January’s already in the rearview mirror and our industry is keeping an eye on all kinds of things. Like silent movies moving into “the Talkies” in 1927, the Chrisman Commentary - Daily Mortgage News podcast is now live and at any place you obtain your podcasts (like Apple or Spotify). Subscribe or download today, it is a great way to listen to this commentary while you run or row or walk, but with a Millennial slant. (It is a work in progress, meant to increase your knowledge to help you help your clients. Comments or questions should be emailed here.) Home Point’s IPO scaled back? Yup. Are investors potentially interested in buying a lender’s stock while current owners are taking chips off the table, and there are plenty of other lenders already public? Yes. Well, sometimes. Attorney Brian Levy addresses how publicly traded mortgage companies better have a plan in case their stocks are shorted and Reddit/Robinhood traders turn them into another GameStop (The GameStop Gambit). And servicing residential mortgage loans by nonbank mortgage originators and servicers are on the FSOC Council’s radar… more below.
Broker and Lender Products and Services
A growing number of lenders across the country are realizing the advantages that FlexClose Funding™ can bring to their customers and their business. The FlexClose process gives lenders precise control over the closing time, no longer binding them to Fedwire® limitations. It typically reduces the hours-long traditional funding and closing process to just minutes. This benefit lets home buyers receive their keys at closing, allows for proceeds to be disbursed after hours and on weekends, and reduces fraud susceptibility. By giving them more control over the funding process, FlexClose-certified lenders gain a competitive market advantage. For more information, please contact us or call 214.821.7800.
4 Biden Housing Policy Cliff's Notes From Sagent! CFPB changes are just the beginning of daily housing/lending policies coming out of the new White House, and Sagent’s Washington-based compliance and GSE relations chief Matt Tully has you covered. Read These 4 Key Takeaways On Biden’s Early Housing Policies covering (1) COVID economics, stimulus, vaccine distro, (2) critical changes at CFPB, HUD, OCC, Fed, (3) latest forbearance & loss mit stats, and (4) how the K-shaped recovery impacts strong/weak borrowers. Matt is all over this stuff coming out of DC, so get his Compliance Compass newsletter for more quick hit policy intel!
It’s Super Bowl week, and the internet is abuzz with conversations of Brady vs. Mahomes, old vs. young and offense vs. defense. Meanwhile, Sales Boomerang is changing the way lenders think of offense and defense in terms of borrower retention. Join Alex Kutsishin and Mike Spotten today at 1 p.m. ET for a webinar covering borrower retention strategies and how best to take the offensive with the highest-converting alerts in existence, Prescriptive Scenarios. Attendees will learn how Prescriptive Scenario notify you when your borrowers are qualified and can benefit from refi, cash-out or MI removal opportunities. If the best defense is a good offense, why not add to your offensive playbook? Sign up now to ensure your team has a winning strategy.
Symmetry Lending is expanding again with program and pricing enhancements! Symmetry is excited to reintroduce the eligibility of 680 FICO scores up to 89.99% CLTV. Looking to avoid jumbo investor guidelines? Use your DU/LP Approval and experience Symmetry’s best-in-class service for a Piggyback HELOC that aligns to Agency guidelines with only a few overlays. Or, if you’re looking to increase your client’s purchasing power, utilize Symmetry’s HELOC as a Piggyback with your Jumbo 1st mortgage to a maximum combined loan amount up to $2,000,000. And to go with these great solutions, Symmetry is also introducing regional pricing! While you’ve seen Symmetry continue to provide lower margins in recent months, visit the Symmetry Pricing Guide to see the significant reduction in margins throughout many states. Take advantage of these tools that will help you close more business and provide industry-leading service, speed, and simplicity to your clients. Contact your Symmetry Area Manager today. And of course, don’t forget to follow us on LinkedIn, Facebook, and Twitter for our ongoing updates.
Free eBook: Guide to Choosing the Right Appraisal Management Company. Like many lenders, you may be seriously considering outsourcing your appraisals to an appraisal management company. However, the decision to outsource to an AMC model is hardly comparable to deciding which AMC to use. In this Free eBook, we’ll guide you through the search for the right AMC, as we break down the top 8 factors you should consider.
Loan Officers and Realtors have a unique relationship, one that continues to evolve with the changes to the real estate industry. Radian’s latest podcast, Simplifying Successful Realtor Relationships, explores the importance of personal branding, making lasting connections, and leveraging social media to connect with Realtors. Join Dave McCormick, Radian’s SVP of Inside Sales, to learn how you can build and strengthen that relationship for long-term success. Check out this episode and all of Radian’s recent podcasts here.
