I realize that this is a commentary about lending, but it is good for MLOs to be cognizant of what their real estate agent client’s clients want… In a kitchen. And here’s a handy dandy chart from builders showing popular kitchen features. My grandmother had one, and I want one: a walk-in pantry! Lots of people want lower rates, despite them often being an indicator of a weaker-than-expected economy, and recently the risk-free 10-year T-note, with no risk of default or prepayment, hit 1.36%. I love the fact that after the last Federal Open Market Committee meeting, plenty of people jumped on the “rates are going up for the rest of the year” bandwagon. Experienced capital markets personnel never bet on the market going one way or the other, and the 10-year dropped in yield after May, and has been relatively steady since. As always, mortgage-backed securities (which determine mortgage rates) lagged the move downward. Certainly, no investor wants to pay a premium above par for a loan that has a higher risk of paying off at par. The audio version of today’s commentary, available here, is sponsored by Origence and features a talk with Brit Barker, VP of Enterprise Solutions, and Michael Farris, VP of Strategic Solutions, about what constitutes a stellar borrowing experience, and how you can achieve it.
Lender Services and Products
Processors produce a fully, perfectly underwritten file? With Candor then can. That’s why a Top 5 C-suite exec calls Candor “The Holy Grail of Mortgage Technology” because Candor has succeeded where everyone else has failed: To automate a complete credit risk assessment. Candor lives up to its promises.
Co-Issue is one of hottest executions for selling MSRs today. The easiest way to get started: PHH Mortgage. PHH offers both direct and agency-assisted Co-Issue actively bidding on Fannie SMP, Freddie CRX and Ginnie PIIT. With some of the most competitive pricing in the market, PHH can onboard your team to begin delivering MSRs as quickly as within 24 hours. Want to retain your MSRs or have an existing servicing book? PHH can subservice for you. Reduce your servicing costs by up to 30% and make the switch in 90 days. As your new Enterprise partner, check out how PHH has been making waves in the MSR market, purchasing over $60 billion this quarter (read more here and here). Contact Chris Sabbe to find out how to get started: Your Capital Markets team will thank you.
Technology drives efficiency across the mortgage process: Why not apply that innovation to Due Diligence and QC? MaxDiligence is the most advanced way for growing lenders to access high-quality Due Diligence and pre- and post-close QC. Regardless of size, lenders need fast, reliable services backed by market-leading technology AND a dedicated staff. MaxDiligence combines detailed reporting and automation with a tenured leadership team that holds over 75 years of combined mortgage operational experience. For a tech-forward diligence experience backed by talent dedicated to supporting your unique business needs, MaxDiligence is your answer. To learn more about MaxDiligence, click here or schedule a call now.
ACES' recent QC Now webinar demystifies the revised QM Rule and proposed servicing rules. Hear from Richard J. Andreano, Jr. and Reid Herlihy from the Mortgage Banking Group at Ballard Spahr and ACES’ EVP of Compliance, Amanda Phillips, as they dissect the CFPB’s ATR/QM Rule revisions and proposed amendments to servicing rules. Watch On-Demand Now. Walk away with a better understanding of: The latest Qualified Mortgage Rule guidance, including the latest loan eligibility guidelines from Fannie Mae and Freddie Mac, current servicing trends, including COVID-specific servicing impacts, and the proposed amendments to servicing rules from the CFPB.
Looking to Grow Your Mortgage Business Without Adding Headcount? Most mortgage teams are looking for efficiencies. Some of them have found a way to increase productivity without adding headcount. As this case-study shows, a division of American Pacific Mortgage quadrupled productivity in 30 days without adding headcount. They did this using TeamworkIQ which eliminates the effort required to coordinate the handoff of loans between team members with “email-and-spreadsheets” or time-consuming meetings. TeamworkIQ also determines “what to do next” and thus eliminates the need to scan dozens of loans in the pipeline to determine the best use of time. This eliminates more wasted time. TeamworkIQ provides real-time, detailed views into each loan file and actively coordinates team member priorities across all the loans your team handles. At $24/month/user the ROI is sky-high. See the data for yourself. See the case-study and request a test-drive. See a demo. Make the switch.
Curious how Connector by Velma® can solve your ECOA - Adverse Action headaches? Learn how Connector reduces risk, rescues at-risk prospects, eliminates hassles, and saves time for your sales and operations teams. Oh, and you will never need to print out and stuff another NOIA letter again!
