Tomorrow is Valentine’s Day, traditionally associated with love. But on the opposite side of the spectrum, an Ohio animal shelter is offering to write your ex’s name in a litterbox, and let its adoptable cats “go to town.” Someone there knows good PR. Did you know that some countries never know who won the Super Bowl? As the pre-printed “Philadelphia Eagles Super Bowl 2023 Champs” t-shirts are shipped off to places like Guatemala or El Salvador, in this country bond market traders and investors are focused on inflation. The Consumer Price Index report for January is tomorrow and forecast to show a 0.5 percent month-over-month rise with energy prices higher again. The headline year-over-year inflation reading is expected to drop to +6.2 percent from +6.5 percent in December. We probably won’t see inflation back in the 2 percent range unless the labor market softens considerably, and that is not evident. Too much inflation will keep the Fed increasing rates to slow it down; an unexpected low level of inflation should be greeted with jubilation that the Fed’s measures are working. Stay tuned! (Today’s podcast can be found here and this week’s is sponsored by the STRATMOR Group, the data-driven mortgage advisory. At STRATMOR, insights and knowledge are applied to guide mortgage clients to make sound strategic decisions and take actions that improve their success. Today’s has an interview with Garth Graham on the current M&A environment.)

Lender and Broker Software, Products, and Services

The contentious debate about how to pronounce “GIF” continues to wage on despite the creator weighing in nearly a decade ago. What’s not controversial is that the right mortgage technologies give lenders an enormous leg up, particularly in a challenging market. Leading digital homeownership platform, SimpleNexus, an nCino company, is committed to offering lenders, homebuyers, real estate agents, and settlement agents the convenience of a remote homebuying process, all in a single-sign-on solution. Join SimpleNexus’ Ben Miller and David Bolin on February 22 at 3:00 PM EST for a live webinar highlighting strategies and tools that drive production, performance, and profits in a tight market. Register now to save your seat!

Over this past month, culminating with last night's Superbowl LVII, we've seen the NFL's most talented teams battle for the Vince Lombardi trophy. Computershare Loan Services (CLS) is also bringing together the industry's best talent as their team gears up to attend MBA's Servicing Solutions Conference in Orlando (Feb 21 – 24). According to CLS' Randy Lightbody, Chief Revenue Officer, lenders are looking to capitalize on a full range of products. Many are partnering with subservicers that understand the nuances of HELOCs and second liens. CLS is a leader in second lien servicing and consistently earns rating agency upgrades in prime, HELOC, and second lien product categories. Contact Randy and the team at Computershare Loan Services to set up a meeting time in Orlando and learn how CLS can help your organization achieve its revenue goals.

Sweeten up your Pipeline this month! LoanStream gives you 3 GREAT WAYS to Close More and Serve More clients. #1: Get 35 BPS Off with the FHA Smart Choice Special through 2/28/2023. #2: Get Appraisal Credit up to $400 at closing from LoanStream for newly approved brokers through 2/28/2023! #3: Join the ABCs of Appraisal’s Webinar happening tomorrow, 2/14 at 11AM PT, reserve your spot now. Restrictions apply to promotions, talk with your LoanStream Account Executive for details.

Isn’t it great when something actually does what it says on the box? LoanCatcher®, Black Knight’s mortgage LOS built specifically for brokers, helps you move through the origination process faster and deliver a better borrower experience, so you can focus on one thing: Catching your next loan. LoanCatcher features a mobile-friendly point of sale, a comprehensive product and pricing engine, robust pre-built and configurable workflows, and advanced capabilities to integrate with the Surefire℠ CRM, so you can convert today’s borrowers into customers for life. Whether at the office, working from home or running errands around town, LoanCatcher gives you the flexibility and capabilities to be the broker your borrowers need. Schedule a demo with Black Knight today.

MortgageFlex will be among the exhibitors at the MBA’s Servicing Solutions Conference & Expo 2023 in Orlando this month, demonstrating its second generation cloud-native servicing software system. The company recently completed a redesign and technology upgrade to its platform, which also includes the first and only multi-lingual servicing portal supporting nearly 30 borrower languages. Improve your customer retention and satisfaction with a more accessible servicing automation tool like you’ve never seen before. Contact John McCrea to schedule sometime to discuss your mortgage servicing needs or stop by and meet us at booth #805. MortgageFlex will see you at the show. Disruption Redefined: Giving Every Servicer the Power to Disrupt Outdated Processes and Succeed.