Servicing, MSRs, and the Economic Conditions impacting Them
Although tens of thousands of loan officers, most lenders with full pipelines, and millions of borrowers, are benefiting from the continued refis, there are losers: any investor hoping to keep loans or securities on their books for an extended period of time, and companies servicing those loans that are refinancing. Does your company have enough money saved up to handle servicing issues if they arise, like handling scheduled/scheduled payment problems with Ginnie Mae pools?
Last week newly appointed CFPB acting Director, Dave Uejio, issued a statement he sent to staff announcing his immediate priorities for the Bureau, and stated he was “concerned” about recent findings, including issues with mortgage servicing. Yes, servicing borrowers has always been a hot touch point for the CFPB.
In SitusAMC’s latest MSR Asset Monthly Snapshot, they discussed MSR pricing issues (prepay speeds, recapture within MSR Fair Value, new production pricing versus bulk pricing versus fair value pricing, shifting new and legacy book prepay speeds, the new 50 bps LLPA impacting refinance borrowers and recapture speeds differences across servicers), credit issues (the additional cost to service loans in forbearance / delinquency status, missing revenue from float on P&I and T&I payments, the recent decrease in forbearance improvement and high number of GNMA borrowers in a forbearance plan) and provided some recent assumption updates.
Updates to consider include the extension of the GSE foreclosure moratorium and FHA foreclosure moratorium, loan limits increasing for 2021, the increased maximum claim amount for HECMs, low rates and low supply continue to put upward pressure on home prices and GNMA’s issuance of a 60-day delay on the LIBOR phase out for HECMs.
On the current market conditions, SitusAMC said the flow/co-issue market continues to improve, and remains the spine of the bulk market, buyers are seeing recapture opportunity outweighing any credit risk concerns, the tightening of market yields as MSRs continue to offer excess return versus other asset classes and a mortgage basis reverting to the mean, which would offset a large portion of primary/secondary spread compression risk. (SitusAMC invites you to join its next MSR Webinar on Tuesday, February 9th at 1pm ET.)
Servicers, and investors holding MBS, are especially interested in economic conditions. The Mortgage Bankers Association’s Dr. Mike Fratantoni recently presented his latest economic and mortgage market thoughts. Monthly payroll growth slowed at year end, and the overall economy moderated, as evidenced by an unemployment rate that appears on the rise again. With the Fed funds rate expected to be at zero through 2022, the lending environment should remain favorable, evidenced by strong, sustained refinance volumes. Purchase applications also show strong continued growth, with strong home sales despite tight inventory. For first-time homebuyers, some welcome news in that home price appreciation is expected to decelerate.
After $3.6 trillion of originations in 2020, the MBA expects $2.75 trillion in 2021, including $1.56 trillion purchase originations. And with IMB (independent mortgage bank) net production profits surpassing 200 bps late last year, the question is now whether those production spreads will hold seeing as mortgage-Treasury spreads have narrowed. The mortgage market is still dealing with elevated delinquencies after the initial spike in Q2 2020, and Ginnie Mae continues to have a higher percentage of servicing portfolio volume in forbearance than Fannie Mae and Freddie Mac.
MCT sent out a whitepaper (with CWDL) explaining how excess servicing is created, the cash and tax consequences of retaining the excess mortgage servicing rights (MSRs), how the global pandemic created an excess of MSRs, the definition of a “Down in Coupon” trade, and the tax treatment of “safe harbor” and excess servicing rights. (MCT also sent out a piece on MSR models. Servicing Insights Volume 10 (“Recapture: Impact on Servicing”) addresses how best to define borrower recapture in servicing, if it should be included in a “Fair Value assessment” of MSR, if the fair value includes it, how to measure it, and what is the best way to properly include it in MSR valuation exercises.
Last week’s economic data was mostly within market expectations and did little to change the narrative that recovery is dependent on the vaccine rollout and the pandemic. Fourth quarter GDP expanded at a 4 percent annualized pace as most spending components posted quarterly gains. Personal spending, however, declined in December as spending on durable goods declined. While that was to be expected, it has materialized a little earlier than some economists had predicted and has led to lower expectations for spending in the first quarter along with uncertainty around new COVID variants. Fortunately, the recent surge in COVID case counts has begun to subside and the economy should soon begin to see the effects of the roughly $900 billion relief package passed at the end of the year. The housing market closed out 2020 with new home sales rising in December, and in fact 2020 was the best year for new home sales since 2006.