Freddie and Fannie News
The GSEs are expanding programs in an effort to clean up the remaining forbearance population. After Ginnie recently extended modifications to 40 years, Fannie updated its modification and foreclosure policies surrounding COVID-19 impacted borrowers. Of particular note, Fannie is providing rate reductions as an option for borrowers with less than 80 LTV. This comes as GSEs record another sharp contraction in retained portfolios in May. This marks the second straight month of contraction and portfolios are well below the FHFA mandated cap of $250 billion. Freddie Mac recorded an 11.1 percent decline in May to $127.2 billion, following an 18.0 percent drop in April. Fannie Mae’s shrank 9.4 percent to $132.3 billion. These contractions are likely in preparation for future buyouts related to COVID-19 delinquencies and loss mitigation strategies.
Although the CFPB recently delayed the mandatory compliance date to Oct. 1, 2022, the January 2021 revised Preferred Stock Purchase Agreements (PSPA), which restricts the types of loans that Fannie Mae and Freddie Mac can purchase, was amended to state that only loans that meet the new QM definition with application dates after June 30, 2021, are eligible for sale to the GSEs. Therefore, Caliber will be aligning with the PSPA requirements announced in Fannie Mae Lender Letter 2021-09 and Freddie Mac Bulletin 2021-13.
Caliber reminded clients that loans, namely conventional and Caliber jumbo, and not government loans, with Application Dates on and after July 1, 2021, will be required to comply with the Revised General Qualified Mortgage Rule. “That expires the QM Patch for Fannie and Freddie loans. Conventional conforming loans are now subject to a pricing cap. Replaces the 43% DTI cap with a pricing cap. Safe Harbor: if the APR does not exceed the APOR for a comparable transaction by 1.5 percentage points or more as of the date the interest rate is set. Rebuttable Presumption: if the APR exceeds the APOR for a comparable transaction by 1.5 percentage points or more but by less than 2.25 percentage points.”
Caliber’s note goes on. “Non-QM: if the APR exceeds the APOR for a comparable transaction by 2.25 percentage points or more as of the date the interest rate is set. The final rule provides for higher rebuttable presumption and Non-QM thresholds for loan amounts < $110,260 and manufactured homes. Replaces the specific underwriting criteria in Appendix Q with a requirement to consider and verify the consumer’s current or reasonably expected income or assets, debt obligations, alimony, child support and DTI ratio or residual income in determining the consumer’s ability to repay. No change to the existing QM product-feature restrictions (negative amortization, interest-only, or balloon features) max 30-year term, or max 3% points and fees.”
Radian just launched a suite of highly innovative digital products and services for its real estate and title insurance businesses, which it debuted at its 2021 Real Estate Investor Day. Collectively known as homegeniusSM by Radian, the products include a direct-to-consumer title insurance portal built on blockchain and a property valuation platform that leverages the artificial intelligence technology behind autonomous driving. The full Investor Day program can be viewed here. And Radian is marking National Homeownership Month: Expanding Minority Homeownership with a talk between Derek Brummer, Radian’s President of Mortgage, and special guest Lindsey Johnson, President of USMI, discussing the challenges and solutions for reducing the racial homeownership gap and helping make homeownership more accessible to all.
Fannie Mae has a new Single-Family page dedicated to the Senior Preferred Stock Purchase Agreement (PSPA) policies and implementation, which features key resources that help navigate policies in response to the amended PSPA.
On June 28th, Fannie Mae’s new Loan Servicing Data Utility (LSDU) tool became available for Post Purchase Adjustment (PPA) form submissions, providing an array of filtering options that display near real-time transparency of statutes for requested data changes. Effective July 1, all PPA forms must be submitted via LSDU using the web portal. Requests submitted outside the web portal will be returned. View the LSDU User Guide.
If you missed Freddie Mac’s Community Land Trust Mortgage Webinar, it’s available to watch at any time (password: MbNE5sd*). Review the presentation deck for content covered during the webinar including mortgage offering overviews, trainings, policy updates and more. Listen to the podcast, “How Shared Equity Programs Help Create More Homeownership Opportunities” with Simone Beaty, director of single-family affordable lending at Freddie Mac. Read the article, “Community Land Trusts: An Untapped Resource for Lenders,” for additional insights. Information and resources needed to work with CLT’s are available on the CLT mortgage web page.
Fannie Mae’s Servicing Lender Letter (LL-2021-02) discusses the foreclosure moratorium extension suspending certain foreclosure-related activities until July 31, 2021.
Flagstar Bank has updated Agency Investment and Second Home adjustments. The investment property LLPAs for fixed terms less than 30 year and FICO greater than or equal to 680 is improving by 2.000. The second home LLPAs are worsening by 1.250.
Compliance news from First American Docutech: FHLMC Again Revises POA Requirements.
