leslie Benjamin to schedule time to discuss how JVerify can help keep your joint venture competitive and compliant. Also, tune into the webinar “Joint Ventures for Lenders and Realtors: Ten Compliance Pitfalls” on July 11, 2018 at 1:00 pm EDT. Please register here.

Are you new to reverse or simply looking for additional processing support? American Advisors Group (AAG) (NMLS# 9392) has a solution. AAG’s Concierge Experience (ACE) offers a team of dedicated HECM Professionals ready to guide your loan officers and processors through all aspects of processing a Home Equity Conversion Mortgage (HECM) loan. ACE is designed to assist partners who would like the option of additional processing support as and when the need occurs and to those who are new to reverse with minimal or no HECM loan experience. The ACE Team allows your team to learn while they earn. Contact the ACE Team or your Account Executive today to discover AAG’s Concierge Experience.

The Community Home Lenders Association (CHLA) announced it would be hosting a Roundtable this Thursday on Independent Mortgage Bankers (IMBs) on Capitol Hill in Washington DC. (More below in upcoming events.) CHLA is also releasing its 2nd annual Report on IMBs today. CHLA’s Executive Director Scott Olson noted that “IMBs have a great story to tell about meeting consumer access to credit needs without creating taxpayer risk. It is also important to rebut some of the myths proliferating in Washington that IMBs are risky or aren’t adequately regulated.”

Upcoming events and learnin’

Don’t miss out on the Lenders One 2018 Summer Conference in Salt Lake City, Utah, August 5-8, at The Grand America. In an age of disruption, it’s never been more important to learn from peers and industry leaders. Keynote speakers Alison Levine and David Robertson will share ways to get ahead in a tough market, and attendees will be able to select from 16 curated education sessions led by industry experts. Topics include:  improving margins, generating business through MarTech, rethinking your compliance strategy and two Secondary Market panels. Touted as the most valuable part of conference, Lenders One has expanded networking opportunities for members to connect with peers and explore best practices. Reserve your spot by this Friday, July 13, or contact Lauren Ketchum to learn more about becoming a member.

The Community Home Lenders Association (CHLA) announced it would be hosting a Roundtable this Thursday on Independent Mortgage Bankers (IMBs) on Capitol Hill in Washington DC. As the only national association exclusively representing IMBs, CHLA is holding the event to further the understanding about IMBs in Congress, federal agencies, the press, and among other policy makers in Washington. Featuring Ted Tozer, David Dworkin, Justin Burch, and IMB member firms, the event will address who IMBs are, highlight their strong growth in mortgage market share, and explain how extensively IMBs are regulated.

In its quest to transform the mortgage industry, XINNIX is offering a free ebook with best practices and strategies that have shaped their own 14-time award-winning culture of high performance, as well as the culture of top mortgage companies around the nation.

Tune into the webinar “Joint Ventures for Lenders and Realtors: Ten Compliance Pitfalls” on July 11 1PM EDT.

The Trump administration recently released a report that made recommendations on reorganizing the federal government, including an outline of a plan to end the GSE conservatorship and make changes to the mortgage finance system without winding down Fannie and Freddie. On KBW’s latest podcast, analyst Bose George joins Brian Gardner to discuss what this might mean to the GSEs, other players in the mortgage industry such as the MIs, and the mortgage market in general as well as a discussion on how changes in accounting rules might impact the mortgage sector.

Freddie Mac has added new webinar sessions, July 10th and July 19th on the Introduction to The Redesigned URLA and New ULAD. Learn about the what, why and how of the URLA and the role the ULAD plays in promoting data standards.

In Colorado, join CoAMP on July 12th, 11AM at Dave & Buster’s, 2000 S Colorado Blvd in Denver, CO for a Wire Fraud and Cyber Crime class. Licensed real estate agents can earn 1 CE credit.

The fabled Western Secondary Market Conference will be July 16th-18th at the Westin St. Francis Hotel, San Francisco.

Register for Johnston Thomas Attorneys at Law complimentary July 26th webinar: Loan Officer Compensation Tips and Trends.

In California registration is underway for Summer CAMP on July 30th-31st at the Coronado Island Resort and Spa. “If you are looking for new products, useful information and helpful tips, Summer CAMP – Destination Coronado is where you want to be…Navigate for Success.”

FHA is providing a free, two-day, on-site training on August 7th in Portland OR. This training will cover a wide-range of topics such as underwriting the FHA appraisal and endorsement protocols and LRS. And the free, one-day “Completing Today’s FHA Appraisal” training on August 9th in Portland, OR. This course is ideal for seasoned FHA appraisers, appraisers new to the FHA Appraiser Roster, as well as those working toward appraiser licensing.

CFPB/BFCP

CFPB Deputy Director Leandra English will drop her months-long legal challenge to Mick Mulvaney for the leadership of the BFCP, saying on Friday that she will leave early this week. English said she was stepping down in light of President Donald Trump’s nomination of a permanent director, Kathy Kraninger, to run the show.

(The legal fight over the future of the agency goes back to the day after Thanksgiving, when then-CFPB Director Richard Cordray abruptly stepped down and named English, his chief of staff, as his successor and then Trump appointed Mulvaney to serve as interim CFPB director. English filed suit against Trump, arguing that the Dodd-Frank Act explicitly gave Cordray the authority to appoint an interim director until the Senate approved a nominee to lead the agency full time. The Trump administration maintained that the financial reform law does not supersede the Federal Vacancies Reform Act, which gives the president the power to fill a vacancy at an executive agency.)

Last week the CFPB announced its intention to provide further guidance later this summer on the applicability of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act) to data collected in 2018 pursuant to HMDA. The statement confirms that 2018 Loan/Application Registers formatting and submission will remain the same. Referencing closed-end mortgage loans or open-end lines of credit subject to the partial exemptions, the Act states that the “requirements of [HMDA section 304(b)(5) and (6)]” shall not apply.

Accordingly, for these transactions, those institutions are exempt from the collection, recording, and reporting requirements for some, but not all, of the data points specified in current Regulation C which implements HMDA. reference to HMDA section 304(b)(5) and (6) provides the actual details of the HMDA relief contained in the Act. Also included is the provision to give the Bureau “discretionary authority” in rulemaking. This authority includes added data fields such as lender credit information and AUS result(s). The partial exemptions are not available to insured depository institutions that do not meet certain CRA performance evaluation rating standards. Guidance will include information on how this provision will be implemented. The Bureau’s complete notice is currently available for your reading pleasure.

Capital markets

Minutes from the latest Federal Reserve meeting show participants discussed the possibility of replacing the bond yield curve as an instrument for predicting a recession. The yield curve has widely been considered a reliable indicator, but changes in the bond market and wider economy have brought its continued usefulness into question. In other words, the NY Federal Reserve continuing to demand 30-year paper tends to push prices higher and rates lower, artificially distorting the curve.

