It is no secret that Congress and regulators have trouble keeping up with technology. But is an AI “conversation” with a borrower any different than a questionnaire given to that same borrower? Will the line be drawn at RESPA items? Can regulators audit transcripts of AI “conversations” without court orders? (One way to have the “inside scoop” on issues like this and others is to register for MBA’s National Advocacy Conference (NAC) this April. The early bird special ends Monday, March 2. It’s the industry’s largest advocacy event and the most effective way to represent your state at the national level.) Mark Weber predicts, “We will see a ‘credential implosion’ in mortgage banking. A person shopping for a mortgage can ask Ai about the best loan scenarios and for loan structuring assistance. Why bother with the credential of Certified Mortgage Planner with all those hours studying and human licensing to originate mortgages? Why would the mortgage industry want to protect human capital through regulation? Every knowledge industry is set up for major disruption.” (Today’s podcast can be found here and this week’s ‘casts are sponsored by FirstClose, a leading home equity technology platform that combines digital application, automated workflows, integrated vendor management, and seamless LOS connectivity, to turn home equity into a scalable, predictable growth engine. Hear an interview with Optimal Blue’s Erin Wester on the extensive lineup of mortgage capital markets innovations unveiled at 2026 Optimal Blue Summit, including an industry-first AI/ML-powered forecasting tool.)
Products, Services, and Software for Brokers and Lenders
What’s the difference between AI (artificial intelligence) and IA (intelligent automation)?
AI has a great idea for automating a process… once we finish discussing it. IA already automated it, deployed it, and closed the ticket. You’re welcome. That’s why FirstClose has embedded intelligent automation directly into its Order Management System, tightly integrated with Encompass® by ICE Mortgage Technology®, helping lenders close home equity loans in as little as 5–10 days. Built with Encompass as the LOS and system of record, the intelligent ordering experience supports ordering, coordinating, and tracking key third-party services directly from Encompass. This helps teams standardize processes and eliminate re-keying data across systems. Loan and borrower data are automatically pulled from Encompass, documents are routed back to the LOS eFolder, and dashboards with a full audit trail help monitor status, identify fallout points, and track vendor performance. Lenders using integrated intelligent ordering have reported up to a 77 percent reduction in time to close, from application to funding. See the enhanced integration at ICE Experience 2026, or schedule a demo here.
First Federal Bank selects Greyhound by OptiFunder to power the modernization and growth of its warehouse lending operations. A top‑performing mutual bank with more than 15 years of warehouse lending experience, First Federal is committed to providing simple, secure solutions that help IMBs maximize the value of their lending programs. According to Robert Turbeville, Senior Executive Vice President and Chief Lending Officer of First Federal, Greyhound stood out as the modern, flexible platform the bank needed. With many of its clients using OptiFunder, the transition offered natural alignment and a true partnership experience. Greyhound delivers configurable workflows and seamless connectivity between warehouse lenders and IMBs which improves security, accuracy, transparency, and speed across the funding lifecycle. First Federal’s Warehouse Lending Division President, Melanie Carrington, expects the platform to support its continued expansion while preserving the high‑touch service its clients value. The collaboration underscores both organizations’ commitment to innovation and a more efficient warehouse lending ecosystem. For information on warehouse lending solutions, visit www.ffbf.com/warehouse-lending or email carringtonm@ffbf.com.
Capital markets teams don’t usually enjoy surprises, especially when they come in the form of rate volatility. Yesterday at the Optimal Blue Summit, however, there were a few pleasant ones. The company introduced Virtual Economist, billed as the industry’s first AI/ML-powered forecasting tool for capital markets leaders, as part of a lineup of nine innovations spanning mortgage pricing, hedging, and competitive data. The company also confirmed it will return to sunny Arizona for next year’s Summit, with early-bird pricing available for a limited time. Register here.
MGIC’s cash flow worksheets for tax year 2025 are now available! Self-employed borrowers? No sweat. MGIC’s editable worksheets help you analyze cash flow, liquidity, and comparative income easily and accurately. And best of all, they’re auto-calculating! Download your worksheets today.
