I head to Vancouver, WA, this morning for a Banner Bank event and will probably have the option of Wi-Fi on the plane. How is it that NASA is able to receive data from 4.6 billion miles away, but I lose my Wi-Fi signal in my kitchen? Having a computer or smart phone has a price. I use Duck Duck Go for a search engine… Don’t think that Google doesn’t alter your search queries to reach your wallet. In other tech news, and you will forget about this note by then, your phone will blare a national emergency alert test today at 2:20PM ET, 12:20 PM MT. Of course, the messages will be accompanied by a “unique tone and vibration.” Listen for a jarring and obnoxious alarm that will immediately make you stop what you’re doing, utter obscenities, and pick up your phone to make it stop. Who can concentrate on Taylor Swift munching on football stadium dogs, or the lack of inventory and high rates, when the Las Vegas oddsmakers are making an active market in Fat Bear Week? (My 401(k) money’s on Otis!) Or maybe you’re watching the courtroom drama in NY or the machinations in Washington DC as groups come together and separate. (Today’s podcast can be found here and this week’s is sponsored by TRUE. TRUE creates accurate data that powers automation and optimizes every step of the lending lifecycle, helping lending organizations rapidly process loans, dramatically cut costs and risk, and radically improve the customer experience. Hear an interview with TRUE’s Bob Noble on practical applications for AI in today’s mortgage industry.)

Credit and Verification Products

What if you could find the secret to succeeding in any market? Good news! It's as easy as connecting with Certified Credit at MBA Annual23! Its advanced mortgage lending solutions can make your organization more efficient, resilient, and profitable. While innovative solutions have earned it recognition, Certified Credit truly shines through their extraordinary commitment to exceptional customer service: over 95 percent of their customer service calls are answered within 30 seconds or less. What’s more, 25 percent of their support staff is bilingual and 100 percent onshore. Certified Credit prioritizes customer service because they know that mortgage lending is about more than just a score… It’s a people-focused industry that runs on strong relationships. Find out what Certified Credit can do for your mortgage lending business by booking a meeting with their experts at MBA Annual23.

In this challenging market with soaring mortgage rates, rising closing costs and fierce competition, every dollar counts. Xactus is focused on helping lenders streamline workflows and reduce expenses with Xactus360, its proprietary verifications platform. Its most recent integration, Flood ReportsX, provides valuable flood risk information to protect your investments. As the flood authority, you can depend on Xactus because it has specialized expertise in determining flood zones. And it’s no close, no pay offer means if the loan doesn’t close, you will not pay for the flood zone determination. Register for Xactus’ Oct. 11 webinar at 12 pm ET on advancing innovation with Xactus360 or see a demo at the MBA Annual. To set up a time, email sales@xactus.com. Also, don’t miss Julie Wink-Davis, Xactus’ EVP of Strategic Sales and Marketing, who will discuss ways to control cloud costs with Dr. Maneesha Asundi at #NEXTFALL23 on October 5th.

Shawn Jobe, Vice President and Head of Business Development for Informative Research, will be a speaker at the upcoming MBA Annual discussing the recent announcements related to bi-merge credit reports and introduction of new credit scoring models by FICO (10T) and VantageScore (4.0). These changes are set to require updates to the operational processes and systems that underpin loan production, servicing, and investor relations. This session aims to provide valuable insights to kickstart your organization’s journey toward compliance with these forthcoming changes. Learn more here.

Lender and Broker Software, Programs, and Services

You already know the housing market is sluggish and the cost to do business is high. What matters most is how you’re reacting to the slowdown. ICE can help you launch marketing strategies that build for the future. The Surefire CRM and Mortgage Marketing Engine comes packed with award-winning multichannel content and automated marketing journeys successful lenders need to help convert hard-won leads and prospects into clients for life. With videos to quell consumers’ interest rate fears and educate them on mortgage preparedness, Surefire positions lenders to be there for borrowers when the time is right. Request a demo today.

