With all of this talk about replacing people in our biz, could this be a future mortgage banker’s conference? Delta is moving toward eliminating set prices in favor of AI that determines how much you personally will pay for an airline ticket. I received this note from an LO in Idaho. “Before we work on ‘artificial intelligence,’ why don’t we work on ‘natural stupidity?’” In this internet age, do you think you “own” things on the web? Facebook is asking to use Meta AI on photos in your camera roll that you haven't shared yet. How about your own face? Denmark is attempting to tackle deepfakes by giving people copyright to their own features. It’s easy to say that using AI leads to dumbness, but also those who are dumber to begin with resort to AI more, rather than trying to think. Multiple studies now suggest that AI will make us morons. (Today’s podcast can be found here and this week’s are sponsored by Ocrolus. Ocrolus is transforming the mortgage industry with AI-powered data and analytics, featuring cutting-edge tools for automated indexing, income analysis, and discrepancy insights that empower underwriters to make timely, confident lending decisions. Hear an interview with Loan Risk Advisors Raymond Snytsheuvel on the state of fair lending in the mortgage industry in the wake of alleged Baltimore appraisal fraud and pending loanDepot litigation.)

Products, Services, and Software for Lenders and Brokers

“CANDID drives a 61 percent daily user adoption rate! Mortgage tech has long struggled with adoption. That’s not a people problem… It’s a product problem. When systems are fragmented, require multiple logins, or operate in silos, they create friction instead of efficiency. LOs don’t log in because the tools don’t work for them. CANDID flips that script with a platform built around a single login and a unified experience that embeds critical systems natively, including the CANDID digital mortgage app, marketing automation, LOS activity tracking, and advanced SMS communication. This CRM is a purpose-built sales and marketing platform designed to operate as the control center for the modern LO. With an industry-leading 61 percent daily adoption rate, CANDID proves that when you build a system LOs actually want to use, adoption is natural. Automation replaces manual busy work. One click triggers multiple actions, and with CANDID’s mobile app, salespeople stay connected to leads, borrowers, and referral partners, anytime, anywhere. If you’re looking for a platform your team will actually use, and one that drives measurable ROI, contact Brad Bieber, Head of Sales or schedule your discovery call today.

Lenders: Eliminate uncertainty before you fund. Class Valuation Analysis helps you make better-informed lending decisions by delivering a licensed, third-party review of the original appraisal, complete with risk grading, additional comparables, and a USPAP-compliant report. For pre-funding due diligence and post-close audits, this solution is rating agency-accepted and gives lenders a fast, cost-effective way to spot issues early and strengthen internal controls. See how Class Valuation Analysis supports smarter lending.

“Headed to the CMBA Western Secondary Conference in Rancho Palos Verdes, CA on Aug. 11-13? The Axos Bank Warehouse Lending Team will be there too. While many mortgage banks are expanding their product offerings, Axos is proud to be scaling ours, including lines of credit from $15MM to $350MM, extended funding cutoff hours to 6:15 p.m. ET, access to over 100 takeout investors, and diverse product offerings, including reverse, second liens, and non-QM loans. So, let's set up a time to talk about fast and flexible lending solutions to maximize your origination opportunities. Contact our Warehouse Lending team to secure a meeting: Eric Nelepovitz, VP, Bobby Martini, SVP, and Justin Castillo, AMP. Won't be at the conference? Not a problem. We're always here to answer your questions and inquiries. Contact our team or visit Axos Bank Residential Warehouse Lending.”

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.

Correspondent and Wholesale Product Offerings

It’s National Mortgage Brokers Day, and Orion Lending is celebrating YOU! For today only (Friday, July 18th), we’re waiving all underwriting fees on loans uploaded by the end of day. Orion is here to help you serve more borrowers with a powerful mix of competitively priced Agency, Non-QM, DSCR, and Jumbo programs, along with our exclusive Boost Down Payment Assistance™ featuring forgivable and repayable second options. With Hybrid eClose now available in STAR Portal, you’ll spend less time at the closing table and more time scaling your business. Not approved with Orion? Get Express Approved today and start submitting loans before the day ends. Plus, new brokers can take advantage of our 30 BPS Summer Pricing Special on Titan Flex, COIN DSCR, and COIN Fuel DSCR. This is your moment to go full throttle: upload your loans today and experience the Orion difference!

“EMMA, Spring EQ’s loan interface, is getting an upgrade. (Hint: you won’t need to use the Wholesale portal anymore!) Since 2024, EMMA has made pricing and registering loans faster and easier. Now, it’s getting even better. New enhancements are on the way that streamline your workflow, save time, and make doing business with Spring EQ even more efficient. Want a closer look? Register for our upcoming webinar, Tuesday, July 22 at 2PM ET for a quick walkthrough of what’s new and how it can help you close more loans with less hassle. Keep an eye out for more details in the coming weeks. In the meantime, let’s continue to work together to help more borrowers tap into their equity. Not yet a partner with Spring EQ reach out here to get signed up Wholesale Partnership.”

