Welcome to February 29; The 366th day is added to keep the calendar year synchronized with the astronomical year or seasonal year. What do astronomers know that we don’t? In general, what do “they” know that we don’t? Recall when Wells Fargo left correspondent, and other correspondent investors wondered the same thing. Now Rocket Companies will shut down Rocket Pro Originate in June, a mortgage origination platform for real estate agents and other financial pros. What does Rocket know? (More below). This biz is always changing, and this week I spent some time with Alanna McCargo, President of Ginnie Mae (without Ginnie Mae execution, FHA & VA programs would not be able to scale), and Ginnie is definitely trying to stay ahead of the curve which in turns helps first-time home buyers. (Found here after 8:30AM ET, this week’s podcast is brought to you by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender. nCino Mortgage Suite's three core products - nCino Mortgage, nCino Incentive Compensation, and nCino Mortgage Analytics - unite the people, systems, and stages of the mortgage process. Hear an interview with nCino’s Tyler Prows on digital transformation and how mortgage technology impacts the way loan officers and origination teams work.)

Lender and Broker Services, Products, and Software

Introducing the future of servicing: Dara by Sagent. Sagent has officially announced the industry’s first-ever mortgage software platform that unifies all data and user experiences for servicers and homeowners across the entire servicing lifecycle. Dara powers every detail of every mortgage for servicers across six primary areas: Core, Consumer, Default, Data, Movement, AI. This is mortgage servicing done right all in one root system, proactively preventing servicer errors, enabling anytime auditability, and drastically simplifying the mortgage servicing tech stack for the first time in decades — and it’s finally here 🤗. Read the full announcement here.

Lenderful Solutions and Mortgage Information Services (MIS) are thrilled to announce their merger, forming a unified entity poised to modernize the mortgage and banking industry. Leveraging Lenderful's comprehensive Point-of-Sale solutions and MIS's nationwide title services, this merger will enhance the digital lending experience, accelerate closing timelines, broaden market outreach, and uphold their steadfast commitment to excellence. This merger also solidifies their dedication to advancing financial inclusion and innovation, delivering unparalleled value, and empowering both borrowers and lenders nationwide. Additionally, Lenderful Solutions is pleased to highlight its recent support to Farmers Bank of Kansas City, where Mortgage with PreQual Express and Home Equity Turbo solutions have enabled Farmers to achieve its objectives swiftly. Farmers is benefiting from the built-in automation tools such as AVM, Credit Pull, VOA, VOIE, and LOS Integration, resulting in exceptional borrower experiences and increased Loan Officer efficiency. To learn more, contact Paul Lehnert, VP of Lenderful Solutions, (313) 910-3070.

“Maximize your non-QM portfolio returns with Planet, the premier Non-QM sub-servicer and asset manager for discerning investors and portfolio managers. Our industry-leading approach enhances portfolio performance from preboarding to resolution. Experience the fastest, earliest preboarding, seamless ACH payment validations and transfers, and strategic marketing to boost autopay adoption. Benefit from customized loss mitigation workflows and unmatched speed in foreclosure and REO resolutions. Choose Planet for high-touch customer service and unparalleled asset management expertise. Elevate your investments. Email us or call (585) 512-1030 and discover the Planet difference today.”

Originations are continuing to see spikes in home equity loans and lines of credit. Your business needs the processes and technology in place to keep up, while also helping to reduce costs, risk and turn times. That’s why ICE offers ValidateSM, an intuitive mobile app built specifically to support and expedite property valuations on home equity originations. Validate combines computer vision technology, a condition-adjusted AVM and up-to-date property data with borrower-supplied photographs to automatically determine a property’s value and available equity. By combining actual property photos with computer vision, the AVM more accurately reflects the property’s condition to determine its value, while helping save you time and money. And since Validate increases valuation accuracy, you can focus on the loans with a higher probability to close to help increase pull though. Click here to learn more about Validate.

As a leading Non-QM and Non-Agency lender, Arc Home introduces enhancements to its Delegated Correspondent services with the updated 'Buy to Your Guide' program and the new SPARC 2.0 client portal. Tailored for efficiency, 'Buy to Your Guide' provides flexible guidelines that adapt to your business model, promoting faster decision-making and a smoother process throughout. SPARC 2.0 streamlines loan management with intuitive navigation and real-time updates, designed to save time and maximize the user experience. Discover how these strategic improvements can support your growth and streamline operations. Visit our website or contact Todd Lautzenheiser, VP of Correspondent Sales to see why Arc Home should be your first look for all Non-QM and Non-Agency lending needs.

