In the various originator-centric conferences I’ve attended, I’ve never seen a session on, “How to beat up your capital markets group on pricing & extensions.” Here at the California MBA’s Western Secondary, the other end of the loan life, besides talk of obtaining real time information from borrowers, margin fluctuations, and waiting for Agency moves, a portion of the talk revolves around obtaining real time info from borrower on the road. Margins, although lower than 2020’s and dependent on origination channel, are still solid compared to historical levels. Lenders are still seeking Agency approvals to sell to the cash windows. MSR lines of credit are a topic, and how subservicer oversight critical. Few expect the Federal Reserve to do much in 2021. Some of the conference talk is revolving around forbearance, eviction moratoriums, and legal maneuvering that borrowers do which can impact servicing values. And how compliance is the “name of the game” for lenders. Along those lines, today’s audio version of the commentary is available here and this week’s is sponsored by ActiveComply, a cloud-based solution for mortgage lenders, banks, and credit unions helps them engage with social media safely and meet compliance and archival requirements. Schedule a 30-minute demo or request a free compliance report for your company.

Broker and Lender Products and Services

Lenders dread switching subservicers. TMS believes in growing happiness, so it make switching a painless, happy experience for both you and your customers. TMS goes the extra mile to ensure an easy, smooth, and fully transparent onboarding process. Said one new client: “I can’t say enough about TMS’s onboarding process. I knew I could call late… TMS was always responsive. TMS even helped us through a Ginnie Mae audit… It was spectacular.” Pain-free onboarding is just one of the reasons why TMS has become one of the nation’s Top 10 subservicers. Ready to make the switch? Learn more about partnering with TMS Subservicing. 

FACT: The “dog days of summer” refers to a specific period when the Sun occupies the same region of the sky as Sirius, the brightest star visible from any part of Earth and located in the constellation Canis Major (aka, the Greater Dog). While this year’s dog days officially ended Aug. 11, homebuyers are still in a dog fight with rising home prices, making it more difficult to save an adequate down payment. To address this challenge, Mid America Mortgage (MAM) now offers its down payment assistance (DPA) program to its wholesale and correspondent partners. This unique program is available to first-time and repeat homebuyers with no income restrictions, making it even easier to help borrowers take advantage of today’s low rates and begin their homeownership journey. To learn more, contact Julas Hollie or seek out a MAM representative at the Texas MBA Conference in Ft. Worth next week.

Stearns Wholesale has made significant improvements and innovative advancements to its tech offerings, specifically within its SNAP platform which continues to evolve and provide a better experience for brokers. These additions included a brand-new look and feel, improved navigation, an enhanced user experience that helps complete processes quickly and easily, and quick access to loan management and pipelines. To watch a video tutorial exploring these exciting new features in Stearns SNAP Platform, click here. If you’d like to partner with Stearns or learn more, click here to be contacted.

Western Alliance Bank’s Specialized Mortgage Services Group continues to be solution-oriented in changing markets in providing various financing vehicles. Warehouse Lending finances a wide spectrum of loan types including Agency, FHA/VA/USDA, Jumbo and Non-QM, funds until 2:30pm PST and works with borrowers to customize terms to meet investor and execution needs. MSR financing provides lines of credit that leverage Fannie Mae, Freddie Mac and Ginnie Mae collateral. Lines can be annual revolvers or longer-term interest only draw periods followed by term finance. Flexible structures provide solutions to accommodate originators’ MSR retention strategy. Additionally, the Specialized Mortgage Services Group provides Note Financing, Treasury Management Services, Working Capital Lines and Commercial Real Estate solutions across the country. Member FDIC.

Worry about bias? Errors?  Repurchases? Only Candor’s Underwriting Decision Science™ can eliminate all three. Need more profit per loan? Only Candor can make decisions versus software that pushes decision making back to a person. Highest data quality means no repurchases. You could be live in 30 days. Contact Candor for a demo. (Favor: Will you please answer 2 one-click questions?)