EXCLUSIVE REPORT: Maxwell 2023 Hispanic American Borrower Survey reveals that 96 percent opt for a national or local lender over online-based options. Increasingly, today’s homebuyers are diverse, with native Spanish speakers set to represent 56 percent of all new homeowners by 2030. Still, Spanish-speaking borrowers often don’t find the home-buying process easy or accessible. To help lenders better serve this demographic, Maxwell conducted a study of Spanish-speaking borrowers, surveying over 1,100 Hispanic American home buyers who completed the mortgage process in the past six months. The findings are eye-opening: For instance, a whopping 96 percent opted for a national or local lender rather than an online-based option. Want to learn how to become the go-to lender for this rapidly growing borrower segment? Click here to download your free copy of Maxwell’s 2023 Hispanic American Borrower Report.

“It’s time to find out when you can reach profitability in 2023! The Richey May team of mortgage industry experts has the knowledge and data to help you understand how to develop a roadmap to return to profitability. Our suite of services include analysis of your production and investor mix, a deep dive into your servicing cash flows, and a thorough breakeven analysis. Our expertise helps you develop a strategic plan for 2023 and beyond. Email to talk to Seth Sprague, CMB.”

Industry Metrics

According to Curinos, January 2023 funded mortgage volume decreased 65 percent YoY and 16 percent MoM. In the Retail channel, funded volume was down 74 percent YoY and 16 percent MoM. The average 30-year conforming retail funded rate in January was 6.38 percent, -14bps lower than December and 298bps higher than the same month last year. Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures. Drill into this data further here.

Going upstream to locks for the month, Black Knight’s January 2023 Originations Market Monitor report was released today. It leverages daily rate lock data from Black Knight’s Optimal Blue PPE, “mortgage lending’s most widely used” pricing engine. “By drawing information directly from origination pipelines, we’re able to provide the industry’s earliest and most comprehensive data-based view of origination activity.” Here’s the report.

Rate lock volumes rose 32 percent in January driven by declining interest rates and seasonal tailwinds, snapping a 9-month streak of declines. Mortgage rates declined in January, continuing a trend that began in early November 2022. Triggered by this pullback, and seasonal tailwinds, rate lock volumes rose for the first time since March 2022, snapping a nine-month streak of declines. Purchase locks set the pace, rising 32 percent, while refinances, which make up a much smaller share of the pipeline, increased as well, with rate/term locks up 37 percent and cash-out locks rising 25 percent. Despite the improvement, rate and affordability pressures continue to challenge purchase lending, with the dollar volume of such locks down 44 percent year over year and 14 percent below January 2020 levels. The full report is here.

Freddie and Fannie Updates

Conventional conforming loans still represent the lion’s share of our market. Thus the policy, procedure, and pricing changes that Freddie Mac and Fannie Mae make ripple through the residential lending industry from top to bottom.

Freddie Mac Multifamily is accepting additional vendors for its renter credit building initiative as the company grows its effort to ensure on-time rent payments are reported to the major credit bureaus. The company launched the initiative with Esusu in November 2021. To date, the program has enrolled more than 150,000 households, establishing credit scores for the first time for more than 20 percent of participants. To facilitate the addition of credit reporting providers, Freddie Mac has posted a new vendor intake form to its website and will consider new participants in the program against a set of criteria it announced late last year.

Freddie Mac announced multiple updates, effective immediately, unless otherwise noted, in Bulletin 2023-3. Updates applicable to Desktop appraisals, property insurance, credit fees, Income – age of tax returns. In addition, Bulletin 2023-3 provides information on enhancements to its CHOICERenovation® offering.

Fannie Mae February Selling Guide update, SEL-2023-01, makes several miscellaneous updates. Information on expanded use of site-built homes as comparable sales for MH Advantage® homes, and making enhancements to support borrowers with nontraditional credit promotes safe and responsible lending by implementing new eligibility requirements for cash-out refinance transactions.

Fannie Mae LL-2022-05 updates to Loan-level Price Adjustments, to include details about the removal of the requirement for Special Feature Code (SFC) 873. Lenders can stop delivering SFC 873 as its internal pricing system will determine when the waiver applies for whole loans delivered and purchased on and after March 1 and loans delivered into March 1 issue MBS pools beginning Feb. 1st.

If you’re looking for current or past Fannie Mae policy updates, bookmark the Fannie Mae Selling and Servicing Policy Archives page to quickly search for and access policy communications by year and/or communication type. This includes announcements, Guide updates, Lender Letters, notices, and our In Case You Missed It job aids.

