Mar. 17: Sales job; Construction, non-QM products; sales webinars; Info on VVOEs, e-Notes, e-recordings

“I’ve washed my hands so many times now I can see the answers to a math test I took in 1978!” We’re going through a test of the financial system. I love it when politicians, or anyone, whine about the government being involved in the financial services sector, or housing finance. You’re telling me “private capital” has the strength to replace Freddie Mac and Fannie Mae, or the Federal Reserve, in this kind of environment? There is, of course, chatter about how about large banks or Agencies that have lent money to companies to finance their servicing portfolios. How’s that collateral? There’s also talk of husbands and wives together for more than eight hours at a time, with an expected baby boom in nine months. Organizers of April and May conferences rushing to book prime autumn time slots. Counterparty risk is once again rearing its ugly head: Texas Capital’s warehouse bank (with its unrelated exposure to the oil business) is “full” and not allowing refis. Appraisers nervous to go into houses, and owners nervous about having appraisers in their house. Virtual showings have increased. Policies and procedures implications go far beyond changing handshakes to fist or elbow bumps, and a sample of recent market-driven changes are below.

Jobs

Zoral Group Inc., an international leader and innovator in the AI/ML/Digital Products/RPA/Big Data space, is seeking a National Sales Director. Zoral is looking for a true “hunter” with mortgage industry knowledge and extensive contact database, plus demonstrated prior success selling end-to-end mortgage and consumer lending solutions. Knowledge of Artificial Intelligence and Data Analytics is a plus. This is a great opportunity for a business development executive to work with a fintech software company with over 15 years of experience and a broad global client base and help them broaden their reach in the US Market. Location agnostic, but will require some travel to attend industry conferences as well as visit client locations. 1099 Preferred. To learn more or to submit your resume, please contact Peter Sandler, SVP.

Lender services and products

“A proven direct lender, Visio Lending is the nation’s leader in Non-QM loans for buy and hold investors of single-family rental and small balance commercial properties. With direct access to Wall Street, having just completed our fifth securitization, we offer the most attractive terms and the fastest, simplest and most dependable process in the country. Learn why thousands of satisfied customers and successful brokers are choosing Visio for all of their SFR rental, vacation rental and small balance commercial needs today!”

With the Coronavirus moving markets daily, and the 10-year T-note at 84 bps, the refinance activity is back and volume is soaring. Remember just two short months ago, however, we were at 1.95, the equity markets could not stop, and LOs were looking for things to chase. One thing has not changed, consumers are spending in the US, even if it is panic shopping, confidence has been up and construction lending is very active. Are you ready for this loan volume? CFSI Loan Management is a full-service construction risk mitigation company, helping lenders manage the construction process from beginning to end. “We help our lending partners to ensure that the contractor and project feasibility phase is set prior to loan approval and after loan funding we provide full service fund control (including lien releases) and a national inspection platform that allows our clients to ensure that the project is progressing on time and the percent complete is accurate for funding each draw.  Lenders manage credit risk, CFSI manages construction risk. Let CFSI Loan Management help you lead your market with real estate agents, borrowers and builders with a construction loan program.” Please contact President Brian Mingham for information.

Is home equity part of your marketing mix? When potential customers think home equity, you want your name to be top of mind. Providing a seamless home equity experience can turn a mortgage customer into a lifelong borrower. Learn how to reach people where they are along the customer journey, providing the peace of mind and sense of security they expect. Download Blend’s eBook to learn how to integrate home equity into your marketing strategy.

Webinars & training

In the wake of the many recent industry conference cancellations due to COVID-19, Maxwell has announced an innovative event to cultivate some of that conference energy with their three-day MAXOUT 2020 “Unconference”, which will take place March 23-25th. I’ll be keynoting a session titled, “2020: COVID-19, Low Rates, Recession?” on Wednesday and I’m excited to be a part of what’s shaping up to be an amazing event. MAXOUT 2020 is 100% web-based and 100% FREE, and three lucky attendees will win a $500 Amazon Gift Card, $250 Amazon Gift Card, or $100 Amazon Gift Card. To check out the agenda, register for sessions, and partake in MAXOUT 2020, visit: www.himaxwell.com/maxout-2020

 

Gone are the days of manual processes that bottleneck your business and bog down your workflow. Being successful in 2020 means giving your team technology that eliminates inefficiencies, allowing them to focus on the work that actually matters. If you want to identify bottom-line-killing roadblocks and evaluate the right tech tools and strategies, this webinar is for you. Join Total Expert and Motto Mortgage for a live webinar on March 18 at 1 p.m. CST to learn how you can implement proven sales and marketing strategies that will deliver maximum profitability.

Calling all Operations Leaders and Executives: According to the Mortgage Bankers Association, total mortgage application activity jumped 55 percent just last week. To assist with capacity challenges and limited staff, XINNIX can train new operations and sales support talent FAST! Its solutions are on-demand and require as few as 10 days to complete, with no travel requirements. There are solutions for all your new talent needs, including Processors, Loan Officer Assistants, Call Center Sales, Retail Loan Officers, and Wholesale Account Executive positions. Schedule an appointment today or call 678-325-3500, to discover how XINNIX can help you source, train and assimilate new talent to your team, quickly.

Join National Mortgage Professional Magazine and Spring EQ, Thursday, March 19 at 2:00 PM Eastern / 11:00 AM Pacific, for “How To Originate 2nd Mortgage-Home Equity Products” Case Studies with top producing home equity expert Lauri Preedge, the final webinar in a series of 3 unpacking all aspects of Home Equity Lending. For those that know you want to add 2nd mortgage Home Equity lending to your strategy moving forward, this webinar is for you. It will show you real life scenarios of how originators have been using this product to boost their purchase volume as well as revenue from standalone 2nds. Learn how purchase combo products are used to set originators apart from realtors in this competitive market, and how standalone 2nd mortgages remain relevant to your new home buyers after the close and improve the overall customer lifetime value. Register for this webinar here.

Policy and procedure changes: into the weeds!

Do lenders headquartered in hurricane-prone areas have “a leg up” on companies located elsewhere when it comes to disaster preparedness and contingency plans? Possibly. People are using this as a good reason to organize their home offices. Everyone is looking at their eNote and eVault capabilities. But what about those shippers that don’t have any choice to come into work: paper files are still alive and well.

Schools are shutting down temporarily everywhere. Attorneys and title companies are letting clients know that they will start having their non-closing employees work from home, and may shutdown their offices altogether much to the detriment of closing a loan. Can your county register deeds? Lenders and vendors are quite pleased when they can operate at almost full capacity even when working from home, but may also be faced with having to care for children that aren’t able to go to school.

Lenders are wondering what will happen if they can’t close and record loans, or how will expirations be handled if they can’t close due to attorneys or government offices being closed. Some are switching to, or already using e-closing. Ken Perry with the Knowledge Coop sent, “This is most likely going to move us closer to E-Closings. If you think wire fraud and email breaches were bad, just wait until a bad guy can sign loan documents by webcam. I can order a driver’s license today that says Robert Chrisman, with accurate data, and has my face on it. HELOCs for all my hacker friends if we aren’t careful in the way we authenticate the borrower!”

The Property Records Industry Association (PRIA) maintains a list of counties that allow e-recording.

What about verbal verifications of employment? Of course, if a potential refi candidate just lost their job, despite saving money on their monthly payment, the lender is going to have a tough time meeting the Ability to Repay (ATR) rules.

Dave Green, Chairman & CEO of the StoneHill Group, wrote, “On a note for those in the mortgage QC world, we are required to send written reverifications per Agency HUS and VA guidelines, for all documents used to qualify for the loan. This requires letters, postage, postage paid return, etc., which may be hard to do for many QC companies to maintain security of non-public information. It is usually done in a secure office environment.”

Several very talented operations folks sent valuable notes. “FHA does require a verbal VOE within 10 days of closing. (2) Alternative Current Employment Documentation. If using alternative documentation, the Mortgagee must: obtain copies of the most recent pay stub that shows the Borrower’s year-to-date earnings; obtain copies of the original IRS W-2 forms from the previous two years; and document current employment by telephone, sign and date the verification documentation, and note the name, title, and telephone number of the person with whom employment was verified. Re-verification of employment must be completed within 10 days prior to the date of the Note. Verbal or electronic re-verification of employment is acceptable. Electronic re-verification employment data must be current within 30 days of the date of the verification.”

One well-known wholesaler wrote, “We’ll be publishing guidance on VVOEs soon similar to the guidance we follow when borrowers are employed during a government shutdown. I hear Freddie will be doing the same. I am not sure on Fannie, but we’ll use the same guidance for both. HUD requires 10 days prior to the note with some exceptions, so we’ll use the guidance on FHA loans sparingly.”

And from a medium-sized retail group: “Regarding the VVOE, FNMA and most Non-A jumbo lenders require this to happen before the note date. It goes without saying, delays getting docs out are imminent. FNMA states, ‘Lenders must obtain a verbal verification of employment (verbal VOE) for each borrower using employment or self-employment income to qualify. The verbal VOE must be obtained within 10 business days prior to the note date for employment income, and within 120 calendar days prior to the note date for self-employment income.’”

Capital markets

Sunday night’s Fed events (100 bps rate cut, $700 billion worth of Treasury and MBS purchases, full reinvestment of Fed paydowns with the removal of the $20 billion cap, the resumption of QE with the Desk buying at least $200 billion over the coming months due to the recent break down in price action with nominal spreads widening, and coordination with other central banks to reduce the cost of using dollar swap lines) helped the MBS market find some footing yesterday. Lower coupons outperforming by a point or more versus benchmark curves, and treasuries prices higher in what was a very volatile trade to open the week: the 10-year yield closed the day -22 bps to 0.73 percent. It would appear the Federal Reserve is now officially spent, as that was the last of its conventional monetary ammunition to counter the economic crisis triggered by the new coronavirus.

 

The Fed’s decision, which was made in lieu of the March FOMC meeting, was followed by an intraday announcement of a $750 billion repurchase operation by the New York Fed. The Desk also wasted no time in supporting the MBS market with two FedTrade operations targeting up to $7.6 billion MBS. In the first, they purchased $5.09 billion UMBS30 2.5 percent through 3.5 percent and then $2.5 billion GNII 2.5 percent through 3.5 percent ahead of the settlement close.

The decision by the Fed was a move that was intended to stabilize and likely lower mortgage rates after they moved sharply higher last week. Instead, investors saw it as evidence the central bank is almost out of bullets. The S&P index experienced its steepest drop since 1987 yesterday, and could soon be lower than when President Trump took office.

(If you are looking for an indicator of where economic data goes from here, it is not so optimistic. China released disastrous economic data yesterday, which shows the effect of its large-scale lockdown from two months ago. Industrial production for the combined months of January and February fell 13.5 percent from a year earlier, retail sales plunged 20.5 percent from a year earlier (both were expected to post increases), and February Fixed Asset Investment contracted 24.5 percent from the year prior when it was expected to increase. February House Prices missed expectations and the unemployment rate jumped.)

Today’s calendar is already underway with February retail sales (-.4 percent, -.5 percent ex-auto). Later today brings same store sales from Redbook for the week ending March 14, February Industrial production and capacity utilization, January business inventories, JOLTS job openings for January and the March NAHB Housing Market Index. The Desk will conduct two MBS FedTrade operations targeting buying $1.1 billion and then $2.519. We begin today with Agency MBS prices worse .125 and the 10-year yielding .80 percent.

St. Patrick’s Day. Here is a great Tullamore Dew Irish Whisky commercial to commemorate. Everyone’s crazy busy, but this is worth the couple of minutes until the end.

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, “Drinking from a Firehose is Not a Long Term Business Model” If you have the 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. This newsletter is designed for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Mar. 16: Compliance, LO jobs; LOS, VA, non-Agency products; Early Payoff trends; deep dive on recent mortgage rate movement

Gosh, what should we talk about today? If there’s a “winner” with the coronavirus, it is dogs. They are experiencing unprecedented levels of people being home with them! Temporary state & county government shutdowns wreaking havoc on recording deeds for funded loans (can you say, “gap insurance”?)? Companies doing what they can to have employees work from home, or help them? (For example, in a step toward a positive boost, Fairway Independent’s Wellness Program is offering every employee a Cybex ARC Trainer to be delivered to their homes!) Trump warring with Jerome Powell? Reports of nonagency platforms seeing a jump in interest as sellers seek liquidity? Nearly every lender now offering free 90-day locks? Starbucks eliminating seating? The CDC recommending events with 50 people or more be cancelled or postponed for 8 weeks? The economic ramifications of bars and restaurants everywhere closing? The Federal Reserve cutting overnight Fed Funds to near 0 percent and planning to buy $200 billion of Agency MBS, causing stocks, especially bank stocks, and rates to plummet this morning? (MBS prices are on the moon today; Don’t forget the primer on what moves mortgage rates.) And what’s with hoarding toilet paper?

Employment

The Compliance Group, Inc. is continuing to expand its operations, and is seeking Compliance Professionals to join its outstanding Compliance Team. These positions will provide support and guidance to clients, handle compliance-related projects, review new and existing regulations for impact to lending industry, perform regulatory and state audits, Internal Audits, Anti-Money Laundering Audits, and other various audits, review compliance audit results, conduct training of internal staff, as well as draft and maintain regulatory policies and procedures. Must be able to manage multiple priorities and assignments and ensure projects are completed timely. At least five years of compliance experience is preferred. Prefer seven to ten years mortgage lending experience. Candidates holding a CRCM is a plus! Job location: Carlsbad, CA or remote. Some travel is required. Excellent verbal, written and communication skills required. Package includes competitive salary and benefits. Please send resumes to Janet Twombly.

American Pacific Mortgage (APM) is excited for another record year and invites you to be part of it. We just recently added over 30 new branches in AL, CA, FL, IL, IN, MO, NV, TN, TX, WI and are just getting goingWant to know why these branches are joining APM? It’s due to our Culture, that we’ve spent decades developing.  As a company built by originators, we aim to serve…YOU. We pride ourselves on operating from a place of abundance and arming you for success. This includes APM’s incomparable mortgage technology stack, ease of doing business, and a variety of innovative programs and resources to grow your production. Now is the time to check out American Pacific Mortgage at JoinAPM.com. To learn how we can make 2020 your best year ever contact Dustin Block (303-378-3166) or email Dustin Block for a confidential conversation.

Lender products & services

Galton Funding has updated its guidelines effective March 9. Galton continues to enhance its industry leading Non-Agency product offerings. Galton’s latest update focuses on its innovative Streamlined SL1 program which allows lenders to originate Non-Agency loans with the ease of an agency underwrite by utilizing Fannie Mae DU findings for income, assets and reserves. In addition to already accepting a DU cert for loans up to $3MM, purchase, rate/term and cash out LTV’s to 95%, aggressive LTVs for Investor properties, and 30- and 40-year Interest Only options, Galton now allows DTI’s to 50%, co-ops and 2-4 unit condos as acceptable property types. Galton also removed certain overlays to better align SL1 with Fannie Mae requirements. The SL1 program has been a huge success since its rollout, and these enhancements make it easier than ever for originators to do non-Agency loans with Galton. Visit http://galtonfunding.com/contact-us and contact one of Galton’s Business Develop Managers to learn how you can grow your volumes with the help of Galton Funding products.