Mortgage Capital Trading, the de facto leader in innovative mortgage capital markets technology, just announced the release of pricing indications for the to-be-announced mortgage-backed securities (TBAs) used by mortgage lenders to hedge their open mortgage pipelines. TBA indications improve transparency in illiquid market segments and act as a key reference point on lenders’ unique executions – critical data for generating accurate front-end borrower pricing. “TBA indications can now be electronically requested ad hoc by mortgage lenders from multiple approved broker-dealers,” said Phil Rasori, COO at MCT. “For the first time, lenders have a custom reference point to their own TBA execution rather than working solely from market-wide pricing that may not be applicable to them.” Read the full press release to learn about this latest innovation.

STRATMOR on Gen Z

Generation Z is on the move and eager to replace Millennials as the largest generational mortgage buying population. In his latest Customer Experience Tip, STRATMOR Group Customer Experience Director Mike Seminari, explains that the buying behaviors of Gen Z are different than what current mortgage lenders are used to seeing. Check out “The Next Mortgage Frontier: Attracting and Engaging Gen Z” for tips from Mike and ActiveComply’s Ally Carty on how to engage with the next wave of generational borrowers and get an edge on the competition.

STRATMOR Compensation Numbers

Lenders, how have rising rates and shrinking margins impacted your 2024 compensation plans? STRATMOR Group’s Spring 2024 Compensation Connection® Study provides valuable comparisons on compensation components, incentive plan structure, compensation percentiles, and more. Three-year trailing data is also included with most data points. Find out how you compare to your peers by participating. Results will only be available to participants, so register today! Questions? Email compconnection@stratmorgroup.com.

Wholesaler/TPO and Retail News

In a reminder that gravity impacts all of us, United Wholesale Mortgage's financial woes are on par with the rest of the industry: the press release is here. UWM suffered a $461 million fourth-quarter loss, blaming it on mortgage servicing rights. The full year of losses was smaller at $69.8 million. In Q4, UWM did $24.4 billion, of which $20.7 billion was purchase business.

As noted above, Rocket Companies will shut down Rocket Pro Originate in June, a mortgage origination platform for real estate agents and other financial pros. Folks are wondering if the company didn’t want their own MLOs to have the competition.

CrossCountry Mortgage (CCM) introduced CCM CashPlus, “designed to transform mortgage preapprovals into cash offers, a critical advantage in a market where multiple bids are the norm rather than the exception. This product stands out by removing two significant hurdles: appraisal and financing contingencies. Available for conventional loans and primary residences, its allure is not just in the mechanics but in its accessibility to buyers who are represented by a real estate agent. This initiative responds to a glaring need in today's market, where the demand for homes far outstrips the supply, and a significant portion of transactions are concluded in cash. According to a recent report, all-cash sales accounted for 32 percent of transactions in January, marking a decade high, with investors and second-home buyers leading the charge.”

Competitors were quick to point out that CCM’s program is only available for conventional and primary homes, and a valuation is required prior to making an offer.

Fairway Independent’s program, for example, has been around for a few years, and arguably offers more flexibility for clients. Fairway pre-underwrites the buyer and signs off on all the buyer's conditions. The only items needed are property related items such as the appraisal, insurance, title work, & HOA/condo approval. Fairway’s program is based off of the contract price (versus a set percentage down payment), and does not require different variations of a valuation before an offer is made. Nor does Fairway’s require the property to be a primary residence or limit the program to conventional loans only.

Citi Correspondent Lending Bulletin 2024-02 contents include credit policy updates applicable to LPA ACE Appraisal Waiver, DU Verification of Employment Alternatives, and Restricted Stock – Agency Transactions. Also, clarifications of Ineligible Project Section and Pledge Assets – Agency Transactions.

If you're seeking home equity lines of credit second mortgage financing for your borrowers, look no further than Kind Lending. Concurrent Piggyback HELOCs behind a Kind Lending 1st loan* are now available. (FNMA or FHLMC first loan only - No Government, Jumbo or Non-QM loans).