The bond market, to the relief of capital markets folks, is a snoozer. Friday the 10-year closed -1bps at 2.83% as the employment data for June stayed on trend, with an increase in payrolls, but subdued average hourly earnings growth. The “not too hot, and not too cold” report won’t raise any eyebrows from the Fed. Separately, the import/export balance export increase was driven mainly by exports of civilian aircraft and soybeans while the uptick in imports was led by capital goods. We should see some more volume this week as people return to work for a full week.

For scheduled economic news, this week doesn’t offer much of importance until the end. Today we’ll have May Consumer Credit and tomorrow only the June NFIB Small Business Optimism Index, and June JOLTS – Job Openings. In addition to the weekly MBA Mortgage Index (prior -0.5%) on Wednesday, June Producer Prices, and May Wholesale Inventories figures will be released. There will also be a Bank of Canada decision. Thursday sees June Consumer Prices, and weekly initial jobless claims before Friday delivers June Import/Export Prices and the Preliminary July Michigan Consumer Sentiment Index. We start the week with rates a shade higher than Friday’s close: the 10-year is at 2.85% and agency MBS prices are worse about .125.

For many women, a trip to the nail salon is a treat, a time away from their significant other, a time to be pampered. For anyone who’s been in for a mani-pedi, or knows someone who has been, this video is must-see – you need sound. (And for those readers who seem to have time on their hands to categorize these jokes and send me the tallies, good luck categorizing this one.)

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, “With Regulations, Be Careful What You Wish For.” 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 over 300 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 2018 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.)

July 7: Letters about the competitive environment, Texas real estate, and subprime making a comeback

Starting off with something a little unusual…For anyone who thinks there isn’t life after mortgage banking, you’re wrong. I was on a flight recently with Virgin America, and lo and behold the flight attendant was Tonya Murphy. Many of you may remember her from “back in the day” with companies like Aurora Loan Services. She’s as happy as can be and welcomes anyone who’d like to say hello – click on her name and send her a note!

Mortgage credit

Lots of people who have been in the business for many years are concerned about the industry sliding back down the credit curve to support business. Or to lure potential loan officers who want to be able to offer that type of product. I found this note sent to me a few years ago by John Hudson by Roy DeLoach of the DC Strategies Group titled, “Hang-in there, Millennials – The New Sub-Prime Mortgage Wave Is Coming.” Roy is a former CEO of the National Association of Mortgage Brokers.

“Hang in there, Millennials and all you other wanna-be first-time buyers still residing in Mom’s basement. The Federal Reserve, Fannie Mae and Freddie Mac could soon be riding to your rescue. Well, not just your rescue, but perhaps more importantly, to save the economy, too. Which is the real reason they want you to take your ‘rightful’ place in the chain of life known far and wide as the ‘Housing Ladder.’

“Actually, Fed Chairwoman Janet Yellen is perplexed ‘why so many Millennials choose to rent’ rather than purchase a home. There was a collective chuckle in the room when I heard her make that statement at a recent House Financial Services Committee hearing. I only pray there are some in Washington who are not only not as confused as the Fed Chair, but also are seeing the very same statistics I am looking at and coming up with the same answer. The way I read the tea leaves, housing is in deep trouble and will likely fall apart sometime in late spring 2016 — just in time to become an election year issue.

“I suspect those leaders not so perplexed in Washington are cooking up a new super-easy scheme – excuse me, mortgage product — just to move potential homeowners out of the basement or out of that high-priced rental they share with several others and onto the first step of the housing ladder. And why not? When people buy a house, they also spend a lot of money on such other things as paint, carpet and new furniture. They also hire local people to maintain their lawns and white picket fences. All of this helps stimulate the economy. It’s called the ‘Velocity of Money,’ which, by the way, is at its lowest point since 1959.

“That is why a new government approved sub-prime mortgage product is coming. It must!

“Some more statistics are in order here. Mortgage Bankers Association figures show the cost of making a single mortgage loan is now over $7,000. [Now $8,500.] Lenders are not immune from the increased costs of doing business resulting from, just to name a few, new Labor Department regulations, health insurance cost increases coming in 2016, and edicts from the Consumer Financial Protection Bureau. Increased scrutiny by the CFPB alone – the Bureau if looking for any mistake it can find in the mortgage process – has increased attorney and technology costs dramatically.

“Congress has even slipped in a hidden tax on homeowners via a charge Freddie and Fannie hide inside every mortgage coming through their doors. Known as a G-fee, this charge is being taken directly into the federal piggy bank to fund whatever programs need to be funded. But they are tacked on to your mortgage rate and you pay it each month, year in and year out, until you refinance or sell and move on.

“Ironically, many of today’s problems in housing finance can be traced directly back to the Dodd-Frank Financial Reform Act, which was supposed to repair a ‘broken’ system. But when government tries to fix something, it usually makes things worse, if only because, in the case of the housing finance system, it has driven the cost of making a mortgage to unparalleled levels.

“More stats. A recent ‘State of the Nation’s Housing’ report from the highly respected Joint Center for Housing Studies at Harvard University shows that the ownership rate has drifted down to 63.4 percent, the lowest in 48 years. If you take out those owners who are 65 years old or older, the rate drops to the lowest in American history.

“On the flip side, 15 percent of the nation’s 25 to 34-year-olds are still living at home, according to the Census Bureau. The Pew Research Center just reported that a record number of young women are living with their parents. You need to reach back 74 years to find a similar situation. And no wonder: Income, adjusted for inflation, is back down to where it was in 1989.

“None of this is good for housing. Neither is one last statistic: A report released in late summer found that renters are spending a record share of their earnings – more than 50 percent – on a place to sleep! It seems strange to me how this is not worrisome, yet spending more than 43 percent of your income on a home of your own is illegal as outlined by Dodd Frank and CFPB regulations.

“Funny how Wall Street figured out long ago that under the rules, it will be easier to pay half of your income or more to rent than spend just 43 percent to buy. So the big investment banks/hedge funds bought up tens of thousands of apartments and single-family homes for lease rather than for sale, and they are raking in billions.

“Lastly, add to this witches’ brew the ungodly amount of student loan debt many young people are carrying, and you come away with a full picture of why I believe the housing market will soon be idling in neutral, especially at the lower end. And it’s why I suspect we are heading back to the days when all a prospect had to do to obtain financing was literally fog a mirror.

