Vice President Dan Quayle sagely observed, among other things, “If we don't succeed, we run the risk of failure." Is our housing market in danger of failing? Hardly. But lenders, big and small, continue to engage in personnel cutbacks, and grappling with companies offering all-cash programs as highlighted in the STRATMOR Group piece. But, like a marathon runner hitting mile 20, there are signs of weariness and the press is flooded with housing news. Attom Data reports a “jump” in foreclosures: 259,000 properties around the nation are in some stage of foreclosure, up nearly 13 percent from the 1st quarter. (The nationwide foreclosure moratorium, imposed early during the Coronavirus pandemic, was lifted at the end of July 2021.) On the builder side of things, what lender or LO doesn’t want their business? “Toll Brothers closed 9,986 homes in 2021… the 11th largest home builder in the U.S. based on closings had between 200,000 and 250,000 qualified leads over the year, or about one lead every two minutes.” Arch MI released its quarterly Housing and Mortgage Market Review (HaMMR) report with a concerned Millennial on the cover. “Home-price growth surprisingly accelerated early this year, as the Standard & Poor Case-Shiller U.S. National House Price Index climbed to 19.8% year over year through February, up from 18.8% through the end of 2021 but still just below the 20/0% record high reached last August… Affordability is now worse than historical norms in all states but four, with the Northwest and Mountain West generally the least affordable along with Florida, Vermont and Hawaii… (Today’s podcast is available here and this week’s is sponsored by Change Wholesale with its proprietary Community Mortgage program. There are no bank statements, employment, or DTI requirements, allowing brokers to deliver more prime loans to more credit-worthy borrowers like small business owners, gig workers, retirees, and anyone else searching for home financing.)

Lender and Broker Software, Services, and Programs

There is a new generation of homebuyers emerging in the market. What should loan officers and mortgage brokers know about this next generation of homebuyers? Download part one of Radian’s three-part series Understanding the Next Generation of Home Buyers, The ABCs of Gen Y and Z to learn more.

“Rocket Pro TPO is thrilled to announce a significant expansion of our industry-leading platform to deliver elite services to non-delegated correspondents and is led by Don Chiesa, SVP – a 30+ year industry veteran who has held senior leadership roles for over a decade with Rocket Pro TPO. Our vision delivers the control, speed, and simplicity you need, starting with your dedicated Crew team, offering personalized responsiveness in operations/underwriting. PathfinderSM by Rocket is powerful technology that delivers answers you need while using our complete mortgage product menu. The Fast 15 Guarantee promises eligible purchase loans will be clear to close in 15 business days plus we’ll clear your warehouse lines with average purchase times of 3-5 days. And, in development, is our new fulfilment service that enables partners to leverage Rocket technology for all their disclosure needs including closing documents. Want to learn more about a partnership? Email Don Chiesa today!”

Having the foresight to reliably predict a customer or prospect’s next move is a huge competitive advantage for mortgage advisors, because seeing the early signals of homebuying intent allows them to put the right offer on the table at the right time. Borrower intelligence simplifies the discipline of reading homebuyer intent, but in a market that’s become crowded with companies selling everything from lead lists to marketing platforms under the guise of “intelligence,” how do lenders find the best borrower intelligence solution available? In its latest eBook, Sales Boomerang breaks down what makes borrower intelligence effective and sheds light on why many “solutions” fall short. Learn how to make more accurate predictions today.

“Are your loans suffering from poor quality, or worse, fraudulent activities?! What if they are, and you aren’t even aware of it? TENA Companies, Inc. has been helping lenders and servicers across the nation monitor loan quality and identify fraud and misrepresentation since its inception in 1982. Stay compliant with investor and regulatory requirements while increasing your loan quality with our comprehensive Mortgage Quality Control audit services. Now available with TENA Web Services (TWS), our latest cloud-based audit remediation platform that allows you to seamlessly view and respond to audit findings, securely transfer files, create and execute action plans, access management reporting tools and coordinate the entire QC follow-up process. TWS is available to all TENA clients at no additional charge. TENA’s comprehensive Quality Control services include Pre-Funding, Post-Closing, Servicing, State Compliance, SecondLook Audit Software, MERS Reporting, QC Plans and more. Contact Us Today to Get Started!”