 

Mortech, a Zillow Group business, hosted a webinar last month discussing the opportunities for mortgage growth along with a demo of its portfolio retention platform. Built on pre-mover data from Zillow, Mortech Protection identifies addresses within a lender’s database that are very likely to list for sale, of which 1 in 4 homes will list in the next 90 days. Lenders can use Mortech Protection to proactively target their outreach marketing to those home sellers who are in need of a new mortgage with the right message, at the right time. With the majority of buyers contacting only one lender before obtaining a mortgage, being informed earlier in the home selling process will better align you to be the first lender to reach out to home sellers when they need financing for a new home. To learn more, view a recording of the webinar here.

Are you ready for VA IRRRL and purchase opportunities in this market? Considering VA mortgage lending for the first time? Join Freedom Mortgage Wholesale for one of our live webinar primers on VA mortgage products and origination processes. Plus, learn more about the recently enacted Blue Water Navy Vietnam Veterans Act of 2019, which has provided new mortgage benefits for jumbo borrowers, active duty Purple Heart recipients, and more. Freedom Mortgage is a leading VA lender and our Wholesale Channel’s No Down Payment VA Jumbo program enables eligible jumbo borrowers to exceed published FHFA county loan limits without a down payment requirement! No jumbo overlays or loan limits! Sign up for a VA Mortgage Product & Process Primer 3/16 or 3/20.

Path, the enterprise-level, cloud-based LOS designed from the ground up for financial institutions of all shapes and sizes is now offering new software versions to match your organization’s size and complexities. Need your LOS preconfigured with standard settings for a quick and simple implementation? You got it! Need a more customized solution specific to your organization and its needs? No problem! With Path, you have options. Contact Michele Warren to learn more.

News from the wholesale arena

Wholesalers, correspondent investors, and the Agencies are keeping an eye on prepayment speeds and churning, especially if a broker or lender makes money on the same borrower twice in a certain period, like 6 or 12 months. Is it an example of a handful of brokers or MLOs impacting the prepayment speeds, and reputation, of everyone? Possibly.

Some are taking action. For example, United Wholesale, who is right on top of its data, noticed a small number of brokers who had prepayment speeds 3x-5x the rest of its broker base. Allen Beydoun, EVP, UWM Sales, informed this group that they will be held to a temporary 12-month Early Payoff Provision. UWM feels that this small group of brokers is hurting the prepayment speed story for all brokers, and decided to take a stand against it. I am sure that others will follow suit. UWM will reevaluate this group of brokers in a few months to see if they are more in line with the cohort. And to the best of my knowledge UWM didn’t cut anyone off, nor worsen their pricing.

“Your account has been flagged for participating in refinancing practices that are having a negative impact on the entire wholesale market. As such, UWM will be implementing a 12-month EPO policy for all loans closed in your name from March 12, 2019, forward. From March 12, 2019, forward, all loans refinanced by you within 12 months of the funding date will require a full EPO. EPO will be required whether you refinance through UWM or not. UWM will reevaluate your refinance speeds on August 1, 2020, and January 1, 2021, and consider removing or revising this policy. Please understand that we must do what we feel is best for consumers and the mortgage industry as a whole.” Makes sense to me.

Live today: industry experts assess broker future. This has been a crazy year already: 2020 has presented brokers with the greatest opportunity to serve the most borrowers, all while facing some of the difficult times for humanity. Today, hear from industry leaders Anthony Casa, chairman of AIME, compliance expert Ari Karen of Offit Kurman, and PRMG Chief Lending Officer Kevin Peranio on how lenders and originators are dealing with rate volatility, the spike in loan demand, EPOs, keeping employees safe and prospecting. Just join National Mortgage Professional’s Facebook Live conversation today 4PM ET/1PM PT on National Mortgage Professional’s Facebook page.

NewRez LLC announced the formal launch of a joint venture mortgage company recently added to its network of partners. NewRez and Shelter Mortgage Company, L.L.C., the NewRez business division focused on JV lending, have partnered in this venture with Landed, Inc. (“Landed”), offering down payment support and homebuyer education programs geared towards helping teachers and school employees afford to buy homes.

As a “March Special,” Mountain West Wholesale is offering free appraisals on FHA and VA purchases through the month of March. This special is applicable on select FHA and VA Standard Loans. This offer is available on new submissions, purchase transactions only, with a minimum 680 FICO or higher. Loans must be submitted between March 1st and March 31st. (Recall that MWF issued Bulletin 20W-012 regarding its discontinuing of some Jumbo R and RC ARM Programs effective February 18. These products will no longer be available for new registrations or locks due to discontinuation of the program by the investor. All locks currently in the pipeline will be honored.)

Capital markets

Yes, yesterday the Federal Open Market Committee cut overnight rates to near zero. Though economic data has been overshadowed by general fear and paranoia recently, it is still important to discuss the actual health of the economy that these economic releases provide. The preliminary March reading for the University of Michigan’s Index of Consumer Sentiment dropped slightly beyond expectations on Friday, and consumer spending activity should follow as sentiment has been shaken by the spread of the coronavirus and the sharp decline in stock prices. The data suggests that additional declines in confidence are still likely to occur as the spread of the virus continues to accelerate. The initial response to this pandemic, however, has not generated the type of economic panic among consumers that was present in the run-up to the Great Recession in 2008. Certainly inflation is missing.

In addition to liquidity challenges, lenders have been messaging me about how last week brought basis challenges, prices lagging well behind the screens, and struggles for option desks. You aren’t alone out there. In my opinion, these are extraordinary, uncharted times, and standard spreads should eventually return. Yes, there are plenty of intra-day price changes, and the uncertainty is certainly driving bonds and MBS. Companies are running scared of EPOs, brokers have been put on warning about churning, and servicers who thought their servicing was worth a point are preparing to write it down to zero because the loan is probably in a different lender’s refinance pipeline. It is a case of why any investor who paid above par for a security that is likely going to prepay would be jumping to do it again. There is no way the industry can refinance $10 trillion to $15 trillion in the next three months, so margins have been widened accordingly. And yes, there are a lot of rumors about the major wholesalers who seem to want to pay up for servicing really hurting in the near future.

Yesterday the Fed announced buying an additional $200 billion in MBS. But last week U.S. mortgage rates have risen to the highest level in months despite recent Federal Reserve interest rate cuts. Mortgage rates are higher because of logjam in the $10 trillion market for mortgage-backed securities (MBS), where most US home loans are bundled. The rush to refinance has flooded the market with MBS. However, as the coronavirus has spread, banks and brokers that act as intermediaries in the market have struggled to sell the bonds. They also have little appetite for adding more of them to their balance sheets. As a result, the difference between yields on mortgage-backed securities and those on 10-year Treasuries has doubled since a month ago to 1.5 percentage points, the widest spread since 2009, during the financial crisis.

It’s a problem if the Fed’s rate reduction moves, and policies in general, don’t lead to lower mortgage rates. If broker-dealers and investors stop buying, mortgage rates are going to go higher. Hopefully some of the pressure is relieved by using the its balance sheet to buy agency securities and create capacity until the market stabilizes.

Looking back at last week, however, Treasuries and MBS pulled back as stocks rebounded from their worst day in over 30 years due to talk of fiscal stimulus and the New York Fed continuing with its repurchase operation. At that point the Federal Reserve said it would make vast sums of short-term loans available on Wall Street and purchase Treasury securities in a coronavirus-related response aimed at preventing poor trading conditions from creating a sharper economic contraction. The Fed also opened the door to a resumption of bond-buying stimulus known as quantitative easing (QE), announced yesterday.

Markets also digested a spate of central bank news: the Bank of Japan (BoJ) conducted an unscheduled repurchase operation, Norges Bank cut rates by 50 bps, and the PBOC announced the lowering of its required reserve ratio for some banks starting today. The result was the U.S. 10-year Treasury yield closed Friday +13 bps to 0.98 percent. After the close, President Trump declared a state of national emergency to deal with coronavirus, stating he would waive interest on student loans until further notice and will be purchasing oil to fill up the Strategic Petroleum Reserve. A coronavirus relief bill has been passed by the House; Senate vote uncertain.

This week’s economic calendar is heavy on data for February, which will give some initial clues about how the coronavirus is impacting the economy. Today sees a very light calendar, with the Empire State Manufacturing for March already out (at -21.5, ugly). Regarding MBS, the Treasury will conduct a Class B FedTrade operation targeting up to $137 million 2 percent ($103 million) and 2.5 percent ($34 million). Tomorrow’s economic calendar includes Retail Sales for February, Industrial Production and Capacity Utilization for February and Business Inventories for January. The middle of the week brings Housing Starts and Building Permits for February as well as a FOMC meeting, before Thursday delivers the usual claims figures as well as the Philadelphia Fed Index for March, and central bank decisions from the BoJ, SNB, and Norges Bank. The week closes with the sole release of Existing Home Sales for February. We begin today with Agency MBS prices better 1-2 whole points and the 10-year yielding .77 percent.

(Thank you to Euie H. for this one.)

“Some people are not shaking hands because of the corona-virus. I am not shaking hands because everyone is out of toilet paper.”

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, “Drinking from a Firehose is Not a Long Term Business Model” If you have the 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. This newsletter is designed for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Mar. 14: Notes on handling capacity, TRID violations, FHA & FHFA on coronavirus; state lending law changes coast to coast

The production and operations staffs of every lender across the nation are “going bonkers.” Responsible senior managers and owners are doing things they never thought they’d have to do like raising margins to limit volume, and asking personnel to “play nice” with each other. Of course it is not in a loan officer’s DNA to limit volume. This is a typical note I received recently. “____ is essentially at capacity. We have loan officers climbing the walls to get every last deal. It kind of brings out the worst in both lender and client. I’m taking those who call me and set up a time to discuss. Those who call for rates are 99.999% a waste of time, although you have plenty of LOs willing to take a shot. I prefer to keep my sanity. While I don’t like the rate shoppers, I understand it! Everybody wants a good deal. I would have never become a lender if this were the environment, but it’s fascinating to watch.”

Some borrowers shop for rates? Who knew!? This week my commentary mentioned loan officers possibly picking and choosing borrowers based on loan difficulty. I heard from attorney David Stein with Ohio’s Bricker & Eckler on the topic. “Rob, I noted the statement in today’s post: ‘…pushing off difficult loans or borrowers that are shopping rates…’ Lenders and loan officers should be very careful. Originators are obligated to make credit available to those who are interested, without regard to a variety of classifications. If access to credit is to be curtailed, lenders need to plan for important fair lending considerations. Access to credit is one of the key issues that are field tested by HUD and the CFPB, through matched pair testing (secret shoppers). Once you turn one person away, you will be expected to treat everyone the same. So, if a lender is to turn away potential borrowers, they are advised to approach all credit inquiries with a clear set of objective criteria.” Thank you, David!

Coronavirus consequences

This commentary has discussed the virus’ effect on rates. Certainly non-critical travel has vanished. What about processing? The question has been sent to me by a few people concerning verbal verifications of employment. “Rob, what do you hear about how everyone is handling VVOEs with employers/schools/etc. being closed due to the Coronavirus? (VVOE=Verbal verification of employment that must be completed no greater than 10 days prior to closing.)”

This is an uneducated guess, but I’ve heard that FHA has no special underwriting provisions for re-verifications of employment. Has anyone heard about Freddie and Fannie? VA? The non-QM or jumbo lenders?

With the influx of volume, lenders, big and small, need to remember compliance is the name of the game. It is important that the industry is aware of some lenders pushing boundaries, but also that wholesale lenders finally be put on notice they are responsible for the TRID clock form the day the broker is aware of the 6 elements.

For example, I received this note. “I was just contacted by a broker in the Northeast who is dealing with a fairly sizeable wholesale lender. The lender failed to issue the TRID early disclosures in a timely manner. The lender instructed the broker to simply send a new 1003 with today’s date. Then the lender will treat the item as timely.

“In effect this lender is telling its broker to commit fraud. To intentionally submit a document it knows to be false to overcome a timing violation issue is a huge problem. This forces the broker to but does not alleviate the timing problem/violation.

“I have been aware almost since the TRID rule was implemented that more than a few lenders disregard the TRID requirement to start the ‘clock’ at the broker shop when the 6 elements are known to the broker. They seem to want to start the clock upon submission regardless of the transaction’s history before it reached them. The rule (See below) requires lenders to ensure the disclosures are issued within 3 days of awareness of the 6 elements, not just when the loan is submitted to the lender.

“But now, if lenders under the duress of volume or for whatever reason, are instructing brokers to create documents to mask the real timing, it seems someone should say something. At least remind brokers that they have the responsibility to issue the early disclosures once the 6 elements are present whether they have found a lender or not and remind lenders that the TRID rule requires them to police the timing regardless of source. They simply can’t just wait to start the clock.

“It seems that with the apparent glut of volume today lenders are experiencing operational challenges to get new deals timely processed. If that is the case, and this is a solution we may be in for some interesting pushback from regulators.” Thank you for the note!

National Mortgage News reports that the Conference of State Bank Supervisors created a centralized link to state websites highlighting information relevant to business continuity plans for licensed mortgage loan officers.

As in-person events, conferences, and training are cancelled nationwide, the Mortgage Bankers Association has launched a new webpage to provide a single source of industry information related to the challenges the industry is facing on the Coronavirus COVID-19.

Homeowners who are facing a temporary hardship due to the coronavirus and heightened safety measures such as businesses shutting down have options to postpone mortgage payments, according to the FHA (Federal Housing Finance Agency). FHFA director Mark Calabria advised mortgage servicers this week to offer forbearance options to those who might be in jeopardy of falling behind on mortgage payments.

Loan officers know that we don’t operate in a vacuum. The striking pace of hiring to start the year will be hard to maintain amid efforts to contain COVID-19. Services are at greater risk than recent periods of slowing growth and threaten the broader health of the labor market. What else is going on in real estate, and companies that are reliant on services?

When was the last time you went to a movie theater? The stock of AMC theaters has declined drastically in the last few years, which has erased more than $3 billion in market cap since 2017. Unfortunately the troubles of the company have only worsened in recent weeks as more news related to COVID-19 pour in. Since the end of January, the firm’s share price has dropped by another 58% and traded at about $2.70 this week.

What if you were a commercial lender on a building with a theater as your largest tenant? Cineworld (the second largest cinema chain in the world) warned investors that the firm’s ongoing viability could be threatened by the revenue losses associated with widespread closures. But it’s not just closures that Cineworld has to worry about. Delays in film releases could also significantly impact the firm’s bottom line. For example, the premiere of the new James Bond movie has been postponed to November due to the pandemic. The firm has warned that this will likely reduce expected foot traffic.