Lenders must use the Supplemental Consumer Information Form (SCIF/Form 1103) for new conventional loans sold to the GSEs with application dates on or after March 1. Any data provided on the SCIF must also be included in each GSE’s automated underwriting system submission file. Read Fannie Mae’s latest reminder.

Fannie Mae Servicers should note if a servicer learns that a defendant in a foreclosure proceeding, or a borrower or secured property title holder in an action seeking to discharge the mortgage, raises any of the New York Foreclosure Abuse Prevention Act statutory amendments, it must promptly report the matter to Fannie Mae. Contact Fannie Mae via Form 20 (credentials required). Review the servicing reporting requirement

Strengthen your QC program with Fannie Mae’s core governance article series. Enhance your quality control (QC) and reduce risk as you delve into Fannie Mae Quality Insider series focused on strengthening core QC governance elements. Each article identifies frequently missed QC tactics around topics such as improving your QC plan, leveraging QC reports, prefunding QC, and internal audit.

Capital Markets: Inflation and the Fed

Rates rose over the course of last week as investors priced in expectations for a more “hawkish” Federal Reserve, meaning it will continue to actively do what it takes to fight inflation. Also rising was Consumer sentiment to open February, according to the University of Michigan Consumer Sentiment Survey. The strong jobs report the week before last probably contributed, but gasoline prices are likely the driving factor. Unfortunately, for those who want the Fed out of the way, inflationary expectations increased, rising to 4.2 percent from 3.9 percent in January. Longer-term inflationary expectations were steady at 2.9 percent.

The trade deficit increased by 12.2 percent to $948 billion during 2022; equal to 3.7 percent of GDP. During the prior decade, the deficit averaged 2.9 percent of GDP. The trade deficit significantly narrowed with the European Union due to a surge in exported petroleum products as a result of the energy crisis brought about by the war in Ukraine. However, the U.S. saw its trade deficit widen with other major trading partners such as Canada, Mexico, and China.

Consumer credit continued to expand in December, albeit at a slower pace than analysts had forecast. Most of the increase was in revolving credit which increased at a 7.3 percent annualized rate. Tighter lending standards were cited as a reason for a slowdown in non-revolving credit which weakened demand for student and auto loans. Consumer sentiment remains low compared to long-run averages and perceptions of both current and future conditions are mixed. Expectations of inflation over the next year rose slightly to 4.2 percent.

Unlike last week, this week sees more higher tiered economic releases with potential market movers, starting with the Consumer Price Index tomorrow, then retail sales on Wednesday, and producer prices on Thursday. Other higher tiered releases include regional Fed surveys, industrial production/capacity utilization, business inventories, homebuilder sentiment, import prices and leading indicators. Plenty of Fed speakers are scattered throughout the week. The week gets off to a quiet start, however, with no economic releases of note. We begin the day with Agency MBS prices roughly unchanged from Friday afternoon and the 10-year yielding 3.73 after closing last week at 3.74 percent. The 2-year is up to 4.54!

Employment and Transitions

“The top 3 reasons mortgage sales professionals change companies: 1) Poor service levels compromising relationships with clients and referral partners. 2) Inadequate sales and marketing support. 3) No chance for advancement or opportunity to take their business to the next level. The top 3 reasons mortgage sales professionals join radius: 1) Nimble and proactive IMB that’s right-sized to meet today’s changing demands. 2) Takes the guesswork out of marketing with their marketing team. 3) Allows you to your own mortgage dream team, or take advantage of theirs. At radius financial group, the focus is on YOU! Empowering you to build and run your business, your way. We give you the tools to help you strengthen relationships and you can build your own mortgage dream team… Or take advantage of ours. Either way, you’re an actual shareholder of everyone’s success! For confidential inquires please contact Carla Herrera.”

The New Year might be the right time for a new opportunity. Sovereign Lending Group has been in business for over 17 years and ranked by INC. Magazine 5000 as one of the fastest growing companies 10 years in a row. SLG is consistently introducing new products like Solar and establishing partnerships with some of the biggest Credit Unions to ensure you have the competitive advantage. To learn more about SLG we invite you for a discreet conversation with Ed Vaccaro, Head of Retail (925-997-1846).

Congratulations to Aaron Drago who has joined Non-QM lender Deephaven Mortgage as Chief Operating Officer where he will be responsible for the continuous optimization and performance of Deephaven’s daily operations, focusing on the twin goals of driving long-term, sustainable growth and maximizing the satisfaction of Deephaven’s wholesale customers and correspondent partners.