While the market is digesting the implications Rocket’s earnings (the shares are down in pre-market trading), remember when, in March 2020, it was as if someone flipped a switch and suddenly everyone was working from home. Now, however, owners and managers of lenders and vendors across the nation are debating allowing employees to continue working from home, requesting everyone come back into the office, or some type of hybrid. Goldman Sachs, for one, has told U.S. employees to return to the office by mid-June and U.K. workers to return shortly thereafter. "We know from experience that our culture of collaboration, innovation and apprenticeship thrives when our people come together," according to an internal memo. Google expects 20 percent back in the office, with 60 percent in a hybrid model. Meanwhile, a segment of workers are embracing the “YOLO lifestyle.” “You Only Live Once.” And the beginning of seeing a post-pandemic world (whenever that is; see joke below) is already starting to cause people, especially Millennials, to question their current job/location/lifestyle. Many Millennials are either quitting their job or keen to quit in search of something else, leading to staffing headaches for some managers. Speaking of Millennials, the audio version of today’s commentary, presented by Robbie Chrisman, is available here. It is sponsored by Origence and features an interview with Roger Hull, Chief Product Officer, and Ray Jandga, Chief Technology Officer. Roger and Ray dive into the technological leaps made when developing the industry’s first truly single platform origination solution.
Lender Products and Services
QC NowWebinar: Insights into Mortgage QC Trends: Will History Repeat Itself. Join ACES EVP Nick Volpe and President, Phill McCall on Wednesday, May 19, as they dive into lessons learned from these 2020 findings and turn to where QC is headed in 2021. Topics covered will include: Highlights from the recent ACES Mortgage QC Industry Trends Report, Early Payment Defaults Decreasing, State of the Industry, and the Outlook for 2021 – What to Watch Out For. Register today!
As MSR pricing tics back upward in 2021 many are wondering if it’s a good time to sell and which loans make sense to retain. To help traders and portfolio managers with this decision, MCT® just announced in a press release that its enhanced best-execution tool (EBX) now automates the process of reviewing your portfolio for retain-release decisions using real-time MSR values at the time of execution. This industry first automatically pulls loan pipeline data from MCTlive!® and portfolio characteristics from MSRlive!® to give traders and portfolio managers actionable insights for retain-release decisions. Phil Laren, MCT’s Director of MSR Services, said “What was once a cumbersome process is now completely automated with EBX. With a click of a button, clients obtain valuable insights designed to assist with strategic and thoughtful retain-release decisioning.” Contact MCT’s MSR team to discuss this automation or how they can help with your next MSR sale.
Exclusive interview: These two women are challenging mortgage industry norms one event at a time. In the latest Clear to Close podcast episode, Maxwell hosts Alan and Bryan sit down with NEXT Mortgage Events Co-founders Jeri Yoshida and Molly Dowdy to discuss the changing role of women in the industry. Learn why Jeri and Molly launched NEXT and its growing impact, from increasing visibility for underrepresented groups to flipping the industry conference format on its head. After this thought-provoking, entertaining episode, you’ll be itching to attend a NEXT conference! Listen to the Clear to Close podcast’s new episode on Apple Podcasts, Spotify, Google Podcasts, or your browser.
Polly, the provider of the industry’s most innovative product and pricing engine, loan trading exchange and analytics suite for the mortgage industry, has been named to the HousingWire 2021 Tech 100 list. With Polly’s Product and Pricing engine, lenders can rapidly configure rule logic, easily customize margin strategies, and automate the lock desk. By leveraging Polly’s end-to-end capital markets ecosystem, customers dramatically save time and reduce costs from rate lock to loan sale and delivery. To learn more about how Polly is revolutionizing mortgage capital markets by delivering cutting edge technology, email Jacob Gerson or visit www.polly.io.
Compliance and Risk
There have been some fraudulent mortgage payoff communications of late. Westcor Land Title Insurance Company noted two for Cenlar payoffs and Mr. Cooper (formerly Nationstar) payoffs. Cenlar sent, “We have been advised that fraudulent payoff letters for CENLAR mortgages are being circulated. If you encounter any, we suggest confirming the information by utilizing an independent phone number - not the one provided on the payoff letter.”
And Mr. Cooper warned, “We have been advised of a scheme involving ostensible payoff statements for Mr. Cooper whereby the demand provides a wire account number that is one digit off from the actual account number used for Mr. Cooper. The phone number is different as well. Please note that the fraudulent letters are identical (format and font) to legitimate Mr. Cooper payoff letters.”
“In times of high volume like we are experiencing these days, agents are cautioned to be sensitive to fraudulent or deceptive practices such as the above. Be vigilant to unusual communications that appear out of the ordinary, even just slightly different from those to which you are accustomed, and do not hesitate to report any clear fraudulent activities to your underwriter.”
