John Kenneth Galbraith said, “The only function of economic forecasting is to make astrology look respectable.” How about forecasts of how dramatic this downturn has been for residential lenders and related third parties? What is making the headlines these days are companies that are not reducing their workforce, since on the flipside nearly every lender, large and small, are having layoffs, as well as many vendors from small to large (like ICE’s cutbacks in its mortgage group which had an operating loss for the second quarter of $6 million). Behind the scenes? STRATMOR Partner Jim Cameron notes, “While the industry struggles with downsizing, correspondent investors are seeing a greater incidence of manufacturing defects as loans are delivered to them. The industry is originating ‘harder to do’ loans and lenders are cutting staff which is not a great combination.” (Today’s podcast is available here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services in the mortgage industry and in banking. Today’s offers a quick interview with yours truly as a primer on what the seller/servicer information released last week might mean for smaller lenders.)

Lender and Broker Services, Software, Programs

NFTYDoor, a digital home equity lender, is excited to welcome Seth Cohen as its Chief Growth Officer. With over 20 years of experience in mortgage banking and client relations, Cohen brings a wealth of expertise in strategy and operations, industry trends, and relationship development. Seth’s role will focus on expanding NFTYDoor’s footprint as a premier wholesale home equity lender. “NFTYDoor offers lenders a plug-and-play home equity solution. It's branded to the lender - from the loan application to digital closing to servicing,” said Cohen. “During these difficult times in our industry, I think NFTYDoor offers loan officers a genuine value-added service to offer their customers, which aligns with a customer for life strategy." To learn more, contact us or visit us.”

Women hold a very influential demographic in the mortgage industry, and many companies are reforming their company culture to be more accepting of women. Companies are racing to provide benefits to their female employees with the intention of making the work environment conducive to women. Click here, to nominate your company for Mortgage Women Magazine's Top Employers for Women. Tell us what sets your company apart in this historically male dominated industry?

Alexa, how should I be using artificial intelligence and machine learning in my mortgage servicing operations? Questions about implementing AI and ML are increasingly common, but the answer isn’t always simple. To start, AI isn’t appropriate for every business challenge, so it’s critical to clearly define the pain points you’re trying to solve. It’s also important to recognize that AI isn’t a one-and-done solution; without a steady stream of new data, AI models can quickly become irrelevant. If you’re considering incorporating AI into your business, check out Black Knight’s recent blog post, “3 Keys to Successfully Applying AI/ML to Servicing Operations.”

Xome®, the premier asset management provider, offers data-driven solutions for mortgage servicers and the expertise required to optimize portfolio execution and reduce credit losses. With a massive audience at the ready, and an auction platform built for scale, Xome can help get you the quickest sales, at the highest price, possible. Benefitting not only you, but also our communities, by helping facilitate a healthy, stable housing market. Xome’s solutions include multi-channel disposition strategies, a leading nationwide auction marketplace, analytics, and loan recapture solutions. Xome also offers affordable housing solutions, including First Look programs for homeowner, owner-occupants, community development nonprofits, HUD-approved nonprofits, and governmental entities. Learn more about how Xome can help you build capacity & optimize efficiencies.

Fair lending requirements apply for the entire life of a mortgage loan. Are you treating similarly situated borrowers the same? Can you document the consistent application of policies and procedures that ensure all borrowers are treated fairly? Do you know where your inconsistencies are? By relying on the team of experts at Richey May, you can be ready to answer these questions and ensure your HMDA data stands up to scrutiny by the CFPB. Now’s the time to review your decision-making processes and tighten up your policies and procedures. A high-level compliance review will reveal organizational issues but can only take you so far. Go deeper with the mortgage specialists at Richey May to not only identify potential fair lending issues, but to also learn how to improve your reporting and avoid unintentional risk. Contact Richey May today to learn more.

“Freedom Mortgage Wholesale is historically, currently, and 4EVER WHOLESALE. Historically wholesale. Our channel’s previous accomplishments support the base upon which we build. Our people and processes have been time tested, allowing for unprecedented stability in any market conditions. Currently wholesale. Every day we help the Independent Mortgage Broker serve America’s Veteran Heroes and our Underserved Communities achieve their dreams of home ownership. 4EVER WHOLESALE. This bold statement echoes the fact that all we have done yesterday and today leads us to our future. A future where Freedom Mortgage Wholesale along with the Independent Mortgage Broker are 4EVER Wholesale. Find out how you can remind every borrower, every month that you are their Independent Mortgage Broker and key facilitator for financing their Happy Home and Future Dreams. Contact your local outstandingly seasoned and capable Freedom Mortgage Wholesale Account Executive or email to work with Freedom Mortgage today!”