SeaWorld Entertainment operates the SeaWorld and Busch Gardens parks, which have more than 20 million annual visitors. Given the potential for increased public health protocols and other restrictions, travel to SeaWorld and similar destinations will likely be impacted. Indeed, equity markets hold a pessimistic view: share prices fell from $35 at the end of January to the low-$10s this week.

Cedar Fair Entertainment operates 15 amusement parks across the US and Canada, including Kings Dominion and Knott’s Berry Farm. In the past few weeks, the company has stated that it is implementing increased cleaning and disinfecting measures at its facilities. But its stock is down considerably.

Six Flags has been ailing for a while. Since early-February, the company’s stock has dropped by more than half. In step with the decline in share prices, the firm’s $800 million Six Flags Theme Parks – Tranche B Term Loans has also been marked at a lower price. All but one trade in 2020 were ‘sell’ trades going at right around par. However, the credit was marked as low as $93 earlier this week.

Litigation, regulation, and state law changes

Thank you to attorney Phil Stein, Practice Group Leader, Litigation, for Florida’s Bilzin Sumberg Baena Price & Axelrod LLP, who sent along this update on residential MBS litigation relating to loans sold prior to 2008.

Let’s play some catch up on what states around the nation have been doing. After all, for multi-state lenders, compliance can become expensive keeping up with what everyone is doing out there.

CSBS announced 2020 legislative priorities for state regulators. John W. Ryan, president and CEO of Conference of State Bank Supervisors (CSBS), recently announced the legislative priorities for state regulators for 2020.

Tim Knopp, Deputy Secretary, Pennsylvania Department of Banking and Securities/Non-Depository, has stated the following in permitting licensees to work from alternate locations: “The Department of Banking and Securities will not take exception to licensees and registrants working from alternate site locations, whether licensed or not, only while the Commonwealth of Pennsylvania is under a Proclamation of Disaster Emergency.”

Did you know that Massachusetts amended provisions relating to mortgage loan originator licensing? Yes, the Massachusetts Division of Banks amended the regulations governing the procedures and requirements for the licensing and supervision of mortgage loan originators, which went into effect on January 10, 2020.

WBK reports that Ohio announced a loan prepayment penalty adjustment for 2020. The Ohio Department of Commerce recently announced its annual loan prepayment penalty adjustment, effective January 1, 2020.

And WBK sent out a note saying that Arizona, Idaho, Nevada, Oklahoma, and Utah amended electronic notarization regulations. Since 2018, several states have enacted regulations to allow for electronic notarizations.

New Jersey adjusted its definition of a High-Cost Home Loan for 2020. The definition of a high-cost home loan has been adjusted for 2020 by the New Jersey Department of Banking and Insurance (the Department) pursuant to the New Jersey Home Ownership Security Act of 2002 (the Act).

Three thousand miles away, the Oregon Rights of Redemption Provision became effective. Effective January 1, 2020, Oregon implemented new notice requirements regarding rights of redemption after a foreclosure complaint has been filed.

NMLS Releases 2019 Q3 Mortgage Industry Report Update covering the 2019 Q3 period detailing data concerning companies, branches, and mortgage loan originators licensed or registered through NMLS to conduct mortgage activities.

In the home of Ben & Jerry’s, Vermont created a new combination license available to certain licensees. The Vermont Department of Financial Regulation created a new type of license—a Combination License—which combines the lender license, mortgage broker license, loan solicitation license, and loan servicer license in the state.

The New York Department of Financial Services (NYDFS) recently announced a new Consumer Protection Task Force within the NYDFS.

Balmy Alaska amended rules implementing its Secure and Fair Enforcement for Mortgage Licensing Act. The Alaska Department of Commerce, Community, and Economic Development (Department) recently amended its rules implementing the Act.

An Irish farmer named Seamus had a car accident. In court, the lorry company’s hot-shot solicitor was questioning Seamus.

“Didn’t you say to the police at the scene of the accident, ‘I’m fine?’” asked the solicitor.

Seamus responded, “Well, I’ll tell you what happened. I had just loaded my favorite cow, Bessie, into the…”

“I didn’t ask for any details,” the solicitor interrupted. “Just answer the question. Did you not say, at the scene of the accident, ‘I’m fine!’?”

Seamus said, “Well, I had just got Bessie into the trailer and I was driving down the road…”

The solicitor interrupted again and said, “Your Honor, I am trying to establish the fact that, at the scene of the accident, this man told the police on the scene that he was fine. Now several weeks after the accident, he is trying to sue my client. I believe he is a fraud. Please tell him to simply answer the question.”

By this time, the judge was fairly interested in Seamus’s answer and said to the solicitor, “I’d like to hear what he has to say about his cow Bessie.”

Seamus thanked the judge and proceeded. “Well as I was saying, I had just loaded Bessie, my favorite cow, into the trailer and was driving her down the road when this huge lorry and trailer came through a stop sign and hit my trailer right in the side. I was thrown into one ditch and Bessie was thrown into the other. I was hurt, very bad like, and didn’t want to move. However, I could hear old Bessie moaning and groaning. I knew she was in terrible pain just by her groans.

“Shortly after the accident, a policeman on a motorbike turned up. He could hear Bessie moaning and groaning so he went over to her. After he looked at her, and saw her condition, he took out his gun and shot her between the eyes.

“Then the policeman came across the road, gun still in hand, looked at me, and said, ‘How are you feeling?’

“Now what the heck would you have said?”

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, “Drinking from a Firehose is Not a Long Term Business Model” If you have the 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. This newsletter is designed for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

 

Mar. 13: Ops, management jobs; broker, DPA, tech products; coronavirus tips: NAR’s report & employer webinar

Here’s an economic tidbit for you. The Port of Los Angeles is reporting a 22.9% decrease in cargo volumes for February compared to 2019, with expectations for continued softness in March. And plenty are intrigued with the news that a Brazilian official who met with both Donald Trump and Mike Pence has tested positive for the coronavirus. We’re looking at no Disneyland. No NCAA men or women’s basketball tournaments. NBA and NHL seasons canceled or postponed (NBA team owner Mark Cuban is floating the idea of paying his hourly workers). New York City banning gatherings of more than 500 people, effectively closing Broadway shows and cancelling the 258-year-old St. Patrick’s Day Parade. Italy having more than 1,000 deaths. The U.S. Federal Reserve’s repo and QE actions taken yesterday ensure ample liquidity, but financial conditions remain incredibly tight. The Fed has probably only bought some additional time until it delivers on what many will be a cut to zero rates and an announcement of a host of additional measures. More on steps lenders, vendors, and organizations are taking in light of the spread of this terrible disease below.

Jobs & promotions

“While other mortgage lenders are hiring temporary operations staff to manage the recent surge in business, Citizens Bank Home Mortgage is adding permanent operations staff now and will continue growing throughout 2020! Citizens is looking for talented processors, closers and underwriters at our five regional operations sites in Marlton, New Jersey, Richmond, Virginia, Melville, New York, Franklin, Tennessee, and East Providence, Rhode Island. We know our Operations colleagues play a critical role in the home buying journey, and we value the important work they do. LOs looking to build your career at a company that is winning in the marketplace and recognizes your contributions, apply to Citizens Bank today! For questions, please email HomeMortgageRecruiting@citizensbank.com.”

A well-established large independent mortgage banking company, with primarily TPO focus, has an exciting opportunity for a dynamic Senior Vice President, Chief Underwriter based in California. The company is looking for a proven executive who will drive strategic issues governing loan quality and manage day to day underwriting operations, including effectively communicating the company’s credit policy within the organization’s underwriting and production teams. Key responsibilities include maintaining and communicating changes to agency and investor guidelines and processes; identifying best practices; recommending changes and monitoring adherence by developing and maintaining strategic risk policy that support the company’s risk management goals. In addition, the role acts as a liaison between credit policy and divisional sales management. Essential qualities include strong talent recruiting and management skills, as well as superior analytical and communication skills. The successful individual will need to balance production growth goals with strong credit risk management practices. The company offers competitive compensation, outstanding benefits and a state-of-the-art campus. Click here to send your resume.

Sagent Lending Technologies, a leading fintech company modernizing mortgage and consumer loan servicing, has appointed Dan Sogorka CEO and president.

Lender services and products

“Are you ready for VA IRRRL and purchase opportunities in this market? Considering VA mortgage lending for the first time? Join Freedom Mortgage Wholesale for one of our live webinar primers on VA mortgage products and origination processes. Plus, learn more about the recently enacted Blue Water Navy Vietnam Veterans Act of 2019, which has provided new mortgage benefits for jumbo borrowers, active duty Purple Heart recipients, and more. Freedom Mortgage is a leading VA lender and our Wholesale Channel’s No Down Payment VA Jumbo program enables eligible jumbo borrowers to exceed published FHFA county loan limits without a down payment requirement! No jumbo overlays or loan limits! Sign up for a VA Mortgage Product & Process Primer 3/133/16 or 3/20.”

AFR’s Conventional One-Time Close program just got even better! FICO and LTV eligibility has been expanded: now qualifying borrowers with a FICO score of 680 or above, and offering LTVs up to 95%. Note, LTVs up to 97% are still permitted when an eligible Freddie Mac CHOICEHome property is combined with the Freddie Mac Home Possible or HomeOne program. Plus, no need to requalify when all documentation used to qualify is less than 365 days (at time of converting to permanent mortgage). This Conventional OTC program may be used with 15, 20, or 30-year fixed mortgages, super conforming mortgages, and high balance mortgages (in designated high-cost areas). Visit afrwholesale.com for complete guidelines. AFR also offers FHA, VA and USDA One-Time Close programs. In addition to providing business partners with unique products and services, AFR also provides industry-leading technology and continuous educational opportunities. For more information go to afrwholesale.com, email sales@afrwholesale.com, or call 1-800-375-6071.

CBC Mortgage Agency (CBCMA) is an innovative government down payment assistance (DPA) program that has given 20,000 families access to the U.S. real estate market while making FHA insurance a far more valuable option. These 20,000 new homeowners, most of them minorities, and all of the credit-worthy, were only able to achieve the American dream thanks to CBCMA’s Chenoa Fund’s program, which provides DPA as well as crucial borrower support services, such as post-purchase education and counseling. By enabling these families to transition from renting to homeownership, they have realized nearly $500 million in property appreciation, according to a recent internal analysis. All this, and more, is being accomplished through innovation that cuts costs for credit-worthy consumers and helps them to become long-term homeowners. Find out how you can help more families qualify for homeownership by becoming a CBCMA correspondent lender.

 

For the third year in a row, TMS has claimed its title as a HousingWire Tech 100 award winner for TMS’ proprietary technology, SIME – Servicing Technology Made Easy. This year TMS raised the bar with their real-time transparency and performance optimization for a lender’s servicing portfolio. All made possible with SIME’s AI Chatbot, 4-D Customer Intelligence, integrated images and recorded calls, which resulted in Industry leading customer service levels, portfolio performance and customer lifetime value, making it the best technology available for lenders. In the market for a new subservicer? Or even a new servicing technology? Check out SIME today at www.GetSIME.com

FundingShield, a HousingWire Tech-100 2020 Winner,  shared a newsletter with lenders reminding them that as BCP / Remote Work plans are put into play due to COVID-19 there is a heightened need to secure remote work and collaborative efforts by leveraging fintech regulatory compliant tech solutions that will facilitate uninterrupted and risk managed day-to-day operations. Increased loan volume is causing lenders to scramble to find resources to close more loans, tools like FundingShield’s cloud based, plug ’n’ play, scalable loan level Guardian and WAVs services (integrated directly in Encompass, APIs or secure web portals) have been in high demand to help improve closing agent vetting/approval, closing document reviews and title / wire fraud prevention saving lenders time and money. A large surge of new clients have signed up for the services in the past weeks due to increased phishing / potential-fraud events and seeking relief for key-staff allowing them to handle additional transaction flow. Contact Info@FundingShield.comto close quicker and safer.

QLMS keeps smashing records and earning prestigious awards. It has seen substantial growth in recent years, none more impressive than the sheer number of brokers and LOs who have become Stronger Together with QLMS’ industry-leading process, prices, products and technology. One piece of technology, The Answer, keeps getting accolades from brokers and the media. MReport just selected The Answer as one of its Top-25 FinTech Innovators! Mortgage experts no longer have to constantly check for changes to product guidelines, instead, they simply have to ask The Answer and a response will be provided instantly, 24/7/365. The proprietary questionnaire-based algorithm has helped brokers reduce loan fallout and win more business. If you’re a broker who hasn’t leveraged this technology to boost your business, click here to partner with QLMS.

Containment is the name of the game

Unlike many vendors and lenders in residential mortgage who can, dockworkers can’t work from home. Due to the coronavirus outbreak, financial service companies across the nation have activated their business continuity and disaster recovery plans. The intent, of course, is to protect employees, be compliant, while continuing to service their customers and partners. They must follow the Gramm Leach Bliley Act and its procedures to ensure that your borrower’s data is just as secure at their home as it would be in the office.

Today, from 12:30 p.m. – 1:30 p.m. EDT, law firm Morrison & Foerster is presenting a webinar for companies titled, “COVID-19 Considerations for Employers.”

As always, there is a lot of uncertainty out there. I have read through dozens of announcements that vendors and lenders have sent out. Everyone is monitoring the severity of the (now) pandemic and the risk level for their employees and operations. Everyone is reminding others of what our parents taught us: keep your area clean, respiratory etiquette/sneeze or cough into your hand or elbow or tissue, wash your hands, and if you’re sick don’t be around others.

Upstream, the National Association of Realtors (NAR) is seeing some sellers changing how their home is viewed. Some are stopping open houses, requiring potential buyers to wash their hands or use hand sanitizer, asking buyers to remove shoes or wear footies, or other changes. The good news: Almost 8 out of 10 (78%) said there has been no change in buyer interest due to the coronavirus.

Companies are creating an ongoing and regular communication to clients and employees. Video messages are proving very worthwhile. Companies are sending emails to employees allowing them to work from home if they can. In general, large companies are doing what they can to not “make” people come in. They are reviewing/creating a secure crisis management and business continuity plan, setting up transparent, clear, and secure communications with employees and partners. Managers are evaluating the likelihood of mass absenteeism or making sure that remote work is as secure as possible from hackers.

MQMR’s Frequently Asked Questions this week is titled, “What questions should lenders ask their vendors to assess the potential impact of coronavirus on service levels/operations?” The current STRATMOR blog is, “Drinking from a Firehose is Not a Long Term Business Model”. And the Lenders Compliance Group posted, “Coronavirus: CDC Guidance – An Urgent Message.”

Capital markets

It was a normal enough day of movement for Treasuries yesterday, as the curve steepened in a non-volatile fashion and the 10-year closed the day +3 bps to 0.85 percent. The big news of the day was the Federal Reserve Bank of New York’s surprise announcement that it will provide up to $1.5 trillion in new temporary liquidity via a $500 billion 3-month repurchase operation yesterday and two more repurchase operations totaling $1 trillion that will take place today. The Fed is altering target purchases which were previously T-bills, of the Not-QE reserve program to QE (due to dislocations in the bill market), saying that the $60 billion in monthly purchases would be spread “across a range of maturities to roughly match the maturity composition of Treasury securities outstanding.” The outstanding amount of money lent to major banks and financial firms surged to its highest level yesterday since operations restarted in September.