“The impetus for this will come from the White House, which will push the Federal Housing Finance Agency, the conservator of Fannie Mae and Freddie Mac, the two secondary market institutions which touch an inordinate amount of loans these days, to create a new mortgage product tailored for all those basement dwellers. It remains to be seen whether Fannie and Freddie will end up looking the other way on lower credit scores, lower (no) down payments, higher debt-to-income ratios, or some combination of the three, to keep the housing market from hitting the wall.

“But whichever way they choose to act, subprime will be back, perhaps just as ugly as it was last time around. Only this time, with the private sector mostly shut out of the market, subprime will be almost totally controlled by Uncle Sam. But as I said earlier, tinkering with the market tends to make things worse, not better. So I am fearful that the result will not be pretty.”

Thoughts on the remainder of 2018

Rich Cowan, president of A-1 Mortgage, observed, “The Texas housing market has been pretty strong for a while now. Demand for housing exceeds supply in parts of Texas. North Texas is probably one of the hottest areas in the state, especially Dallas-Fort Worth, where home prices continue to climb. Dallas was even one of the top housing markets in the country last year. I think the Dallas-Fort Worth market will continue to be strong throughout the summer, but then slow down a little in the fall as most families want to be settled in their new homes by the time school starts.

“The Houston housing market is stabilizing after last year’s flood, and home prices are going up. The average days on market for homes for sale dropped to 58 days in May and there was a one percent rise in home sales and new record highs for home prices per data from the Multiple Listing Service of the Houston Association of REALTORS. The group reported the average home price for single-family homes edged up 1.3 percent to $305,511 in the greater Houston area in May. Houston isn’t as red hot as Dallas-Fort Worth, but it’s still a solid housing market.”

Rich finished with, “Austin remains competitive in terms of housing and San Antonio is also strong. One of the reasons A-1 opened a Texas office is because we see growth there, and so far, we haven’t been disappointed.”

And Gagan Sharma, CEO of BSI Financial, has input on individual issues. “From a servicing perspective, one of the most significant changes [during the first half of the year] has been the requirement to send monthly statements to borrowers in bankruptcy. As a special servicer, we see portfolios and borrowers that need assistance and help in the bankruptcy process. We have invested significant effort in training, setup and technology changes. The other major change has been the rise in rates, and reduced prepayments.

“All indications [for the second half of the year] seem to be that we will continue to see an increase in rates. As a result, prepayments are down. In parallel, we have seen an increase in prepayments due to borrowers selling their existing homes to move, up-size, downsize or other life situations. The continued improvement in the macro economy is also reflective in delinquencies continuing to be low.

“We worry about natural disasters [in the second half of 2018] and making sure that we are sufficiently prepared to meet borrower needs. More broadly, we believe that our industry must focus on improving and streamlining the borrower experience. That may involve a combination of technology investments, process re-engineering and staff training. Consumers expect ease of use, and being able to access information when they want it, how they want it. As an industry, we need to provide that, while keeping costs under control.”

From Connecticut Michael Dubeck, CEO and President, Planet Financial Group, penned, “It was arguably one of the most difficult first two quarters that we’ve seen in the industry in several years. When overall volume declined, we saw companies carrying unprofitable branches, excess operations and corporate support cost structures raise margins as much as 200 bps to offset negative profitability. Margin compression was certainly a factor, but not a significant contributor. Significant adjustments to pricing, for example, directly impact the branches, which have the choice of making concessions to stay competitive or seeing volume drop even further. Companies with diversified revenues lines, including a substantial retained servicing book, probably fared the best.

“[In the second half of the year], companies may continue to reduce staff or exit business lines completely to maintain competitive margins. Others will continue to hang on because they believe volume will increase in the second half of the year. Conversely, other companies may keep higher margins to reach profitability, which poses a challenge to sales MLOs in retail branches.

“Based on what new branches are asking us, leadership is now becoming much more important because people want to know the company has a plan and is committed to a direction.

 

They’re also asking if we retain servicing, which is ironic because Planet Home Lending was a Ginnie Mae servicer before it became an approved issuer. That tells us others agree that to grow in an otherwise shrinking market, you must have a multichannel platform and diversified revenue streams that hedge against the challenges we saw in the first half of 2018 and will continue to see through the rest of the year. For us, that’s servicing, retention and distributed retail, correspondent and commercial lending.

 

“Certainly, [the major challenges for the second half of 2018] are rising rates, challenges in managing liquidity and the ability to maintain margins. You can’t be an eternal optimist. When rates are rising, margins are compressing, and you have supply issues in competitive housing markets, you cannot manage the business impulsively.

“This isn’t a typical year where you have a terrible first half and you make up for it in the half second half. It’s July and it’s still an extremely difficult market. Even after Q2, some companies will continue to shed costs and look for exit strategies. Some lenders will respond with irrational and unsustainable pricing.

“This is a much longer cycle. We expect the challenges of lower volumes and margin compressions to continue. It will take experienced leadership, managed liquidity and a strong balance sheet to see it through. At Planet Home Lending, we’re fortunate to have the ability to continue to invest in our retail growth during this time.”

Patrons at the zoo were astonished to see an old man jump over the bars of the lion’s cage. Seemingly oblivious to the danger, he walked among the fierce creatures holding the latest bestselling book in his hands, intently perusing its contents.

The spectators were beside themselves.

“What in the world is he doing?” shouted one.

“Is he crazy? He’s going to get killed!” yelled another.

“Don’t worry about him,” replied the man’s son. “That’s just my dad. He likes to read between the lions.”

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, “With Regulations, Be Careful What You Wish For.” 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 over 300 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 2018 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.)

 

July 6: State-level investor changes – lending law tweaks in states that start with “M”; economics moving rates

Everyone needs some learnin’, and LOs and underwriters are very interested in income, education, and trends. The US Census Bureau tells us that since the mid-1900s, postsecondary enrollment has increased during recessionary periods when the state of the labor market declines. Like during the Great Recession as college enrollment increased from 17.2 million in 2006 to 20.4 million by the end of 2011 and subsequently decreased. The increase was seen at both 2- and 4-year colleges and at both the graduate and undergraduate levels as people sought to acquire new skills as well as upgrade existing skills. The percentage of students who left college saw greater unemployment rates in 2012 to 2015 versus 2000 to 2007. The increase in the percentage of unemployment was seen across all degrees (associate’s, bachelor’s, or advanced) as the labor market was slow to absorb the increase in degree holders.

State-level legal and investor changes

When I was a kid growing up in the San Francisco Bay Area, a new family moving in next door was a big deal in the neighborhood. They were usually moving in from a neighboring town, or from across the bay, or one time, from a far-away distant land called “Southern California.” Today, I can walk down my street, not-too-far from where I grew up, and hear many people speaking on their phones is a dozen or so languages. Of course, immigration is very state-specific. Wyoming doesn’t see the same influx as Florida. So it was with interest that I read the National Association of Realtor’s Profile of International Activity in U.S. Residential Real Estate. There are many factors which make purchasing a home in the U.S. either affordable or expensive for foreign nationals.