Make a Good Impression

MBA’s Mortgage Action Alliance (MAA) Advocacy in August campaign is quickly approaching! During the whole month of August, members of Congress will be home in their states and districts to hear from constituents, and it’s time to make our collective voice louder. MBA’s Legislative and Political Affairs team will work to coordinate state in-person and virtual meetings for advocates, as well as provide attendees with resources and pre-meeting preparation. Participation in these meetings is essential to MBA’s advocacy efforts as they build and strengthen relationships with policymakers by allowing you to share your stories and educate members on issues affecting our industry. Interested in getting involved? Sign up here. Contact MBA’s Manager of Political Affairs Margie Ehrhardt at (202) 557-2708 for more information.

loanDepot Lawsuit Details

News broke this week of Case 1:25-cv-02294-JRR where LoanDepot.com LLC is the defendant in this class action complaint filed in Maryland by attorney Ari Karen, head of litigation, labor and employment at Mitchell Sandler on behalf of four named class members. According to the filed Complaint:

“This is a class action arising from loanDepot’s deployment of a sophisticated, years-long scheme to systemically circumvent and conceal its willful violations of the loan officer compensation laws set forth in the Truth in Lending Act (‘TILA’), 15 U.S.C. § 1601, et seq. for the purpose of obtaining a competitive advantage over other lenders and maximizing profits at the expense of Plaintiffs and those similarly situated, all to enhance its financial performance in the months leading up to and following its Initial Public Offering (‘IPO’)…

“loanDepot unlawfully steered Plaintiffs and those similarly situated to loans with higher rates and fees and further created a system for the falsification of internal forms and federal disclosures to conceal these illegal activities. Loan officers were punished with reduced commission rates if they were unable to sell loans with higher rates, and further punished with no commission if they did not falsify internal documentation aimed at concealing the illegal activity.

“Since initiating the unlawful conduct alleged herein, loanDepot has originated over $300 billion in loans, all of which were affected by loanDepot’s unlawful steering practices, in violation of TILA and potentially various criminal statutes, including Wire Fraud (18 U.S.C. § 1343), Securities Fraud (18 U.S.C. § 1348), False Statements (18 U.S.C. § 1001), and Conspiracy (18 U.S.C. § 371), among others…

“Thus, a lender cannot link a reduction in compensation to some alternative factor that is merely a proxy for the loan terms. So, in this case, loanDepot could not use the sham transfer to an ILC as a justification for reduced compensation if the transfer was within the loan officer’s control. This is why loanDepot required the completion of internal forms offering reasons for the transfer outside the loan officers’ control, such as ‘customer request.’

“Without these justifications explaining that the transfer was outside of the loan officers’ control, the sham transfer would still be an insufficient basis to alter compensation. In other words, both the sham transfer and the falsified reasons for that transfer were essential to loanDepot’s efforts to circumvent the loan officer compensation rules and conceal that there was an illegal variation of the loan officer’s compensation based on loan terms.” (End of quote from the Complaint.)

As quote by the National Mortgage News Attorney Karen said, “What is being alleged in the lawsuit is not merely a technical violation or garden variety imperfection in compliance with the rule. The allegations assert a designed effort to circumvent the rule in its entirety to obtain an advantage over the industry at the expense of borrowers and competitors."

The case has captured the interest of originators and attorneys alike. Interestingly, I was unable to get any attorneys to comment on the record. One told me I could quote, but not attribute, the following, “I don’t know and won’t comment about the particulars of the facts alleged and application to law, but LO Comp can have serious and expensive consequences, especially when applied on a class wide basis. It is just surprising to me that a long-time respected mortgage industry attorney like Ari is representing class action plaintiffs on the opposite side of matters he regularly advises other lenders about.”

Originators were a bit more direct, but also desired anonymity. One said, “Mortgage bankers don’t have to disclose their compensation, but brokers do. But brokers can switch to borrower paid and reduce their comp that way. Why shouldn’t mortgage bankers be able to reduce their own comp?” Another chimed in with, “There’s no consumer harm from a consumer negotiating a lower rate that is paid from the LOs commission. That’s the definition of a technical violation. Besides, CFPB recently said LO Comp should be rescinded anyway.”

Meanwhile, something some found intriguing was the level of detail in the Complaint about the allegations of how loanDepot supposedly enabled these LO Comp violations by lowering compensation and using different internal originators. That kind of operational detail is not normally available to consumers who normally only know the final rate, fees, where to send their monthly payment, and the overall customer experience.

This is definitely a case on which to stay tuned!

Capital Markets

Nothing melts away the recent Trump/Powell spat-induced yield curve steepening like a batch of better-than-expected economic data, and that is exactly what happened yesterday. Data was highlighted by the June U.S. retail sales (+0.6 percent month-over-month) and weekly initial jobless claims (-7k week-over-week to 221k) reports that were both solid in terms of their messaging for consumer spending and economic strength. However, retail sales figures are not inflation-adjusted and heavily skewed toward goods, raising the possibility that higher prices are boosting nominal spending while masking underlying weakness.

The inflation data that was released this week showed that tariffs are beginning to filter into consumer prices, particularly in categories like toys and appliances. Or maybe CPI and PPI showed there is no notable headline uptick in inflation from tariffs. Interpret it however you like *shrug emoji*. While overall inflation remains moderate, signs of price pass-through from foreign exporters suggest that consumers may increasingly, and ultimately, bear the burden of trade tensions. New York Fed President Williams and Governor Kugler yesterday both signaled comfort with current policy, citing steady inflation and continued economic resilience as reasons to hold rates steady in the near term.

Mortgage rates rose for the second straight week in the latest Primary Mortgage Market Survey from Freddie Mac. For the week ending July 17, the 30- and 15-year mortgage rates rose 3-basis points and 6-basis points, respectively, to 6.75 percent and 5.92 percent and are now just 2-basis points and 13-basis points lower than a year ago.

Today’s economic calendar kicked off with June housing starts (+4.6 percent, stronger than expected) and building permits. Expectations were for declines to 1.200 million and 1.350 million from 1.256 million and 1.394 million in May. Later today brings preliminary June Michigan sentiment. We begin Friday with Agency MBS prices slightly improved from Thursday’s close, the 2-year yielding 3.88, and the 10-year yielding 4.43 after closing yesterday at 4.47 percent.