(Despite the Fed move the bond market “sold off” slightly, primarily due to a) some thinking that we’re “overdone” on the downside in terms of rates, and b) the removal of some uncertainty. Lenders would love to have some rate stability for a change, or even a move higher, improving pull through.)

In the afternoon, the NY Fed announced plans to buy a maximum of $3.2 billion in agency MBS over the March 13 through April 13 period, based on February paydowns that totaled $23.2 billion before the $20 billion tapering cap. It also released a new FedTrade schedule covering the March 13 to 26 period targeting up to $1.53 billion MBS over three operations with the first Monday when up to $137 million UMBS15 2 percent and 2.5 percent will be purchased.

Today’s scant Friday the 13th economic calendar only has import/export prices for February and preliminary March Michigan consumer sentiment. We begin today with Agency MBS prices worse a shade and the 10-year yielding .85 percent.

A man stumbles up to the only other patron in a bar and asks if he could buy him a drink. “Why of course,” comes the reply.

The first man then asks: “Where are you from?”

“I’m from Ireland,” replies the second man.

The first man responds: “You don’t say, I’m from Ireland too! Let’s have another round to Ireland.”

“Of course,” replies the second man.

Curious, the first man then asks: “Where in Ireland are you from?”

“Dublin,” comes the reply.

“I can’t believe it,” cries the first man. “I’m from Dublin too! Let’s have another drink to Dublin.”

“Of course,” replies the second man.

Curiosity again strikes and the first man asks: “What school did you go to?”

“Saint Mary’s,” replies the second man. “I graduated in ’72.”

“This is unbelievable!” the first man responds. “I went to Saint Mary’s and I graduated in ’72, too!”

About that time, in comes one of the regulars and sits down at the bar. “What’s been going on?” he asks the bartender.

“Nothing much,” replies the bartender. “The O’Malley twins are drunk again.”

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, “Drinking from a Firehose is Not a Long Term Business Model” If you have the inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Mar. 12: Ops, sales management, production jobs; broker, cap. mkts. products; corresp. & wholesale news

Here’s a sign of the times. “Rob, I would think many lenders are for sale; they just don’t know it yet. EPOs, servicing write-downs, renegotiations, margin calls… If early pay off penalties are assessed for any loan that pays off in less than six months, and the industry was doing about $2 trillion a year, that means (roughly) $1 trillion of loans may be subject to penalties since they are at higher rates or on which investors paid more than 100. I know that I am generalizing, but still, thinly capitalized companies should be aware and preparing for this.” Something else that companies are very aware of is staff working from home, and sometimes take their cue from law firms. In a relationship business, law firms are analyzing the “work from home” question as the coronavirus spreads. A number of law firms say they’re equipped and ready to have their lawyers and staff work from home for the short term. But working remotely for a long period of time poses a major test for an industry built on relationships.

Employment, promotions, transitions

A Los Angeles area-based mortgage banker is seeking an experienced Wholesale Production Manager. The ideal candidate will be instrumental in the nationwide expansion of the Wholesale channel. The candidate will have an opportunity develop new product offerings, sales executives, as well as continue to grow their personal production with experienced support staff and technology. The company is a multi-state “Customer-Centric” lender, with an emphasis on building relationships with their customer. Production continues to grow year-over-year with Retail and Wholesale channels. If you are interested in a confidential conversation about the opportunity send your contact information to Anjelica Nixt.

“This is your chance to meet your business breakthrough! Let us fly you to sunny Denver for our April 1st Meet Motto event where you’ll learn how you can maximize your business opportunity and take control of your career. Discover how a Motto Mortgage franchise can be your growth catalyst and have a chance to meet our team and tour headquarters. Travel, meals and accommodations are on us (with qualification – no purchase necessary)! Call 303-796-3477 or email us at events@mottomortgage.com for more information or to RSVP. Meet Motto. Meet business opportunity.

PRMG is Hiring Experienced Underwriters Remotely! Underwriting has drastically changed over the years and even more recently. You can’t just expect to be asked to work longer and harder hours in times like these. At PRMG we’ve invested millions of dollars to make underwriting easier on the underwriters. We fully believe in Underwriters doing more with technology and not being replaced by it. Our support and Leadership for Ops is rivaled by few. If you want to join– NOW is the TIME! PRMG employs over 2000 people across the country and is licensed in 48 states with nearly 180 branches located throughout the nation. Contact HR@prmg.net for a complete job description or confidential inquiries.”

Join Golden State Finance Authority for an in-depth look at the new GSFA OpenDoors® down payment assistance program! OpenDoors is a game-changer when it comes to helping homebuyers in California purchase a primary residence with little-to-no money out of pocket. The GSFA OpenDoors Program features homebuyer assistance up to 7% of the loan amount, FICO requirements as low as 620, flexible DTI requirements and enhanced pricing. FHA, VA, USDA and Conventional Loan financing is available. Plus, GSFA delegates the loan process to the Participating Lender so no additional compliance review from GSFA is necessary, making the process simple and easy for both borrower and Lender. Ready to start closing more loans?? Join us for a Lender Training Webinar. and view Program guidelines at www.gsfahome.org. You don’t want to miss out on this EXCITING new Program!”

First Continental Mortgage, Ltd. (“FCM”), an independently owned mortgage banker, is seeking to fulfill an open position of Production Manager/RMLO (PM) located in its Houston, TX headquarters. FCM has been in business for 27 years and maintains multiple home-builder partnerships operating in Texas, Washington, and Colorado. The PM will manage the daily operations and LO production in connection with an exclusive account servicing one of the largest privately owned home builders in the country. The PM will work closely with senior management and branch staff to achieve company goals and metrics such as capture and exemplary customer service expectations. This individual will also generate his/her own loan production. The PM must have and maintain an active LO license in the state of Texas. For more on this exciting opportunity please click here.

AmeriHome continues to grow its Non-Delegated business, and its Non-Delegated team! AmeriHome is excited to announce that Dawn Frensdorff has joined the sales team as a Non-Delegated Account Executive. Dawn’s experience in correspondent lending and knowledge of agency, government and non-Agency products will be a tremendous asset for clients and prospects in the Southwest US. AmeriHome is also looking to fill other critical roles, so please be sure to check out the careers section on its website. Highlighted roles for this month in the Non-Del channel include FVP, Sr. Credit Operations, (Dallas office) and Inside Sales Account Executive (location flexible). Make sure to check out AmeriHome’s Non-QM Income Flex and Non-Agency Jumbo programs as well!

ReverseVision announced the appointment of Joe Langner as president to “lead the company to achieve its strategic vision of establishing HECM and private reverse mortgages as lending portfolio staples alongside traditional and government loans.”

Key Mortgage Services, Inc. has added Brooke Mulder as SVP of Sales Development to focus the salesforce on scalable business growing strategies to increase their reach throughout Chicagoland.

Guild Mortgage has promoted Doug Jameson (AZ & CO) and Eric Weiss (TX) to regional manager positions to help manage the company’s future growth. Previously district managers, Jameson and Weiss were promoted when their predecessors, Andy Stewart and Chad Overhauser, were named VPs and divisional sales managers in January as part of a recent restructuring that included new roles for three senior members of Guild’s leadership team.

Lender products & services

Bluepoint Mortgage is offering a special during the month of March: a 50-basis point price improvement on FHA Streamline loans. Bluepoint is accepting broker applications from nearly 30 states; the approval process can take as little as 48 hours. Bluepoint Mortgage provides a comprehensive line of lending products for their broker partners. Questions about pricing or becoming approved should be directed to Managing Partner Allen Samuel.

Maxwell announced their latest feature, MPay™, designed to help lenders reduce losses and streamline a frequently overlooked part of the mortgage process — receiving consumer card payments. Maxwell’s embedded payment platform enables lenders to seamlessly manage consumer card payments within the Maxwell platform. Whether you collect payments for the appraisal, rate locks, final inspection reports, or other fees, your borrowers expect it to be as effortless as buying a cup of coffee. MPay helps lenders maintain PCI compliance while removing the hassle of paper forms, third-party emails, and confusing entries on credit card statements. MPay collects payment and deposits funds directly in the lender’s account. To learn more about MPay and the other intuitive Maxwell features that power hundreds of lenders, click here and request a demo.

Are you getting the guidance you need during market volatility? In the last two weeks, MCT has authored seven timely market updates and articles, hosted two webinars, and provided a constant stream of support and communication to lender clients. The wide-ranging topics covered include ensuring liquidity, mitigating margin calls, managing pull-through, and detailed market analysis. Despite the latest increase in rates on Tuesday and Wednesday, did you know opportunities exist to float down rates, reduce fallout, and improve your execution at no cost to the borrower? Contact MCT to explore specific opportunities in your pipeline, or brush up on Rate Renegotiation Best PracticesAs your trusted capital markets partner, MCT stands by you during times of market volatility – even if you are not an MCT client. Reach out for guidance and support or join the MCT newsletter.

Wholesale & correspondent tidbits

As mentioned above, Bluepoint Mortgage is offering a special during the month of March: a 50-basis point price improvement on FHA Streamline loans. Bluepoint is accepting broker applications from nearly 30 states; the approval process can take as little as 48 hours.

This months’ AmeriHome newsletter, the “AmeriHome Angle”, discusses the California Consumer Privacy Act (“CCPA” or the “Act’). Effective January 1, 2020, the Act grants California residents vastly expanded privacy rights and control of how their personal information is handled by covered entities. Read the complete article, CCPA Implementation & Beyond, to find out more information.

Plaza Home Mortgage has made changes to some of its most popular programs. Its FHA High Balance cash-out minimum FICO has been reduced from 640 to 620. Also reduced, its FHA 203(k) High Balance minimum FICO to 620.  Plaza’s AUS Non-Conforming program will allow DTI to 50% for LTV <= 80% and FICO >= 720. DTI for 95% LTV remains at 35% and the maximum DTI in all other scenarios will be 43%. This change is effective for all locks starting Monday, March 9, 2020. VA Renovation Jumbo  loan amounts to $765,600 are now available nationwide. Previously the VA Jumbo maximum was limited to the FHFA county limit. This update is effective immediately.

Effective April 1, 2020, Wells Fargo Funding will no longer permit Loan-level exceptions. They will exclusively follow the standard Non-Conforming program underwriting guidelines as published in the Wells Fargo Funding Seller Guide and will discontinue making policy exceptions.

PCF Wholesale “has one of the best EPO policies in all of wholesale lending. Its FNMAE-Conventional Loans are 130 days from Funding. FHA/VA Loans are 150 days from Funding and NonQM loans are 180 days from funding.”

With the release of the new 4506-T forms, the vendor’s name and address must be included on loan 5a. Correspondent Lenders should, when possible, include the below vendor information on line 5a for all loans delivered to Fifth Third Correspondent Lending: TALX Corporation, a provider of Equifax Verification Services, 11432 Lackland Road, Saint Louis, MO 63146. If this vendor information is not on the 4506-T, then tax transcripts must be provided if the loan is selected for either pre-purchase or post-purchase audit. Reminder, line 5b of the form must always be left blank.

Capital markets

The latest ISM manufacturing index just barely remained in expansion territory for February after stabilizing in January following the de-escalation in trade tensions at the beginning of the year. However, it is not expected to continue as the upcoming data should begin to show the effects of trade disruptions caused by the coronavirus especially in those industries which rely on China for key components. The service sector continued to expand in February with the ISM non-manufacturing index increasing to 57.3. Like the manufacturing sector, the service sector is expected to take a hit as consumers scale back on travel, entertainment and recreation, arts, and food services. With the markets firmly focused on the future, February’s stellar jobs report, which showed 273,000 new jobs added, barely made headlines. Additionally, December’s and January’s data were revised upwards bringing the average pace of hiring to 243,000. Without the coronavirus we would be talking about the continued strength in the labor market and a recovering manufacturing sector.

Yesterday, March 11, 2020, will go down as the day the longest bull market in American history came to an end, as well as the NBA season being cancelled until further notice. The World Health Organization formally declared COVID-19 a pandemic. U.S. Treasuries still pulled back for the second day in a row, though movement lacked the volatility on display Tuesday. Treasury yields across the curve moved +4 bps to +9 bps after further stimulus measures were announced and proposed by Australia and the European Commission, respectively. Positive CPI figures followed the fate of all recent economic releases, which is to say that they will have no bearing on the market’s belief that the Federal Reserve will soon be cutting the target range for the fed funds rate at next week’s FOMC meeting, if not sooner.

Let’s turn to today. The ECB cut rates 10 bps in their latest policy decision, following suit of the Fed and BoE. ECB head Lagarde’s press conference is currently underway. She commented yesterday that Europe risks a major economic shock not unlike the global financial crisis. The domestic economic calendar is also already underway with a trio of releases: Weekly Initial Claims for the week ending March 7 (-4k to 211k), February PPI (-.6 percent), and Core PPI, ex food and energy (-.3%), mostly due to energy. Later today will be $16 billion of reopened 30-year Treasury bonds. Thursday starts with Agency MBS prices better by .125 and the 10-year yielding .69 percent.

A Texan walks into a pub in Ireland and clears his voice to the crowd of drinkers. He says, “I hear you Irish are a bunch of hard drinkers. I’ll give $500 American dollars to anybody in here who can drink 10 pints of Guinness back-to-back.”

The room is quiet and no one takes up the Texan’s offer. One man even leaves. Thirty minutes later the same gentleman who left shows back up and taps the Texan on the shoulder. “Is your bet still good?”, asks the Irishman.

The Texan says yes and asks the bartender to line up 10 pints of Guinness. Immediately the Irishman tears into all 10 of the pint glasses drinking them all back-to-back. The other pub patrons cheer as the Texan sits in amazement.

The Texan gives the Irishman the $500 and says, “If ya don’t mind me askin’, where did you go for that 30 minutes you were gone?”

The Irishman replies, “Oh…I had to go to the pub down the street to see if I could do it first”.

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, “Drinking from a Firehose is Not a Long Term Business Model” If you have the inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 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.)

Mar. 11: Ops, LO (incl. SBA) jobs; marketing, broker, non-QM products; training & events, many over the phone

First, a note of clarification. Yesterday’s commentary mentioned that there was talk of “warehouse banks temporarily suspending funding refi biz.” I received several notes stating that while one warehouse bank has done this, others are totally open for business and eager to continue to support their clients, and emphasizing the need for a trusted partner. Yes, there’s a lot going on out there with this tidal wave of business. But how big is the wave? I received this email from Scott Happ, CEO of Optimal Blue. “With our systems being on the front-end of a large percentage of this market activity, we have a unique perspective on where we are and what is yet to come. We do have an early indication as to the magnitude of the volume tsunami with which this industry is faced. Since March 1st, we have processed over $73 billion in rate locks, far outstripping previous records. Based on this pace of activity and our overall market share, our preliminary calculations show that the market’s run rate is in excess of $5 trillion of annual originations.” (This is out of over $15 trillion of mortgages; the MBA forecasts $2.61 trillion.)

