The other day I walked in on Myrtle who was looking at the litter cleaning robot on the screen as if to ask, “What’ll they think of next?” Businesses and arrangements are always coming and going. There’s a new in-house appraisal product, noted below. Who wants to go in with me on starting a 2nd home company with a common-sense name, nothing foreign sounding. “Let’s Split It.” (Tagline: “Your Perfect Vacation Home Awaits.”) Wouldn’t “I Gotta Guy” be a cool name for a business? And useful? Call the number, they hook you up with a plumber who shows up, or a gutter repair person who is competent, or whatever you need. New companies are out there. Ever heard of “Calque”? Me neither until Morgan C. from Highland Mortgage pointed out “The trade-in mortgage.” Freddie Mac announced its newly enhanced mortgage rate survey. Progress Residential, with over 85,000 single-family rental (SFR) homes, is now the largest SFR owner in the U.S., surpassing Invitation Homes. The company has been growing at a rapid rate, accompanied by criticism and protests from tenants and community organizations for unsafe practices and problems. Yes, institutional investors once again buying single family homes. Along these lines, here are some great landlord stats. (Today’s podcast is available here and this week’s is sponsored by MCT Investor Services, which helps investors scale their seller base, automate the bid process, source whole loan and flow co-issue production, automate AOTs, and analyze performance all in a cost-effective manner. Listen to an interview with SimpleNexus’ Andria Lightfoot and Marine Bank & Trust’s Shaun Williams on executing a competitive mortgage strategy in today’s market.)

Lender and Broker Services, Software, and Products

LAST CHANCE: Register for free TMC webinar and learn how to recoup revenue and save costs in 2023. Are you ready for next year’s challenges? In this webinar from Maxwell in partnership with TMC, industry veterans, including Maxwell’s Jim Smith, Peggy Rubadue, and Alan Parris, along with Thrive Mortgage VP of Operations Donielle Geiser, combine expertise from past downturns with insight into today’s unique market. Tune in for outside-the-box ways to save costs and bolster revenue. You’ll learn how to leverage overlooked areas of the lending process to boost the bottom line, how to better use technology to drive efficiency and borrower leads, how to grow product and channel offerings sustainably, and how to offload overhead and avoid hire-and-fire cycles. Click here to save your seat at “Planning for 2023: How to Recoup Revenue, Save Costs & Drive Loan Volume in an Uncertain Market,” taking place Thursday, 11/17 at 1:00 p.m. ET.

“But we’ve always done it this way,” said the lender who couldn’t quite hit revenue targets. If your lending processes are stuck in a rut, consider this the nudge you need. Plan to join Optimal Blue’s webinar, “Using Data to Improve Processes and Boost Business,” on Dec. 7 at noon CT. During this complimentary session, John Dumonsau, Mike Vough and Rick Allen will discuss ways you can incorporate primary and secondary data into your processes to compete more effectively. Attendees will learn how: competitive intelligence and analytics can increase revenue; data can help capture every basis point; and easy-to-understand data can inform quick decision-making. Register for the webinar today.

“With the number of borrowers who need Non-QM options on the rise, it is more important than ever to choose the right Non-QM lender. Angel Oak remains fully committed to the Non-QM sector and with over $15B in total origination volume closed since inception, we are the clear leader in this space. And now we’re making it even easier to close loans with us. We will now go to 90% LTV on our Bank Statement and our Platinum Full Doc/Prime Jumbo Fallout program as well as allow for negative DSCR on our Investor Cash Flow program. In addition, we have just lowered rates across the board on all non-QM programs. For more information reach out to your account executive today! Or email to learn more.“

LAST CALL! Don’t be one of the 54% of sales professionals that start the new year without a business plan. Join XINNIX at 9 AM PT/NOON ET TOMORROW, November 16 for a free live business planning class – “Your 2023 Roadmap to Success” – packed with valuable tips on how a well-crafted business plan can help you set goals and strategies to drive your bottom line forward in 2023. XINNIX wants to make sure that every sales professional gets the right start to the new year, so invite your friends, colleagues and even any family you may have who work in sales! Reserve your seat today.