Bill Hultman let me know that the California ballot initiative on privacy was withdrawn on 6/28/18 after a bill was enacted earlier that day (CA AB 375) that has similar privacy requirements.

Plaza’s Closed-End Second Lien program guidelines have been updated to reflect that rate and term refinance transactions are eligible in the state of Texas. As a reminder, cash out refinances are not eligible.

Plaza will be updating the fees in California and Indiana for appraisal orders placed on or after June 15, 2018.  Click here for the fee schedule.

Plaza will be increasing the fees in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, South Carolina and Vermont for appraisal orders placed on or after April 16, 2018.

AmeriHome Mortgage posted the following information is a recent bulletin: On March 29, 2018, the official Interpretation of requirement changes implemented with Texas SJR 60 became effective. The changes made in the Interpretation provide for two main clarifications regarding a new home equity to “rate and term” refinance, also known as an (f)(2) refinance: Lenders must provide the refinance disclosure under Section 50(f)(2)(D), the (f)(2) Disclosure, to the owners at least three business days after the owners submit an application specifically for the refinance of a home equity loan to a rate and- term refinance loan; and the refinance disclosure must be delivered or placed in the mail no later than three business days after the loan application is submitted.

The state of Michigan has recently enacted Senate Bill No. 737, regarding the requirements for recording with the register of deeds and lays out the requirements for instruments that may be accepted by the register of deeds. The name of each person executing the instrument must be legibly printed, typewritten, or stamped beneath the original signature or mark of the person, and the signature must be in black or dark blue ink. The bill also specifies the page and font size based on when an instrument was executed. Further requirements include that if an instrument or any part of it is in a language other than English, a written English translation must be attached to the instrument. Also, if the instrument is executed after January 1, 1964, the instrument must contain the name and business address of the person who drafted the instrument. Another requirement is that for instruments recorded on or after September 12, 2007, the first 5 digits of any social security number appearing in or on the instrument must be obscured or removed.

The State of Minnesota enacted provisions relating to its Revised Uniform Law on Notarial Acts effective on January 1, 2019. Determination requirements provides that a notarial officer who takes an acknowledgment of record, verifies statements on oath, witnesses or attests signatures. A notarial officer who certifies a copy of a record or an item that was copied must determine that the copy is a full, true, and accurate transcription or reproduction of the record or item. The provisions require an individual to appear personally before a notarial officer whenever the officer performs a notarial act regarding a record signed or a statement. A notarial officer may identify an individual through personal knowledge or with satisfactory evidence of the individual’s identity. A notarial act must be evidenced by a certificate of notarial act and sets out the requirements of that certificate. The mandatory contents of the official stamp, grounds for denying, refusing to renew, revoking, suspending, or condition commission of notary public have also been updated.

Minnesota modified its provisions relating to mortgage loan originator continuing education requirements effective on August 1, 2018. The amendment provides that to meet the written test requirement, an individual shall pass a qualified written test developed by the Nationwide Multistate Licensing System and Registry (NMLSR), designated as the NMLSR’s National Test Component with Uniform State Content for Mortgage Loan Originator Licensing, and administered by a test provider approved by NMLSR based upon reasonable standards. To meet the annual continuing education requirements, a licensed mortgage loan originator shall complete at least eight hours of education that includes one hour of Minnesota state law and rules.

Through House Bill 595, Maine enacted the Revised Uniform Fiduciary Access to Digital Assets Act provisions effective on July 1, 2018. The Act ensures users retain control of their digital property and can plan for its ultimate disposition after their death. These provisions also address the expectation of privacy under federal law. These provisions also cover: disclosure of digital assets to conservator of protected person, fiduciary duty and authority, custodian compliance and immunity. The definition of property is also amended to include digital assets.

Capital markets

And as the Federal Reserve carries out its intention to shrink its $4.5 trillion (that’s a lot) portfolio of bonds, it is heading for challenges of timing and priorities. It embarked on a strategy last year of letting bonds mature without reinvesting the dividends, which so far has proved successful, but questions are arising about how long this strategy should be maintained.

Housing and jobs drive the U.S. economy, and what has housing been telling us? New home sales surged 6.47 percent in May to a seasonally adjusted annual rate of 689,000 led by a 17.9 percent jump in sales in the South. New home sales in the South were the highest since 2007 and their annual rate of 409,000 represents roughly 60 percent of all new home sales nationwide. For historical perspective, new home sales have averaged 650,830 since 1963 with an all-time high of 1,389,000 in July of 2005 and an all-time low of 270,000 in February 2011. Demand for homes continues to outpace supply and prices continue to rise. The most recent S&P Case-Shiller National Home Price Index shows home prices are up 6.4 percent year-over-year nationwide.

“May pending sales of existing houses declined 0.5%, are at a 4-month low, and have declined Y-o-Y for 5 straight months. Similarly, existing home sales in May declined slightly and through 5/18 are down 1.4% compared to January-May 2017. They are down Y-o-Y for three straight months. Lastly, first time mortgage applications for the week ending 6/29 are down 1% Y-o-Y. Is it rising rates, higher prices, or tax changes?” So asked noted economist Elliot Eisenberg.

Are you more confident? Consumer confidence remained high in May despite a 2.4 point drop in the index. The dip has been attributed to consumer expectations surrounding trade issues and gasoline prices, however more than twice as many consumers expect business conditions to improve over the remainder of the year versus those who expect conditions to worsen. Payrolls continue to grow; however, growth may soften as current openings become more difficult to fill given current labor market tightness.

Strong demand for long-dated debt has made the spread between five- and 30-year US Treasury securities the flattest yield curve since August 2007. The spread contracted more than 4 basis points June 28, the sharpest narrowing since February.

The yield curve (in this case, the difference in rates between the 2-year and 10-year) continues to flatten. Does it matter? Yesterday’s post-holiday session saw no change to the 10-year but did see the 2s10s spread narrow 3bps with focus on trade as Chinese officials warned that tariffs on imports from the United States will be implemented if the U.S. follows through with the midnight implementation of duties on $34 billion of imports from China.

Of more interest to me was the discussion of the yield curve in yesterday’s release of June FOMC Minutes, but the flattening trend has not elicited calls for a slower rate hike pace while acknowledging increased uncertainty from trade policy. We are still on pace for two more rate hikes this year. There was little market reaction to the minutes as the discussion around inflation and the jobs environment still pointed to two more rate hikes this year. But there was some dovishness indicated by the comments: “Most participants noted that uncertainty and risks associated with trade policy had intensified and were concerned that such uncertainty and risks eventually could have negative effects on business sentiment and investment spending. The claims report showed claims continue to be low, while an uptick in the ISM Manufacturing Index for June, suggesting there was an acceleration in both manufacturing and non-manufacturing activity, helping raise Q2 GDP estimates. Finally, we had some hawkish headlines on the ECB and BoE with the former suggesting the first rate hike will be in September 2019 versus market expectations of December 2019.