Did you know, the Texas MBA, founded in 1917, is the oldest state MBA? Similarly, the Fort Worth Stock Show and Rodeo is the oldest continuously running livestock show and rodeo. In just a few days, hundreds of mortgage bankers will head to Fort Worth for the 105thTexas MBA Annual Convention. IDS has packed its bags and is looking forward to seeing everyone in person again! More than just an award-winning doc prep provider, IDS also offers a full suite of eClose options through its eClose platform, Solitude Solution. If you’re attending the Texas MBA Annual, make sure you stop by booth 415 and say howdy or set up a time to meet with Daniel Miller in Fort Worth.

Lenders and Investors Follow Agency moves

The Urban Institute thinks that Fannie Mae's new policy of including rental history will expand access to home ownership. But, as Brent Nyitray points out, “Fannie expects few borrowers will actually benefit from this new system. This is because lenders cannot request bank statements directly from the banks due to PI restrictions, and banks will be reluctant to release the data to lenders due to the information security risks.”

Remember that, in terms of volume shifts, business is picking up for the private-label mortgage market in which financial firms package pools of mortgages and sell them as bonds which are not backed by government-owned Fannie Mae or Freddie Mac. Issuance topped $42 billion in the second quarter, the biggest total since the coronavirus pandemic began.

FHFA expects Fannie Mae and Freddie Mac to increase their loan purchase activity for lower income and minority borrowers. FHFA released a proposed rule seeking comments on the percentages of Fannie Mae's and Freddie Mac's loan acquisitions expected to meet goals related to helping lower-income families and minority neighborhoods for 2022-2024. The proposed goals include low-income home purchase (80% or below area median income): 28% (up from 24%). Very low-income home purchase (50% or below area median income): 7% (up from 6%). Minority census tract home purchase (a new subgoal): 10%. Low-income census tract home purchase (a new subgoal): 4%. Low-income refinance goal: 26% (up from 21%).

The new census tract subgoals reinforce FHFA’s commitment to increase access to credit to all borrowers no matter their location.  The proposed rule stops the practice known as “double counting” when a single loan could be counted in multiple categories. The FHFA is expected to announce program changes (i.e. possible pricing and policy changes) to facilitate the achievement of these goals. Changes to the Preferred Stock Purchase Agreement amendments of January 14, 2021, should certainly be part of any new initiatives, particularly the loans with “triple risk” factors (i.e. high LTV and DTI and credit scores below 680). 

PennyMac posted new announcements 21-62: Updates to Best Efforts Rate Sheet

And 21-63: COVID-19 Related Updates in alignment with Freddie Mac and Fannie Mae.

Flagstar Bank updated conventional underwriting guidelines, effective immediately, with changes to delayed financing, Fannie Mae rate and term (limited cash-out) refinances, credit card rewards. For new locks Flagstar Bank has updated some of the existing Agency State & Loan Amount MSR loan level price adjustment values. And Flagstar Bank is updating its Conventional Guidelines regarding expired, expiring and ongoing temporary COVID requirements.

FAMC updated its conventional conforming guidelines to align with recent Fannie Mae and Freddie Mac changes including Fannie Mae new guidance for the use of credit card reward points as eligible assets. Freddie Mac’s cash-out refinance – Delayed Financing. A transaction is not eligible for a limited cash-out refinance if the borrower completed a cash-out refinance transaction with a note date 30 days or less prior to the application date of the new refinance secured by the same property per updated eligibility requirements.

FAMC issued a reminder  regarding extenuating circumstances. The guidelines were updated to reflect that waiting periods and documentation requirements for extenuating circumstances on bankruptcy and foreclosure follow the Fannie Mae Selling Guide. This policy change was effective on August 3, 2021.

Loans using Remote ink-signed notarization (RIN) are ineligible for purchase to Wells Fargo Funding. Did not align with Freddie Mac’s permanent policy and Loans utilizing RIN continue to be ineligible. Please note loans using remote online notarization (RON) continue to be eligible as described in Wells Fargo Funding Seller Guide (Seller Guide) Section 508.02(b): eMortgage Eligibility. And two new data entry fields are now available at Registration for Best Effort Loans to allow Wells Fargo Funding and Sellers the opportunity to participate in future Agency offerings predicated on this data: County, Total Qualifying Monthly Income of All Borrowers.

Don’t forget that Wells Fargo Funding has retired its COVID-19 temporary policy on Gap coverage eligibility for all loans, effective August 23.

