Lynyrd Skynyrd sang, “Sweet home, Alabama, where the skies are so blue…” Through the wonders of airship transportation, today I’m off to Alabama. The skies won’t be blue all the time with some rain in the forecast, but that won’t stop attendees at the conference learning about reigning in credit costs, why rates are doing what they’re doing, and artificial intelligence. I am sure that some of the talk will involve politics and bureaucracy, speaking of which, here’s an opinion about the CFPB: Why does one unelected bureaucrat get to decide credit card fees? There’s also the servicing angle: Our biz is concerned about how the Consumer Financial Protection Bureau’s latest supervisory highlights may impact borrowers’ trust in their mortgage service providers, specifically Regulation X, Regulation Z, unfair, deceptive, and abusive acts or practices, and what the bureau deems as "junk fees." (Found here, this week’s podcasts are sponsored by Matic, the digital insurance marketplace built for the mortgage industry. Matic integrates home insurance shopping into the lending and servicing experience, allowing customers to shop carriers and find a policy in minutes. Create a new revenue stream that boosts customer happiness today! Hear an interview with the MBA’s Joel Kan on all the latest trends across the mortgage industry, from profitability and predictions to margins and volatility.)

Lender and Broker Software and Services

Exclusive for ICE Mortgage Technology’s customers, the best and most valuable sessions from ICE Experience 2024 are now at your fingertips, online and free now through May 31. Log in to view everything from inspiring keynotes and compelling fireside chats to popular breakout sessions and panel discussions. This content is only available for a limited time, so start watching now to catch all the sessions most important to you before they are gone. Register here for access.

Down Payment Resource (DPR) published its Q1 2024 Homeownership Program Index (HPI) Report, revealing 2,373 U.S. DPA programs and counting. Beyond tracking the eligibility and benefits information of every DPA program in the country, DPR’s tools support DPA program management from lead gen to underwriting so you can turn more homeownership dreams into reality. Now integrated with the Encompass LOS by ICE Mortgage Technology, DPR automatically matches borrowers with eligible DPA programs based on loan app data and guides underwriters through requirements, including product overlays. Catch up with DPR’s CEO Rob Chrane or Enterprise Sales Executive Tani Lawrence at MBA Secondary May 19-20 to learn how lenders are using DPR to strengthen referral relationships, approve more loans and meet CRA requirements. Schedule a meeting today.

“Truv offers income and employment verification through Fannie Mae's DU validation service. We're thrilled to announce that Truv is now an authorized report supplier for mortgage lenders using Fannie Mae's Desktop Underwriter® (DU®) validation service. With Truv, lenders can lower costs by up to 80%, reduce risk of fraud and buybacks by leveraging real-time data directly from the source, and accelerate growth by increasing pull-through rates and closing loans faster. Contact our team for a demo today to start saving. Learn more.”

On February 12, 2024, TMS became an additional servicing partner to MetroDPA. The TMS metroDPA makes mortgages more accessible for homeowners in Colorado by providing first mortgage financing, down payment, and assistance with closing costs. In addition to the standard program, TMS offers the metroDPA Denver Advantage, an exclusive offering for homebuyers purchasing within the City & County of Denver limits with enhanced pricing. Please join TMS, Stifel, and eHousing for another training session on May 13, 2024, at 10:00 AM MST. This training will provide you with valuable insights into the TMS metroDPA program and ensure you are fully equipped to comply with its requirements. To register for the training session, please click here.

Flood insurance compliance is a growing area of interest for regulators, especially when it comes to borrower harm, insufficient coverage, force-placed insurance, and losses. Clayton Servicing Oversight helps banks, MSR owners and servicers measure their performance, validate regulatory and investor compliance, and identify loan and portfolio-level risk. Whether preparing for an audit or establishing ongoing flood insurance testing, Clayton ensures the best execution of regulatory and investor guidelines to mitigate losses. Click here to learn more about how to help your team identify and remediate potential problems before internal or regulatory audits do.

FREE EBOOK: Single women home buyers are on the rise: Here’s how to earn their business. Did you know that women who take on mortgages solo have grown dramatically to now transact almost a fourth of home purchases? Despite their rise, this demographic tends to feel uneducated about loans and dissatisfied with the lending process. Mortgage solutions provider Maxwell surveyed 1,000 single women home buyers to dig into these borrowers’ goals, challenges, and lending preferences. Some of the findings are surprising: For instance, single women are 50% more likely than their male counterparts to choose a local lender. Want to learn more—and become the go-to resource for this growing segment? Click here to download Maxwell’s Single Women Home Buyer Report.