This morning the Bureau of Labor Statistics tells us that the June unemployment rate was 4%, worse from last month’s 3.8%, nonfarm payrolls were +213k, better than the 195k expectations, and hourly earnings were +.2%, +2.7% year over year, expected +2.8% from a year ago. In the frenzy of employment data, the May international trade balance was announced ($43.1 billion). Friday starts with the 10-year yielding 2.82% and agency MBS prices a few ticks (32nds) better than Thursday’s close.

(There are some clever folks in the mortgage biz, although they should keep their day jobs.)

Earlier this week: “I was offered a free trip to Giza in Egypt, but I had to get five people underneath me to sign up first. I said no thanks, it sounds like a pyramid scheme.”

Marc E.: “I was involved in that pyramid scheme to Giza. The guy who sold me the trip said it was all legit. It wasn’t until later that I found out Egypt me.”

Ron B.: “I also was duped by the scheme. For a long time I was in de-nile.”

David Z.: “Marc & Ron – when did you realize he Madoff with your money?”

Adam K.: “I went to Giza as well. I hurt myself moving all those big stones and had to go to the Cairo-practor!”

Scott S.: “Next time you want to trust him, but, aren’t Euphrates just going to do it again?”

Mark S.: “Your story about Giza sounds like a Croc to me!”

Rob A.: “I fell for it too. I feel like an Asp.”

Paul B.: “When I heard about that pyramid scheme i said Tut Tut Tut do people still fall for them?”

Roger M.: “When I tried to confront the guy who scammed me, he already moved pharaoh way.”

Kerry D.: “I got burned on that Egypt thing too, but it turns out they were doing this all over the African continent. The broker on the deal was a guy named Dan. I’m Ghana Sudan. Kenya ask Marc and Ron if they have his contact info?”

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, “With Regulations, Be Careful What You Wish For.” 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 over 300 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 2018 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.)

July 5: LO culture; securitizations and Agency risk transfers continue to change capital markets

Basketball folks have been talking about 33-year old LeBron James signing a four-year, $154 million deal with the Lakers. I don’t know the intricacies and details of the contract, but that averages out to roughly $38 million a year, nor am I going to take the time to figure out the debt-to-income ratio on his two Southern California digs. But the photos look nice. The economic picture looks good for King James. And possibly not so bad for others, and that is helps drive rates. In a joint interview, Warren Buffet and Jamie Dimon said the economy is strong and still has steam. Reasons stated by Dimon for this forecast, “Business sentiment is almost at the highest level it’s ever been, consumer sentiment is at its highest levels, markets are wide open, housing’s in short supply and my guess is mortgage credit will expand a little bit.” (More below on secondary marketing and what is influencing rates these days.)

LO training & culture

LO culture is a big deal. A recent survey of XINNIX students showed that 100% would recommend XINNIX training to other Loan Officers. This is high praise for an organization dedicated to fostering a culture of excellence. In their quest to transform the mortgage industry, XINNIX is offering a free ebook with best practices and strategies that have shaped their own 14-time award-winning culture of high performance, as well as the culture of top mortgage companies around the nation. To download your free copy of this ebook today, CLICK HERE!

Capital markets

Demand in the secondary markets, along with demand for portfolio product, drive rates in the primary market that borrowers see. That, combined with Freddie and Fannie transferring risk from the taxpayer (since they are under government conservatorship) to the private sector, make for interesting developments. Let’s see what has been happening in the secondary markets.

Angel Oak Capital Advisors has completed its second securitization of 2018 (AOMT 2018-2), a $402 million offering that is their largest to date. This brings Angel Oak’s total to approximately $1.6 billion in secured residential loans over seven securitizations in three years. AOMT 2018-2 is almost entirely comprised of non-QM residential mortgages that were primarily sourced through the firm’s three affiliated mortgage lenders. The senior tranche of AOMT 2018-2 received an AAA rating from both Fitch and DBRS, and the weighted average credit score for the 1,096 total loans in the pool is above 700.

Fannie Mae on June 26 announced the winning bidder for its thirteenth Community Impact Pool of non-performing loans, 667 loans totaling $129.23 million in unpaid principal balance. The transaction is expected to close on August 20, 2018, and includes loans are geographically focused in New Jersey, New York, Baltimore, Maryland, Cook County, Illinois, and Miami, Florida areas. The winning bidder was VWH Capital Management, a minority woman owned business. The pool also had a weighted average note rate of 4.35%; weighted average delinquency of 30 months; and weighted average broker’s price opinion loan-to-value ratio of 99% weighted by UPB.

Fannie Mae on April 11 announced the results of its sixth reperforming loan sale transaction from nearly a month prior that included the sale of approximately 9,400 loans totaling $1.96 billion in unpaid principal balance, divided into two pools. The winning bidders were NRZ Mortgage Holdings LLC (3,015 loans; $686.4 million UPB; average loan size $227k; weighted average note rate 4.04%) and Towd Point Master Funding LLC (6,363 loans; $1.273 billion UPB; average loan size $200k weighted average note rate 3.12%). The pools were expected to close on May 24, 2018.

Fannie Mae on June 26 priced its fourth credit risk sharing transaction of 2018 under its Connecticut Avenue Securities (CAS) program, a $939.5 million note offering scheduled to settle on July 3. CAS is Fannie Mae’s benchmark issuance program designed to share credit risk on its single-family conventional guaranty book of business. The reference pool for CAS Series 2018-C04 consists of more than 103,000 single-family mortgage loans with an aggregate outstanding unpaid principal balance of approximately $24.7 billion. The loans included in this transaction are fixed-rate, generally 30-year term, fully amortizing mortgages, and were underwritten using rigorous credit standards and enhanced risk controls. With the completion of this transaction, Fannie Mae will have brought 27 CAS deals to market since the program began, issued $33 billion in notes, and transferred a portion of the credit risk to private investors on over $1 trillion in single-family mortgage loans.  Since 2013, Fannie Mae has transferred a portion of the credit risk on approximately $1.4 trillion in single-family mortgages through its risk transfer programs.