Meanwhile, out of Chicago comes a story titled, “Threat to everybody: Townstone says feds mean to make example of them to expand regulatory power over lenders.”
According to a recent report, in March 2021, consumers submitted more mortgage complaints to the CFPB than in any month since April 2018. Within those complaints, mentions of forbearance and related terms reached their highest monthly average since March and April of 2020, while the number of borrowers who reported struggling to make payments also rose.
The CFPB has published a final rule delaying the mandatory compliance date of the final QM rule until 10/1/22. the Bureau notes that "policies, agreements, or legislation created by parties other than the Bureau (including the PSPAs) may limit the impact of the mandatory compliance date delay. Further remarking that sections of the letter agreements amending the PSPAs appear to provide FHFA with the authority to allow the GSEs to purchase certain loans that do not comply with the QM definitions. Despite this extension of the GSE Patch from the CFPB, the most recent announcements from FHFA and the GSEs confirm that the GSEs will not accept loans qualified under the Patch with applications beginning on July 1, 2021. As such, the industry should continue moving forward to implement the new QM General Definition (based on the APR/APOR spread) by July 1, 2021. View the Final rule official interpretation in its entirety.
Requirements to check outsourced service providers (such as contract underwriters and processors) against exclusionary lists? MQMR’s answer was that while it is a best practice, it may not always be feasible to do, particularly if the lender is not made aware of the individual contract underwriter’s/processor’s name by the third-party service provider that employs them. There are Agency guidelines on this issue. Fannie Mae Selling Guide Chapter A3-3, HUD Handbook 4000.1, Chapter II, A, 1, iii, and Freddie Mac Seller/Servicer Guide Chapter 3101 are all good places to start.
FAMC announced the USDA-RD revised 3555-21 will be available in GUS beginning on April 28, 2021, and it may be used immediately. The revised form must be used for all loans submitted or resubmitted through GUS on and after May 1, 2021. Note: The form has a revision date of March 2021.As previously announced, the form has been updated to remove the annual and repayment income calculation attachments. Lenders must document their annual and repayment income calculations per the USDA-RD policy.
Loan Estimate and Closing Disclosure rounding and calculating rules are widely discussed, the lack of information for other required disclosing has caused compliance headaches for lenders and servicers. Read the article Arena of Ambiguity: Aggregate Escrow Account Analysis and Rounding for the complete article.
An issue which has plagued the industry since the original TILA-RESPA Integrated Disclosure rule was finalized is ambiguity as to which fees should be disclosed on the Loan Estimate (“LE”). Should they only be the fees actually paid by the borrower? Or should they be both the fees actually paid by the borrower, as well as any other fees legally imposed on (but not necessarily paid by) the borrower? Or should all the fees connected with the transaction be disclosed, regardless of whom is paying for them? Read Clear as Mud: Fees Disclosed on the Loan Estimate for more discussion points.
In First American Docutech Compliance News: FNMA Modifies Authorized Changes to Form 3047.
MQMR addressed how lenders can ensure its subservicer is following its policies and procedures. Subservicer deficiencies may range from warnings to heavy fines up to and including loss of the ability to service loans, therefore, it is important to ensure proper subservicer oversight and monitoring. Fortunately, the GSEs require all subservicers to follow GSE guidelines when servicing loans. However, the master servicer should have an oversight policy in place to ensure compliance, establishing the master servicer’s servicing Quality Control Program and including several items, such as: Procedures demonstrating how the master servicer verifies that the subservicer is actually following its own procedures; an explanation of how the master servicer implements quality control audits and when and how often such audits will be performed; a method to track subservicer servicing errors and deficiencies, as well as any remediation plans; and (as a best practice) an annual onsite visit that permits the master servicer to sit with key subservicing staff to understand the staff’s day-to-day process and reconcile it against the subservicer’s written policies and procedures.
Jonathan Foxx of Lenders Compliance Group was recently asked about what servicers should do when internal audits picked up incorrect reporting of interest, in this case too late for some borrowers who have already filed their tax returns. Any mortgage lender that receives $600 or more annually in mortgage loan interest payments from a borrower is required to complete IRS Form 1098, and mistakes in the accuracy of such information can be made, more commonly than thought. He referred to the case of Strugala v. Flagstar Bank by the U.S. Court of Appeals for the 9th Circuit. In that case, the district court dismissed Strugala’s claims, and the 9th Circuit affirmed, because the mortgage contract contained no express terms concerning the bank’s mortgage interest reporting practices. For more information, click the above link.
Another snoozer of a day in the bond market yesterday, which was all the more peculiar given potential market moving news. That included Secretary Yellen walking back comments regarding her need for higher rates comments, the ADP Employment Survey showing the private sector added 742k jobs in April, while the ISM Non-Manufacturing survey for April dipping from a record high but still expanding for the eleventh straight month. The report did make several references to capacity constraints and material shortages. This did not stop Chicago Fed President Evans from downplaying concerns about inflation during remarks he made on the day. The lack of movement in the market suggests investors are holding out for the April Payrolls report tomorrow, where expectations are for about 940k jobs added.