Looking at Friday in particular, Treasuries and mortgage-backed securities did not do well as the markets received a spate of economic data. Personal income and personal spending both exceeded expectations, though personal spending still declined. The Q4 Employment Cost Index increased more than expected, though moderated from a year ago. The final January reading for the University of Michigan Index of Consumer Sentiment just missed expectations, holding relatively steady in January despite rising coronavirus cases and a deterioration in the labor market. Pending Home Sales decreased 0.3 percent in December, not as bad as feared, while the Chicago Purchasing Manager’s Index improved to beyond consensus in January. For the week, the Desk of the NY Fed purchased $36 billion, nearly all of the $39 billion maximum, reminding us that the Fed’s demand is supporting low rates and higher home prices.
This new-month’s economic calendar kicks off with a couple minor numbers: manufacturing PMIs from both Markit and ISM, along with construction spending for December. After last week’s FOMC events, two Fed Presidents are scheduled to speak today: Atlanta’s Bostic and Boston’s Rosengren. Today’s NY Fed Desk operations are the first on the new MBS FedTrade schedule and totals up to $5.2 billion conventional 1.5 percent and 2 percent. We begin the week with Agency MBS prices roughly unchanged and the 10-year yielding 1.08 after closing last week at 1.09 percent.
Jobs, Promotions, and Transitions
Annaly Capital Management Inc. (“Annaly”), through its taxable REIT subsidiary Onslow Bay Financial LLC, continues to expand its residential whole loan and MSR platforms with new personnel additions. Annaly is the largest mortgage REIT with approximately $14 billion in permanent capital. Annaly is seeking a Business Development Manager (Director). This role will be responsible for sourcing, vetting, fostering, and closing originator relationships that will facilitate the growth of Onslow Bay’s correspondent loan network. Onslow Bay’s targeted whole loan acquisition strategy will be in the expanded credit, non-agency whole loan market. Full job description and application instructions here. Annaly is also seeking a Mortgage Specialist (Vice President) to manage the cash operations of the Residential Mortgage Loan and Mortgage Servicing Rights products. This role is responsible for the data integrity, validations, exceptions, reporting and to act as liaison with the business and technology solutions teams. Full job description and application instructions here.
Redwood is hiring! Redwood is an innovative leader in the Jumbo space with multiple job opportunities including Underwriting, QC, Conversion Analysts, and other roles. “We offer competitive pay, generous benefits, and opportunities for growth. If you want to work at a great company with a fantastic culture, please visit the Redwood career page to apply.”
“Trinity Oaks Mortgage is excited to announce our newest addition to the TOM family! Collin Douglas joins the company as EVP of Corporate Strategy where he will head up our strategic initiatives in Capital Markets, Secondary Marketing, and Lock Desk Policies and Procedures. An industry veteran with 18 years of senior management roles in virtually every aspect of mortgage banking, Collin most recently led the creation and development of the secondary mortgage department for a large Texas community bank. ‘I'm excited to welcome Collin to an already existing All-Star staff that we have at Trinity Oaks Mortgage,’ says Michael Kuentz, President of Trinity Oaks Mortgage. ‘Collin will take us to new heights as we continue our upward growth trajectory, while at the same time never losing site of our core mission.’
EPM closed out 2020 with over 300% growth and looks to continue that upward trajectory in 2021 with Phil Mancuso’s promotion to President. Phil has been with EPM since 2013, serving as the Chief Revenue Officer. As President, Phil will be overseeing many aspects of EPM’s operations, including Capital Markets, Pooling, Securitization and Fulfillment, Finance, Human Resources, Compliance, Analytics, and Marketing. Mancuso has had an accomplished career with 2021 marking his 33rd year in the industry. EPM CEO Eddy Perez announced at EPM’s recent annual conference in Atlanta, and in true EPM fashion, the new Brand Ambassador, Rick Flair, sent in a congratulatory video. “Phil’s dedication, determination, and results-driven nature have earned him this promotion that will elevate EPM. It is no understatement to say that Phil understands our services, culture, and clients from all perspectives. We are fortunate for his leadership and look forward to 2021 and beyond,” expressed Eddy Perez.
“Caliber Home Loans is a step above the rest, giving our loan consultants the support they need to succeed in the purchase market. What makes us different from our competitors? Our success stems from our hard working, best in class loan consultants, who are supported by our cutting-edge technology to streamline the mortgage process. Last year, Caliber Retail achieved a 28% increase in market share and a 44% purchase growth rate. This is more than double the industry average of 20% purchase growth rate in 2020, per the Mortgage Bankers Association. Caliber is a leader in the purchase mortgage market, and we’re looking for more purchase experts to join our team. To learn more about what makes us #CaliberStrong, follow us on Twitter, Instagram, and LinkedIn. To be immediately considered for Operations or Sales positions, email Jonathan Stanley or Brian Miller respectively.”