Fannie Mae priced its sixth Multifamily DUS REMIC in 2018 totaling $535.3 million under its Fannie Mae Guaranteed Multifamily Structures program on June 20. The M8 marks the third Green GeMS issuance of 2018 and brings the program total to $5.5 billion in GeMS backed exclusively by Green MBS through Fannie Mae’s Green Financing Business. Fannie Mae’s Multifamily Green Financing Business provides financing through several different green product offerings, encouraging apartment building owners to make energy and water savings improvements to their properties. Fannie issued over $27 billion in Green MBS in 2017.

Fannie Mae on June 11 announced that it completed its second and third traditional Credit Insurance Risk Transfer (CIRT) transactions of 2018 covering existing loans in the company’s portfolio. The two deals, which together cover $10 billion of loans, are a part of Fannie Mae’s ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market. To date, Fannie Mae has acquired about $6.2 billion of insurance coverage on $254 billion of loans through the CIRT program. The new transactions transferred $311 million of risk to sixteen reinsurers and insurers. Fannie Mae will retain risk for the first 50 basis points of loss on a $9 billion pool of loans, and if the $45.2 million retention layer is exhausted, reinsurers will cover the next 300 basis points of loss on the pool, up to a maximum coverage of approximately $271 million. With CIRT 2018-3, which also became effective April 1, 2018, Fannie Mae will retain risk for the first 50 basis points of loss on a $1.3 billion pool of loans. If this $6.7 million retention layer is exhausted, an insurer will cover the next 300 basis points of loss on the pool, up to a maximum coverage of approximately $40 million.

Fannie Mae on June 12 announced the winning bidders for its thirteenth non-performing loan sale, which included approximately 9,800 loans totaling $1.64 billion in unpaid principal balance, divided among four pools. The winning bidder for the transaction was MTGLQ Investors and is expected to close on July 20, 2018. The four loan pools awarded in this most recent transaction include: (pool 1 – 2,372 loans with an aggregate UPB of $358 million; average loan size $151k; weighted average note rate 4.73%; weighted average delinquency 25 months); (pool 2 – 3,182 loans with an aggregate UPB of $478 million; average loan size $150k; weighted average note rate 5.21%; weighted average delinquency 40 months); (pool 3 – 1,403 loans with an aggregate UPB of $210 million; average loan size $150k; weighted average note rate 5.13%; weighted average delinquency 40 months); (pool 4 – 2,881 loans with an aggregate UPB of $595 million; average loan size $206k; weighted average note rate 4.60%; weighted average delinquency 39 months).

Fannie Mae on June 13 began marketing its seventh sale of reperforming loans as part of the company’s ongoing effort to reduce the size of its retained mortgage portfolio. The sale consists of approximately 27,000 loans, having a UPB of approximately $6.17 billion, with bids due July 10. Reperforming loans are mortgages that were previously delinquent, but are performing again because payments on the mortgages have become current with or without the use of a loan modification. The terms of Fannie Mae’s reperforming loan sale require the buyer to offer loss mitigation options designed to be sustainable to any borrower who may re-default within five years following the closing of the reperforming loan sale. In addition, buyers must report on loss mitigation outcomes.

Freddie Mac on June 25 that it has obtained a new insurance policy under its Agency Credit Insurance Structure (ACIS) program. This is the company’s fourth stand-alone ACIS credit-risk transfer transaction, which provides a maximum limit of up to approximately $300 million of losses on single-family loans. ACIS 2018-SAP1 transfers credit risk on a $19.1 billion pool of 15 and 20-year mortgages purchased between May 1, 2017 and Feb. 28, 2018. In the first half of 2018, Freddie Mac issued an aggregate of approximately $1.2 billion credit risk transfer. Since 2013, the company has transferred a significant portion of credit risk on more than $1 trillion of UPB on single-family mortgages.

Freddie Mac on June 22 priced a new offering of Structured Pass-Through Certificates (K Certificates), which are backed by underlying collateral consisting of fixed-rate multifamily mortgages with predominantly 7-year terms. The company expects to issue approximately $930 million in K-732 Certificates, which are expected to settle on or about June 28. They also priced approximately $1.0 billion in Class-A K Certificates (K-F47 Certificates) on June 21, and approximately $1.0 billion in K-077 Certificates on June 19, expected to settle on or about June 26.

Freddie Mac on June 15 announced the pricing of the SB50 offering, a multifamily mortgage-backed securitization backed by small balance loans underwritten by Freddie Mac and issued by a third-party trust. The company expects to guarantee approximately $454 million in Multifamily SB Certificates (SB50 Certificates), which are anticipated to settle on or about June 26, 2018. Freddie Mac Small Balance Loans generally range from $1 million to $6 million and are backed by properties with five or more units. This is the sixth SB Certificate transaction in 2018. 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.

Freddie Mac on June 12 announced the pricing of $1.05 billion Structured Agency Credit Risk (STACR) 2018-DNA2 Notes, its second lower LTV deal of the year, and the second STACR transaction in which the notes are issued by a trust rather than as Freddie Mac debt. Through STACR, Freddie Mac transfers a significant portion of its mortgage credit risk on certain groups of loans to private investors. That came four days after announcing pricing for a $1.6 billion rated securitization of both guaranteed senior and unguaranteed subordinate securities. The program is designed to reduce less liquid assets in its mortgage-related investment portfolio and shed credit and market risk via economically reasonable transactions.

Turning to economic news and the bond market, inflation is something everyone likes to talk about. A little is not enough, a lot is too much – in other words, the Federal Reserve can talk about a target but can’t do much to hit it. Commerce Department figures show the price index for personal consumption expenditures in the US rose 2% in May compared with the year before, representing the first month it has reached the Federal Reserve target since April 2012. The increase has been attributed to a strong labor market pushing wages higher and generally robust economic growth.

Rates were roughly unchanged at the close of Wednesday’s shortened market hours, despite the trade war rhetoric between the world’s biggest economies worsening with President Donald Trump taking measures to prevent China Mobile from entering the U.S. market. Trading volume was light as many participants took off early or were out of the office. Markets return from the Independence Holiday today with a busy economic calendar. Data kicked off with MBA mortgage applications for the week ending June 29 (-.5%, refis at 37.2% of overall apps).

We’ve had some labor market indicators ahead of tomorrow’s nonfarm payroll reading starting with job cuts from Challenger (+18% to 37,202), followed by ADP employment (+177k, less than expected), then jobless claims (+3k to 231k). Markit nonmanufacturing is seen holding steady at 56.5, while ISM nonmanufacturing is seen increasing 0.2. The U.S. Treasury will announce the auction sizes for next week’s 3- and 6-month T-bills along with the details of next week’s mini-Refunding consisting of new 3s and reopened 10s and 30s. Finally, this afternoon we will get the minutes from the June 12/13 Fed meeting along with the reinvestment recap for the week ending July 4 which is expected to total $3.0 billion (over four days) compared with $2.6 billion in the prior week. Yes, the NY Fed continues to do that. We start with the 10-year yielding 2.86% and agency MBS prices worse nearly .125 versus Tuesday’s close.