ACES Q3 2025 Mortgage QC Industry Trends Report shows concentrated rise in critical defects as income and compliance findings increase. “While the overall critical defect rate increased again in Q3 2025, the underlying data points to a market adjusting to a shifting mix rather than a broad decline in manufacturing quality,” said Nick Volpe, executive vice president of ACES Quality Management. “The increase was driven primarily by concentrated deterioration in income- and compliance-related findings, reinforcing the importance of documentation integrity and disciplined validation as refinance activity expands and lenders continue to operate lean.” Notable findings: The overall critical defect rate increased 18.5%; Income/Employment defects increased 47.6%; Legal/Regulatory/Compliance defects increased 16.8%; Purchase defect share decreased to 62.65%, while refinance defect share increased to 37.35% as refinance review share expanded; Conventional loans accounted for 57.18% of all critical defects. Read the full report.
Verus Mortgage Capital entered 2026 after delivering its strongest year on record, a clear signal of the stability and continued maturation of the non-QM market. As the sector grows toward 10 percent of all originations, driven by borrower demand rather than expanded credit, lenders must look beyond pricing. Execution consistency, securitization performance, strong liquidity, and the depth of an investor base are what define a trusted secondary partner. In a market that can shift quickly, underwriting discipline, transparent reporting, and durable capital matter more than ever. The fact is, sustainable growth requires a partner built for multiple rate cycles, not just favorable ones. If you’re entering or expanding in non-QM, now is the time to evaluate the long-term stability of your secondary partner. Start 2026 with confidence. Contact Jeff Schaefer, EVP – National Sales, at 202-534-1821 to discuss your non-QM strategy.
Today on the Lenders One webcast, Rick Seehausen, the new President of Lenders One will be on at 2PM ET to discuss a mortgage executive’s career path, what running L1 will entail, and what’s in store for members and providers.
The Chrisman Marketplace is a centralized hub for vendors and service providers across the mortgage industry to be viewed by lenders in a very cost-effective manner. We’re adding new providers daily, so check back often to see what’s new. To reserve your place or learn more, contact us at info@chrismancommentary.com.
Government Lending News
(Not including government sponsored enterprises, like those which might be under some form of conservatorship for many years.)
60-70 percent, depending on who you ask, of Ginnie servicing is owned by non-banks. Servicing assets, of course, have been in the news recently with the UWM/Two Harbors, Pennymac/Cenlar, and Rocket Companies/Mr. Cooper deals. The recent proposal originating from the Federal Reserve has raised the consciousness of bank versus non-bank mortgage business.
The overwhelming majority of VA and FHA loans go into… Ginnie Mae's mortgage-backed securities (MBS) portfolio outstanding grew to $2.9 trillion as of January 2026. In addition, Ginnie Mae issued $52.1 billion in total MBS, resulting in net portfolio growth of $20.6 billion. View the Press Release for details.
USDA Rural Development posted Procedure Notice (PN) on February 10, 2026, advising that changes were made to Handbook 1-3350, Chapters 3-8 and 10, as well as Appendix 3. A few key highlights of the changes have been posted. Review the Procedure Notice (PN) 655 carefully for more details.
FHA announced the publication of Mortgagee Letter (ML) 2026-02, Requirements for a Mortgagee’s Sale of a Beneficial Interest and Declaration of Trust Submission. This ML formalizes in the Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1), FHA’s existing process for reviewing the sale of a beneficial interest in a group of FHA-insured mortgages, which may only be accomplished through an FHA-approved declaration of trust. Additionally, it clarifies existing Declaration of Trust submission elements to help improve FHA’s review process. The provisions of this ML may be implemented immediately but must be implemented no later than January 31, 2026.
FHA’s Mortgagee Letter (ML), 2026-03, updates the requirements for mortgagees’ bidding at a foreclosure sale and for utilizing Claims Without Conveyance of Title (CWCOT), including post-foreclosure sales efforts. Claim Filing Guide has been updated to reflect the changes in the ML and is available on the supplemental documents webpage. The provisions of this ML may be implemented immediately but must be implemented for foreclosure sales scheduled on or after April 29, 2026.