Get the accounting support you need to weather any market conditions. These are volatile times in mortgage lending. With rates rising, inflation at a 40-year high, and the market cooling off, many lenders are looking to outsource their accounting needs, and it helps to know where to look. Richey May’s Client Accounting and Advisory Services (CAAS) lets you outsource the knowledge you need: expert, flexible, mortgage industry knowledge that can hit the ground running. Need coverage for a staff member on leave? Training for your team on mortgage-specific items? Help with year-end close or ASC lease implementation? We’ve got you covered. Outsourcing your mortgage accounting with Richey May not only puts your finances in expert hands, but also lightens your administrative load so you can focus on your company vision, growth and making key business decisions. Contact us for details and learn more here.

“We are pleased to introduce the next generation of Real Estate Valuation and the Appraisal Process into the market, allowing lenders to bring their valuation workflow in-house. Unlike an AMC, our business model is singular and focuses solely on the success of your lending business and your business alone. We accomplish this by partnering and administering over your own software platform allowing each branch or loan officer the ability to have their own relationships with an appraisal staff for each market area they are lending in state by state. This is 100% compliant with all state regulations. No longer will a lender have to rely on the transactional relationships they’ve established with one or multiple AMCs. Our universal appraisal software platform allows lenders to bring all of their valuation workflow in-house with more control, lower appraisal costs, better service, happier clients, borrowers, and appraisers. Please contact Rob Chrisman to forward your note of interest in hearing more about this.”

Conventional Conforming Leads the Way

Over the months and years, Freddie and Fannie continue to see the lion’s share of residential loans. What they do, the industry follows, and let’s see what’s going on out there ahead of the “end of next week’s” or “right after Thanksgiving” conforming loan limit announcement.

Freddie Mac reported its third quarter 2022 financial results and filed its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission (SEC). Freddie had $1.3 billion of net income, Making Home Possible for 542,000 Households in Third Quarter 2022, financed 392,000 mortgages, with 56% of eligible loans being affordable to low- to moderate-income families, and enabled 130,000 first-time homebuyers to purchase a home. Financed 150,000 rental units, with 96% of eligible units being affordable to low- to moderate-income families

Fannie Mae also announced earnings for the 3rd quarter: Press release reporting third quarter 2022 financial results. “$2.4 billion net income for the third quarter of 2022, with net worth reaching $58.8 billion as of September 30, 2022. Net income decreased $2.2 billion in the third quarter of 2022 compared with the second quarter of 2022. The largest driver of this decrease was an increase in credit-related expense, primarily driven by lower actual and projected home prices. $134 billion in liquidity provided to the single-family and multifamily mortgage markets in the third quarter of 2022. $92 billion of single-family home purchase acquisitions in the third quarter of 2022, more than 45% were for first-time homebuyers. Acquired approximately 285,000 home purchase loans and 99,000 single-family refinance loans during the third quarter of 2022. Approximately 143,000 units of rental housing financed in the third quarter of 2022, a significant majority of which were affordable to households earning at or below 120% of area median income, providing support for both workforce and affordable housing

Freddie Mac Multifamily’s loan purchase cap for 2023 will be $75 billion as set by FHFA. Freddie Mac has also received from FHFA updated criteria for its “mission-driven” business, which includes loans for affordable housing and underserved market segments.

FHFA defines its mission-driven requirements in Appendix A of its Scorecard. For 2023, 50% of loans purchases must be mission driven. “The loan purchase cap and new mission-driven requirements will shape how we approach the multifamily market in the year ahead,” said Kevin Palmer, head of Multifamily for Freddie Mac. The caps for 2022 and 2021 were $78 billion and $70 billion, respectively.

Freddie Mac is adding new features and advanced capabilities to Loan Selling Advisor®.

Examples include pricing and committing application programming interfaces (APIs).

Updates to credit fees. Early pool disclosure and 2-day settlement cycle for Guarantor.

Check out all the new stuff in Freddie Mac’s news article, Loan Selling Advisor Spices It Up.

Fannie Mae says, “ensure your business continuity plans are in place.” Business continuity procedures are defined as plans to continue operations if adverse conditions occur, such as a storm, a fire, or a crime. With the increasing number of natural disasters occurring, make sure to assess your risk, review your resources, and update your plans as necessary. Check out: Review the risk self-assessment, Share the disaster support flyer with your customers.

