The final day of Q3 already… Aside from F1 drivers, did you know that Ferrari employees are not allowed to buy Ferrari cars? The exotic car market certainly has its own price movements, with various models going up and down in price independently from economic conditions. In general consumer inflation hasn’t been a threat for decades, yet financial markets continue to be focused on it and influenced by it. And the financial markets can’t help but be influenced by politics. In favor of it or against it, thinking it is necessary or unnecessary, the impeachment inquiry is in the news. And quickly with it, for better or worse, come the jokes. For example, Indiana’s Carol K. sent along, "Wine Pairings for Impeachment Scenarios.” Analysts believe that the inquiry won’t directly impact mortgage rates, but it certainly shifts the focus off of other pressing issues and economic events.
The disclosure dance is complex and infamous for tripping up borrowers and adding days (i.e., dollars) to the loan cycle. That’s why SimpleNexus is enhancing its integrated disclosures solution, which irons out the choreography between borrowers, LOs and disclosure desks with automatic push notifications that prompt parties to securely sign and review disclosure docs from any device, without logging into multiple portals. The new auto-fulfillment service will make it easier to disclose to non-eConsenting borrowers by either mailing disclosures packages directly to applicants in accordance with regulatory deadlines or generating disclosure documents as a single file to be sent by the lender’s disclosure desk. For more info on how SimpleNexus can remove roadblocks from origination, request a personalized demo.
Borrowers and Clients Determine All
How important is personal touch to borrowers, and particularly first-time homebuyers? According to data from STRATMOR Group’s MortgageSAT Borrower Satisfaction Program, at closing the originator’s physical presence at closing can often be the deciding factor on whether the borrower leaves the table a promoter or a detractor. Just 38 percent of originators have attended their first-time homebuyers’ closings in 2019 YTD. This has cost 18 NPS points, meaning roughly 18 less borrowers per 100 were delighted enough to refer their friends and family. In his September MortgageSAT Tip, MortgageSAT Director Mike Seminari offers lenders three steps to take to make sure first-time homebuyers are feeling the personal touch.
NewDay USA has launched a Veteran Streamline Refinance Program for military families. To qualify, borrowers must have made six payments on their VA loan and be able to lower their current interest rate by 0.50 percent if they are refinancing a fixed-rate mortgage to another new fixed-rate loan. Once they have applied for a loan with NewDay, customers will be guided through the refinance process by a NewDay account executive who has been thoroughly trained about the military lifestyle and how to best serve military borrowers.
Mountain West Financial, Inc. updated its privacy policies (federal and state) and consequently its initial loan disclosure packages effective September 23. Borrowers will be notified of their right to opt-out of some information sharing for marketing purposes. Those that obtain their disclosure packages by e-sign will be able to make their elections immediately. Those that don’t will have to mail in their elections. RESPA Affiliate Disclosure will also be updated.
Vellum Mortgage announced that through its partnership with Finicity and Freddie Mac, the October 1st implementation of Finicity’s new Verification of Income and Employment (VOIE) solution creates a significant move to a full digital mortgage setting a new benchmark for automated income and employment assessment, while adding to Vellum’s customer centric, digital mortgage experience ElevateSM. Finicity’s VOIE solution instantly validates the income used for loan qualification by extracting the borrower's income data from the pay statement and cross-verifying it with income transactions reported by their financial institution. This automates a mostly manual process for lenders while also reducing the borrower “hassle factor”.
Finicity announced the first-of-its-kind Verification of Income and Employment (VOIE) solution that will speed up borrower verifications and further advances the industry in its shift to become fully digital. Designed to stand up to the stringent requirements of the U.S. mortgage market, the VOIE solution is already in use by Freddie Mac’s asset and income modeler (AIM). The solution digitally extracts a borrower’s pay statement data from their pay stub and then cross-verifies it with their transactions from their financial institution. Finicity’s VOIE solution is anticipated to provide successful income and employment verification coverage of over 70%.
Looking forward towards the 2020 election, are there political implications from a recession? Downturns are generally bad news for the presidents who preside over them. Both the elder President Bush and President Carter lost re-election bids thanks, at least in part, to recessions. And slowdowns aren’t great for the politicians who oversee them either, even if they never turn into officially declared contractions. President Reagan took heat in 1986, after his re-election, when output growth dropped below potential, even though America would not experience another recession until the early 1990s.
President Trump, for his part, has been insisting that the United States economy has great momentum, and that it is the Fed’s reluctance to cut interest rates and media fearmongering, not his policies, that risk holding it back. The fact that the economy is not shrinking yet and may avert a recession altogether does not mean that everything will be sunshine and roses. Employers are reluctant to lay off workers until business gets pretty bad, because hiring and training is expensive. So a recession becomes far more likely once businesses start cutting jobs and workers start to lose their paychecks, as those consumers pull back sharply on spending, eventually shrinking the economy in earnest.
The Fed has yet to allay recessionary fears so far, including Fed Chair Powell going out of his way during press conferences to say he does not expect a recession, despite a growth output reading well off its recent high. The growth output reading is still not cause for concern, and consumer spending remains strong. After all, this expansion could be different, with slow growth actually causing higher unemployment without turning into a recession. While there’s no precedent for that in the United States, Australia has had several instances of rising unemployment in its current 28-year economic expansion. And many people believe President Trump will unwind many of his punitive tariffs on China either before things get too bad, in the hope it boosts his reelection bid. Regardless of the President's tweets and actions in the face of data, the strength of the domestic economy should have an impact on his results at the polls.
