Winter is coming. I don’t need a new coat to walk from my bedroom through the kitchen and into the dining room to work on this commentary. Who is buying neckties or new dress shoes, or spending money renting cars, going to a theater, or having something dry cleaned? The sales volume of many things is tepid at best although online shopping and technology expenditures are solid. But how can I expect to keep my computer secure when even putting my key into my front door lock creates sounds that lock pickers can use to recreate a key to my house? (Thieves would be wasting their time here unless they wanted T-shirts and mouse pads from long extinct mortgage companies and my dwindling supply of hotel shampoo and soap.) I’ll get to the point: there are some simple things that everyone working from home should do to keep their system secure and their IT department happy. (Speaking of IT, lenders who want more detailed information on the functionality and resource requirements on loan origination systems should take the five minute LOS survey in STRATMOR’s 2020 Technology Insight Study; lenders who participate receive the survey report for free.)
Broker and Lender Products
“With record low rates and refis booming, EPOs are plaguing lenders. In mid-July 2020, the 30-year fixed rate hit an all-time low of 2.98%, and that was the 7th time this year. You better believe borrowers are shopping! Fear not, for there is a cure! On average, a Sales Boomerang lender's database triggers at least 17 EPO alerts per month with each EPO costing lenders an average of $11,500. That’s almost $200,000 a month in penalties alone! Sales Boomerang has created a new and highly valuable alert that notifies mortgage lenders the moment when someone in their database is in danger of becoming an EPO. Now you can save 100% of those EPOs! “Look at the opportunity cost you have by not having Sales Boomerang. Last year we closed over $72M in loans that we would have lost from not having Sale Boomerang.” (Stephen Barton, Eustis Mortgage) Schedule a demo today!”
Driving down origination costs has taken on a new meaning in recent weeks. Register for today’s live virtual demonstration @2:20pm CT with Service 1st’s @Curtis Knuth and @Lisa Binkley as they demo a fintech solution that reduces multiple income calculation touchpoints to one. Income+ is engineered to empower simplicity, cutting the income determination process by up to 40 FTE minutes. Learn how Income+ standardizes income calculations using a customizable rules engine. Lenders receive a one-page supplement report of independently validated monthly income calculations via verifications they already order! It’s an easy integration & simple deployment on API or web portal… just turn it on. No implementation fees, no manual uploads, and no monthly minimums! Hurry, register for free. It’s happening today!
The COVID-19 pandemic has led to a wake-up call for the mortgage industry. Borrower job loss and other disruptions due to COVID-19 caused many to miss mortgage payments and potentially go into forbearance. Those unexpected delinquent borrowers have caused a “pig in a python” situation: a huge, overwhelming disruption in the lending pipeline due to archaic technology and poor customer service. In a recent White paper, TMS covers how a proactive approach to customer service and top-of-the-line technology allowed them to be prepared for this challenging time.
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Rumors continued to swirl over the weekend about a change to the sudden FHFA price increase for refinances a few weeks ago that is supposed to take effect 9/1. The Wall Street Journal reported that while the Federal Housing Finance Agency (FHFA) was resisting industry pressure to rescind the 50 bp fee on refinances, the agency was negotiating with industry groups to delay implementation. Even a one-month delay would allow originators to clear most of their existing locked pipelines and avoid having to pay the 50 bp fee on those loans. A longer delay would help further by reducing the overall impact of the fee since refinance activity should start declining in 2021.
A delay would certainly help lenders, and the owners of those lenders, in the short term (Mr. Cooper, for example, is on the hook for $20 million given its Agency pipeline). Borrowers would be helped in the long term. Senators sent a letter to the FHFA requesting that the 50 bp fee be rescinded. Politicians, the Trump administration, real estate agents and mortgage lenders oppose the fee, and opponents refer to it as a refinancing tax. Trade groups such as the Mortgage Bankers Association and the Community Mortgage Lenders of America are lobbying against the fee or at least a delay. The announcement of the fee caught the industry off guard and came with very little justification.