A recent First State Mortgage announcement was issued regarding SOFR Conforming ARMs.

Capital Markets

Fears over economic growth, Covid-19, and tapering by the Fed were pushed to the side yesterday as the FDA gave full approval to Pfizer-BioNTech’s Covid vaccine. Attention now turns to what is expected to be a dovish-leaning speech by Fed Chair Powell in front of the virtual Jackson Hole Symposium on Friday. Supply-side disruptions are the current issue, with inflation high and unemployment low. In Washington, the House adopted a $3.5 trillion budget resolution. Treasuries pulled back while the MBS basis closed tighter, led by lower coupons.

Yesterday, we saw new home sales increase 1.0 percent month-over-month in July to a seasonally adjusted annual rate of 708k, more than expected. It’s a tough pandemic comparison period, with new home sales down 27.2 percent from the same time last year, when people were escaping the cities. Home builders are continuing to put up the homes but are seeing them sold later in the construction process, keeping new home inventory light and pricing strong. New home sales, counted when contracts are signed, are being pinched by cost constraints and affordability pressures.

Today’s economic calendar began with the MBA’s mortgage application index (for the week ending August 20) showing an increase of 1.6 percent from one week earlier. We’ve also received durable goods for July (only -.1 percent, less of a drop than expected, and +.7 percent ex-transporation). Prices are a function of supply and demand, and yesterday’s $60 billion 2-year Treasury note auction was met with excellent demand. Today sees a $61 billion 5-year note offering and tomorrow brings a $62 billion 7-year note auction. Later today we will receive remarks from San Francisco President Daly. We begin the day with Agency MBS prices roughly unchanged and the 10-year yielding 1.30 after closing yesterday at 1.29 percent.


Jobs and Promotions

Join the award-winning team at Embrace Home Loans! The company was just named to the Inc. 5000 list of Fastest-Growing Private Companies in America for the sixth time and has consistently been named to Best Mortgage Companies to Work For each year by National Mortgage News. Embrace receives high marks for customer satisfaction too: It has nearly 3,000 5-star reviews on Zillow and an average 5 out of 5-star reviews on Google. Need more convincing? The average tenure of Embrace loan officers is just over seven years across all channels, compared to the industry average of two years. Why do they stay? “We work with our loan officers and branch managers to carve out a clear career path, then provide the technology and marketing support they need to succeed,” says Steve Adamo, the Rhode Island-based lender’s president of national retail production. Interested in joining a winning team? Contact Steve Adamo today.

“At ClearEdge Lending you get the best of Non-QM Products, Pricing and Service while saving time and money. We’ve Improved pricing on several of our Non-QM products making the move to ClearEdge a no-brainer. Additionally, our hybrid appraisal turn times are half of the industry average and cost half as much too. The hybrid appraisal can be matched with a number of our Non-QM loan programs allowing you to close loans faster and more efficiently. When you want innovation, speed-to-close and streamlined documentation you will find it at ClearEdge Lending. To take advantage of these opportunities, visit ClearEdge Lending and apply to be an approved partner. Come join a winning team and build your career with one of the fastest growing Non-QM lenders by visiting Careers or by emailing us.”

“Millennials and Gen Zers made up more than 50% PrimeLending’s purchase customers so far in 2021. How are our loan officers winning these digitally-forward borrowers in today’s competitive market? By connecting with them how, when and where they want to do business. Thanks to our powerful tech stack that includes Salesforce, Total Expert, Blue Sage, Podium and more, PrimeLending’s LOs are better equipped to build their personal brand, engage with customers, originate loans, and create lasting relationships. Learn more by checking out our video. Do you have the resources you need to stay top-of-mind as the marketplace continues to evolve? We are hiring LOs who want to go where the customers are: contact Nic Hartke to explore opportunities!”

Six-year Deephaven vet Mack Walker has been promoted to Senior Vice President, Director of Capital Markets at Deephaven and is now charged with driving the growth and profitability of all Deephaven sourcing channels, including product development and the delivery of non-QM assets into the secondary market. “He is also a key voice in marketing, business development and other company-wide initiatives.”

Atlanta’s Equity Prime Mortgage has appointed Kevin DeLory as chief lending officer, in charge of building and leading its sales force and transforming the company’s third-party and consumer experience.