Jobs

Thrive Mortgage is attracting the best and brightest talent in the industry. Thrive recently announced the addition of Marla Guillaume as Director of Multi-Channel Origination just prior to the annual company Summit in Austin. “We could not be more thrilled to have Marla in such an important position,” stated Randell Gillespie, National Sales Director for Thrive. “Her experience and reputation in the industry is unmatched, and the growth she will certainly bring is a great complement to her vast experience leading top-level teams.” Guillaume, a former board member of multiple statewide and national industry organizations, cites Thrive’s culture, innovative thinking, and operational expertise as her primary motivators for joining the team. “From the first visit, I knew this company is destined for greatness.  Meeting so many amazing people at Summit solidified that I’ve made the right move.” For more information on available positions, please reach out to Chris Karageorge.

What’s your story? Academy Mortgage wants to hear it. This simple yet powerful question was the theme of Academy’s annual 2020Leadership Summit. Recognizing that people are interconnected through stories, the Summit featured oversized storybooks full of team members’ accounts of individuals who have made an impact on their lives. Inspirational speakers shared how storytelling works in business, can inspire change, and motivates others to become their best self. More than 300 leaders from across the country attended the two-day event, where they also learned tips on how to share their stories and how to be better listeners. As is typical of Academy events, the Summit included a service activity to pack 60,000 meals for Rise Against Hunger. Click here to watch video highlights from the event. Contact SVP Bill Sohan if you’re interested in opportunities to connect with your peers and use storytelling to achieve your Potential.

Did you know business loans extend to self-employed borrowers?  Makes sense, right? As long as the loan proceeds are used for a business purpose, a self-employed borrower is eligible. World Business Lenders provides hyper-flexible loan solutions for businesses, including the self-employed, either because they can’t qualify elsewhere (i.e., junior lien positions behind construction loan), or because they need the proceeds faster than other lenders can close (i.e., an SBA loan). In these cases, most LOs turn away the borrower who then has to find a merchant cash advance (MCA) loan program with exorbitant fees and rates. A business loan from WBL is the answer since the credit decision is primarily based on equity in just about any form of real estate available (i.e., primary residence or a gas station) and on deposit activity of business bank statements (DTI, FICO, personal finances irrelevant). LOs can offer this program in all 50 states regardless of licensing; RESPA does not apply. Phil Grossfield recently joined World Business Lenders reuniting him with the former owner and executive team from MortgageIT. He is currently taking loan applications and hiring AEs in SoCal and AZ.

 

Accenture, the leading global provider of mortgage services for the US mortgage industry, is hiring for underwriter and processor positions in its Charlotte and Sacramento operations centers. “As a talent-led organization, Accenture puts people first. We embrace diversity as a source of creativity, innovation and competitive advantage. This commitment to our people is reflected in Accenture being recently named in Fortune’s Top 100 Best Companies to Work For and having been on this list for the past 12 years. We have competitive salaries, great benefits and paid time off. If you’re looking to be a part of a team where you feel valued and want to learn more about these positions click here.”

 

Gateway Mortgage, a division of Gateway First Bank, had a record 2019 with $7.6 billion loans funded. Almost 500 team members, representing over 160 mortgage centers in 40 states, attended Gateway’s recent Sales Rally. Gateway opened 34 new offices in 2019 making for many new faces in the crowd. Approximately 100 loan officers and teams were recognized during the annual Sales Rally as top producers, rising stars top teams, and more. One of the most prestigious recognitions is the Team Player Award. Voted upon by Gateway’s mortgage operations personnel, it is awarded to the Branch Manager and Loan Officer that most exemplifies a team player attitude. The winners of this award are collaborative problem solvers and show a willingness to put other people’s feelings and needs in front of their own. This year’s winners were branch manager Jack Little and loan officer Mac Dadyan. Visit Gatewayloan.com for a bright future.

 

Lender products & services

Exception-based wholesale lender, FundLoans is improving Super Jumbo underwriting by offering 48-hour turn times for loan amounts greater than $1.5MM. In addition, FundLoans is proud to recognize the newest members of the executive team, Christine Rembao, VP of Operations and Jerry Tubbs, VP of Credit Risk, for their contributions to the company’s success in redefining non-QM and make-sense lending. “FundLoans’ primary mission is to provide an all-hands-on-deck experience that shows brokers how much we too, care about their loans,” said Rembao. With FundLoans, brokers can expect excellence, a team-oriented approach, out-the-box thinking and innovation. Contact FundLoans at info@fundloans.com or 866-562-0967 for more information.

GSF Mortgage Corporation (GSF) continues to make its mark as “best in class” as a Single Close Construction lender for FHA, VA, USDA, FNMA, and Jumbo loans. Additionally, GSF offers a premium second home option. Under FNMA guidelines, clients may offer borrowers the opportunity to build a second home, taking advantage of historically low rates. Also, if you have a client thinking about retirement, you can now offer your clients the opportunity to build a dream vacation home. At retirement, your borrowers now have the option to live where they once vacationed. GSF also offers Jumbo second home financing without leveraging a third party. All draws are handled by GSF, ensuring a quick, accurate, and transparent draw administration process. Additionally, it provides your client and builder partners with a single point of contact to ask questions at any time. Contact Robert Stephens (561-715-1064) to learn more.

How low will the 10-year go, and what effect will the continued drops in market indices have on mortgage rates? If anyone had the perfect answer to that question, they wouldn’t be reading this. Originators industry-wide are overcapacity, and purchase season is around the corner. While originators concentrate on capitalizing on their refinance pipelines, it is critical not to forget about their purchase business. Being ready for purchase money season means more than just having the traditional product lines available. Originators, now more than ever, need to be prepared to offer alternative products like Non-QM to meet the needs of their referral sources and clients. Over the past 12 months, Deephaven Mortgage has rolled out its full suite of IDENTI-FI technology tools, including the IDENTI-FI AUS, IDENTI-FI Scenario Calculator, IDENTI-FI Bank Statement Calculator, and the IDENTI-FI Scenario Desk. All of these tools are aimed at driving technology into the hands of the originator to help them “IDENTI-FI” whether their client is eligible for Non-QM financing. Get in touch today and get started readying your Non-QM purchase pipeline with the help of the Deephaven Team and technology. Contact brokerinfo@deephavenmortgage.com (Wholesale) or sales@deephavenmortgage.com (Correspondent) or visit www.deephavenmortgage.com.

The Association of Independent Mortgage Experts is extending the submission deadline for the inaugural AIME Broker Rankings to March 31. The rankings are the first in the industry to feature lists based on data from independent mortgage brokerages and loan originators who are working solely in the wholesale channel. AIME Broker Rankings will recognize the top-producing, fastest-growing and most accomplished independent mortgage brokers and brokerages. Those that qualify and are confirmed as part of the final AIME Broker Rankings will receive a digital recognition badge that individuals can use on their websites and social media. The AIME Broker Rankings are part of AIME’s commitment to increasing the visibility of the independent mortgage broker community by highlighting the achievements of the men and women working in their own communities to bring the best mortgage options to their clients. For more information about the rankings visit http://aimegroup.com/broker-rankings.

In order to support the influx in today’s marketplace, Stearns Wholesale Lending is leaning on smart tools to create a faster and easier client experience. With rates sitting at historic lows, working with a lender that has the capital backing, the right fulfillment growth plan and pricing strategy to support the Wholesale community is critical. As a lending community we must work smarter and partner together to ensure we can take advantage of the opportunity that lies ahead. To be contacted by Stearns, click HERE.

PROTECT YOUR POND. Right now everyone is fishing out of someone else’s pond, but the smart lenders are protecting their ponds from poachers. The winners in this market will be those who protect their database while bringing in the most profitable new opportunities. If you’re just fishing in other people’s ponds, you’re losing the best customers… your existing ones! Turn on the most sophisticated borrower retention system in the industry. Don’t wait… Don’t hesitate… click here and be live within 30 days.

Trainings and events

Yes, many large group gatherings have been cancelled by organizers. But smaller groups are still meeting, events farther out are still “on” at this point, and some training & events have moved to webinars or telephone conferences.

For example, today at 2PM ET XINNIX, The Mortgage Academy presents its quarterly Leadership Lessons Webinar: “Beyond the Daily Commentary: A Live Q&A with Rob Chrisman.” I am looking forward to answering your questions in this live format on the web. When you register, you can submit your questions for me to answer. In addition to this interactive session, XINNIX will share a timely and much needed solution to help leaders immediately bring relief to their current operational challenges fast. If you don’t know XINNIX, they are the premier performance development company serving our industry.

Tomorrow Join National Mortgage Professional Magazine and First Equity Funding 2PM ET/11AM PT to learn how to “Boost Your Overall Loan Origination by Working with Real Estate Investors.” Christian Pepe and Anthony Palmiotto will dive into how to work with real estate investors to not only increase your business, but also dramatically increase your conventional and FHA business.

The California MBA’s Mortgage Technology & Marketing Committee’s (MTAM) next webinar will be on March 19th, and is titled “Consumer Controlled Data is King”. The value of data has never been higher (it’s been called the “new oil”), and the all-star panel will focus on the basics of data aggregation, how it drives the mortgage process, up the funnel with mortgage readiness, consumers and their willingness to share data, all with the practical lender viewpoint in mind. The panel includes Brian Vieaux, President of FinLocker; Kevin Peranio, Chief Lending Officer at PRMG; Paul Diegelman, VP of Digital Payments and Data Aggregation at Fiserv; and John Seroka of Seroka Brand Development.  Registration is free and open to anyone in the industry.

National MI is offering the following training webinars through the National MI University in March: March 11th, Cultural Outreach: How to Step Up Your Video Marketing, March 18th, Mortgage Insurance 101 with Nancy Early, and March 19th, 7 Ways to Manage Email, Avoid Inbox Overload, and Control Your Workday.

Franklin American Mortgage Wholesale Customer Training Calendar has been published. This month’s calendar offers a variety of training opportunities such as: Loan Processing, The Secrets to Being a Networking Superstar, Evaluating Borrower Assets and 7 Ways to Manage Email.

FHA is offering a free, onsite training in Kansas City on April 14th. This credit underwriting training will provide an overview of FHA underwriting procedures and address various industry-related frequently asked questions (FAQs) related to FHA’s Single Family Housing Policy Handbook. While’s you’re in KC, on the 15th FHA has appraisal training will cover FHA appraisal requirements, including FHA appraisal protocol and updates to FHA appraisal policy as outlined in FHA’s Single Family Housing Policy Handbook.

There’s TMBA’s 104th Annual Convention, April 19-21. Take advantage of early pricing.

The California MBA is hosting the Mortgage Innovator’s Conference, a premier mortgage industry event featuring speakers and companies that will provide practical innovation and improvement strategies for mortgage banking and digital mortgage implementation. It will take place at the Sheraton San Diego Hotel & Marina, May 3-5.  Be sure to make your hotel reservation today to take advantage of discounted room rates!

Brian Montgomery, Assistant HUD Secretary, will return to the National Settlement Services Summit (NS3) June 10-12 in Naples FL. More than 800 professionals from across the country attend NS3. Comprehensive educational presentations and dynamic panel discussions are the focus.

Capital markets

The word of the day yesterday was “recovery.” Treasury yields shot up, as did both global stocks and oil prices. While that has many market participants breathing a sigh of relief, with Treasury yields across the curve gaining +15-30 bps by the end of the day, I’d venture to say a more apt word is “volatility.” Governments are stepping up their efforts to combat the economic fallout from the virus: President Trump met with Republican lawmakers to discuss a payroll tax cut, Italy announced an $11 billion aid package as the whole country is on a travel lockdown, Japan announced a second aid package worth $4 billion, and the UK cut interest rates and unveiled its first post-Brexit budget.

The virus has exposed a dangerous weakness in the U.S. economy: heavily leveraged companies. Business debt now exceeds that of households for the first time in almost three decades. Goldman Sachs CFO said that the bank is seeing reduced liquidity and rising funding costs. Interestingly enough, the NFIB Small Business Optimism Index posted an increase in February from January.

This morning we learned of a big jump in mortgage applications from the MBA for the week ending March 6: +55.4 percent from one week earlier, and the MBA now forecasts total mortgage originations to come in around $2.61 trillion this year, a 20.3 percent gain from 2019’s volume ($2.17 trillion). Refinance originations are expected to double earlier MBA projections, jumping 36.7 percent to around $1.23 trillion. Purchase originations are now forecasted to rise 8.3 percent to $1.38 trillion. The 10-year yield saw a 42-bps decline during the reporting period, though mortgage rates only declined 8 bps in the 30-year term, amid capacity and pipeline hedging issues.

We’ve also had February CPI (+.1 percent) and Core CPI (+.2 percent) figures. The Treasury then conducts the second leg of this week’s mini-Refunding when they auction $24 billion reopened 10-year notes in the afternoon. The calendar closes with the February Treasury budget. We begin today with Agency MBS prices better by .125 and the 10-year yielding .7 percent after closing yesterday +25 bps to 0.75 percent.

John Travolta was hospitalized late Tuesday night for suspected COVID-19. He had chills, they were multiplying and he was losing control, but doctors now confirm that it was only Saturday Night Fever and they assure everyone that he is Staying Alive.

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, “Drinking from a Firehose is Not a Long Term Business Model” If you have the inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 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.)

Mar. 10: Sr. sales job; processing, marketing, tech products; disaster updates; rate volatility continues

There sure is a lot going on out there! There is talk of warehouse banks temporarily suspending funding refi biz, lenders charging lock fees, lenders & vendors restricting visits from outside personnel, avoiding RESPA violations but “pushing off” difficult loans or borrowers that are shopping rates, and lenders making their pricing more aggressive for purchases but creating a hit for refis. Of course lenders are increasing margins since it is the easiest way to cut volume in a hurry. Certainly pleas from LOs about, “Can’t we match our competition? They’re better than us by .125!” are going unheard. Lenders are increasing refi lock times to 90 days, and usually giving 30- or 60-day pricing regardless. And analysts are busy thinking about all of this. One wrote me, “What about the impact of a 12-15%, or higher, corona-virus driven drop in the stock market on purchase volume? While a refinance volume surge is happening, the impact of lower rates on purchase volume may be offset by the impact of financial losses in the stock market on down payments and a general unease about a weakening economy. We could be entering a ‘not the time to buy’ mentality, especially with expected significant layoffs in certain sectors, e.g., hotels, airlines, food and beverage, etc.” Meanwhile, JW Michaels & Company released its annual Financial Services Market Data Report showing compensation for various executive positions of top-tier financial services, accounting, legal, technology, and business institutions. (Of course, STRATMOR has its survey dedicated to the mortgage industry.)