Does your current loan application have a 90% completion rate? In a competitive market, lenders must maximize every borrower lead. Maxwell Point of Sale delivers a game-changing digital experience to help you attract, convert, retain, and delight borrowers like never before. The Maxwell QuickApply™ feature allows borrowers to pre-fill required fields by simply inputting their zip code and last four digits of their social security number, cutting time to complete the application and leading to an over 90% application completion rate. Lenders using Maxwell Point of Sale slash time-to-close by more than 13 days and save an average of 21 BPS per loan. Ready to close more loans than your competitors? Schedule a call with our team to learn more about Maxwell Point of Sale and start turning more leads into borrowers.

Are you operating your lending business as a commodity (think oil companies) or as a specialized niche (think the Ritz-Carlton)? As mentioned yesterday, mortgage purchase applications have fallen to their lowest level since 2018… so you can’t really afford to operate as a commodity, can you? Specialized niche lenders keep the distance open between them and their competitors by continuing to innovate. What’s something your customers want that competitors can’t give them while they’re looking for a new home? Immediate payment and closing cost answers specific to their financials. QuickQual by LenderLogix is one of the only adjustable pre-approval and pre-qualification technologies that can do exactly that, and it integrates with your LOS. QuickQual allows borrowers and Realtors to run those scenarios right on their cell phones based on the parameters their loan officer sets. It’s pretty neat and worth checking out. Visit LenderLogix’s site to learn more.

Clear Capital’s ClearAVM™ is setting the standard for lending-grade automated valuation models (AVMs), and you can try it today with 30 FREE AVMs. ClearAVM is the industry-leading, lending-grade AVM that provides reliable and accurate predictions of market value in seconds. ClearAVM combines nearly 20 years of appraisal know-how, top-notch computer scientists, the most recent property data, and advanced machine learning to produce values on more than 136 million addresses across the U.S. ClearAVM is designed for situations that demand highly-precise and efficient results: home equity lending, portfolio valuation, review, and underwriting. Even orders of tens of thousands of AVMs can be returned directly to your system in seconds via our API, or in bulk. Get started today with 30 free AVMs.

CDFI, No Ratio News

Orion Lending is proud to announce the release of COIN – Cashflow Only Investor Loan! This business purpose investor loan offers DSCR DOWN TO ZERO, with no disclosures or required wait periods, cash out can be used as reserves, delayed financing OK, and state licensing not required in many states! Oh, and COIN is underwritten entirely in house with a 24-hour UW Purchase Commitment too! New brokers are approved within hours, sign up today! What’s not to love? To learn more about this out of this world investor program, please click here.

One topic of conversation in this Non-QM Forum in Orange County is the Community Development Financial Institutions Fund (CDFI), backed by the U.S. Treasury, to “economically empower America's underserved and distressed communities.” Last night I spent some time with Evan Stone, founder and CEO of Champions Funding which not only specializes in CDFI lending but also recently rolled out four non-QM products. Yes, interest rates are certainly higher than Fannie & Freddie programs, but hey, if you’re helping your borrowers buy a home…

On the flip side of expansion, recently Quontic announced that it will no longer be accepting applications under its No Ratio loan program. “As a U.S. Treasury certified CDFI, Quontic remains committed to offering flexible mortgage products to our CDFI target market borrowers who would otherwise be ineligible for financing under more stringent ATR guidelines. That said, we must also be highly attuned to current market conditions for such products, as well as the safety and soundness considerations of these products in today’s economic environment.

Quontic’s note went on. “Specifically, despite continued robust consumer demand, the following conditions have resulted in a directive from our board of directors to discontinue funding No Ratio loans: High levels of Early Payoffs (EPOs). This has become particularly acute as interest rates have increased dramatically and borrowers are increasingly using the No Ratio program as a short-term bridge to alternative more favorably priced solutions. Inability to Obtain AAA Securitization Ratings. As you are likely aware, Non-QM loans typically end up in securitizations which create market liquidity. Because of a strict focus on ATR compliant loans, no rating agency is willing to assign a AAA rating to bonds which include No Ratio loans, notwithstanding our CDFI exemption to ATR. This has resulted in a diminished secondary marketplace for this product. Affordability Concerns.

“Given the spike in interest rates, combined with severe increase in home prices, we have growing concern over affordability of payments associated with higher rate products such as the No Ratio loan. In the past, we successfully leaned on other indicia of ability to repay, such as low LTVs, great credit, etc., but as we look to the future, we must ensure that we do not repeat the mistakes of the last credit crisis of 2009/10. While others may choose to continue to make similar loans, Quontic is committed to providing affordable solutions to its borrowers.”

