Loan officers know that rent is a “piece of the puzzle,” “a part of the equation” in the homebuying decision. They should be glad to know that the typical rent in the U.S. is now $1,600, an annual increase of 2.3% in October. I’m simplifying things quite a bit, but it is not lost on LOs that a $1,600 monthly outgo, including taxes and insurance after a $20,000 down payment, buys someone a $300,000 house at current rates. And it’s still the American Dream! What isn’t in the American Dream is having your personal information sold by motor vehicle departments around the nation. For example, the California DMV pocketed $52,048,236 in revenue in the 2017-18 financial year through the sale of drivers’ personal information. California is not alone in the practice of selling names, physical addresses and car registration information to companies like LexisNexis and Experian, as well as to private investigators, insurance companies, and prospective employers.

Lender Products and Services

Freddie Mac Single-Family is ALL FOR reducing barriers and raising hope. Freddie Mac is expanding the thinking around affordable lending and inspiring others to do the same. With All For HomeSM, we’re leading the way through providing insights, education, mortgage products and business solutions that address the needs of today’s borrower and of The Borrower of the FutureSM. Rising home prices and interest rates, coupled with a lack of entry-level inventory, are increasing affordability challenges. Demographic and cultural shifts, migrations from rural to urban, first-time homebuyers with thin-credit files and complex processes pose additional barriers to achieving the American dream. It takes collaboration and partnership to innovate solutions that make a positive impact. Learn more about All For Home, discover key insights to inform your business and take advantage of solutions and tools that will enable your borrowers to make Home Possible®. All in.  All of us.  All For Home.

Minnesota Vikings quarterback Kirk Cousins overcame a lot of doubters to become a successful NFL player. Austin Niemiec, EVP and leader of QLMS, sat down with Kirk to talk business, sports, family and philosophy. Their great conversation is captured in Austin’s growing library of podcasts with top influencers in the mortgage field and beyond. Search “Stronger Together” on any of the top podcast platforms to listen and subscribe. If you aren’t already a QLMS approved partner, click here and flex your superpower of CHOICE!

The slow season doesn't have to be slow, and it won't be slow for lenders like PRMG, Wallick & Volk, AnnieMac, Churchill Mortgage, American Pacific Mortgage, and Willow Bend Mortgage. What are these lenders doing differently? They've realized what over 70 other lenders have already discovered: what Sales Boomerang's Automated Borrower Retention System will do for them when the market shifts completely. This is your recession buster. Schedule a demo and be prepared for whatever the market brings. 

In the November issue of STRATMOR’s Insights Report, CEO Lisa Springer connects the leadership elements of passion, purpose and persistence to her recent experiences in Santorini, Greece. “I came away from our visit to Santorini with new perspectives about the importance of reinforcing our passion, purpose and persistence at STRATMOR,” says Springer. “In today’s world, companies must overcome competition, rising costs, changing customer perceptions, the unpredictability of social media, and regulatory threats, all in tandem. Mortgage lenders have the additional challenges of disparate systems, geographically dispersed locations, and different state and municipal laws and regulations. It takes passion, purpose and persistence to succeed and to grow.” Also, in the November issue, MortgageSAT Director Mike Seminari offers insight into the importance of creating awareness and establishing accountability in translating the vision for a great customer experience from leadership to loan officer. Read the November Insights Report.

Conventional Conforming News

The new Uniform Residential Loan Application will have a significant impact on the industry and the FHFA and GSEs (Freddie Mac and Fannie Mae) are debating new implementation timelines. The new timeline is a result of changes to the URLA that were announced in August, which include eliminating the language preference question. The proposed schedule includes mandatory use of the new form by November 1, 2020. Early adoption can begin on August 1, 2020. Lenders that coordinate with the GSEs and complete a readiness questionnaire may be permitted to use the new form beginning May 1, 2020. The MBA wants to hear from industry about the proposed new timeline and for more information, please contact Rick Hill at (202) 557-2718.

As expected near Thanksgiving, the Federal Housing Finance Agency (FHFA) today announced the maximum conforming loan limits (based on changes in the average U.S. home price) for mortgages to be acquired by Fannie Mae and Freddie Mac in 2020. In most of the U.S., the 2020 maximum conforming loan limit for one-unit properties will be $510,400, an increase from $484,350 in 2019. (According to FHFA's seasonally adjusted, expanded-data HPI, house prices increased 5.38 percent, on average, between the third quarters of 2018 and 2019. Therefore, the baseline maximum conforming loan limit in 2020 will increase by the same percentage.)

“High-Cost Area Limits,” usually along the coasts or in major cities where 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit. “HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a ‘ceiling’ on that limit of 150 percent of the baseline loan limit. Median home values generally increased in high-cost areas in 2019, driving up the maximum loan limits in many areas.” The new ceiling loan limit for one-unit properties in most high-cost areas will be $765,600 (150 percent of $510,400).

And don’t forget the different loan limit calculations for Alaska, Hawai’i, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $765,600 for one-unit properties.

The Agencies posted updates. For example, Freddie Mac will update Loan Product Advisor® on December 4, 2019, so you may begin originating mortgages with these new loan limits. “However, mortgages with higher original loan amounts eligible under the 2020 loan limits must have Freddie Mac funding or settlement dates on or after January 1, 2020. As a reminder, actual loan limits for certain high-cost areas, as determined by FHFA, may be lower than the maximum high-cost area limit.  When originating super conforming mortgages, you must check the loan limits for the specific county where the property is located. The Single-Family Seller/Servicer Guide will be updated with the 2020 loan limits with a December Bulletin. Make sure to read our article and FHFA’s press release for details on the 2020 loan limits.”