Employment & promotions

Zoral Group Inc., an international leader and innovator in the AI/ML/Digital Products/RPA/Big Data space, is seeking a National Sales Director. Zoral is looking for a true “hunter” with mortgage industry knowledge and extensive contact database, plus demonstrated prior success selling end-to-end mortgage and consumer lending solutions. Knowledge of Artificial Intelligence and Data Analytics is a plus. This is a great opportunity for a business development executive to work with a fintech software company with over 15 years of experience and a broad global client base and help them broaden their reach in the US Market. Location agnostic, but will require some travel to attend industry conferences as well as visit client locations. 1099 Preferred. To learn more or to submit your resume, please contact Peter Sandler, SVP.

NewRez added Baron Silverstein as President and Neeraj Kalani as Chief Marketing Officer.

Lender products & services

Still in need of a digital mortgage platform for your business? It’s not too late or too busy to refine your business for higher margins and a more efficient LO organization. 2020 HW Tech 100 Winner, Maxwell, continues to stand out from the digital mortgage competition with their software designed for the true end user — the loan officer — and a customer success team designed to speed up time-to-value, averaging only 2.5 weeks to launch most clients. Speed matters, and investing now will reap large benefits in the future. To learn more about Maxwell and their mortgage dedicated digital platform, click here or request a demo.

 

Housing inventory has hit an eight-year low according to Realtor.com, stoking desperation and bidding wars among eager homebuyers. In hot markets, agents know that quickly submitting an offer from a qualified buyer can secure a home under contract, while a prolonged pre-approval can send buyers into a tailspin. SimpleNexus’ “from anywhere” platform makes it easy for LOs to rapidly turn pre-approvals. At GreenState Credit Unionone LO “received an application at 9 pm on a Friday night while riding in a car and was able to deliver a pre-approval within minutes.” Needless to say, the Realtor was blown away. Read the full account hereTo learn more about how you can earn a reputation as a stand-out partner to borrowers and real estate agents, schedule a demo with SimpleNexus today.

 

Even the best-laid plans go awry sometimes. More than 2,500 mortgage pros attend Ellie Mae Experience every year in search of new and innovative ideas. The show’s cancellation, announced yesterday, has left a lot of people with open calendars March 23-25. LBA Ware invites you to block off 15 minutes of that time to square away your incentive comp administration. LBA Ware’s CompenSafe has a plug-and-play Encompass integration that seamlessly retrieves loan pipeline data to automate near real-time incentive compensation management. Book a virtual meeting with LBA Ware’s CEO Lori Brewer to see how CompenSafe streamlines operations, motivates sales teams and improves transparency.

 

Join National Mortgage Professional Magazine and First Equity Funding on Thursday, March 12 at 2:00 PM Eastern/11:00 AM Pacific, to learn how to “Boost your overall loan origination by working with real estate investors.” Christian Pepe and Anthony Palmiotto will dive into how to work with real estate investors to not only increase your business, but also dramatically increase your conventional and FHA business. They will tell you strategies that can be the gateway to new realtor relationships and first-time home buyer business. Some topics that will be covered include understanding the mindset of a real estate investor, strategies to earn real estate investor business, what is the BRRRR Method and why you need to understand this strategy, increasing first time home buyer business through investor relationships, winning realtor referrals through investor clients, and turning denials into closed loans. Click here to register.   

 

Did you know that only 21% of marketing automation users feel that their capabilities are above average or higher? The most common barriers to success include the absence of a sound strategy and the inability to fuel the content required to nurture different buyer pathways along with poor implementation of the technology. Seroka Brand Developments’ Marketing Automation Optimizer helps you take full advantage of your marketing and sales automation technology. Whether you’re using Marketo, Hubspot, Pardot, Outreach, SalesLoft or any other technology, Seroka can assist you. They have the strategic capability, content development expertise and technical knowledge to drive a successful program for your company. Reach out to Seroka today for a FREE consultation, and get ready to #turnupyourbrand in 2020!

 

The future of lending awaits. Blend is partnering with industry leaders to create real change. Executives from Navy Federal, Eagle Home Mortgage, and Truist will be speaking at Beyond 2020, Blend’s digital lending conference. Check out the details and join Blend in writing lending’s bright new future.

 

With application volumes through the roof, lenders already feel like they’re drinking from a firehose. And the surge has just begun. Many are wondering how best to prepare for a fast-paced 2020. In my experience, boom times can quickly overtax processors and underwriters, revealing weak links in workflows that ordinarily seem solid. If you’re drowning in applications and missing turn time targets, you’ll want to zero in on the process inefficiencies that are slowing you down and find ways to improve them. FormFree’s Passport shaves hours of manual work off each loan file by automating asset, income and employment verification in a single report. It not only speeds up processing and underwriting, it also frees originators to spend more time ‘wowing’ borrowers to earn the referrals that will keep you riding high after the market slows. Reach out to Christy Moss for more info.

“Since 1986, Sutherland has been a dedicated partner enabling our clients to maximize their opportunity to build their business portfolio. Today, mortgage volume is surging and lenders are looking for concrete solutions to capitalize on our unprecedented rate environment. Whether your need is Underwriting capacity or portfolio retention, Sutherland has the experience needed. Our dedicated Solution Architects and onboarding specialists develop a sound ramp strategy, and in most cases, have our clients up in less than 45 days. If you would like to schedule a discovery call, reach out to Neil Armstrong, AMP.”

Disaster news

No, this isn’t a report on your lock desk’s morale. Or, at this point a disease update. We’ve had the Pearl River Flooding (Mississippi, Feb 10-14) and Tennessee Tornadoes (March 2-3).

(That said, Lenders Compliance Group published an FAQ that discussed how businesses can proactively prepare for the impact of COVID-19. It is called Pandemic Preparation: Bracing for COVID-19.)

FEMA declared designated counties in Tennessee as disaster areas in DR-4476. The states’ Storms, Tornadoes, Straight-line Winds, And Flooding for the incident period March 3rd warranted Individual Assistance to Davidson, Putnam and Wilson counties.

An update has been made to the Lakeview Loan Servicing Disaster File either declaring a new disaster.

First Community Mortgage posted 2020-02 Delegated Correspondent Announcement that outlines the 4 Tennessee Counties added to the FEMA Declared Disaster list. Its 2020-03 Announcement adds updated information specific zip codes in Davidson County TN. And First Community Mortgage posted 2020-04 and 2020-03 Wholesale Announcement’s regarding FEMA declared disaster areas in Tennessee, along with a disaster update announcement regarding counties in South Dakota for its Delegated Correspondent and Wholesale channels.

An update has been made to the Lakeview Loan Servicing Disaster File regarding DR 4469 – South Dakota Severe Storms, Tornadoes, and Flooding.

Veros Real Estate Solutions announced the availability of a new enhancement to its Disaster Data Solution: Executive Portfolio Dashboard Reporting. This dashboard report provides a visual summary of the potential impact on a portfolio of properties following a natural disaster such as a wildfire, hurricane or earthquake. When a region is declared a disaster area, the Disaster Data Solution allows lenders, servicers, appraisal management companies, and other mortgage transaction participants to determine if a U.S.-based residential property is likely to have been directly affected. This new dashboard visualizes tiered levels of exposure in a portfolio, from no-exposure to maximum-exposure, displaying potentially impacted areas in relation to properties in the portfolio. Veros Disaster Data Solution allows a servicer to: Pinpoint which borrowers to focus immediate outreach. Prioritize properties for property condition inspection. Protect servicers real estate assets. Gain an executive dashboard overview of portfolio exposure. Maintain compliance with GSE disaster policy regulations.

Capital markets

Last week’s positive economic data was eclipsed by the continued spread of the coronavirus and the unexpected emergency 50 basis point rate cut to the Fed Funds Rate by the Federal Reserve. While the number of patients being treated in the US remains a fraction of those overseas, financial markets were volatile and the 10-year Treasury bond yield sank to a record low of 0.69 percent. Most experts expect a global economic slowdown as a result of the virus and the resulting impacts of quarantines and production shutdowns in the supply chain. Despite the emergency rate cut, the markets still expect the Fed to cut further following the upcoming FOMC meeting on March 18th with a near 100 percent probability of a 25-bps rate cut and potentially even another 50bps rate cut. Financial markets will closely watch industrial data coming from China which already say auto sales decrease 80 percent year over year in February. Predicting the full economic impact of the coronavirus remains a challenge especially given the uncertainty about how and where the virus will spread.

My daughter tells me that Mercury is in retrograde (whatever that means), and that is why markets are so panicked. U.S. Treasury yields on the 5-year note, 7-year note, 10-year note, and 30-year note all sank to fresh historical lows yesterday. In addition to further coronavirus concerns, the rally was prompted by a plunge in the price of oil after Saudi Arabia cut its wholesale prices for April and signaled plans to increase production, launching a price war with Russia after OPEC failed to agree to a production cut last week. Oil prices are down 50% in the last couple months. The 10-year yield fell to a record low of 0.398 percent during trading before closing the day -21 bps to 0.50 percent. The fed funds futures market is now pricing in a 75-bps cut to the Fed Funds Rate on or before March 18. The market selloff speaks to a sense that policy makers are falling further and further behind the virus.

In addition to oil seeing its worst price drop since 1991, Japan posted a 7.1 percent decline in Q4 GDP, even worse than expected, analysts now say Europe will almost certainly fall into a recession, China’s January/February trade deficit totaled $7.09 billion (the expected surplus was $24.60 billion; the prior surplus was $47.21 billion), and gold, which tends to rise when investors are worried about the stock market, did just that. I’d like to sit here and say the virus does not justify the panic, but once financial markets are spooked, they move with a mind of their own.

As I said yesterday, economic releases matter little these days. Today, besides a big bounce back in stock markets, sees another relatively light calendar, which began with the NFIB Small Business Optimism Index for February. The Treasury will conduct the first leg of this week’s mini-Refunding when $38 billion 3-year notes are auctioned in the afternoon. The Desk will conduct a GNII FedTrade operation targeting up to $288 million 2.5 percent ($124 million) and 3 percent ($164 million). We begin today with Agency MBS prices all over the map but generally worse .125 and the 10-year yielding .64 percent.

Paddy was driving down the street in Chicago sweating because he had an important meeting and couldn’t find a parking place.

Looking up to heaven he said, “Lord take pity on me. If you find me a parking place, I will go to Mass every Sunday for the rest of me life and give up me Irish Whiskey!”

Miraculously, a parking place appeared at Deloitte and N Clark.

Paddy looked up again and said, “Never mind, I found 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, “Drinking from a Firehose is Not a Long Term Business Model” If you have the inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 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.)

Mar. 9: Tech, appraisal, cap. mkts jobs; broker, title, recruiting products; EPOs, margin calls, appraisal delays, sticky mortgage rates…

As everyone grapples with changing the clock in their car… The world’s shortest horror movie? At 14 seconds, here you go. (Thanks to Kevin K. for that one.) I was surprised by a question I received in Chicago last week. “Are you hearing of home sellers holding off on open houses not wanting to have 50 strangers cycle through their house?” What I am not surprised by is the reaction to the rate moves. The “risk free” U.S. 10-year is yielding .4 percent this morning. Volatility is no lender’s friend. Indeed, lender’s worlds are filled with early pay off penalties, renegotiations, margin calls, servicing write downs, and lengthy appraisal delays in many areas. Our industry can’t refinance $10 trillion of outstanding MBS in three months. COVID-19 is here, and it will continue to be the main driver of mortgage-rate movements for quite some time. But, as usual, mortgage rates haven’t dropped as much as some would expect, and in fact have edged higher, especially for some jumbo programs. What gives? Producers should skim through the capital market section to see why some banks and lenders are holding the line on rates and not following the drop as others may be, and why it makes sense for the loan officers.

Employment

A leading real estate technology company is searching for a VP-Product Manager to lead the expansion of its Single Family Residential for Rent business. 10+ years of mortgage industry/real estate finance experience is required, with an intrinsic knowledge of the mortgage value chain (including, but not limited to loan origination, processing and underwriting, closing & funding, regulatory/compliance frameworks, and capital markets). Proven strategic planning skills including the translation of strategic ideas into executable actions is a must. Product management experience with P&L responsibility is essential. Interested candidates can reach out to Chrisman LLC’s Anjelica Nixt to submit a resume and begin the interview process.

Black Knight, Inc. is a leading fintech looking to grow our team with forward-thinking, collaborative individuals who want to make a difference. Black Knight recently acquired, Compass Analytics, a leading provider of cutting-edge mortgage pricing and risk management technology and advisory services to the mortgage industry. We are currently hiring for a Capital Markets Account Executive to work with all existing Compass Analytics (Black Knight) clients nationally as a relationship manager to ensure client satisfaction, build product awareness and adoption, and identify strategic solutions and cross-sell products. The successful candidate will be able to efficiently manage projects and work closely with sales, account management, product managers and implementation teams.” If you’re interested in learning more about this role, the job description and application can be found here, and any additional questions can be relayed to Megan Goulette.

Valuation Partners, a leading nationwide appraisal management company, is expanding its sales force. The AMC had a record year in 2019, has been in business for over 35 years, and has a best of class reputation. Valuation Partners is looking for a VP of Sales for the Northeast Region. Our ideal candidate possesses mortgage sales experience in the northeast (NJ, PA, NY, MA, MD, CT, RI, ME, DC and DE).  A background in correspondent, mortgage insurance, and/or mortgage vendors sales experience is desirable. Compensation is a combination of base plus commission, health and dental, and 401(k). Join a team with a full suite of valuation products, a commitment to exceptional customer experience with senior leadership that understands the appraisal business. If you are interested, please send your confidential resume to sales@valuationpartners.com.

“Time is money and that means you count on your operations team to move your loans through underwriting as fast as possible. At Castle & Cooke Mortgage, we’re so awesome that nearly half of all loans in underwriting come out ready to close the first time. If that’s not enough, the rest average just 4 conditions. Our processors are some of the best in the business and they know how to get it done. Giving your borrowers and referral sources a stellar experience is your number one priority, which makes it our number one priority. Industry-leading turn times is just one way we help you delight your customers. Want to learn about the other exceptional things we do for you and your clients? Contact Christi Fullerton today.”

Lender products & services

Have you heard? Connector by Velma® added an automated NOI letter to its ECOA-Adverse Action compliance workflow solution for Ellie Mae’s Encompass Digital Lending Platform. The new ECOA workflow tracks loans nearing the 30-day notification window and automates the LO file update. Multiple manual steps for the loan officer and the operations team are eliminated and no loans are missed. Best of all, no time is spent by anyone logging into Encompass! Exciting stuff; get more information here.

It is important to think about what technology you are using to win future referrals and repeat business. HomeBinder gives Originators a way to ensure they aren’t forgotten. Show borrowers how to care for their greatest asset. Give them a reason to remember you with a complete home management suite of tools. The relationship doesn’t end with a closed loan for you or Agents you work with. Don’t be forgotten by your mutual clients. Co-brand and share the wealth! Call 800-377-6915 to learn more or click here. Integrations with Encompass is available. Click here for a 3-minute demo video!