Looking at the daily bond markets, Treasuries were higher and the curve closed steeper to end last week, including the 10-year yield ending -1 bp to 1.68 percent, after the day’s slate of economic data showed weaker than expected personal spending in August and decreasing nondefense capital goods spending decreased in August, indicating weak business investment. Treasuries were boosted by tumbling equities in the wake of reports that the Trump administration was considering delisting Chinese firms from U.S. exchanges and limiting the exposure of government pension funds to companies in China as two of many ideas to limit the flow of U.S. investment funds into China. That news made the most waves in markets despite the uptick in the core PCE index to just below the Fed’s target, at 1.8 percent year-over-year versus an upwardly revised 1.7 percent previously.
In Fed speak, Philadelphia Fed President Harker said that the Federal Reserve may need to return to growing its balance sheet sooner than previously thought. That view echoes what Fed Chairman Powell said during his most recent press conference. The New York Fed conducted a repurchase operation, accepting $22.7 billion of bids, well below the $100 billion maximum. The NY Fed's 14-day term repo operation was also undersubscribed, as total bids amounted to $49.0 billion, below the $60.0 billion maximum. The NY Fed today will purchase up to $1.041 billion UMBS30 3 percent ($737 million) and 3.5 percent ($304 million).
Today’s economic calendar contains only two 2nd-tier releases with Chicago PMI for September and the September Dallas Fed manufacturing figures. Tomorrow brings another pair of releases with August Construction Spending and September ISM Manufacturing Index before the midweek session reveals last week’s application data and the September ADP Employment Change reading, though that will be dwarfed in importance by Friday’s payrolls report. Thursday contains August Factory Orders and September ISM Non-Manufacturing Index, before the week closes with the ever-important Payrolls report and the August Trade Balance. The lone central bank decision comes from the RBA on Tuesday, and Fed Chair Powell makes remarks Friday, while overseas economic releases include China PMI, German unemployment, EU CPI and Canadian GDP and manufacturing PMI. With regards to MBS, the NY Fed will conduct two FedTrade operations in which they will purchase up to $1.5 billion Class A and C MBS. September agency prepayments will be released after the close on Friday. We begin today with Agency MBS prices roughly unchanged from Friday evening and the 10-year yielding 1.69 percent.
Jobs, Businesses for Sale, and Changes
An FHA Full Eagle is for sale. A mortgage company with a Full Eagle, that has been in business for 10 years and has a clean record, is deciding to close its doors. The 1st $60K will take it. Avoid the test case phase and start closing your FHA loans on your warehouse line. Please contact Chrisman LLC’s Anjelica Nixt if you're interested.
A well-established large independent mortgage banking company, with primarily TPO focus, is seeking a seasoned and dynamic CFO. As a member of the executive leadership team, this individual is responsible for performing effective treasury and financial management, warehouse relationships, MSR sales, forecasting, planning and analysis, budgeting and financial reporting. The ideal candidate will possess exceptional leadership, strategic thinking, communication and analytic skills. This position is based in Southern California, will report directly to the COO and will manage the finance and accounting team. CPA and mortgage banking experience required. The company offers competitive compensation, benefits and an amazing culture. Click here to send your resume for consideration.
Greg Gunn has been named vice president/Midwest regional manager of Bell Bank Mortgage as it expands its footprint in several U.S. regional markets. Founded in 1880, Bell Bank Mortgage is Minnesota’s largest residential mortgage originator, with thousands of family mortgages to its name. Gunn, who has 26 years of experience in the mortgage field and is based in St. Louis, will be responsible for recruiting mortgage lenders, developing brand awareness and building business in Springfield, St. Louis and Kansas City, Missouri as well as Omaha and Denver. At a time when many mortgage companies are tightening operations due to market challenges, Bell is actively expanding and recruiting in several new regions.
Celebrity Home Loans, “CHL,” is seeking to add an experienced legal counsel to its team. Opportunities exist at the Assistant or General Counsel level for the right candidate. This is a great opportunity for someone looking to advance their career through additional oversight and visibility into all of the legal aspects of operating an independent mortgage banking organization. The Company’s President currently serves as its General Counsel and is looking for the right person to take on that role. The position can be located in its headquarters in Oak Brook, IL, at any of its many locations through the US, or virtually. A demonstrated history serving as legal counsel for independent mortgage bankers in areas of regulatory compliance, labor law, contracts and vendor management is desired. CHL is licensed in 23 states and has a 50-state licensing strategy it intends to complete by 2021. All confidential inquiries should be directed to Michele Skibinski.
ComplianceEase, the leading provider of automated compliance solutions to the industry, is looking for an experienced Enterprise Sales Director to join its team and lead the effort to position ComplianceEase as a true strategic compliance partner! The ideal candidate will possess a high degree of intrinsic motivation and passion to win, have an established intellectual horsepower, excellent communication skills, the emotional intelligence required to navigate complex deal structure, and secure stakeholder commitment, both internally and externally. Contact Nancie Dunn for more details.
With over thirty years of lending in Texas, Austin’s Mission Mortgage has been expanding dramatically recently and must fill several positions due to this growth including a Production/Sales Manager and an Operations Manager. The Production/Sales Manager is expected to take the lead with Mission’s current origination staff, working to help them improve, increase production, recruit, and help Mission grow with additional originators, additional sales staff, and marketing. (This person should either live in, or plan to move to, the Austin area.) The Operations Manager would oversee the non-sales staff, and non-management side of Mission Mortgage’s business, including overseeing the processing staff, workflow, and managing the pipeline. Confidential inquiries should be addressed to Chrisman LLC’s Anjelica Nixt.
Congrats to Peter Demiris who has joined CALCAP Lending as SVP, Capital Markets & Servicing. With over 15 years of experience in Investment Management, Investment Research, Servicing & Loss Mitigation, and a variety of Capital Market executions including Whole Loan Trading and Loan Securitization, he’s ready!