New Freddie and Fannie Updates

As was noted in this Commentary last week, FHFA and Ginnie Mae issued a joint announcement of their updated minimum financial eligibility requirements for seller/servicers and issuers. Prompted by the changing nature of the U.S. housing finance system, these enhanced eligibility requirements reflect Ginnie Mae’s and FHFA’s shared goals to promote confidence in approved issuers and seller/servicers and improve the safety and soundness of the U.S. mortgage-backed securities (MBS) ecosystem through all economic cycles.

Phil Rasori from MCT writes, “Fannie confirmed that the TBA rule is in fact gone. We see this as a win for the prospect of hedging in general since the 50bps liquidity on IRLCs appears to be regardless of BE or hedged pipelines. Agency lender letters are supposed to come out in September.”

Bob Broeksmit, CMB, President and CEO of the Mortgage Bankers Association (MBA), issued the following: "We appreciate FHFA and Ginnie Mae for their collaboration on this proposal, which reflects a significant amount of MBA's feedback to the existing and previously-proposed rules. Of particular note, we are pleased that FHFA will now allow a significant portion of the unused committed agency servicing advance lines of credit to count toward the liquidity requirements. In addition, the agencies significantly reduced and recalibrated the "origination liquidity" requirements to better reflect expected margin call risk.

"Importantly, FHFA and Ginnie Mae also extended the implementation timeline to provide servicers sufficient runway to adjust to the new requirements. Other proposed changes that MBA had supported during the comment phase were also preserved in the final rule, including eliminating the procyclical liquidity requirement for nonperforming loans and recognizing differences in remittance types. Finally, we appreciate that FHFA and Ginnie Mae will align most, although not all, of their standards. Additional analysis will be needed to fully assess the impact, and we will work with FHFA and Ginnie Mae to ensure the requirements are properly calibrated.

Fannie’s trading desk spread the word that beginning Wednesday, August 24, a new 30-year Fixed Rate HomeReady® product grid will be available for committing in Pricing & Execution - Whole Loan®. Committing HomeReady loans into this new product grid is optional and can potentially help users refine their rate sheets and best execution analysis. For more information, read the Committing Grid Fact Sheet and view the Browse Prices Export File Specification document.

With the uncertainty in the market environment, Fannie Mae issued an Eligibility Reminder reiterating the importance of seller/servicers to keep in touch with Fannie Mae to maintain eligibility. Approved seller/servicers must update Form 582 and notify Fannie Mae within five business days of certain organizational or financial occurrences as specified in the Selling Guide. Mortgage bankers also have quarterly financial reporting requirements.

Fannie Mae August Selling Guide update, SEL-2022-07, includes permitting lender-funded grants for certain transactions and adding an alternative to satisfy the verbal verification of employment requirement for non-DU® validation service loans.

Freddie Mac announced that Mr. Cooper is the first servicer to integrate their proprietary system with Freddie Mac’s Resolve® default management tool via an application programming interface (API). Although other servicers have integrated through their vendor platforms, Mr. Cooper is so far unique in using its own system (CMOD System) to connect directly to Resolve. Freddie Mac’s platform requires a significantly reduced dataset, eliminating the need for most data entry. Mortgage servicers deploy Resolve to receive decisions, values and workout terms derived from Freddie Mac’s Single-Family Seller/Servicer Guide. Resolve APIs return workout decisions in as little as three to five seconds.

Freddie Mac has made several announcements related to the Uniform Closing Dataset (UCD) and Loan Closing Advisor®. To help you strategically plan and prepare for system impacts, here is what’s to expect: Revised UCD Specification Impact Memo addressing the following: Loan Closing Advisor accepting Enact Mortgage Insurance Corporation, New Quality Mortgage (QM) Short Term adjustable-rate mortgages (ARM) data point, Addition of valid values for taxes and other government fees, Differences between UCD Critical Edit Matrix and UCD Specification.

Critical edits and messages related to the QM rule that were added to Loan Closing Advisor on April 13, 2022, continue to fire. On May 31, 2022, the GSEs announced that the UCD Critical Edit Transition timeline has been revised for Phases 3 & 4.

Housing finance agencies (HFAs) and their originating lenders are partners in Freddie Mac’s efforts to make home possible for very low-, low- and moderate-income families, minority communities and other underserved populations. Continually offering solutions to advance affordable homeownership, Freddie Mac added new enhancements to the Freddie Mac HFA Advantage® mortgage. Read the Single-Family news article to learn more about the new HFA Advantage enhancements.

Freddie Mac issued a reminder that “Genworth” is no longer a valid Uniform Closing Dataset (UCD) enumeration for the Mortgage Insurance (MI) Company Name Type. View Loan Closing Advisor August 1 Release for details.

