Many youngsters don’t know the “Shave and a haircut? Two bits!” knock, or musical notes. Some things are timeless, like British Prime Ministers coming and going, and like what happens to certain lenders and investors when rates go up and credit spreads widen out. And we were reminded, in the cases of FHA, VA, Fannie, and Freddie, why some level of government interaction is good as “Sprout is out” was making the rounds yesterday. Sprout, which made a name for itself in non-Agency TPO activity in correspondent, wholesale, and retail channels, shut down. Unfortunately, it is not the first, won’t be the last. In this case, Sprout President Shea Pallante held a companywide phone call. (Word has it that Sprout’s entire correspondent team was let go and moved over to Oaktree Funding Corp. Those impacted can always post their resume for free here, and anyone can view them for several months for a nominal fee.) One industry vet wrote to me saying, “Like having the kids come home from college, it’s amazing how quick you can burn through cash when you have hundreds or thousands of employees on the payroll and/or branches across the nation to pay rent on.” Another wondered, “I realize non-QM is not subprime, but they were/are both non-Agency. In ‘08 we saw subprime evaporate in March and gone by June. Then jumbos in August. In March of 2020 many vanished. This time we have no subprime, non-QM volumes are still very small and may evaporate quickly unless Wall Street has an appetite for it. Fannie and Freddie high balance goes up to $970k, and private banking portfolios have a demand for it on the retail channel: A tough environment out there and its getting dicey.” (Today’s podcast is available here and this week’s is sponsored by Real Estate Connection (REC), a boutique real estate brokerage that acts as a centralized and organized, fully-managed real estate fulfillment service, connecting buyers with local qualified Real Estate Agents and walking them through the entire home purchase and selling process with the lender partner. Today’s has an interview with Brian Coester on connecting buyers, sellers, lenders, title companies, and real estate agents.)
Lender and Broker Products, Software, and Services
Digital transformation is changing the lending experience for lenders and consumers, alike. Add to that, today’s complex and evolving market continues. Why not turn to a leading Correspondent and Housing Finance Agency partner to guide you through these changes and the impact on mortgage lending. For the eighth consecutive year, U.S. Bank has been named one of the World’s Most Ethical Companies by the Ethisphere Institute, a global leader in defining and advancing the standards of ethical business. Contact a U. S. Bank Account Executive and connect with us at the Western Secondary Conference, July 25-27 in Dana Point, CA. Learn more about the benefits of partnering with U.S. Bank.
With Candor you improve your pull through ≥15% and get to borrower surety whiplash fast. Watch FBC’s COO Travis Rulle describe their speed to decision as a Candor client. In a market where every app counts, you owe it to yourself to explore the only platform that delivers automation well beyond income calculation and OCR. You can be live in just 30 days Contact us for a demo.
Nearly a century ago, a Missouri bakery began selling machine-sliced bread. It was a serious hit, hence the expression “the best thing since sliced bread.” To be the “sliced bread” of home financing, lenders must pivot their messaging and strategy to match the market. Fortunately, the Surefire CRM and marketing automation platform from Black Knight maintains a fresh library of award-winning content that makes it easy for lenders to turn on a dime with market-relevant messaging. If you’re in the market for marketing strategies that will make purchase and equity-related loans your bread and butter, download Surefire’s guide to surviving rising rates.
In a new MCT case study with Daniel Sugg, Chief Mortgage Lending Officer at Michigan First Credit Union, Mr. Sugg describes how technology like MCT’s Rapid Commit is helping Michigan First improve efficiency by automating pricing and commitments to the GSE’s. Mr. Sugg also discusses how MCT is helping Michigan First Credit Union improve profitability to provide more value for its members. Read the full case study to learn more. As a credit union, you have deep community roots, loyal membership, and are always looking to grow market share. One way to help your members get the best rate or price is by optimizing your investor set. In this whitepaper, How Credit Unions Can Benefit Members Through Investor Set Optimization, MCT discusses how to quantify where to deliver your production, auditing your investor base, and how to optimize your investor set. Download the whitepaper or contact MCT for more information.