Today’s economic calendar began with job cuts for April from Challenger, Gray & Christmas (only 22,913 cuts). We’ve also received weekly jobless claims (498k, continuing claims 3.69 million) and preliminary Q1 productivity (+5.4 percent) and unit labor costs (-.3 percent). Later this morning brings Freddie Mac’s Primary Mortgage Market Survey and a heavy dose of Fed speakers including New York’s Williams, Dallas’ Kaplan, Atlanta’s Bostic, and Cleveland’s Mester. The Desk of the NY Fed will conduct three operations with one in each class and totaling up to $6.8 billion. We begin National Tequila Hangover Day with Agency MBS prices roughly unchanged and the 10-year yielding 1.58 after closing yesterday at 1.58 percent.
Jobs and Hires
“Has your company grown too large? Is the feeling the same as when you joined? At Bay Equity we embrace a culture of sharing. One great example of that culture is our Bay Equity Tools and Best Practices Playbook. Would you like to learn how one of our loan originators has been a Bay Equity President’s Club Award winner in all 5 years since they started producing? Call Sean Wilson to learn more about Bay Equity and our Playbook.”
“Ready to join a team that’s focused on helping you win more business? Last month Citizens Home Mortgage hosted an exclusive virtual Power Hour featuring two of the most dynamic real estate industry leaders in the business: Tracy Tutor, top Douglas Elliman agent and star of “Million Dollar Listings: Los Angeles," and Tom Ferry, well-known real estate coach. Tracy and Tom shared their thoughts on the post-Covid 19 housing landscape, real estate best practices, personal brand strategies, and a pulse check on the current market. It was an hour chocked full of great insights and information designed to help our partners take their business to the next level. This was just one example of how Citizens Home Mortgage is providing top notch tools and resources to our sales force and to their referral partners. If you want to be part of an organization that provides opportunities like this, consider being part of our winning mortgage team. Visit Citizens Careers today to see all of our openings. Click here to access the replay, use the Password: Fq7B2iAc.”
Looking to grow your book of business? According to NRMLA, there are 24 million seniors with $7 trillion in home equity in the U.S. today. Many have a desire to stay in their homes, provide in-home care for a spouse, or simply afford a decent retirement lifestyle. The demand for reverse mortgages is starting to explode. Now is a great time and opportunity to add the reverse mortgage product (HECM) to your toolbelt and American Advisors Group (AAG, NMLS# 9392) needs qualified reverse and traditional loan officers to help with this demand. Our national advertising campaign featuring Tom Selleck drives AAG's brand awareness and pushes a high volume of quality leads to our loan officers. Our amazing fulfillment teams free up our loan officers to do what they do best: sell! Bonus? The compensation potential is incredible. If you are planning your next move or would like to hear more, email Ryan Zaro (657-236-5344).
Planet Home Lending, LLC drives business to our retail branches at record rates by creating customers for life. Our recapture rate for refinances and purchase loans originated by our distributed retail branches was 70% in Q1 2021, four times the industry average of 18% reported by Black Knight for Q4 2020. We market our MLOs to their customers by featuring their picture and contact information on monthly mortgage statements and sending traditional and digital marketing on their behalf. When the analytics indicate a customer is ready to move up, buy a second home, or they’d benefit from cashing out or removing PMI, Planet sends that customer back to the retail MLO. With a constant flow of automated marketing to keep existing customers, Planet MLO’s have more time to focus on what they do best: Reaching new borrowers and building new business. For a confidential conversation about joining Planet Home Lending, contact Henry Brandt (214-396-3012).
“According to the National Association of Hispanic Real Estate Professionals,® the rate of Latino homeownership increased in 2020 for the sixth straight year, despite economic challenges brought on by COVID-19. So, what’s fueling that growth? Recently, James Hecht, Caliber’s EVP of Retail Production, participated in a panel discussion explaining the role independent mortgage bankers are playing and why we are uniquely positioned to serve the needs of Latinos. Homeownership is not just a dream, it’s Caliber’s steadfast mission. In 2020, we proudly helped more than 118,000 families purchase a home and we consider it a great honor to help even more Americans in 2021. You can be a part of this incredible journey when you join the team that makes homeownership an equitable and inclusive experience for all. To be immediately considered for Operations or Sales positions, email Jonathan Stanley or James Hecht respectively.”
Gateless, launched last year by Guaranteed Rate President and CEO Victor Ciardellia, named B2B sales executive Sergio Murer as its National Sales Leader. “Gateless streamlines workflows and automates key components of the loan process, providing a value proposition that really speaks for itself.”