QLMS is always looking for the next tool to help brokers keep winning business. Seven months ago, it introduced Padlock, a groundbreaking program that provides brokers free rate lock extension days. QLMS has saved its partners’ clients more than $11 million since launch! That translates to an average of $669 saved per loan that used Padlock. These savings are another way brokers can differentiate themselves from the competition. By providing clients with the flexibility of free rate lock extensions, LOs are saving them hundreds of dollars during the closing process that other brokers would not be able to offer. Padlock is just one of the many ways LOs are Stronger Together with QLMS. If you are not a partner, click HERE to see how QLMS’ innovative tools can help grow your business.

Happy Birthday to Silk Title Co. who turns 18 this year. Three more years and they can (legally) drink at conferences. To celebrate early, Silk Title grew by 582% last year and only added 13 employees. Silk’s President & CEO, Marc Trachtenberg said, “The growth is helpful because it is providing the capital we need to keep investing in technology for the digital closing experience. But what I care more about is we did not lose a single client as we tripled our overall client base.” For 2020, the company is actively seeking strategic partners to enhance integrations. “Service at scale is remarkably difficult. We cannot do it in our own silo because it requires our lending partners and others in the tech ecosystem to build software around the right processes instead of processes around the software, which causes limitations.” Feel free to reach out to Marc Trachtenberg to chat.

Attention all Marketers! BombBomb and Usherpa, two great Colorado companies, are now integrated. As the ONLY integration in the industry with compliance review built in, the power of personal video is now insanely simple and worry free. What makes it unique? Usherpa consulted with all the stakeholders before calling the integration finished. Management talked to CEO’s, Marketing Directors, and of course LOs, and then to compliance folks who worried that making it easy for LOs to send personalized videos to everyone in their database might run up against some compliance issues, so they customized a compliance review system as a safeguard. This way every stakeholder can rest easy knowing that any BombBomb video going out from its LOs meets compliance standards to a tee! Curious? Ask them how it works today.

“Can’t talk, my pipeline is full!” If you’ve made any calls to your prospects recently, we guarantee you’ve heard this objection. If you’re looking for the perfect time to start recruiting, you won’t find it. Now, more than ever, you need to remain consistent and focused on the overall value in building upon new & existing relationships. Model Match’s Talent Management Suite provides your team with the tools needed to stay hyper-focused, and your team united in one central, collaborative space. Build healthy pipelines of qualified candidates across your entire footprint with Market Insights or partner with Team Hammerhouse to experience a revolutionary partnership that drives success through strategically deployed resources, collaboration, and accountability tools. Connect with our team to see how Model Match can help you transform your recruiting efforts.

Capital markets

The coronavirus outbreak is having an unusually strong impact because it is hitting the global economy from two directions. The outbreak has crippled China’s ability to produce goods, while consumers’ fears have sent demand tumbling elsewhere. The yield on the 10-year US Treasury has reached another record low, increasing the likelihood the yield will hit zero. Institutional investors and some economists are now saying this might happen before year-end, as could two and five-year yields going negative.

I know I must sound like a broken record at this point, but… U.S. Treasury yields plummeted on Friday to new record lows, as they have again here Monday morning, and the stock market posted another day of huge losses due to continued coronavirus concerns, which are now spurring credit worries. The 10-year Treasury yield fell from 0.93 percent at Thursday’s close to as low as 0.66 percent on Friday before closing the day -22 bps to 0.71 percent, down -45 bps over the course of the week. While the February employment report was stronger than expected, it was largely ignored as it is expected to be the last positive payrolls report for a while due to the impact of the coronavirus. There is now a 100 percent probability priced into markets of another 50-bps cut at or before next week’s FOMC meeting and over a 60 percent probability of a 75-bps cut.

Despite the drop in Treasury yields over the last couple weeks, many sales staffs have not seen the decline in rates they were hoping for, and some have even seen an increase in rates (up to 0.5 percent in some cases, especially with jumbo investors). LOs are wondering why. Last week, I addressed why mortgage rates do not fall as fast as Treasury yields. (The two main reasons are: 1. High refinance demand due to lower rates doesn’t mean lenders have to sacrifice margin for higher volumes, unnecessarily reducing profits. Pricing is the quickest and easiest way to manage capacity. 2. As mortgage rates drop, prepayment speeds/refinances increase, hurting mortgage investors, which then puts upward pressure on rates.) What’s going on now?

A year ago, when volumes were dropping, lenders cut margins in an effort to spur business and keep volumes up. Currently, the drop in rates has lenders overloaded with new files. With loans flowing through the door management views it as easier to widen margins, remain below capacity, and make more basis points per loan, rather than hiring, training, and paying more people to handle the volume. Leaving staff alone, margins can be increased and loans will still flow, especially from existing servicing portfolios. The thinking is that because of all the refinance demand, if borrowers don’t like an offered rate, they can go somewhere else and the lender’s bottom line will still be fine.

Yes, there are trillions of dollars of outstanding mortgage debt that can now be refinanced into a lower rate, but given that we fund about $2 trillion per year, there is no way to keep up with demand, especially in the next couple months. Rounding, we can’t fund $11 trillion in three months. It allows lenders to be selective in their lending, letting problem clients go elsewhere while still exceeding volume targets off of the “low-hanging fruit.” The challenge is for sales staffs to reframe how they think, giving up some loans they “would have done,” instead of processing them.

The other part of the equation is what investors are willing to pay for loans. Let’s look at a very simple pricing example. If an investor paid a premium (ex. $102k for a $100k loan, or a price of 102), they are expecting to collect monthly principal and interest payments for a long enough duration to justify the upfront expenditure. When rates drop, borrowers refinance more quickly than investors anticipated at the time they purchased the loan from a lender, meaning the investor makes less on the loan than expected as interest payments cease.

When rates drop, investors preemptively offer lower prices to lenders under the assumption the borrower won’t stick around in that loan long enough to generate many months of interest payments. That downward pressure on MBS prices means mortgage lenders in turn need to either charge borrowers higher upfront costs for a specific rate, or keep the same upfront costs and opt for a higher rate. The bottom line is that when investors pay lower prices, mortgage rates will not be able to fall as fast as Treasury yields. To investors, the value of investing in mortgages is always thought of in relative terms to a risk-free benchmark like Treasuries.

As rates fall investors need more and more yield in order to be compensated for the risk the borrower refinances faster than they currently expect. If the bond market stabilizes with less volatility around these current Treasury yield levels, mortgage investors will get more and more comfortable making assumptions about borrowers’ predisposition to refinance, allowing mortgage rates to gradually move down closer to Treasuries.

Volatility is the key player here. It increases costs lenders pay to do business, to ensure lenders can honor the rates being locked by consumers, and to offset the money they lose when consumers break a lock agreement due to market volatility. As volatility decreases, lenders can tighten up margins between the rates they’re offering and the rates implied by what investors are paying for mortgages. But in recent weeks lenders have been increasing margins to offset the increased costs associated with volatility. And with lower rates, costs increase to maintain a servicing portfolio: think of it as running in place.

“Regular” economic news matters little these days, and there is none today. And Tuesday only has the NFIB Small Business Optimism Index for February. Wednesday sees the usual MBA Mortgage Applications, as well as CPI figures for February and Treasury Budget for February. Thursday brings a very-revealing ECB Policy Decision in the wake of last week’s emergency 50 bps rate cut by our Federal Reserve and February PPI figures. The week closes with Import/Export prices for February and the Preliminary University of Michigan Consumer Sentiment for March. We begin today with Agency MBS prices better .250-.750, depending on coupon, and the 10-year yielding .42 percent.

Thanks to Brian M., who from out in California sent, “It being ‘Irish History Month’ I thought this might be a good clip for your readers.”

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, “Drinking from a Firehose is Not a Long Term Business Model” If you have the inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 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.)

Mar. 7: February lock data; LIBOR transition update, and primer on SOFR & LIBOR differences

The Federal Financial Institutions Examination Council (FFIEC) updated guidance identifying actions that financial institutions should take to minimize the potential adverse effects of a pandemic. Pandemic? That is normally associated with science fiction movies or the Spanish flu in 1918. Amazing to pause and think about what is happening out there. Whether it is from a human eating a snake that ate a bat, or bad fish, major events are being cancelled, fist bumps and elbow taps are replacing handshakes, and people are doing what their parents taught them to do decades ago about common sense or common courtesy: wash their hands, be careful about cleaning surfaces, and cover their mouths when they sneeze or cough!

Lenders are focusing on prioritizing pipelines, re-evaluating rate lock renegotiation policies, and dealing with employee burnout. Many are wondering why mortgage rates are stubborn and not going down or, in some cases, actually going up! More on this Monday.

Federal Reserve officials and economists say that the central bank has limited capacity for stimulus to blunt the impact of the coronavirus outbreak and that an increase in government spending might be needed. The Trump administration has not said whether it is receptive to fiscal stimulus to bolster the economy. Meanwhile, in mortgage land…

According to Informa Financial Intelligence February 2020 Mortgage Originations Data, rate-lock volume has increased 111% YoY and 17% MoM across all channels, while funded volume has increased 59% YoY and fallen 9% MoM. In the Retail channel, lock volume has increased 117% YoY and 17% MoM, while funded volume has increased 66% YoY and 2% MoM. Average 30-year Conforming FRM funded loan note rates have fallen 94bps from February 2019, with refinance rates lower by 106bps and purchase rates lower by 90bps. Compared to 2019, YTD Purchase lock volume is up 12% and funded volume is up 1%, while YTD Refinance (R/T & C/O) lock volume is up 193% and funded volume is up 206% YoY Informa sources a statistically significant data set directly from lenders to produce these benchmark figures.

LIBOR… SOFR… SOIA

While many are waiting for Freddie and Fannie, via the FHFA, to provide further guidance on the transition, others are moving ahead. No one wants a “last minute” conversion situation.

For example, Docutech sent out a, “New Data Integrity Check: Warning for LIBOR-Based ARMs Originated on or After October 1, 2020” piece worth a gander. And Docutech also sent to clients a “Roadmap to LIBOR Retirement”.

Want to see what your borrowers, or servicing clients, are reading about SOFR? Here’s a recent piece from Yahoo.

Yet there is caution, especially in commercial lending. “Nobody is relying on SOFR language today, but it will become a cascade. When the largest institutions become more comfortable, it’ll come together in a relatively quick timeframe.”

The credibility of LIBOR (London Interbank Offered Rate) was undermined slightly by a price-fixing scandal a few years ago, and LIBOR will be phased out as a benchmark borrowing rate as soon as a year from now. LIBOR has served as a key benchmark interest rate for the past few decades, despite only large banks borrowing at the actual LIBOR rate. It is familiar to millions of businesses and individuals because their borrowing costs are often tied to LIBOR (plus some spread). In the U.S., this new benchmark rate has been determined and is known as SOFR (Secured Overnight Financing Rate).

 

There are many technical differences between the two rates, but LIBOR and SOFR are highly correlated. Both benchmarks usually move in tandem with the effective fed funds rate, determined largely by the monetary policy stance of the Federal Reserve. Regardless of the specific drivers in any one instance, SOFR is more sensitive than LIBOR to changes in the mix of Treasury security collateral and cash, as well as some liquidity and leverage regulations. There tends to be more volatility in SOFR than in LIBOR.

 

The sensitivity of SOFR versus LIBOR has some market participants worried. However, the FOMC is expected to be on hold through 2021, with forecasts for real GDP growth and consumer price inflation likely not strong enough to induce Fed tightening. As a result, SOFR should remain largely unchanged over the next year or two at its current level of roughly 1.60 percent, easing apprehension over the transition. SOFR can encounter short periods of volatility, but Fed policymakers hope that their open market repo operations and Treasury bill purchases depress SOFR volatility.

 

One proposed solution to the potential problem of more borrowing costs as a result of the volatility with SOFR rates is to have households and businesses borrow at a term SOFR rate that is determined in arrears. Although SOFR can be volatile on a daily basis, its one-month moving average tends to be more or less as smooth as 1-month LIBOR. So, a one-month SOFR rate would be the moving average of the daily SOFR rate over the past month. It is not a perfect relationship, and it is important to bear in mind that a one-month moving average of SOFR is inherently backward-looking, whereas 1-month LIBOR is an inherently forward-looking rate. But consumers should not worry the transition is going to have a material impact on their borrowing costs.

 

There are other important differences between the two rates. SOFR is determined on a continuous basis by the interactions of numerous financial institutions in the Treasury security repo market, while LIBOR is based on a survey of only 16 global banks. SOFR is a secured rate, the transactions from which SOFR is based involve pledging U.S. Treasury securities as collateral in order to borrow cash from other financial institutions. For comparison, LIBOR represents the average rate at which select large banks can “fund themselves” in the wholesale, unsecured funding market. Another difference is that, as its name implies, SOFR is an overnight rate, whereas LIBOR traditionally has a term component to it (1-month LIBOR, 3-month LIBOR, etc.).

 

Let’s get a little more technical. SOFR is based off of repo transactions, which provide a way for an institution to borrow or lend cash for a specific period of time using financial securities as collateral. The repo transactions relevant to SOFR specifically focus on borrowing cash overnight collateralized by Treasury securities. As a result, movements in Treasury repo markets that affect SOFR are driven by the supply and demand for both loanable cash and Treasury securities.

 

The cash reserves of over 5,500 depository institutions that maintain accounts at the Federal Reserve Banks serve as a key source of loanable cash in the Treasury repo market. Prior to the financial crisis, banks were reluctant to hold excess cash reserves because those reserve holdings did not earn interest. Legislation that Congress enacted during the Great Recession gave the Federal Reserve the authority to pay interest on reserves. Accordingly, reserves that the banking system held at the Federal Reserve mushroomed from late 2008 to 2014 due to the quantitative easing that the Fed undertook during those years.

 

Reserves became an important component of high-quality liquid assets that banks must now hold as part of regulatory requirements post-Financial Crisis. These reserves held at the Fed are an asset of the banking system but a liability of the central bank. Banks moved towards willingly holding excess reserves in sizable quantities until the Federal Reserve began unwinding QE in October 2017 by allowing the Treasury securities and MBS that it owns to slowly run off its balance sheet, shrinking the asset side of the Fed’s balance sheet to shrink the Fed’s liabilities. As a result, reserves held at the Fed have receded by more than 50 percent over the past few years.

 

Treasury supply has increased roughly $2.4 trillion over the past two years, as the drop in bank reserves held at the Fed (a liability on the Fed’s balance sheet) was matched in part by a decline in Fed holdings of Treasuries (an asset on the Fed’s balance sheet). More influential on supply, securities outstanding increased as a result of the increase in the federal budget deficit. FY 2019 saw a budget deficit of $984 billion, an increase of more than 100 percent from just four years prior in FY 2015 ($439 billion).

The Urban Institute’s Housing Finance Policy Center has just published a new brief: The Termination of LIBOR: An Update on Implications for the Mortgage Market. You’ll find an examination of the status of the US mortgage market in preparing for the transition at the end of 2021 from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR) index; LIBOR is the index used to set interest rates on mortgages and millions of other financial contracts. There are signs of slow progress. The authors believe that many market participants will look to Fannie Mae, Freddie Mac, and their regulator, the Federal Housing Finance Agency, for guidance on how to handle the shift from LIBOR to SOFR with minimal disruption to the US mortgage market.

