A Pennsylvania man is suing Smart Water for not making him smart, and here, in this Commentary, I’d like to formally announce my lawsuit against Thin Mints. Residential lenders are not only watching the 10-year yield hit a pandemic high, but are concerned about the legal and regulatory environment. Whether it is lawsuits or lending, the role of government, and regulators, is shifting. Anyone hoping for smaller government with this Administration was dealt a blow with the latest proposal to eliminate credit bureaus and have the government control (through the CFPB) the credit process. (I certainly received my share of emails over the weekend opposing this move, for a variety of reasons.) The Consumer Financial Protection Bureau and the National Credit Union Association (NCUA) signed a memorandum of understanding agreement to improve coordination between the agencies.
Lender Products and Services
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Have you heard? Connector by Velma® added an automated NOI letter to their 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.
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Rocket Mortgage yesterday did something that no lender has ever done: amplified the importance of local independent mortgage brokers for 60 seconds on a national scale to the more than 100 million people watching the Super Bowl. The commercial, which starred comedy superstar Tracy Morgan and NFL powerhouse Joey Bosa, demonstrated to America that home buyers will be certain how much home they can afford and have certainty their loan will close with the help of a mortgage broker in their community. Pair this with the recent launch of Rocket Mortgage’s national broker directory, and it is evident brokers are a vital part of both the Rocket ecosystem, and the full mortgage lending landscape. If you have not yet partnered with the company that is amplifying the broker community to America’s largest audiences, click HERE to join and start working with Rocket Pro TPO in as few as 24 hours.
Computershare Loan Services’ (CLS) fulfillment team is staffed and ready to process, underwrite, and close loans in your platform, or theirs. Its highly trained underwriters have an average tenure of 10+ years in mortgage banking and have the experience you need to get borrowers to the closing table on time. CLS’ dedicated back-office operations expand your business when and where lenders need it, without the overhead. Partner with CLS today and learn how they keep your business moving forward.
CFPB in the News
The Consumer Finance Protection Bureau has done a fine job in the last four years of working with the financial services industry and consumer groups, and educating both. Is that going to change?
Acting CFPB Director, Dave Uejio, is considering using the disparate impact standard against lenders for discriminatory effects even if their policies are neutral. His blog post last week stated that the “policies of the financial services industry have both caused and exacerbated racial inequality”, as reported in the National Mortgage News. CFPB watchers expect that he will move quickly so that Rohit Chopra, once the Senate approves him as permanent Director can review the matters. The CFPB’s position is that because an “effects test” is found in Regulation B, ECOA’s governing regulation, then disparate impact applies to ECOA. And That statute has not been considered in a Supreme Court case.
The blog post conveys his “broad vision” for the Division of Research, Markets, and Regulations (RMR). Buckley LLP reports that Acting Director Uejio emphasized that “in order for the Bureau to respond to his previously stated policy priorities: (i) relief for consumers facing hardship and economic crisis due to the Covid-19 pandemic, and (ii) racial equity, the agency must sharpen its focus on the consumer experience. To achieve this goal, Uejio is authorizing the Bureau’s use of its 1022(c)(4) data collection authority and has asked RMR to examine ‘the impact of specific industry practices on consumers’ daily budget and overall bottom line in order to target effective policy interventions.’
“Among other things, RMR has been asked to take the following immediate steps. Prepare an analysis assessing housing insecurities such as mortgage foreclosures, mobile home repossessions, and landlord-tenant evictions. Prepare an analysis to address pressing consumer financial barriers to racial equity in order to “inform research and rulemaking priorities,” and ‘xplicity include in policy proposals the racial equity impact of the policy intervention.’ Resume data collections paused due to Covid-19, including HMDA quarterly reporting, CARD Act data collection, PACE data collection, and the previously completed 1071 data collection. Focus mortgage servicing rulemaking on Covid-19 responses ‘to avert, to the extent possible, a foreclosure crisis’ when pandemic forbearances end in March and April. And to explore options for preserving the status quo with respect to QM and debt collection rules.”
Buckley LLP’s note finished with, “Uejio also noted that he ‘will be assessing regulatory actions taken by the previous leadership and adjusting as necessary and appropriate those not in line with [the Bureau’s] consumer protection mission and mandate’ and that he wants to ‘preserve, where possible, maximum policy flexibility’ for President Biden’s nominee once confirmed.”
MCT released Episode 6 of Rasori’s Relentless Releases, covering features of the MCTlive! Pool Optimizer and a new optimizer comparison tool. The episode also reviews the January 14th proposal of volume caps on agency cash window deliveries and how MCT is helping clients navigate this new proposal. Whether you are delivering cash window or MBS, optimization is necessary as the granularity of pricing technologies surrounding the cash windows have facilitated more transparency into the spec markets. MCT is confident that the MCTlive! Pool and Commitment Optimizer sets a new standard for our industry. MCT will host a webinar in the near future that will review all of the potential implications of these caps and best execution recommendations. View Episode 6 of Rasori’s Relentless Releases to learn more, or subscribe to the MCT newsletter for future updates.