All new Fairway Wholesale Lending locks, dated on or after Wednesday, November 9th, will reflect a waiver of the Loan-Level Price Adjustments (LLPAs) on HomeReady and Home Possible® programs. View Fairway Wholesale Lending Client Announcement 2022-11-09 for details. Fairway Wholesale Lending announced its newest offering, seller funded Temporary 1/0 Buydowns, available to be locked for all standard Agency Programs on and after Wednesday, November 9. Learn more at Fairway Wholesale Lending.

FHFA recently announced that Fannie Mae and Freddie Mac will eliminate LLPA’s for certain borrowers and affordable mortgage products on loan deliveries December 1, 2022 and after.

PRMG is immediately removing the LLPA cap on all new locks and new price quotes under the HomeReady and HomePossible programs, effective immediately. PRMG’s Pricing engine has already been updated to reflect the change. Evaluation of the remaining announced updates are underway; notice will be sent once those changes are implemented.

SunWest Mortgage has updated its underwriting guidelines in accordance with the Freddie Mac Bulletin 2022-23 introducing an option where LPA considers the borrower’s cash flow as part of the credit assessment. Requirements to use the enhancement in LPA can be found on the SunWest Mortgage website.

Pennymac updated Conventional LLPAs value to zero, effective for all Best-Efforts Commitments taken on or after Friday, November 11th. Effective for all Best Effort Commitments taken on or after Monday, November 7, 2022, Pennymac will update Conventional LLPAs as shown in Pennymac Announcement 22-71.

FAMC/Citizens Correspondent National Bulletin 2022-19 includes information on Conventional Conforming, VA USDA-RD and MERS Updates.

Effective with new Best Efforts rate locks completed on/after Tuesday, November 1, 2022, Citi updated state geographic adjusters across all conventional loan products.

AmeriHome General Announcement 20221016-CL summarizes previously published changes made during October, additional changes made with this announcement, and recent Agency and regulatory news.

Capital Markets

Mortgage-backed security prices dropped a little, and Treasury yields trended higher, to open the week despite the market not receiving any data. (Markets often bounce after a big move, so that is no surprise.)

After we learned last week that the Consumer Price Index rose 0.4 percent in October and was up 7.7 year-over-year, the rate hike conversation continued. Fed Governor Waller said that a 50-basis points increase is being considered for the December meeting. Fed Vice Chair Brainard said that the time is coming for the central bank to moderate the size of its interest-rate increases. While she favors downshifting to a half-point move as early as next month, Brainard also said there’s still “additional work to do.” That said, the New York Fed's latest survey of consumer expectations showed an increase in one-year inflation expectations to 5.9 percent from 5.4 percent while three-year inflation expectations increased to 3.1 percent from 2.9 percent… And the Fed monitors inflation expectations. The Fed’s moves are having an impact. Growth in consumer credit slowed in the third quarter from an 8.7 percent annualized rate to 6.8 percent as rising interest rates shifted consumer behavior. Also declining was small business optimism for October as businesses are still concerned with inflation and the potential effects on sales over the coming months. Additionally, 90 percent of those surveyed still need help filling open positions as applicants remain scarce or are simply unqualified.

In more good news, the Mortgage Bankers Association reported that the delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 3.45 percent of all loans outstanding at the end of the third quarter of 2022, according to its National Delinquency Survey. (For the purposes of the survey, the MBA asks servicers to report loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage.) The delinquency rate was down 19 basis points from the second quarter of 2022 and down 143 basis points from one year ago. Today’s economic calendar has already seen November Empire State manufacturing (+14.5) and the Producer Price Index for October (+.2 percent, +8.0 percent for the year, ex-food & energy +6.7 percent for the year). Headline PPI was expected to increase 0.4 percent month-over-month and 8.2 percent year-over-year, so producer inflation is less than expected. Later this morning brings Redbook same store sales and several Fed speakers (Governor Cook, Philadelphia Fed President Harker, and Vice Chair for Supervision Barr). We begin the day with Agency MBS prices better by .250-.375 and the 10-year yielding 3.77 after closing yesterday at 3.87 percent: have we switched to expectations of more gradual Fed actions?