Fannie Mae implemented an update to Desktop Underwriter® (DU®) Version 11.0 during the weekend of Aug. 20, which will include changes to RefiNow™, housing goals messages, and more. Read the DU Version 11.0 Release Notes and Review the Integration Impact Memo.

FHFA Proposes 2023-2024 Multifamily Housing Goals for Fannie Mae and Freddie Mac has been posted.

FHFA Announces Update for Servicers to Maintain Fair Lending Data has been posted.

Fannie Mae August Servicing Guide update, SVC 2022-06, incorporates new policies requiring servicer maintenance of certain fair lending data elements.

Capital Markets

MCT recently announced that its award-winning capital markets platform, MCTlive!, is the first to integrate with Freddie Mac’s Cash Settlement Purchase Statement API. This API connection allows MCT Mark-to-Market and Hedge Accounting Reports to be updated with Freddie Mac purchase data directly, instead of waiting to run reports through a Loan Origination System (LOS). Read MCT’s press release to learn more about this functionality. Curious to know how these integrations are improving efficiencies and reducing data errors? View MCT’s new web page, Freddie Mac Integrations for Mutual Clients, to learn how their API integrations allow mutual clients to retrieve loan-level pricing to save time and improve data accuracy. Users access this integration through MCT’s Bid Auction Manager within MCTlive!, which combines bid tape management with a powerful loan pipeline management platform. View the MCT web page or join their newsletter to stay up to date on new innovations.

Last week’s economic data did little to support the case that the U.S. economy is currently in a recession. While headline retail sales were flat in July, that was influenced heavily by a sharp decline in gasoline prices which allowed consumers to spend in other areas. The decline in gasoline has continued into August with prices down about 11 percent month-to-date. As record high pandemic-era household savings decline, the pace of consumer spending will depend on the labor market. The recent uptick in initial jobless claims paused for the week ending August 12 as they edged down to 250k. Home price appreciation is finally starting to ease with prices up 10.8 percent over the last year in July versus 15 percent in February. Housing affordability remains an issue with record high prices and mortgage rates nearly double where they were a year ago. As a result, single-family building permits fell for the fifth month in a row in July as builders pulled back on new projects.

Housing starts plummeted 9.6 percent in July to an annualized pace of 1.446 million as higher prices and reduced affordability left potential buyers on the sidelines. Slowing residential construction may prove a headwind for growth in the coming quarters. Despite the housing cooldown, consumers are still spending as evidenced by the 0.8 percent increase in core retail sales. Additionally, industrial production rose 0.6 percent in July as motor vehicle and parts manufacturing picked up steam. Markets have been seesawing with each new report and last week was no exception. The slightly stronger than expected economic data pushed up expectations for a 75-basis point rate hike in September, while the minutes released from the last FOMC meeting brought them back in favor of 50-basis points. The minutes highlighted the internal debate at the Fed around aggressively fighting inflation versus the worry that they could tighten more than needed to achieve the goal of price stability.

This week includes the $126 billion in month-end fixed coupon supply to be auctioned over Tuesday to Thursday and updates on regional Fed surveys, S&P Global PMIs, new home sales, durable goods, pending home sales, the second look at Q2 GDP, and Fed Chair Powell’s Jackson Hole appearance where a push back on forward curve pricing would not be surprising. The week gets off to a slow start with the only data point today being the Chicago Fed National Activity Index for July (rising to +.27). Regarding MBS, the NY Fed will purchase up to $169 million UMBS15 3.5 percent and 4 percent this morning. We begin the day with Agency MBS prices roughly worse .125 and the 10-year yielding 2.97 after closing last week at 2.99 percent.


“At Acra Lending, our focus is on being the best-in-class Non-QM lender by providing competitive mortgage lending programs. We are looking for people to join our team who are as excited as we are to help customers achieve their goals in investing and purchasing property. Acra is actively looking for experienced Wholesale Account Executives, Fix and Flip Account Executives, Correspondent Sales, and more! Being able to provide industry leading programs to meet the needs of our customers is what we do best. If you or anyone you know are interested apply at JoinAcra or email us.”

NP, Inc. celebrated 26 years of business in June and continues to rapidly expand on a national scale. As a result, the TPO lender is actively recruiting additional seasoned professionals. Most recently, NP was proud to have Rudy Orman join as SVP of TPO Lending. The team will attend the AIME Fuse National Conference in late September. Visit NP, Inc.’s booth to find out where its growth strategy has taken NP this year as well as NP’s latest products. NP, Inc. is proud to offer its partners a wide array of loan products, including Delegated Correspondent, Non-Delegated Correspondent and Wholesale Non-QM.