UK financial firms are increasingly confident of a smooth transition from Libor to the Sterling Overnight Index Average by the end of 2021. “The UK is leading the rest of the world on the transition, and its progress has been very good,” says an executive overseeing the switch at one UK bank.

Andrew Hauser, executive director for markets at the Bank of England, was quoted saying that banks should accelerate a move away from Libor. He said that haircuts will begin in October for Libor-linked collateral and that any such collateral issued after October will be ineligible for use at the central bank. The BoE will also begin posting a compounded Sterling Overnight Index Average index in July. “These initiatives are aimed at turbocharging sterling transition, helping the market deliver against its commitment to transition away from Libor and further de-risking sterling markets,” Hauser said.

Buckley LLP reported to clients on testimony from Fed Chairman Jay Powell on the upcoming transition from LIBOR to the Secured Overnight Financing Rate (SOFR), stating that federal regulators are working to ensure financial institutions are prepared for LIBOR’s possible cessation. “When asked whether Congress should ‘simply give the Fed the right to prescribe backup rates when the debt instruments do not do so,’ or explicitly adopt SOFR, Powell responded that he did not believe a federal law change is necessary at this time. Powell further responded that the Fed will inform Congress if a change in federal law is needed, emphasizing that the Fed’s ‘process is ongoing’ and that it is ‘committed to having the banks ready by the end of next year to switch. . .away from LIBOR in case [the rate] is no longer published.’ Powell noted that while SOFR will be the main substitute for LIBOR, the Fed is ‘working with regional [banks] and some of the larger banks, too, about the idea of also having a credit sensitive rate.’”

Two guys grow up together, but after college one moves to Maryland and the other to Miami. They agree to meet every ten years in Myrtle Beach to play golf and catch up with each other.

At age 32 they meet, finish their round of golf and head for lunch.

“Where you wanna go?”

“Hooters.”

“Why Hooters?”

“They have those gals with the cleavage, the tight shorts, and the gorgeous legs.”

“You’re on.”

At age 42, they meet and play golf again.

“Where you wanna go for lunch?”

“Hooters.”

“Again? Why?”

“They have cold beer, big screen TVs, and side action on the games.”

“OK.”

At age 52 they meet and play again. “So where you wanna go for lunch?”

“Hooters.

“Why?”

“The food is pretty good and there’s plenty of parking.”

“OK.”

At age 62 they meet again.

After a round of golf, one says, “Where you wanna go?”

“Hooters.”

“Why?”

“Wings are half price and the food isn’t too spicy.”

“Good choice”

At age 72 they meet again.

Once again, after a round of golf, one says, “Where shall we go for lunch?”

“Hooters.”

“Why?”

“They have six handicapped parking spaces right by the door and they have senior discounts.”

“Great choice.”

At age 82 they meet and play again. “Where should we go for lunch?”

“Hooters.”

“Why?”

“Because we’ve never been there before.”

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, “Drinking from a Firehose is Not a Long Term Business Model” If you have the inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 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.)

 

Mar. 6: Sales, AE, LO jobs; marketing, doc products; lender & real estate vendor tidbits

Yesterday, as I was working on my commentary, I looked down. There I was, wearing my WAMU sweatshirt over my Lehman Brother t-shirt, sipping cocoa out of my Countrywide mug, with my World Savings shorts and IndyMac bike socks. And I thought to myself, “Dang this industry sure put out a lot of wearable swag!” Actually I was reminded of how many people literally owe the clothes on their backs to companies in this industry. And it’s all different, not like a UPS driver’s uniform, right? Something else that is different is the volatility of this interest rate environment. Few in lending will tell you that they like volatility, especially capital markets staff and anyone who locked in a rate for their borrower more than a few days ago. I mean… a .75 percent yield on the risk-free U.S. 10-year T-note? Perspective: a retired couple puts their entire $1 million in savings into a security and earns $7,500 per year, or $625 per month. Does that even cover their utilities?

Jobs, transitions, & promotions

Guardian Mortgage is pleased to announce Josh Martin as the new Director of Mortgage Loan Sales, SVP.  Josh brings over 20 years of mortgage banking experience to his new role, predominately in markets in the Pacific Northwest.  In addition to being an accomplished loan originator and branch manager, Josh has also recently served as Regional Manager, critical in expanding Guardian’s growth in several regions.  Mischelle Weaver, President of Guardian Mortgage, says, “We are excited to have Josh lead our team as Director of Mortgage Loan Sales.  He brings years of determination, experience, and passion to help propel Guardian Mortgage/Sunflower Bank’s mortgage line of business to new heights.”  In his new role, Josh will continue to be headquartered in Guardian’s Spokane, WA office.  Guardian Mortgage is proud to recognize Josh’s achievement as well as the accomplishments of all our talented staff.  To learn more visit Guardian Mortgage.

LoanDepot has added Steve Rennie and his 20+ years of experience to its Business Development team, in the role of Business Development Director for the West. Steve will support and drive growth throughout the Western US for loanDepot’s retail Division. loanDepot is the #2 retail lender in the country and continues to drive industry leading growth, with a focus of combining local in market community lending with modern age technology and education. Driving originator volume growth with increased efficiencies, cheaper operational costs, faster closing cycles at aggressive pricing.  If you are interested in reaching out, Steve can be reached here or (949) 288-7420.

Lakeview Wholesale, an industry-leading, top-rated residential originator and loan servicer, is hiring talented field Account Executives! “If you are ready to take your career to the next level, we want to hear from you. We are seeking experienced professional Account Executives with strong relationships in several markets including Denver, Minnesota, Phoenix, Salt Lake City, Southern California, and Wisconsin. Contact Michael Cullen today and learn more.”

Mortgage rates are down! And DocProbe’s Trailing Docs business keeps scaling up to keep up with the pace! Join the close-knit national sales team of one of the nation’s premier providers of trailing document fulfillment services as a full time Senior Business Development Associate in the South-Central Region. “Please visit our website at www.docprobe.net to learn more. As a Senior Business Development Associate, you will be responsible for generating new business through prospecting and networking, as well as introducing our services to your existing contacts. The position is geared for individuals with experience in sales to Mortgage Bankers, who possess the drive and ambition to make calls, network, and have the face-to-face visits necessary for success. The ideal candidate possesses outstanding interpersonal skills, and has an established Mortgage Banker client base within which they can network. Confidentially submit your resume and cover letter for consideration to Nick Erlanger.”

Gateway First Bank, one of the largest banks in the State of Oklahoma and one of the largest mortgage operations in the United States, has promoted Jake Carlisle to Regional VP of the Pacific Northwest to oversee all Gateway offices in Washington, Oregon, Idaho and Utah.

Lender products & services

Altisource®, your one source for real estate and mortgage solutions, has released its 2020 report, The State of the Originations Industry. This exclusive report reveals results and feedback from 200 professionals in the mortgage origination business. The report finds that as originators seek to expand their business in 2020, 78% of mortgage originators surveyed are adding new products to spur growth, while 34% of respondents seek efficiency by automating technology. Find out what’s driving your originations industry peers in 2020 with this exclusive report.

With state regulatory agencies ramping up their enforcement of mortgage lenders (we see you, California!), ensuring compliance at the state level is more important than ever. Thankfully, IDS has you covered with its library of state-required documents, which are thoroughly researched and regularly updated by IDS’s in-house compliance team. IDS users also get access to the “IDS State Disclosure Matrix,” which outlines the state-specific documents available within idsDoc and notes the default parameters used to determine when specific documents should be included in a loan package. What’s more, IDS has also added enhanced eSign tools for state-specific documents in idsDoc, ensuring lenders don’t have to sacrifice their digital mortgage goals to maintain state-level compliance. To learn more about this new feature or IDS’s support for state-level compliance, contact Matthew Mackey or set up some time to talk with us at MBA Tech.

Top of Mind just released an analysis revealing that LOs who use automated marketing campaigns close twice the deals and produce double the revenue in contrast with LOs who do not engage prospects with automated marketing campaigns. The numbers derive from fourth quarter 2019 user productivity data at SurefireCRM’s top-quartile lender clients. The study found that automated marketing efforts were highly correlated with improved LO performance when outbound marketing campaigns preceded the receipt of a loan application. The biggest takeaway, according to Top of Mind CEO Bill Hayes, is that Surefire’s award-winning content and automated workflows have “the very real ability to substantially lift average closed-loan volume and revenue produced by every loan officer. This is meaningful evidence that using automated marketing campaigns succeeds as a best practice.”

Vendor news

Certainly the consumer of tomorrow wants the home loan experience to be different than the consumer of yesterday. And vendors want to help! Let’s take a random look at who’s doing what.

Secure Insight announced yesterday that it has entered into a business agreement with CoreLogic, a leading global property information, analytics and data-enabled services provider, to deliver highly-specialized closing table risk data surrounding the attorneys, title agents, escrow officers and mobile notaries who handle lender and consumer funds and documents in mortgage transactions. Secure Insight offers the mortgage industry’s largest database of risk assessed, risk rated and monitored data accessible by lenders as a pre-closing risk management and compliance tool. Secure Insight® founder and CEO Andrew Liput stated “We are excited to collaborate with CoreLogic, widely viewed as offering the most reliable and effective loan fraud data reports in the mortgage industry. With the addition of our agent risk data, the CoreLogic Loan Safe product will offer lenders even more reliable and relevant risk data to help them meet their compliance and loan quality assurance goals.”

Radian Group Inc. announced that it has made a strategic investment in Covered Insurance Solutions, Inc., an independent digital insurance agency whose proprietary technology enables homebuyers to easily compare and purchase homeowner insurance at any time, including during the mortgage application process. “Covered provides homebuyers with fast, free and unbiased homeowners insurance options from 19 major national carriers during the loan origination process and through the homeownership life cycle, partnering with mortgage lending, servicing and real estate providers. Its end-to-end software seamlessly integrates with banking and lending platforms, accelerating the closing process and providing partners with a value-add customer experience that improves borrower retention and engagement.”

A new tech company called LemonBrew has launched its so-called “custom matching platform” to link up home buyers (and sellers) with local, expert real estate agents. The team behind the operation consists of “experienced entrepreneurs and operators” who work in the real estate and mortgage industry. Their goal is to create a frictionless home buying experience.

PollyEx Inc., a provider of SaaS solutions for the mortgage industry, has now integrated its Loan Trading Exchange with Ellie Mae’s Encompass® Digital Lending Platform, through Ellie Mae’s Encompass Partner Connect™ API technology. This new integration will allow lenders to share data between PollyEx’s Loan Trading Exchange and Encompass, maximizing efficiency during the loan sale process. The bi-directional API integration enables mortgage lenders to effortlessly share their “for sale” pipeline from Encompass and, in turn, receive loan-level pricing and other settlement data upon loan commitment.

Real estate and mortgage startup Homie, which launched in 2015 in Utah and expanded into Arizona in 2018, is now set to move into three new states after the company raised $23 million in new funding. Homie closed its Series B equity round of financing, in which the company raised $23 million. Last year, the company raised $10 million in its Series A funding round. Homie plans to expand beyond Utah and Arizona into three other states. The company has been in growth mode for several years now. The company started as a flat-fee real estate company, before expanding into mortgage lending in 2017. Homie now also offers title insurance and homeowners insurance. The goal of these expansions is to build an “end-to-end home selling and buying platform,” the company said. Homie continues to operate its flat-fee model, charging homeowners $1,500 to sell their home. And according to the company, its model is working. The company claims it was the “#1 residential real estate brokerage office in Utah by transaction volume and transaction value in 2019,” completing more than $1 billion in total real estate transactions in Utah and Arizona last year. The company also saw 150% revenue growth last year.

InMotion launched its mobilizing Software known as Sluice. Utilizing Sluice, multiple users can work on the same valuation order while storing a comprehensive history of changes made during the appraisal timeline. At the same time, Sluice’s distributed-ledger database provides an extra layer of security. It’s the only appraisal platform to incorporate blockchain technology.

Vendorly is now providing NTFN with a third-party risk management (TPRM) solution to maximize the company’s processes and minimize the risk presented by their large network of third-party vendors. NTFN has been able to successfully streamline their vendor management procurement and vetting process, saving an excess of 50 percent of their prior vendor management spend. NTFN initially managed vendors with a manual in-house process and turned to Vendorly’s software and services to streamline vendor management procurement and vetting process. With Vendorly’s onboarding tools and TPRM support team, NTFN gained economies of scale and was able to focus on addressing identified vendor risks as opposed to time consuming and more mundane paper and electronic document collection and review. In addition, NTFN was able to save money on Vendorly license costs as a member of Lenders One, a national alliance of independent mortgage bankers.

BSI Financial is forming a “one-stop shop” in Entra Solutions. The new company will combine the operations of four existing companies: Entra Title Services, a nationwide provider of  property title insurance; Entra Default Solutions, a foreclosure management company operating in Arizona, California, Nevada and Texas; Entra Asset Management, a national company that provides asset recovery, valuation and property disposition services; and Entra Escrow Services, which provides property escrow services in California.

Recall that Docutech and Simplifile joined forces to create a Case Study: Discover Home Equity eClosing. This study spotlights the lift Discover has recognized when using our Solex eClosing solution for Home Equity loans.

Capital markets

Stop me when this sounds familiar. Treasury yields across the curve dropped to new all-time lows yesterday due to global coronavirus fears. Stop? Okay, I think that sums it up. The only other thing I would add is that despite the 50 bps Fed rate cut earlier this week, the market is still fully priced for a 25-bps cut at the upcoming FOMC meeting on March 17-18. There is a 60 percent estimated chance for a 50-bps cut at the March meeting, and a 75 percent likelihood of a cut priced for June, which would put the target fed funds rate at 0.25 percent to 0.50 percent.

Today’s calendar is already underway with the important Nonfarm payrolls for February (strong at 273k), Unemployment rate for February (3.5%), Average workweek for February (+.3 percent), and Trade Balance for January ($45.3 billion). Despite the strong employment data, coronavirus ripple effects through the economy are driving bonds and rates.

It is a busy day for Fed speak, with all of Chicago’s Evan, Cleveland’s Mester, St. Louis’ Bullard, New York’s Williams, and Boston’s Rosengren, Kansas City’s George and Minneapolis’ Kashkari taking the stage at points throughout the day. Speaking of the Fed, the Desk today is scheduled to purchase a maximum of $598 million UMBS30 2.5 percent ($326 million) and 3.0 percent ($272 million). This week’s economic calendar closes out later this morning with Wholesale Inventories for January and Consumer Credit for January. We begin today with Agency MBS prices better, again, by .125-.250 and the 10-year yielding .75 percent after closing yesterday yielding 0.93 percent.

As I put my car in reverse, I thought to myself… “This takes me back.”

(Thanks to Rich B. from SLC for that groaner.)

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, “Drinking from a Firehose is Not a Long Term Business Model” If you have the inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 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.)