Why does opening every ironing board sound like you’re dipping a witch in scalding oil? Cutting costs can sound like that as well, and while we await the 2023 conforming loan limits tomorrow, and the industry grapples with massive credit reporting cost hikes, lenders are not the only ones taking a close look at expenses these days. Owners of vendors and third-party providers are also looking at middle layers of management, cutting back, certainly cutting salaries, or ridding themselves of unproductive salespeople. (Yes, sales staff can report to senior management or owners!) Meanwhile, our industry continues to pay for the sins of previous days. “Santos orchestrated the scheme to recruit fake, or ‘straw’ buyers to purchase 12 properties in Newark. Using the identity and credit of these straw buyers allowed Santos, Simoes, and their conspirators to conceal their identities from the lender as the actual purchasers of the properties.” (Today’s podcast is available here and this week’s is sponsored by Candor Technology: Home of the One Touch Underwrite, supporting lenders from Point of Sale to Post Close QC, to reduce repurchase risk, increase underwriter productivity by 400 percent, and decrease turn-times by 10. Listen to an interview with Axel Thibon on personal investment advice and financial wellness.)

Lender and Broker Products, Software, and Services

Home Equity loans could be your bread and butter in 2023. Navigate the market maze by adding a new product to your offering: Reverse Mortgages. Offering Reverse Mortgages adds a lucrative home equity product to your portfolio that caters to over 10,000 new leads a day* with over $11.5 trillion in home equity.** Go FAR With the #1 Wholesale Reverse Lender Finance of America Reverse LLC (FAR). FAR offers the most innovative product suite in the industry, comprehensive training programs, customizable marketing material, and a dedicated account team. Reverse mortgages can help you solve the unknown. Power your business with reverse. †Since December 2011. Based on trailing 12 months’ endorsement volume. *Source: U.S. Census, 2020 Census Will Help Policymakers Prepare for the Incoming Wave of Aging Boomers. **Source: NRMLA, Senior Home Equity Exceeds Record $11.5 trillion.

So, you still have people manually doing your ECOA/Reg-B Adverse Action Process, huh? That’s costing your business time and money, ya know. How would you like to get your LO’s and Compliance Folks back to doing the things that will generate revenue for your business? Let Velma Connector take on those tasks for you. Connector works with your LOS to automate the entire ECOA process, from start to finish. Connector even sends out NOI letters automatically to borrowers when there’s an issue! Plus, limited human interaction with the process eliminates the chance of costly non-compliance fines. What’s not to like? Oh, and did we mention that users report an average of 389% ROI in the first year? Not too shabby. Book a demo today and get your first month of Velma Connector for free!

“Get the right services, at the right time. With rates climbing and production at historical lows, companies have been forced to lay off corporate personnel, leaving themselves unable to get important work done. If you’re considering outsourcing important functions, you want to do it right. Richey May Advisory provides mortgage industry expertise and the ability to customize as business dictates. Need outsourced accounting and advisory? Our CPAs dive into financials to find hidden opportunities, handling tasks like bill pay and accounts receivables while consulting. Looking for business intelligence? We can help you assess performance versus peers and determine where to make improvements. Need cyber services? We’re highly skilled at-risk assessments, penetration testing, cloud security, and more. At Richey May, we have the tools, knowledge, and experience to augment your team like no one else. Reach out to learn how we can lend support… Whenever and however you need it.”

Chrisman Commentary has discussed per loan cost a lot recently. Take3Tech products are a viable solution to lower that cost thus increasing your profit. Think about how Expedia helped make travel booking easier. Or how Pricing Engines helped you find the right investor and best price. Take3Tech has two technologies that will make mortgage banking easy! LoanMaps: Based on the borrower’s profile, LoanMAPS will tell you the most cost-effective Digital Validation Source (DVS), and whether the DVS might get you D1C! D1C on income/employment can take you from application to clearing conditions straight to schedule to close. TheRuleTool: Think of it like Expedia for investor guidelines! It organizes Agency, Government, Bond, and Jumbo loan guidelines then display it all in one spot! If you are looking for speed from application to close and to drastically reduce costs, contact us. Attending 12 Days of TMC? Check out our lightning showcase!

FHA, VA, and USDA News

It is always interesting to look at percentages of applications. Of course, some lenders to more of one type of loan or another, but industry-wide application data is worthwhile to scan. For example, the Mortgage Bankers Association tells us that adjustable-rate apps are now below 9 percent, the lowest for a few months. The FHA share of total applications is running at about 13.5 percent, the VA share of total applications at about 10.5 percent, and the USDA share of total applications is firmly below 1 percent. All of these programs are an important tool to LOs.

If you like stats and numbers on performance, the MBA tells us that in October the share of Fannie Mae and Freddie Mac loans in forbearance was 0.31% but Ginnie Mae loans in forbearance increased 8 basis points to 1.41%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 11 basis points to 1.03%. In the secondary markets, most of these loans find their ways into Ginnie Mae securities. Here is the Ginnie Mae issuance calendar.

The Department of Housing and Urban Development (HUD) released its Federal Housing Administration (FHA) Annual Report to Congress on the financial status of FHA’s Mutual Mortgage Insurance Fund (MMI Fund) for fiscal year (FY) 2022. It is filled with all kinds of tidbits. For example, the percentage of first-time homebuyers using FHA insurance was approximately 84 percent of total FHA forward mortgage purchase endorsements. The share of mortgages insured by FHA to borrowers of color reached 29 percent of all FHA forward mortgage insurance endorsements.