Want an easy win? Automate your upfront fee collection. You’ll save on labor, elevate your customer experience, and won’t miss out on uncollected fees. Integrated with Encompass® by ICE Mortgage Technology™, you can be up and running with Fee Chaser in days and see an immediate ROI. Schedule a demo here.

“In the ever-changing landscape of real estate and mortgage lending, staying informed is key to success. The new Lending Edge podcast is your essential resource, designed to help you navigate the industry's complexities as it dives into insightful discussions, expert interviews, and explores the latest trends and technologies shaping the field. We connect you with top industry leaders, sharing their journeys, strategies, and lessons learned. Ready to take your lending expertise to the next level? Subscribe to Lending Edge wherever you get your podcasts. Discover the essential resource for real estate and mortgage loan professionals.

Listen and subscribe here!”

TPO Home Equity Product

Redwood Trust is known for many things, primarily its market-leading non-agency correspondent and securitization platform for Prime Jumbo loans. Redwood also recently entered the home equity space, with the launch of a brand new Closed-End Second purchase program, as well as Aspire, Redwood’s home equity investment (HEI) direct origination platform. Redwood’s Closed-End Second program is competitively priced and offers 10, 15, 20, and 30-year fixed rate options, allowing up to an 85% LTV and $350k loan amount. And through Aspire, Redwood offers clients opportunities to earn fees on Aspire-originated home equity investments. Please reach out to your Redwood Relationship Manager or for more details.

Fannie and Freddie Updates

MBA and Freddie Mac staff will host a webinar this week on May 9th at 1 PM EST, to discuss Freddie Mac's recently proposed new product that will allow them to purchase certain single-family closed-end second mortgages. The webinar will cover the details of their proposal and allow time for members to ask questions. You can register for the webinar here.

Would you like to voice your opinion on the issues of prohibiting incentive-based payment arrangements that the agencies determine encourage inappropriate risks by certain financial institutions by providing excessive compensation or that could lead to material financial loss, and requiring those financial institutions to disclose information concerning incentive-based compensation arrangements to the appropriate Federal regulator? Here’s your chance.

While we’re opinions, which everyone have, remember the name Meredith Whitney? She had some thoughts about Freddie tapping into home equity. Does our economy need more stimulus?

FHFA Final Rule Fair Lending, Fair Housing, and Equitable Housing Finance Plans has been posted.

The Federal Housing Finance Agency (FHFA) issued its annual report on single-family guarantee fees charged by Fannie Mae and Freddie Mac (the Enterprises). Guarantee fees are intended to cover the expected credit losses, administrative costs, and cost of capital that the Enterprises incur when they acquire single-family loans from lenders. The report analyzes loans acquired by the Enterprises in 2022 by product type, risk class, and lender delivery volume, including a comparison to similar data from loans acquired in 2021.

The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) published new Reconsideration of Value (ROV) policies after months of collaboration with FHFA and the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration. A Reconsideration of Value is a request to an appraiser to re-assess the appraised value of a property due to potential appraisal reporting deficiencies or inappropriate selection of comparable properties, or based upon additional information the appraiser should consider.

Fannie Mae released its annual update to the 2022-2024 Equitable Housing Finance Plan (the Plan) to knock down housing and homeownership barriers faced by historically underserved consumers and communities across the United States. The 2024 Plan updates reflect Fannie Mae’s intention to expand and scale its efforts, particularly those related to helping consumers safely and soundly overcome barriers related to limited credit history, burdensome up-front housing costs/ access to credit, and financial and property resiliency. Details on the Plan’s actions and initiatives are outlined in the 2024 Equitable Housing Finance Plan and 2023 Performance Report. To learn more about Fannie Mae’s ongoing efforts to support the housing ecosystem, read Katrina Jones’ Perspectives blog.

In May, the Selling Guide Fannie Mae SEL-2024-03 was updated to introduce a definition for a first-generation homebuyer loan, added requirements for a borrower-initiated appeals process for appraisals, clarified when an Affidavit of Affixture is required for manufactured housing loans, expanded our shared equity policies related to manufactured housing in community land trust properties, allow sellers/servicers to designate MERS as the nominee for the beneficiary in the security instrument for co-op share loans, updated requirements for submission of financial statements and reports, added details to supplement previously issued policy requirements pertaining to trust income, and other miscellaneous updates.