Earlier this week: “I was offered a free trip to Giza in Egypt, but I had to get five people underneath me to sign up first. I said no thanks, it sounds like a pyramid scheme.”

Marc E. sent, “I was involved in that pyramid scheme to Giza. The guy who sold me the trip said it was all legit. It wasn’t until later that I found out Egypt me.”

Which motivated Ron B. to relay, “I also was duped by the scheme. For a long time I was in de-nile.”

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, “With Regulations, Be Careful What You Wish For.” 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 over 300 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 2018 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.)

July 3: Sales jobs; digital and accounting products; lenders shifting tactics; loan closing technology & UCD news

While the Northeast swelters and California burns, remember that on July 4, 1776, the Continental Congress approved the Declaration of Independence, setting the 13 colonies on the road to freedom as a sovereign nation. Builders in this country have been complaining about the cost of doing business for quite some time, and it is worsening. Aside from the declining number of skilled construction workers, “The nation’s largest nail manufacturer, Mid-Continent Nail, laid off 60 of its 500 workers because of increased steel costs,” and apparently eyeing moving to Mexico. With the tariffs, looks like prices of many things will be going up in the short term; the longer term benefit to our country is certainly the subject to debate.

Employment & recruiting

Phoenix Capital, Inc. (PHOENIX), the premier advisory firm for Trading, Mortgage Services and Analytics, is excited to announce varied career opportunities for talented candidates across all business lines, including within its Sales and Client Management team for immediate hire. After more than two decades of industry leadership, PHOENIX has successfully managed over $800 billion in MSR transactions since 2013 and provided analytic solutions to a majority of the top 20 banks and mortgage servicers. Diverse business lines offer high-touch trading advisory and valuations/analytics for mortgage servicing rights and whole loans, in addition to mortgage servicing oversight/QC and loan level due diligence. Our team members integrate a comprehensive understanding of tailored client objectives, accumulated market intelligence, policy insight and unwavering customer service to forge deep and durable relationships across the industry. Experience the PHOENIX difference and explore opportunities with us today. For more information, contact your PHOENIX representative or inquire at careers@phoenixtma.com.

Some companies have a $1 Billion Dollar Producer. Stearns Wholesale has 16. Introducing the Stearns Billion Dollar Club. The inductees of this Club include elite sales and operations team members that have distinguished themselves through their hard work, exceptional customer service and outstanding results at Stearns—helping us fund billions of dollars in loans and act as the catalyst to fulfilling many Americans dreams of homeownership. Why fund millions when you can fund billions with Stearns Wholesale. Congrats to our Billion Dollar Club Members: Dawn Martin, Eric Yang, Kriss Rico, Delfino Aguilar, Erin Futterer, Frank Burruel, Greg Simms, Joni Busskohl, Joy LaFreniere, Kelley Sweetin, Ken Hager, Laura Zakharin & Kerri McMurray (LZKM), Mary Porcari, Nichole Foster, & Steve Zabriskie.

The industry is on the move!  It’s vital to find the right producers for your organization – the first time. By becoming a strategic growth partner, Model Match can get you meetings with the right candidates, guaranteed!  If you’re looking to get in front of qualified candidates that are matched to your company profile and production requirements, we are the partner for you! Model Match is changing the way the industry recruits and providing visibility into the process like never before.  Ready to increase your production and bottom line? Model Match can help!  CLICK HERE and let us show you how. Model Match is at it again, sharing our headhunting secrets and creating value for the industry through our FREE monthly educational series.  Please join us Tuesday, July 17th at 12pm EST as we discuss, “How to fail at recruiting, and why you should. CLICK HERE to register.

Lender products

Since going live with Loan Vision in April 2018, Open Mortgage has experienced early gains in its finance department in the shape of streamlined accounting processes and enhanced loan level reporting. Jackie York, Controller at Open Mortgage shared, “Before Loan Vision, a margin report would take eight manual hours to create. With Loan Vision I’m able to hit refresh on the report anytime during the month. That is an amazing quick win.” Read the press release for more information on how to reduce manual workloads and gain business insights with Loan Vision or contact Carl Wooloff to schedule a demo.

The rapid pace of innovation in the industry has changed how modern lenders market to consumers. Yet, many lenders today are trying to build their marketing and sales growth engine on outdated technology and practices. To position your salespeople for success – and your company for growth – you need the right tools, processes and support. Prioritizing your marketing technology requires commitment across your organization. Join Total Expert, Movement Mortgage, and HW on July 11th for a live webinar, Leading Digital Transformation in Marketing: The Success PlaybookThese digital transformation leaders will explore the framework of the modern marketing stack and cover best practices for executing your marketing strategy across your entire organization at scale.

 

Company news around the industry

Recently Blue Lion Capital asked HomeStreet to reduce its mortgage business.

And Philip Timyan, an activist investor, reportedly pressed Franklin Financial to enter into a sale or merger “as promptly as possible.”

“In a company-wide call Monday morning, TMS CEO Darius Mirshahzadeh announced a new customer-centric structure to fuel its fintech growth. “This year has been a defining year as we position ourselves as a total homeownership fintech company. The changes in leadership align with our goal to have the customer at the center of everything we do – from buying and selling their home through their final mortgage payment and everywhere in between.” With the new leadership structure, TMS promoted Barbara Yolles to chief strategy officer and Pete Sokolovic to president of originations, where he will oversee both retail and wholesale business channels. The newly created positions ensure TMS will continue to grow even amid marketplace trends, as the company is on track to exceed its 2017 volumes for every line of business in 2018.”

PricewaterhouseCoopers LLP is to pay $625.3 million in damages to the Federal Deposit Insurance Corp. for failing to uncover the fraudulent scheme that resulted in failure of Colonial Bank.

Yesterday the commentary mentioned a deal between Stearns Lending and Certainty Home Loans. Although the description in my commentary was correct, the original subject line was incorrect. Readers should realize that the Stearns/Certainty deal is a partnership bringing together two like-minded companies. Stearns Lending has agreed to acquire an equity interest in Certainty Home Loans. Certainty’s current ownership will continue to hold a significant share of the equity. And as noted yesterday, Certainty will continue to operate under the same name after closing. “We are excited that Certainty Home Loans is joining forces with Stearns through a unique equity partnership arrangement,” said Jim Clapp President of Certainty Home Loans. This partnership allows Certainty Home Loans to further accelerate its growth plans by leveraging Stearns’ best-in-class technology platform to streamline and improve interactions with partners, customers and team members while staying true to the brand promise of providing confident closings.

e-Notes, loan closing, and UCD news

Georgetown Mortgage, LLC, headquartered north of Austin, TX, made Texas history when it closed the state’s first loan that used both an eNote and was notarized with a remote online notary in Katy, TX. Recently, Texas passed legislation that allows for the use of remote online notaries whereby the transaction is closed electronically with the use of webcams and recording software which eliminates the need for a notary to be physically present. This type of service enables a borrower to close anywhere, anytime, and with few limitations. The transaction was closed with zero paper and no physical signatures via an eClosing portal. The eNote is Fannie Mae eligible and will be serviced by Georgetown Mortgage, LLC. CFO Michael Jones noted, “We allow our borrowers to close their home loan from work, the comfort of their own home, or even on vacation and have it fund immediately…with Georgetown Mortgage, the application is electronic, the process is electronic, and now the closing is 100% electronic and remote.”