Trends and Opportunities
Dave Savage and Kristin Messerli interviewed over 25 highly successful and experienced industry experts to provide market insights and a practical guide to gaining market share in 2022 and beyond. “We are in a unique moment in the history of housing. With a rapid spike in interest rates, inventory at historic lows, home prices rising at unprecedented levels above income, and a purchase market that is both highly anxious and digitally reliant, mortgage and real estate professionals must be strategic to capture the market opportunity today.” Click here to read the full report with details on trends, opportunities, and strategies.
Government Lending Updates
Although comparisons often pop up, FHA and VA loan programs are not the same as non-Agency programs. They are not, per se, subprime, especially given the backing by the U.S. Government. Let’s see who’s doing what.
FHA issued temporary partial waivers to its Home Equity Conversion Mortgage (HECM) policies. Temporary partial waiver of Mortgagee Letter 2015-11. This waiver allows mortgagees to offer repayment plans to HECM borrowers with unpaid property charges regardless of their total outstanding arrearage and is effective through December 31, 2022.
Temporary partial waiver of Mortgagee Letter 2016-07. This waiver permits mortgagees to seek assignment of a HECM immediately after using their own funds to pay unpaid property taxes and insurance on or after March 1, 2020, by temporarily eliminating the three-year waiting period for such assignments. The waiver is effective through December 31, 2022.
These waivers provide mortgagees with expanded flexibility to help senior homeowners with HECMs who continue to experience significant financial difficulties due to the COVID-19 pandemic.
On June 23, the FHA announced FHA INFO 2022-64 to issue the following temporary partial waivers to its Home Equity Conversion Mortgage (HECM) policies for senior homeowners impacted by the Covid-19 pandemic who continue to experience significant financial difficulties. Specifically, the first temporary partial waiver concerns Mortgagee Letter 2015-11. The FHA notes that its waiver “allows mortgagees to offer repayment plans to HECM borrowers with unpaid property charges regardless of their total outstanding arrearage.” The second waiver—concerning Mortgagee Letter 2016-07—“permits mortgagees to seek assignment of a HECM immediately after using their own funds to pay property taxes and insurance on or after March 1, 2020, by temporarily eliminating the three-year waiting period for such assignments.” Both waivers are effective through December 31.
FHA published the latest version of the Single Family Housing Policy Handbook 4000.1. This update includes enhancements and revisions to existing guidance as well as various technical edits. In most cases, this newly added language augments and enhances existing policy.
Fairway Wholesale Lending announced the expansion of its FHA manual underwriting options. Effective on and after June 29, 2022, including loans in process, manual underwriting will be permitted on FHA standard fixed rate 203b / 203h Products and FHA manufactured homes for borrowers with 580 - 599 FICOs. For full requirements, refer to the FHA matrices in the Fairway Wholesale Lending program guidelines.
Mountain West Financial Wholesale provided a breakdown by Section of FHA’s Handbook revisions and clarification in MWF Bulletin 22W-055.
Pennymac is updating Government & Conventional LLPAs effective for all Best Effort commitments taken on or after Wednesday, July 06, 2022, as shown in Pennymac announcement 22-42.
The eagerly anticipated, though not so timely, Federal Open Market Committee (FOMC) minutes from its June meeting showed that policymakers acknowledged the risk for a slowdown in growth from tighter economic policy. There was also concern about higher inflation becoming entrenched if the public begins questioning the Fed's resolve.
What does that mean? Rates may need to keep rising for longer to stop surging prices from becoming entrenched, which means that the committee deemed moving to a restrictive policy stance as appropriate. The FOMC meeting at the end of this month is still expected to yield a 75-basis point hike, but the Fed could tighten its grip with an "even more restrictive stance" if needed. Keep in mind that what the Fed thought 30 days ago is not that meaningful at the moment since economic data, inflation data, and the bond market response has turned much more dovish since the meeting. The Fed minutes had no mention of potential MBS sales.