Fannie Mae announced updates to the Equitable Housing Finance Plan, focused on knocking down housing and homeownership barriers. The Plan outlines 23 specific actions, building on the progress of the past two years, including initiatives that scale opportunities for renters and homebuyers, housing counseling and education, and affordable housing solutions for first-time homebuyers.

Fannie Mae’s Income Calculator, a free web interface provides instant access for lenders to easily and accurately create more certainty in the income calculation for self-employed borrowers, which may help improve loan quality. Users can maximize the borrower’s income by utilizing allowable add-backs not found in 4506-C tax return transcript data, which may result in lower DTI due to higher income being calculated.

Fannie Mae, in collaboration with Freddie Mac, has developed a framework for lenders to review and respond to a borrower-initiated reconsideration of value (ROV). This policy educates the borrower about their right and the process to appeal an appraisal on their own behalf, creates uniform industry-wide expectations for how to manage ROVs, and maintains appraiser independence. Read the Selling Guide announcement.

Freddie Mac Single-Family Seller/Servicer Guide Bulletin 2024-6 announces updates pertaining to: Reconsideration of value (ROV) process requirements, expansion of the permitted use of an attorney opinion of title letter, credit report inquires, reserves requirement for concurrent mortgage applications, acceptable sources of large deposits, borrower cash flow in the Loan Product Advisor® (LPASM) credit assessment, and inclusion of trended credit data in credit reports submitted to LPA.

Freddie Mac published its Equitable Housing Finance Plan and Performance Report for 2023 along with revisions to its 2024 objectives and actions within its three-year Equitable Housing Finance Plan. Read the 2024 Plan, 2023 Progress Report, and progress report highlighting its accomplishments against the 2023 Plan.

Capital Markets

Listen to today’s podcast interview with Joel Kan from MBA for a better summary for what is happening to rates than I can give you here. Sure, Fed Chair Jerome Powell has reiterated that the Fed isn’t seeing much in the way of stagflation (defined by slow or negative economic growth coupled with inflation), but if one “tortures the numbers” enough you can see signs of growth slowing and inflation has yet to slow down in response.

The week after the jobs report is historically light on data, although the Fed is out of its blackout period and they’re all running amok speaking all over the place. There are geopolitical concerns between Israel and Hamas in southern Gaza for investors to weigh. There are two economic releases of note this week: The U.S. Treasury Department’s Monthly Treasury Statement for April and consumer sentiment, which will have the inflation expectations number. Fiscal receipts jump in April as Americans file taxes, swinging the monthly fiscal balance to a surplus, even in years when the government runs an annual deficit. The week opened with Richmond Fed President Thomas Barkin saying that high interest rates will help cool inflation to the central bank’s 2 percent target. Nothing earth-shattering there.

There is some optimism that we have finally seen the peak of mortgage rates, since the labor market is beginning to cool, though my advice would be not to hold your breath. Skilled labor and unskilled labor are still in demand, although they will be affected if demand continues to slip. Both heavy government borrowing and a massive federal budget deficit mean less money is available for mortgage lending.

Between the Fed’s cautious approach to inflation, and home sales at 30-year lows despite 40 million more jobs and 70 million more people living in the U.S. now compared to then, stored-up housing demand gives little reason to expect lower rates. In terms of recent MBS issuance, as of the end of April the figure sat at $3.477 trillion, up 22.9 percent year-over-year. Trading was $1.259 trillion in April, up 16.3 percent year-over-year, and outstanding MBS as of the fourth quarter was $52.9 trillion, up 5.5 percent year-over-year.

Today’s calendar gets under way shortly with Redbook same store sales for the week ending May 4. The only other data point is consumer credit for March, due out this afternoon. Regarding supply, the Treasury will auction $58 billion 3-year notes. One Fed speaker is currently scheduled, Minneapolis Fed President Kashkari. Before the open, the RBA and Sweden’s Riksbank were both out with their latest monetary policy decisions. We begin the day with Agency MBS prices a touch improved from Monday’s close and the 10-year yielding 4.46 after closing yesterday at 4.49 percent.