Remember HAMP? It’s remnants are still around for borrowers if their loan is owned by F&F, it is a first mortgage and not a refinance, and other requirements are met. It is titled the Flex Modification Program. Fannie Mae has a Fact Sheet, as does Freddie Mac.

The PennyMac Correspondent Group posted a  Revised Sample Rate Sheet for Conventional and VA LLPA Updates. In addition, Announcement 19-59 provides information regarding Updates to Conventional LLPAs and VA Full Doc Price Adjustments.

Fannie Mae issued a Lender Letter to provide guidance on updated mortgage insurers’ master primary policies and related endorsements and other forms. Any loan sold to or securitized by us that has mortgage insurance and a loan application date on or after March 1, 2020, must be insured under one of the new approved forms.

Lakeview posted a new announcement regarding important updates to the following: TSAHC Program Changes, Forgivable 2nd Lien DPA Options, Freddie Mac LPA, Fannie Mae SEL-2019-08 and an important reminder regarding rental income calculations and documentation.

Capital Markets

Loan officers should know that rates may chop around at these levels well into 2020. Keep in mind that the latest minutes from the Federal Open Market Committee point to a Fed that would prefer to keep monetary policy unchanged through the end of 2019 so they can monitor what effects their recent changes have on the economy. Financial conditions are looser than earlier in the year and at a place the Committee feels is “appropriate” to sustain the current economic expansion. Additionally, the FOMC indicated that it would need to observe substantial economic degradation prior to any further easing. The mood of the financial markets continues to hinge on whether or not a trade deal will be reached between the US and China. Deal or no deal, the markets do not expect any movement in monetary policy until the second half of 2020. Although there are plenty of downside risks that may force the Fed's hand earlier such as a global growth slowdown and weak business investment. All eyes will be focused on consumer spending heading into the holiday shopping season and through year-end.

Yesterday Fed Chair Powell said that monetary policy is now well positioned to support a strong labor market and return inflation to the Fed’s symmetric 2 percent objective. He reiterated that if the outlook changes materially, policy will change as well, adding that at this point in the long expansion, he sees the glass as much more than half full. Mr. Powell began the week describing how the economic expansion has seen major gains among minorities, the disabled, and people who don’t have degrees. That is a new line of Fed communication this year, and Minneapolis Fed President Kashkari likely helped Powell arrive to that conclusion.

Cutting rates three times in 2019 has largely been due to trade tensions and a slowing global economy, but the Fed has also offered new explanations for their actions, focused on low-paid Americans. Kashkari has been an advocate that monetary policy can play the kind of wealth redistribution role once believed to be solely the domain of elected officials. After all, politicians control government spending and taxes, and the Fed’s guiding doctrine says that moving rates around can shift prices, but not the structure of job markets, or the prevalence of inequality.

In 2017, Kashkari began to examine widening disparities in the economy, expecting to generate research that might inform lawmakers’ decisions, rather than the Fed’s. What he discovered was that Americans who’d given up looking for work after the financial crisis (who weren’t therefore counted among the unemployed) were reentering the labor force, confounding expectations at the U.S. economy kept creating jobs, even as low jobless rates suggested that it should’ve been at or near full employment under old assumptions. It turns out that supply explanations, like men (ages 25 to 54) that had dropped out, wasn’t a big source of the problem. The issue was weak demand, which implies the trend could reverse, if policy makers let the economy heat up enough. This may influence the Fed to raise rates less rapidly during the next economic expansion. 

Turning to rates, U.S. Treasuries rallied on Tuesday despite encouraging new home sales data and optimism surrounding a trade deal. New home sales in October beat expectations and saw a large, upward revision to the prior month's number. On the trade front, China reported the two sides "reached consensus on how to resolve related issues and agreed to maintain communication on the remaining issues," while the U.S. side acknowledged a phone call took place but declined to comment on what was discussed. The next few retail sales reports will be of particular interest, given both the next round of incoming tariffs and Thanksgiving falling late this year, causing many in the retail sector to worry about holiday spending activity.

But that is a few weeks in the future. We began today with the MBA Mortgage Applications Index for November 23 (+1.5 percent). Markets have also received jobless claims for the week ending November 23 (213k), the second estimate of Q3 GDP (+2.1% from +1.9%), and Durable Goods Orders for October (+.6%). Later this morning brings consumer spending information, Pending Home Sales for October and the Fed's beige Book, in addition to $32 billion 7-year Treasury note auction results. We begin the day with Agency MBS prices worse .125-.250 (not that anyone is locking today) and the 10-year yielding 1.78 percent after closing yesterday at 1.74 percent.

Employment

Wyndham Capital Mortgage, the highest consumer-rated digital mortgage lender, announces rapid expansion on the heels of record-breaking performance. The company is scaling its sales teams to meet the demands of its customer growth by debuting a new headquarters in early 2020. Earlier this year the company opened its first lending centers in Kansas City, KS (13 new employees) and Salt Lake City, UT (8 new employees with more in the coming weeks).  Wyndham is building an entirely new model for loan officers, offering freedom and flexibility, operational excellence, and comprehensive marketing support. Shifts in the mortgage industry have created a need for experienced loan officers, a need Wyndham can meet. The company’s operations department supports loan offers with dedicated speed teams, robotics, and an all-inclusive marketing platform, resulting in closing timelines 16 days faster than the national average. To learn more about how Wyndham can help you grow your career, visit join.wyndm.co.

Congratulations to John Cannon who is the new president of CPC Mortgage Company, a subsidiary of the Community Preservation Corporation.