Today’s economic calendar is under way with June job cuts from Challenger (U.S.-based employers announced 32,517 cuts in June, a 58.8 percent increase from the 20,476 cuts announced in the same month last year and 57 percent higher than the 20,712 cuts announced in May). We’ve also received weekly jobless claims (235k, up from 231k) and the May trade deficit ($85.5 billion). Later this morning brings the latest Freddie Mac Primary Mortgage Market Survey and Treasury will announce the details of the mini-Refunding consisting of new 3-years and reopened 10-years and 30-years for $43 billion, $33 billion, and $19 billion. Two Fed speakers are currently scheduled to speak on the economy and monetary policy: Fed Governor Waller and St. Louis' Bullard. Agencies will release June prepayment data in the afternoon. Also of interest will be the minutes from the last European Central Bank (ECB) monetary policy meeting. Today’s MBS purchase (or better yet, payoff reinvestment) operation sees the Desk back UMBS30s for up to $922 million 4 percent through 5 percent. We begin the day with Agency MBS prices worse .125 and the 10-year yielding 2.96 after closing yesterday at 2.91 percent.
Bay Equity is 3 months into the merger with Redfin and the results are more than impressive! Since the merger on April 1st, Bay Equity originators have taken more than 3,700 applications from new customers looking to purchase a home with Redfin agents. This is on top of all the business Bay originators bring in from additional valued referral sources. Bay Equity is a great home to increase your database and to close more loans in this down market. Is your company currently driving new business into your pipeline? Bay Equity is! If you would like to learn more about this opportunity, please reach out to Sean Wilson for a confidential conversation.
REMN’s hiring successful Account Executives nationally. REMN Wholesale is your solution-based national lender! Utilize Simple Access (Non-QM) Investor Cash Flow Program that allows for unlicensed MLOs in 38 states, and unlimited cash-out on DSCR. Ask your AE for details! REMN knows RENO! Renovation lending concierge service, combined with product/process expertise, makes REMN your “Go To” lender for FHA’s 203(k) Standard & Limited, and Fannie Mae’s HomeStyle® Renovation Loans. Did you know that REMN is a 2022 Platinum Sponsor of AIME (Association of Independent Mortgage Experts)? For the 3rd consecutive year as a major sponsor, REMN displays its commitment and unwavering support for the national broker community. REMN + ARIVE = BROKER SUCCESS! ARIVE is the industry’s first full-stack loan origination platform and wholesale marketplace for independent mortgage brokers. REMN loan products, pricing and integrated loan registration is available automatically to REMN Wholesale - approved Brokers. REMN WHOLESALE is REMN READY!
ClearEdge Lending continues its expansion across the country, and its Commercial Division is following suit. With the recent addition of four Business Development Representatives (BDR) located in CA, NY, FL, and GA, ClearEdge Lending’s Commercial Division is pressing forward with business purpose lending, adding Fix & Flip, Bridge Loans, and Lines of Credit to its array of versatile non-QM loan options. The Commercial Division is actively seeking Account Executives and BDRs to continue delivery of unrivaled service to brokers with easy-to-close lending solutions. Come build your career with one of the fastest growing non-QM lenders by emailing us or viewing open positions here.
Are you at a stage in your career where you produce at a high level but are looking to live the life you’ve always wanted outside of work? Many Veteran Originators think they need to choose between production or their personal life. Nothing could be further from the truth! One of the Top Originating teams in the nation is looking to help 1 Veteran Originator experience what it’s like to produce at the same high level, while also living the personal life they’ve always dreamed of. Changing how you’ve always done something is hard, but it’s time to break away from everything that has held you back. Calculating income, reading guidelines, working nights and weekends is not the life of an originator. If you close $25M or more per year and want to stop choosing between production or personal life contact Anjelica Nixt to schedule a confidential conversation.
“At Supreme Lending, we understand that every loan matters. We see how you and your teams are pouring your blood, sweat, and tears into your business right now, helping families get into homes while financially protecting your own family and livelihood. We're here to help. Supreme offers exceptional support and services to get each loan to the finish line, beginning with customized marketing at the local level to promote your brand and set you apart from the competition. Originator benefits like a designated Deal Desk facilitate moving loans forward efficiently, while live Branch Support and a dedicated Concierge Team provide high-touch service to pave the way. Want to grow your branch/region? Supreme has an in-house department of full-time, experienced Recruiters to bring talent to your team. Contact Director of National Recruiting Ryan Baxter on LinkedIn to join a lender where every loan counts.”