Strong consumer demand in the U.S. is powering a surge in economic growth worldwide, but is causing manufacturers and analysts to warn of supply shortages and further inflation rises, as other countries resort to lifting interest rates. If you have a “dollar-ized” economy, you are forced into increasing rates even if you don't think it will solve anything.
Even though market participants have been waiting all week for today’s payrolls data, there were still several economic releases to digest yesterday, including lots of manufacturing PMI data from around the globe. Manufacturing was mixed overall relative to expectations but ultimately still indicative of a sector operating in expansion mode. Domestically, the June ISM Manufacturing Index fell from May and missed expectations, but was still indicative of expansion, marking the 13th straight month of gains.
Coupled with the weekly jobless claims report reaching a fresh pandemic low, the aggregate takeaway validated the continuation of several trends. Namely, the manufacturing sector remains strong, inflation pressures are still prominent (we saw recently that the price Index hit its highest level in over 40 years), and there is still difficulty in finding workers to meet the demand which is likely holding back the pace of the recovery. Finally, total construction spending decreased in May when it was expected to increase, though we are still witnessing ongoing strength in private residential construction spending, a byproduct of strong demand driven by a scarce supply of existing homes for sale. Treasuries pulled back slightly while the MBS basis ended modestly tighter.
Today’s early close before the Independence Day weekend kicked off with the ever-important June employment report: the Unemployment Rate was 5.9 percent due to a rise in the labor force, Nonfarm Payrolls were 850k, and Hourly Earnings came in at 3.6 percent year over year, as expected. We’ve also received the May trade deficit (). Later this morning brings May factory orders. Due to the early close, the Desk will conduct just one operation that will target up to $2.95 billion UMBS30 2 percent and 2.5 percent. Due to factors like Gfees, overhead costs, servicing valuations, and excess servicing multiples, 30-year rates are obviously going to be higher than that. Though, we saw yesterday from this week’s Primary Mortgage Market Survey from Freddie Mac that the 30-year rate fell back below 3 percent, falling 4 bps to 2.98 percent. The 15-year fixed and 5/1 hybrid ARM rates were mixed at 2.26 percent and 2.54 percent, respectively. After the employment data ae begin the day with Agency MBS prices up/better nearly .125 and the 10-year yielding 1.43 after closing yesterday at 1.47 percent.
“Doorway Home Loans is experiencing substantial growth and we need experienced underwriters who want to grow with us. Ideal candidates must possess a VA SARS certification, conventional, government and jumbo lending experience, and a sincere desire to collaborate with producers in an environment of mutual respect and high performance. Applicants should have a good sense of humor, low ego, and the confidence to communicate directly with loan officers when needed. Our 1-year HUD compare ratio in the Neighborhood Watch is 0%, and we deliver average loan turn times of 21 days. Doorway is growing at an annual rate 5 times faster than the average independent mortgage bank, while maintaining our positive, radically transparent, and authentically caring culture. Competitive benefits and hybrid office/work-from-home flexibility. Please forward all enquiries to Denise Rodriguez.
Bell Bank Mortgage is off to another solid start in 2021, with several of its most productive months ever. Mortgage lenders who want to be part of this success story, and help build a presence in Missouri, Kansas, and now Colorado, should talk to Bell’s Midwest market manager, Greg Gunn, or one of the producing area managers who have recently joined Bell. Jake Kearney and Nate Thurman in Overland Park, Kan., are Bell’s leaders in Kansas City, while Ryan Campbell is producing area manager in Columbia, Mo. Brian Tichenor is opening Bell’s newest office in Colorado Springs. All five are seeking experienced mortgage lenders and support team members who fit Bell’s “people-first” culture and can build client and business partner relationships. Watch this 90-second video for a taste of Bell’s simple requirements (doing good and being the good) and consider Bell for the next step in your mortgage career!
Are all the best accounts in your region taken? For AEs they can be solely yours with wholesaler Loan Simple. And if there’s one lender who lives up to their name, it’s them. Take their “Simple is Supersonic” process that lets you and your brokers work at light speed. It starts with 4-hour turn times from initial submission to decision, to give borrowers fast approvals and a seat at the closing table. It also means closing in as little as 10 days, thanks to a streamline process and closers that are superfast. Simple is Supersonic means your brokers are approved and ready to go in 24-hours or less, plus they’re assigned a dedicated team within 48 hours to get them started. Simple is Supersonic also means a 1-hour call back and, get this, a click and drag Blob folder where your team can drop in a single PDF and Loan Simple will index every document. What used to take 24 hours now takes about 30 minutes. Did someone say, “Whiplash?” Loan Simple is all about making an AE’s job simple and brokers look great. If you’re ready to be the fastest AE in history and help grow your broker’s business, it’s time to stake your claim and apply now.