Capital Markets

Discussed in the Press Releases post, Ginnie Mae’s mortgage-backed securities (MBS) portfolio outstanding grew to $2.53 trillion in January, including $28.1 billion of total MBS issuance, leading to $10.8 billion of net growth. January’s new MBS issuance supports financing for more than 91,000 households, including more than 46,000 first-time homebuyers. Approximately 77.6 percent of the January MBS issuance reflects new mortgages that support home purchases, because refinance activity remained low due to higher interest rates.

Setting aside bitcoin surging past $60,000 for the first time in more than two years, we learned yesterday that U.S. purchase mortgage applications dropped for a fifth consecutive week, approaching the lowest level since 1995. Relief can either come from lower mortgage rates, which are currently holding around 7 percent, or more home building. Traders now see the Fed’s first rate cut in summer, the first of (slightly more than) three 25 basis points reductions priced in for all of 2024. If you recall, and how could you not, the market entered January aggressively betting on around six rate cuts for the year. Three Federal Reserve officials said yesterday that the pace of interest-rate cuts will depend on incoming economic data, nothing surprising in those remarks, suggesting the path to lower borrowing costs may look different than in previous rate-cutting cycles.

Recent bets by traders have been forcibly unwound from short-term yields elevating even further above long-term ones as a resilient economy and sticky inflation have led Fed officials to push back against market speculation that rate cuts would begin in March. Yesterday brought about a “bull-steepener,” which occurs when bond prices rise faster in the short-term part of the yield curve than the long-term end, sending yields down faster in the short-end. Eventually, this will be caused when the Fed brings short-term rates down through rate cuts, but the move yesterday came as traders looked to profit from the U.S. Treasury yield curve returning to a traditional upward slope. Returning to a positively sloped yield curve from the currently inverted one would require a transition known as a steepener. That would put longer-dated yields back above their short-term equivalents, reflecting the normal compensation for risk over time.

In terms of economic data, the second estimate for Q4 GDP showed a slight downward revision to 3.2 percent from the advance estimate of 3.3 percent, as expected. The downward revision was primarily due to a downward revision to private inventory investment. Meanwhile, the GDP Deflator was revised slightly higher to 1.6 percent from the advance estimate of 1.5 percent. There was also an upward revision to personal spending growth (3.0 percent versus 2.8 percent in the advance estimate) that was driven by an upward revision to services spending, underscoring the resilience of the U.S. consumer in a solid labor market.

Today’s economic calendar kicked off with the much-awaited release of the Personal Income/Outlays report for January, which shed some additional light on how inflation is evolving. January personal income and spending came in at +1.0 percent and +.2 percent, respectively, versus expected increases of 0.4 percent and 0.2 percent month-over-month. The core PCE price index was +2.8 percent year over year, as expected. Weekly jobless claims were 215k, so the job market is steady. Later today brings Chicago PMI for February, pending home sales for January, KC Fed manufacturing for February, Freddie Mac’s Primary Mortgage Market Survey, and at least four Fed speakers. We begin the day with Agency MBS prices roughly unchanged from Wednesday night, the 10-year yielding 4.28 after closing yesterday at 4.27 percent, and the 2-year at 4.68.

Jobs

Take your business to new heights with OceanFirst Bank. Steve Adamo, President of Residential and Consumer Lending continues to expand OceanFirst Bank’s Residential Lending division. As a result, top producing Loan Officers have joined the Bank. With the ability to blend the benefits of an independent mortgage company with the stability of a banking environment, OceanFirst Bank is growing exponentially. Loan Officers that join the team have the ability to grow their business and gain stability from a top financial institution. OceanFirst combines a leading-edge tech stack and the benefit of having great product and pricing with unique portfolio options, direct agency lending, and secondary market choices. OceanFirst’s National Association allows Loan Officers to lend nationally without dealing with individual state licensing. Contact John Costa, Senior Vice President and Head of Mortgage Sales or 609.444.6121 to learn more. FDIC | Equal Housing Lender | Equal Opportunity Employer

Advisory and accounting firm Richey May has continued the expansion of its Mortgage Banking Analytics practice by hiring Tyler House, CPA as Director of Data Analytics. Tyler will lead the ongoing development of all of the firm's data analytics and benchmarking solutions and will also lead its efforts to deliver proactive insights to clients to help them operate more efficiently and profitably.