Capital Markets

The markets now expect the Fed to lift its policy rate near 3% by year-end, which would be the most aggressive hiking cycle in decades. Given the sharp increase in rate hike and inflation expectations, 10-year U.S. Treasury yields have roughly doubled from about 1.5% at the end of 2021 to around 3% in May. That said, there are plenty of economists who believe that long-term rates, which obviously include 15- and 30-year mortgages, have leveled off for the foreseeable future.

Looking at rates, we saw some volatility in the bond market yesterday following mixed economic data in addition to hawkish-leaning comments from Fed Vice Chair Brainard ahead of today's nonfarm payrolls report. Brainard pushed back against a potential pause in 50-basis point hikes in September, which had been more priced in earlier this week. Cleveland Fed President Mester said that the Fed expects to slow growth and slow inflation while maintaining a healthy labor market. In addition to raising rates, there is a lot of concern over the reversal of the Fed’s bond buying program. The last time the Fed tried quantitative tightening, which was during a time of benign inflation, it caused major disruptions in the money market. This time around is much more complicated with the war in Ukraine, inflation, and changing monetary policy from central banks across the globe. Finally, Freddie Mac’s latest Primary Mortgage Market Survey saw fixed mortgage rates narrowly changed from the week prior.

After the latest ADP Employment Survey yesterday showed the economy added 128k jobs in May, well below expectations for today’s 350k estimate for the jobs report, the headline figure in today’s payrolls report showed for nonfarm payrolls +390k, stronger than expected but slowing somewhat. We are dealing with a tight labor market and elevated inflation, meaning monthly job gains are closer to pre pandemic levels as the job growth rate of hiring has tempered across all industries. We also had May’s Unemployment Rate (steady at 3.6 percent) and Average Hourly Earnings (+.3 percent, weaker than expected, good news for the Fed). Later this morning brings the final May S&P Global Market Services PMI, ISM non manufacturing PMI for May, and more remarks from Fed Vice Chair Brainard. The Desk will purchase up to $1.7 billion 30-year MBS 3.5 percent through 4.5 percent across GNIIs and UMBS30s. We begin the day with Agency MBS prices worse .250 and the 10-year yielding 2.94 after closing yesterday at 2.91 percent after the jobs data.

Employment and Transitions

Live, work, and play in beautiful Big Sky Montana! First Security Bank is currently looking for an experienced Real Estate Lender with a strong understanding of working in a prestigious resort community. The ideal candidate has a strong knowledge of Jumbo secondary and portfolio products along with land and construction loans in compliance with the Bank’s lending policies and procedures. Our local underwriting and processing team is there, every step of the way, to help streamline the process. To apply, please visit us here and discover for yourself what makes First Security Bank, Division of Glacier Bank, the top financial institution in Montana and recognized by national publications as a top ten bank in the nation. Or email your resume to Peter Morgan. First Security Bank… Success Together. Member FDIC, Equal Housing Lender.

“LoanCraft is seeking a Business Development Manager to help us grow. Qualified candidates will have a B2B sales background focused on the banking or mortgage industry. You will lead initiatives to generate and engage with business partners to build new business for the company. Please apply here: Business Development Manager. LoanCraft provides mortgage automation solutions and tech-enabled outsourcing services to lenders, built on a robust PPE platform. Services include all forms of income calculation services including self-employed income, automated credit scan tools, document solutions, and "Best Offer Wizard" offer selection and promotion. Outsourcing services include complete fulfillment of real estate loans. Our on-demand income report service is transforming the process of calculating income. We provide a rapid and accurate assessment of income with the ease of ordering an appraisal. Customizable to conform to our customers’ guidelines, the report is well suited for all types of borrowers including self-employed and business owners.”

Signature Bank announced the appointment of its Corporate Mortgage Finance (CMF) Group to provide financing solutions for a range of mortgage-related collateral across Signature Bank’s national footprint. “The Signature Bank CMF Group is experienced in understanding the complexities of the mortgage origination, servicing and investment sectors and works with clients to structure commercial and residential mortgage-supported financing facilities to meet their strategic liquidity and balance sheet management needs.” Heading the new CMF team is Ken Logan to oversee the Group’s strategy, direction, and execution as well as handles portfolio and credit management responsibilities. Included in the officer ranks are Kelly Kucsma, Paul Tirella, Michelle Marrapodi, Keith Ashworth, Michael Tenkerian, Melissa Marini, Jason Carter, and Christine Castner