Lenders must react to state-level restrictions. United Wholesale Mortgage has expanded the reach of its virtual e-closing capabilities, as borrowers in 16 states cannot utilize the industry’s first end-to-end online mortgage without wet signing any documents. The virtual process can also be applied to purchase transactions. UWM has partnered with Boston-based Notarize to make this enhancement possible through the Notarize for Mortgage platform. Participating 16 states include Alabama, Florida, Illinois, Indiana, Kansas, Maine, Maryland, Missouri, Montana, Nebraska, Nevada, New Hampshire, Ohio, Tennessee, Virginia and Washington.

Freddie Mac and Fannie Mae (the GSEs) have reduced the Seller data requirements from those communicated in its December 12th, 2017 announcement and will now limit the requirements to the Seller data that is contained only on the Borrower Closing Disclosure. These revised requirements will become effective on June 24, 2019.

The Uniform Closing Dataset (UCD) mandate is in full effect. Loans must now be delivered to Loan Delivery with a UCD XML file along with a Borrower Closing Disclosure (CD) embedded within the XML file for a successful submission. Loan Delivery will fire fatal edits if UCD requirements are not met. To continue supporting your UCD adoption, Fannie Mae and Freddie Mac (the GSEs) have finalized the Seller data requirements by reducing the seller data elements located on the Borrower CD form. In addition, the GSEs have also outlined the impacts to UCD based on the Consumer Financial Protection Bureau (CFPB/BCFP) TRID Amendment. Visit the UCD page and the UCD Collection Solution page for more info.

Ditech is now accepting Hybrid E-Closed on conventional conforming loans. To be eligible for purchase, the Note, Mortgage, and Non-MERS loans-original assignment (if applicable) and the SSA 89 must contain a wet signature. All other documents in the closing package can be e-signed. Proof of E-Consent for all borrowers, and non-borrowing spouses signing closing documents, must be included in the loan file when submitting to Ditech for purchase. Ditech will not allow E-closings on loans closed with Power of Attorney, Texas Equity Section 50 (a)(6), New York Consolidation, Extension and Modification Agreement or loans closed in Trust (e.g., Living Trust or an Illinois Land Trust).

Ditech will require evidence of successful submissions of Uniform Closing Dataset (UCD) data to both Fannie Mae and Freddie Mac prior to purchase. This includes the requirement of embedding the Closing Disclosure PDF in the UCD data file. In addition, additional UCD warning messages will transition to fatal edits in June. We encourage our Clients to evaluate their UCD submissions to identify all “warning to fatal” messages and take appropriate action.

During the UCD adoption phase, FAMC has not suspended loans from funding when the UCD requirements were not met. The most common trend identified is the omission of the embedded Borrower’s Closing Disclosure PDF from the XML file submission. It should be noted that as of June 25, 2018, any conventional conforming loan not meeting all UCD requirements will be suspended from funding.

Guaranteed Rate has branded the solution FlashClose, which allows customers to opt-in, review and complete most documents in advance of the notary arriving, saving an hour or more at the closing table with some averaging a mere 10-minute appointment to provide inked signatures.

Homeowners Financial Group is one of the first Arizona based mortgage lenders to complete an eClosing with Pavaso, a leading eClosing technology provider. With Pavaso Digital Close, HFG can now continue to offer a more convenient digital process to their clients from start to finish.

Flagstar Bank’s delegated correspondents can now enter the ULI in Paperless File Manager when submitting the loan documents for purchase. The ULI may be entered utilizing the Delegated or CAD Post Closing Single or Multi Doc Upload types. When inputting the ULI in Paperless File Manager, a document must be uploaded for the input to be saved.

The mortgage industry is ripe with innovation as digital mortgages, eNotes, and eMortgages are changing home loans. On July 17, 2018, Dykema will be holding a webinar to answer these questions and more. Industry leaders, Laura Baucus, Erin Fonte, Joseph Hickey, and Luke Sonicki will speak at the event on a number of topics that will exhibit the future of home loans (you can see the full list of topics here).

Capital markets

Rates were up to start the week, including the 10-year closing +2bps at 2.87% as investors looked past potentially rising global trade tensions to focus on tech strength ahead of the July 4 holiday. Tariffs literally cannot be modeled, so expect to see a lot of back-and-forth as investors play a guessing game the rest of the year. In China, weaker-than-expected manufacturing data for June added to concern that the country’s growth is softening. The MSCI Asia Pacific Index sank to its lowest level since in 10 months, a worry for investors as is the decline of the British Pound in yet another big week for Brexit, and pressure on the Euro as tensions deepen in the German coalition.

The strong U.S. news is starting to wane. As far as economic releases went, total construction spending increased 0.4% in May, falling short of expectations on the heels of a revised 0.9% increase in April. Combined with the downward revision for April, construction spending will make a smaller contribution to Q2 GDP forecasts than what was originally anticipated. But the ISM Manufacturing Index increased in June, marking the 22nd consecutive month the index has been above 50.0 and reflecting continued strength in the manufacturing sector.

Today’s economic calendar is pure 2nd tier numbers: the Redbook Same-Store Sales Index for the week ending June 30, ISM-New York, and May factory orders. Little stands in the way of MBS traders heading out early. The Treasury market will close at 2:00pm ET, 8AM Hawai’i time, ahead of tomorrow’s holiday. If anyone cares about locking in a loan, we start with the 10-year yielding 2.88% and agency MBS prices are better .125.

Yesterday’s cutting-edge humor mentioned, “I was offered a free trip to Giza in Egypt, but I had to get five people underneath me to sign up first. I said no thanks, it sounds like a pyramid scheme.”

This prompted Marc E. to fling, “I was involved in that pyramid scheme to Giza. The guy who sold me the trip said it was all legit. It wasn’t until later that I found out Egypt me.”

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, “With Regulations, Be Careful What You Wish For.” 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 over 300 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 2018 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.)