Looking at what moved rates last week, nonfarm payrolls came in well below expectations of 105,000 at 49,000 in January and December’s loss was revised down to 227,000. Part of this was due to annual revisions in the data set that saw pre-recession employment stronger than previously reported and the job losses due to the pandemic worse than originally thought. But if one were to exclude the exaggerated season swings in data, January would have seen a slight decline in payrolls. Worse yet, the hardest hit remains those in the 25-54 age group, whose total employment has fallen back near October 2014 levels. To no one’s surprise, the bulk of job losses were in the leisure and hospitality sector which has been hit the hardest during the pandemic.
Looking at state level data, most of the losses were in California and New York, states which reinstated stricter social mitigation policies in the face of rising cases towards the end of the year. Even without government mandated restrictions, many consumers still do not feel safe patronizing these businesses at their pre-pandemic frequency. An enduring recovery will be difficult until this sector of the economy recovers or employment shifts to other industries like technology which continues to show robust growth.
And thus a little flavor about the domestic labor market was revealed this past Friday, and it didn’t provide a great taste. January jobs data was weaker than expected and the unemployment rate dropped to 6.3 percent (although it was primarily due to discouraged Americans who stopped looking). The economy has 6.5 percent fewer jobs than a year ago and there are still 4 million people who have been actively looking for work for 27 weeks or longer. Adding to the bleak news were downward revisions on the November and December jobs reports. The uncertainty in the job market through the remainder of this year should mean we’ll continue to see low rates and Fed purchases of MBS.
The bond market sold off to close the week as the talk inevitably turned toward the need for a large stimulus deal to boost a reeling economy, that jobs report providing an impetus to finalize a bill. Now that Senate Democrats have passed a budget framework allowing the package to pass with a simple majority and no Republican support, aid is likely only weeks away.
This week will see details of the sweeping $1.9 trillion bill hammered out. And the U.S. Government is certainly taking advantage of refinancing debt at lower rates. Treasury supply is likely to have the biggest market moving impact with the record $126 billion Quarterly Refunding being conducted over sessions tomorrow through Thursday. Fedspeak is on the lighter side, with just Cleveland’s Mester on the schedule today, but Chair Powell is scheduled to speak before an Economic Club of New York event on Wednesday.
The economic calendar sees updates on CPI, wholesale inventories and the January budget. MBS has a busy week with Class A 48-hour notification tomorrow, Class B on Thursday and Class C net out on Friday ahead of the long weekend. The Desk is scheduled to purchase $27.2 billion maximum across the first four days of the week with a new schedule and reinvestment estimate due Thursday afternoon. Today’s schedule sees the Desk targeting up to $7.2 billion over three operations with one in each class.
The events calendar is relatively light and begins later this morning with the Employment Trends Index for January. That will be followed subsequently by the release of the MBA’s Forbearance and Call Volume Survey for the week ending Jan 31 and the FNMA Home Purchase Sentiment Index for January. With little of note today, things swing into gear tomorrow with the January NFIB Small Business Optimism index, another labor market indicator in December Job Openings and a $58 billion 3-year Treasury note auction. We begin the day with the 5-year T-Note and Agency MBS prices down/worse almost .125 and the 10-year yielding 1.19 after closing last week at 1.17 percentattributed to broad-based optimism about the future economy.
On Jan. 19, Caliber Home Loans CEO Sanjiv Das was a featured panelist on the Washington Mortgage Bankers Association’s CEO Panel. One topic of interest for the panel was diversity in the mortgage industry. At Caliber, we advocate for diversity in our leadership and workforce. We know that a variety of perspectives strengthens us as a team, and superior customer service is the result. We’re particularly focused on addressing the lack of minority homeownership and we are committed to building trust with our customers with tools such as a first-time homebuyer portal and customized programs that educate and assist with financial planning. If you’d like to join a company that actively strives for diversity, equity and inclusion, Caliber is for you! Visit our website today to view open opportunities. To be immediately considered for Operations or Sales positions, email Jonathan Stanley or Brian Miller, respectively.
A mortgage and real estate CRM technology company is seeking an aggressive Sales Director who will be responsible for establishing and driving sales activities for a hosted CRM software solution throughout the country: “Software as a Service.” You will be expected to lead a team of national sales representatives as well as participate in all sales and marketing efforts to drive customer acquisition efforts and company revenue targets. “We are a software development company that creates and provides market leading solutions to the mortgage industry. You must have experience selling on-demand, SaaS (Software as a Service) solutions, subscription-based products to the residential Mortgage Industry, or online solutions specifically targeting real estate agents. Sales management experience, planning, leading and knowledge of the mortgage and real estate verticals are critical to success. Position is based anywhere in the U.S. To apply, please respond with resume to Anjelica Nixt for forwarding.