“U.S. Bank Correspondent serves as a trusted advisor who continues to invest in technology and solutions to support our clients. Contact a U. S. Bank account executive to connect with us at the 2023 MBA Annual Conference and Expo October 15-18 in Philadelphia, PA. To learn more about our HFA offering and commitment to affordable housing, contact a U. S. Bank HFA client sales executive to connect with us at the NCSHA Annual Conference and Showplace October 14-17 in Boston, Massachusetts. Together, we will empower sustainable homeownership.”

Did you know that 7.9 million Hispanic Americans under the age of 45 are mortgage-ready? That’s a huge opportunity to expand your reach and grow your business, if you know how to tap into the Hispanic market. Don’t miss out! MGIC can help you develop your cultural competency and reach Hispanic first-time homebuyers with Spanish-language materials and more. Check out MGIC’s Hispanic marketing resources today!

Just as adventurers rely on maps to find their way, mortgage lenders can benefit from a well-charted strategy. With interest rates expected to soften next year, now is the time to map your strategy for capturing an influx of homebuying activity. To help lenders navigate the waters ahead, TrustEngine is launching the Path to Profitability webinar series. In our first episode, "Charting Strategies for Success," we'll explore ways to improve your margins with insights from James Deitch of Teraverde and in house experts Dave Savage and Rich Harris. Join us tomorrow 10/5 at 2 pm ET to delve into the biggest market opportunities of 2024 and lay the foundation for a more promising year ahead. Register now to save your seat!

The digital mortgage era is here. Is your LOS up to the challenge? Mortgage Machine™ is an out-of-the-box, all-in-one LOS designed to accelerate lenders’ operational velocity and support an end-to-end digital origination process. Created by eMortgage pioneer Jeff Bode, Mortgage Machine’s key platform features include AI-powered task automation, a scalable cloud-based infrastructure, flexible APIs, pre-configured workflows for retail and TPO channels, integrated document management and POS functionality. Mortgage Machine also offers all-in-one eClosing capabilities – including an eClose room, eNotes, eVault and RON – and utilizes MISMO SMARTDoc® data and security standards. With the recent addition of Dan McGrew to the team, lenders also have a seasoned eReadiness expert in reach. If you’re ready to harness the time and cost-savings digital mortgages deliver, schedule a demo or meet with the Mortgage Machine team at MBA Annual!

Learn how one lender increased loan file speed from application to processing by 38% with Maxwell Point of Sale. Homeowners Financial Group makes it a mission to wow its borrowers from the first touchpoint. By partnering with Maxwell, Homeowners empowers its team to deliver a top lending experience while improving operational efficiency. Features such as mobile-first functionality and QuickApply™, which automatically pre-fills application fields, speed borrowers through the process and remove tedious tasks from lending team members, allowing for higher-ROI work. In fact, since partnering with Maxwell, Homeowners has seen loan files move from application to processing 38% faster, while 4 out of 5 of its best performers using Maxwell Point of Sale were named to the prestigious, nationwide Top 1% Loan Officers list by Experience.com. “The efficiency of Maxwell allows us to focus where it matters most—spending time understanding and supporting the dreams of our clients,” says Bill Rogers, President & CEO. Want to learn more? Click here to read Homeowners’ full story.

M&A is Back in the News

There’s a lot going on all of a sudden. Redfin said “adios” to the NRA. Oops. The NAR. The brokerage said it would require many of its brokers and real estate agents to cancel their memberships with the National Association of Realtors due to allegations of sexual harassment at NAR.

Meanwhile, Australia’s Computershare is saying “adios” to its mortgage services business in the United States and selling it to Rithm Capital, owner of Newrez and Caliber and other companies. Yes, Computershare, the provider of share registry and employee share plan services, is selling its “troublesome” (their words, not mine) CLS mortgage services business in the U.S. to asset manager Rithm Capital for $720 million. For those of you playing along at home, Rithm owns Newrez and Caliber, and will probably fold the Computershare folks into those entities. Or watch for news of severance packages…

The sale of CLS comes just after the business returned to profitability in the six months ended June 30. Congratulations on that! But Australia's Computershare said it will sell its U.S. mortgage services arm to asset manager Rithm Capital for $720 million, as Computershare aims to focus on its core businesses. The deal includes the sale of Specialized Loan Servicing (SLS), a mortgage subservicer in the U.S., and would add a mortgage servicing rights portfolio of about $136 billion in unpaid principal balance to Rithm.