Freddie and Fannie have a different official take. “The actions we have taken… with the support and direction of [the Federal Housing Finance Agency] will ensure we can continue to maintain that stability over the long term.” Sure, it is easy to understand that Fannie Mae and Freddie Mac are taking advantage of the mortgage-refinancing boom to shore up their capital as they seek to return to private ownership. But at the expense of every lender in the United States? And at the expense of every homeowner refinancing to save money and, in effect, help the consumer-based economy?
And let’s not forget the planned withdrawal of policy allowing the GSEs to purchase loans that enter forbearance prior to delivery. How does that help stabilize the housing market and provide support to American homeowners during the current public health crisis? “Q128. Does Fannie Mae purchase loans that are in forbearance? Yes, certain loans that go into forbearance after loan closing and before sale to us became eligible for sale beginning May 1. Loans must have note dates on or before Aug. 31, and must be delivered by Oct. 31, 2020. Refer to Lender Letter LL-2020-06, Selling Loans in Forbearance Due to COVID-19 for eligibility and delivery requirements. Q129. Will the note and delivery dates be extended any further for selling loans in forbearance? No, there are no plans to further extend the terms for selling loan in forbearance. Loans with note dates after Aug. 31 that go into forbearance after closing and before sale will not be eligible for sale to us.”
Investors and lenders continue to react. PennyMac Correspondent Group has posted new announcements: 20-48: Fannie Mae SEL 2020-04, Freddie Mac Bulletin 2020-31 and FHA Mortgage Letter 2020- 24 20-47: Fannie Mae and Freddie Mac Adverse Market Refinance Fee
Effective for loans submitted on and after today, August 24, AmeriHome is temporarily suspending loans submitted for Non-Delegated Underwriting where self-employment income is used to qualify any borrower. This temporary suspension is effective for all Fannie Mae, Freddie Mac, and FHA programs eligible for Non-Delegated Underwriting.
loanDepot Announcement topics include LDW Overlay Matrix, Fannie Mae Solar Panel Clarifications, Freddie Mac Bulletin 2020-31 Conventional, Essent COVID-19 Alignment Extensions Conventional and VA Lending Guide – Fee Recoupment for IRRRLs Government.
Mountain West Financial is retiring its conventional Professional Product offering as this option will no longer be available in secondary markets. This product was designed to treat student loan payments differently for recent graduates of medical programs. All loans currently in process under the Professional Product must be locked no later than August 31st, 2020 and must fund no later than September 30th, 2020.
We saw consistent Treasury yield curve flattening throughout last week, and Friday was no exception. Data points were the name of the game on the day, and markets received some upbeat economic news in the form of both Markit's flash Composite PMI reading for August and July existing home sales. Flash PMIs in the U.S. rose well above expectations in both the manufacturing and service sectors, taking the composite reading its highest level in 18 months.
This commentary focuses on mortgage lending and housing, so it was interesting to see that existing home sales also blew past consensus, posting their largest monthly increase on record, buoyed by cheap borrowing costs. Total sales in July were up 8.7 percent from a year ago, reflecting considerable demand for existing homes. Eventually, low supply will boost home prices higher, but for now, the residential real estate market is proving a rare bright spot for the pandemic economy. That was welcome news to close the week after new unemployment claims from the previous week jumped unexpectedly to 1.1 million and Federal Reserve officials offered more grim warnings of a slow economic recovery.
With no economic data of note today (aside from the Chicago Fed National Activity Index for July later this morning), things pick back up tomorrow with the August FHFA Housing Price Index, June S&P Case-Shiller Home Price Index, July New Home Sales, and August Consumer Confidence. The midweek session brings July Durable Goods Orders before Thursday sees the second estimate of Q2 GDP Second Estimate, and July Pending Home Sales. The week closes with July Personal Income and Spending, the PCE Price Index, July Wholesale Inventories, and Final University of Michigan Consumer Sentiment for August. The Desk will conduct three MBS FedTrade operations today targeting up to $5 billion 2 percent and 2.5 percent starting with $765 million UMBS15s followed by $2.8 billion UMBS30s and $1.4 billion GNIIs. We begin the week with Agency MBS prices unchanged from Friday and the 10-year also unchanged yielding 0.63 percent.