FHA announced an extension to its temporary partial regulatory waiver of drainage and Flood Hazard Exposure which require a residential structure located in a Special Flood Hazard Area or a Federal Emergency Management Agency (FEMA) designated coastal high hazard areas to be constructed such that the lowest floor is at least “two feet above” the Base Flood Elevation (BFE). FHA is encouraging interested stakeholders to review the waiver located on the Department of Housing and Urban Development’s (HUD) Housing Waivers webpage. Contact the FHA Resource Center with questions.
Although they kicked the can down the road a few months ago, it is still worthwhile to think about how the FHA reacts to a government shutdown. Due to a lapse in appropriations, many Federal Government agencies shut down operations and furloughed staff back then until further notice. However, FHA Office of Single Family Housing and some of its mortgage insurance programs were operational but with limited services. Under a funding lapse, FHA’s actions and decisions about the operations that continue are governed by the U.S. Constitution, statutory provisions, court opinions, and Department of Justice (DOJ) opinions, which provide the legal framework for how funding gaps and shutdowns have occurred in recent decades. Check out the Department of Housing and Urban Development’s (HUD) Contingency Plan for Possible Lapse in Appropriations document on hud.gov.
Capital Markets
Bonds were subdued yesterday, with the new global 10 percent tariff the main headline affecting market sentiment ahead of second-tier data such as a slight (but better than expected) improvement in Consumer Confidence for February, wholesale inventories in December increasing by 0.2 percent (as expected; no change from November), and soft demand for $69 billion of 2-year notes auctioned by the U.S. Treasury. Markets will likely remain highly sensitive to trade headlines in the near future with the Trump administration pursuing new “national security” tariffs through different legal rationale, fueling uncertainty around the global trade outlook.
Rate-cut expectations for the Federal Reserve have shifted further into the second half of the year, though the prevailing expectation remains two to three cuts by the end of 2026. This should keep longer-term pricing anchored near 3 percent and yield curves flattening rather than steepening. Fed officials continue to signal patience and a wait-and-see stance. Keep in mind that this “hawkish” Fed has cut 175-basis points in the last year-and-a-half, despite inflation remaining elevated, and reinforcing the view that monetary policy is influenced (read: pressured) by more than just data.
According to the FHFA House Price Index, U.S. home prices rose 1.8 percent from Q4 2024 to Q4 2025 and 0.8 percent from the third to fourth quarter, with a modest 0.1 percent monthly gain in December, extending a streak of annual appreciation that dates back to 2012. Prices increased in 41 states, led by North Dakota, Delaware, and Illinois, while nine states and D.C. saw declines, with Florida posting the largest drop. Gains were concentrated in the Midwest, particularly the East North Central division: 66 of the 100 largest metro areas saw appreciation, though certain Florida metros experienced notable price corrections. The S&P Case-Shiller Home Price Index was up 1.4 percent year-over-year in December, unchanged from November.
Today’s economic calendar kicked off with mortgage applications rising 0.4 percent for the week ending February 20, with the composite index up modestly on both a seasonally adjusted and unadjusted basis. Refinance activity increased 4 percent week over week and was 150 percent higher than a year ago, while purchase applications declined from the prior week but remained 12 percent above year-ago levels.
The only other data point is the largely inconsequential EIA weekly petroleum status report later this morning. Treasury then auctions $28 billion reopened 2-year FRNs and $70 billion 5-year notes before the NY Fed conducts a buyback in 1- to 10-year TIPS for up to $750 million. We will receive “Fed speak” from Richmond’s Barkin, Kansas City’s Schmid, and St. Louis’ Musalem. Additionally, earnings continue from Wall Street. We begin the day with Agency MBS prices roughly unchanged from Tuesday’s close, the 2-year yielding 3.48, and the 10-year yielding 4.05 after closing yesterday at 4.03 percent.
Get Rob Chrisman Daily by Email