After the close of the transaction, but probably before the severance packages are issued, SLS' portfolio and operations would be transitioned to and managed by Newrez, a Rithm portfolio company. Rithm, which is focused on the real estate and financial services industries, will fund the acquisition through a combination of existing cash and available liquidity, along with additional mortgage servicing rights financing.

“The addition of SLS continues to grow our best-in-class special servicing business and adds more clients and homeowners to the Newrez platform,” said Baron Silverstein, President of Newrez. “It further strengthens our origination and servicing channels, both of which are designed to deliver a customer experience that prioritizes a successful homeownership journey.”

Some would say that it is a good move for the seller: The sale of wide-moat Computershare’s CPU noncore U.S. mortgage servicing business, or CLS U.S., is a positive development.

M&A is not without its share of personnel changes. Recall that Optimal Blue was acquired by the Perseus Operating Group of Constellation Software Inc. last month. The notice released yesterday stated, “… acquisitions commonly prompt change and leadership transitions, and our integration into Constellation is no exception. Three members of our senior leadership team have made independent decisions to pursue other opportunities outside of Optimal Blue. This includes Kevin McMahon, CEO, Ed Batt, VP of sales, and Matt Cesarz, chief technology officer. Each leader is committed to ensuring a smooth transition so we can continue delivering the top-tier service and innovation you expect from Optimal Blue.

“We’re pleased to share that Scott Smith, an executive leader within Constellation, will serve as the interim leader of Optimal Blue while a CEO search is conducted. Scott brings extensive relevant experience to Optimal Blue, including 15 years at Microsoft and 20+ years in real estate and mortgage technology... As a reminder, we are hosting an executive briefing webinar this Thursday, Oct. 5, at 3 p.m. ET, to hear more about Optimal Blue’s new ownership under the Perseus Group of Constellation, and to preview the exciting things on our product roadmaps.”

Capital Markets

Banks' balance sheets could face further pressure as higher interest rates exacerbate unrealized losses on bonds and loans. At the end of the second quarter, banks' unrealized losses on investment securities totaled $558 billion, up from $516 billion at the end of Q1 but down from $690 billion at the end of Q3 of 2022, according to the Federal Deposit Insurance Corp. Treasurys' excessive downturn may be due to concerns around rising debt levels in the US, bank officials have said. Though benchmark U.S. yields are at their highest levels in 16 years, concerns around an undersupply of bonds have caused a Treasury selloff, diverging prices from fundamentals.

The Federal Reserve must proceed carefully with its monetary policy decisions and focus more on how long rates should remain high to combat inflation, says Vice Chair for Supervision Michael Barr. "In my view, the most important question at this point is not whether an additional rate increase is needed this year or not, but rather how long we will need to hold rates at a sufficiently restrictive level to achieve our goals," Barr said. "I expect it will take some time." To bring inflation down, the Federal Reserve may need to raise interest rates one more time this year before holding them, said Federal Reserve Bank of Cleveland President Loretta Mester. This move "will depend on how the economy evolves relative to the outlook," Mester said, while adding that it shouldn't abruptly change the current outlook.

Hawkish rhetoric from Fed officials once again pushed bond yields up yesterday, including the 30-year Treasury yield to its highest level since 2007. Accordingly, the odds of another 25-basis point rate hike sometime later this year moved to greater than 50 percent, leading spreads to “blow back out.” The August Job Openings and Labor Turnover Survey (JOLTS) showed a big jump in openings (to 9.61 million from 8.83 million), reversing two months of losses.

Today’s economic calendar kicked off with mortgage applications decreasing 6.0 percent from one week earlier, not much of a surprise as activity was expected to remain subdued with mortgage rates just below their highest levels since the early 2000s. We’ve also received ADP employment for September (+89k, lower than expected). Later this morning brings the final September S&P Global services PMI, September ISM non-manufacturing PMI, August factory orders, and remarks from no fewer than four Fed speakers. We begin the day with Agency MBS prices are better a solid .250 from Tuesday and the 10-year yielding 4.74 after closing yesterday at 4.80 percent. The 2-year is at 5.10.