“Caliber Home Loans is recruiting top candidates with at least one year experience in the mortgage industry for our Caliber Operations and Sales teams across all channels. We are offering enhanced sign-on bonuses and incentive plans for Underwriters, Processors, and Closer/Funders. In the past four months, we hired over 1,000 new team members across Caliber, 400 of them Operations alone! We are experiencing unbelievable growth and are ready to fill nearly 500 additional Operations positions! If you have a passion for helping customers achieve their dream of home ownership, we want to talk to you! Visit Caliber Careers to learn more about our job opportunities. To be immediately considered for a position in Operations or Sales, email Jonathan Stanley or Brian Miller respectively.”
“FundLoans announced the launch of its enhanced non-QM and Jumbo product lines which include loan amounts up to $5MM, cash-out available on Jumbo investment, 24 months full-doc up to 90% LTV, and DSCR as low as 0.8 with the ability to qualify on IO payment. As a trusted leader in “make-sense” lending, FundLoans provides brokers with competitive interest rates, five ways to calculate bank statement income, and forward-thinking underwriting options. Click here to submit your scenario. Interested in joining our non-QM redefined team? Here’s your chance! FundLoans is hiring Account Executives, Underwriters and Operations team members. Email us at info@fundloans to apply.”
“Towne Mortgage Company is growing (again!) and would like to bring on high performing Underwriters with at least 3 years of experience. Over the last year our volume has increased by 300% and for nearly 40 years we have provided big name results with a small Towne touch. Being part of our Towne has its perks. We offer industry leading health benefits because we care about your safety and well-being first. Boost your performance with skills training and maintain work/life balance with our alternative work arrangements. Towne is committed to fostering a respectful, inclusive community that is diverse in all aspects, both in and outside of the office. Come for the stability, stay for the culture. Full-time, on-site, 100% REMOTE and flexible/part-time opportunities are available. If interested, please contact Jessie James to learn more.”
“NewRez, a rapidly growing and well-capitalized national lender, is looking to hire Client Managers to act as the single point of contact for clients in our Correspondent Lending Division. You’ll be responsible for facilitating an exceptional customer experience throughout the life cycle of the loan (including underwriting, lock, closing, shipping, audit, purchase, and servicing). The position requires best-in-class communication, problem solving skills, knowledge of all loan programs, compliance, investor requirements, and general mortgage origination standards. Named by National Mortgage News as one of the best mortgage companies to work for, NewRez offers competitive compensation, comprehensive benefits, and supports employee volunteerism and charitable initiatives through our NewRez NOW program. For more information on the position or to submit your resume for consideration, please email Maureen Mitchell.”
“At Summit Funding, we are not just a mortgage company, we are a group of individuals with a mission to be our best. A privately owned, top 35, 100% retail lender we originate, close, fund and service all our own loans and just celebrated our 25th year in operation. We are hiring right now and have in office and remote options available for Loan Processors, Junior Underwriters (great opportunity for a Processor who wants to take the career step into Underwriting), Conventional and Government Underwriters, Closers and Funders. We also have opportunities for Leads and Supervisors in Processing, Closing and Underwriting. Check out all our career opportunities or email Jennifer Hudson for more details or to send your resume.”
Freedom Mortgage’s fast-growing wholesale division is seeking talented professionals for many work-from-home roles including corporate finance and operations. If you are an experienced finance manager in mortgage banking, submit your resume to bit.ly/FMRecruiting. In addition, opportunities for Loan Processors, Closers and Underwriters are available throughout the continental U.S. If you are fueled by your entrepreneurial spirit and are looking for a great work culture, please visit bit.ly/FMRecruiting to review available positions and submit your resume.
Want to work at the FHA? There’s an opening for the Deputy Director, Quality Assurance Division, Washington, DC.