FHA announced the availability of informational fact sheets for its 203(k) Rehabilitation Mortgage Insurance Program (203(k) Program). These materials are designed for FHA-approved lenders and are intended to increase their awareness and understanding of the features and benefits of FHA’s 203(k) Program.

FHA is rescinding the mandatory use date for FHA Catalyst’s Electronic Appraisal Delivery Module, as published in Mortgagee Letter (ML) 2022-19.

FHA published the Acceptance of Private Flood Insurance for FHA-Insured Mortgages final rule (Docket No. FR-6084-F-02) in the Federal Register. Specifically, the final rule updates FHA regulations to allow borrowers the option to purchase a comparable private insurance policy meeting FHA requirements in lieu of a National Flood Insurance Program (NFIP) policy for FHA-insured mortgages secured by properties located in Federal Emergency Management Agency (FEMA)-designated Special Flood Hazard Areas (SFHAs).

In AmeriHome Product Announcement 20221102-CL, sellers are reminded that FHA, VA, and USDA refinances have multiple seasoning requirements. These requirements can be found in the AmeriHome Program Guides and the AmeriHome FHA, VA, and USDA Quick Reference Guide.

Sun West offers FHA loans with FICO down to 500 and a competitive price. Products and services have no affiliation with or endorsement from any government agency or body. Details can be downloaded here, in addition, all Sun West program guidelines are available on AllRegs.

Pennymac has updated Government LLPAs effective for all Best Effort Commitments taken on or after Friday, November 25, 2022. The ‘Temporary Interest Rate Buydown’ LLPA will be updated on the following LLPA Grids: ‘FHA Other Price Adjustments’, ‘VA Other Price Adjustments’ and ‘Guaranteed Rural Housing Other Price Adjustments’.

Capital Markets

The FOMC minutes, released on Wednesday, said that inflation is still too high and that a sustained period of below-trend GDP growth would be helpful in re-setting inflationary expectations. Is the Federal Reserve going to slow down on increasing the overnight Fed Funds rate? The need to moderate on aggressive monetary policy was present in Wednesday's release of the minutes from the Fed's latest meeting, though some caution that it was the same usual chatter and only a perceived shift in tone. "A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate," according to records from the Nov. 1-2 gathering. "A slower pace in these circumstances would better allow the Committee to assess progress toward its goals of maximum employment and price stability."

Fed officials still said the persistence of inflation meant that the federal funds rate may have to go higher than they previously expected to achieve the central bank's goal of bringing down price pressures. The word "inflation" was even mentioned 95 times in the minutes, remaining the primary focus on the gathering. The big picture remains that the Fed intends to slow down to allow more time for lags to operate and cumulative tightening to date to show up in the data. We will learn more this week when Fed Chair Powell speaks ahead of the central bank’s next pre-meeting “quiet period.”

Looking at some data point, last week’s manufacturing data reversed a recent trend that had pointed to a slowdown in the sector. Core capital goods shipments jumped 1.3 percent in October and orders rose 0.7 percent. However, the decline in orders for September was revised down from -0.4 percent to -0.8 percent. Despite the decline in new orders there are still many backlogs throughout the manufacturing sector that may sustain activity for a bit but, if demand continues to fall, will eventually work their way through the system. October’s housing data was a welcome surprise showing new home sales rose 7.5 percent to an annualized pace of 632k. While this is still 14.2 percent below last year’s pace it does point to success builders are seeing with price discounts, incentive, and rate buy-downs. This points to the fact that there are buyers ready to move forward as affordability improves which may lead to stabilization in housing as rates settle into a lower range.

And so the markets are currently pricing in a 75 percent probability of a 50-basis points rate hike at the next FOMC meeting in December, however November’s inflation data, released just before the meeting, may heavily influence that decision. Also influencing the decision will be this Friday’s U.S. jobs report, which headlines this week's economic calendar. Today sees just Dallas Fed manufacturing for November, due out later this morning, and remarks from New York Fed President Williams. Later this week brings home price indexes, consumer confidence, preliminary Q3 GDP, and PCE. We begin the week with Agency MBS prices roughly unchanged from the end of last week and the 10-year yielding 3.68 after closing last week at 3.69 percent.

Originator Jobs and Investors Wanted

A top 10 mortgage company seeks flow business purchase partners to acquire quality loans for their balance sheet. The retail lender has a nationwide footprint, and residential loans can be either purchased servicing retained or released, and coupon & underwriting guidelines are subject to negotiation. Products to include conventional fixed and adjustable, FHA/VA, and jumbo, as well as HELOCs, HELOANs, and Personal Loans. Interested investors, principals only, should reply to Chrisman LLC’s Anjelica Nixt to forward your note of interest.

PacRes Mortgage is excited to announce the hiring of industry veteran John J. Reed to open a retail branch office in Irvine, CA, with a satellite office in Claremont to grow the mortgage footprint in Orange, Los Angeles, Riverside, and San Bernardino counties. PacRes is a growing company with a simple vision, put people over profit. They are actively expanding nationally and are currently licensed in 36 states across the country and adding to that number. "We are excited to join PacRes where everyone within the organization strives for a 5-star customer experience. PacRes Mortgage has demonstrated what it means to stay the course tried and true throughout the ebbs and flows of the mortgage industry. Throughout my career, I have enjoyed building around strong companies and people and PacRes is no different,” says John. Want to join John and The PAC in Southern California? Please reach out directly to John J. Reed at (714) 305-2912.