As we digest the news that CIT is buying Mutual of Omaha Bank, others are looking at demographics. Families moving create jobs, right? From 2017 to 2018, roughly 32 million Americans moved. The reasons include family, work, and housing reasons, obviously. The five most common reasons? 5.3 million moved because they wanted to move to a better house or apartment, 4.1 million moved to start a family, 3.6 million for a miscellaneous family reason, 3.3 million for a new job, and 2.6 million because they wanted cheaper housing. Hundreds of thousands moved to attend or leave college, wanted a change of climate, millions wanted to buy, not rent, or wanted an easier commute. And they are moving into smaller houses. After rising for a decade, average new home sizes are falling as builders pivot away from luxury buyers to first time homebuyers. Square footage is dropping slightly and townhome and condo popularity is on the rise for first time home buyers as well as empty nesters. And companies encourage ownership. For example, Unison, the home co-investing company, is having a “Dream Home” contest: participants are asked to create short (15-60 second) videos that answer the question, "What does your dream home look like and how would it change your life?" $25k – tell your clients!

Lender Products and Services 

Chenoa Fund: Creating a Legacy of Responsible Borrowers: Part 4 in a series on DPA The Chenoa Fund strives to create successful borrowers over the long term to ensure that underlying FHA mortgages perform well. What’s our approach? One key is creating incentives to ensure homebuyers make payments on time. A large proportion of the second mortgages provided in connection with the Chenoa Fund program are forgivable, and carry no interest or payment obligations. To ensure borrowers feel they have “skin in the game,” these seconds are only forgiven after borrowers make 36 consecutive on-time payments on their first mortgage. This structure encourages homeowners to prioritize payment of their loan and stay on track. A second key is our 12 month post-purchase program for borrower success, in which we stay in regular touch with the borrower to help them transition to homeownership. 

Blockchain is ushering a new world order for mortgage finance. At least, this is what one technology expert in the industry is predicting. Between blockchain and advances in servicing technology, the industry has a lot of much-anticipated changes to watch out for. Great technology powers proactive customer service, and looking at the way TMS is paving the way for new servicing technology, both borrowers and lenders are about to experience the revolutionary benefits. 

Optimal Blue reports a rise in lenders who have transitioned from best efforts to mandatory delivery to capture significant profitability gains and efficiencies. For those still considering a switch, Optimal Blue has compiled several value-added resources, including: 1.) Weekly Market Summaries featuring the best efforts to mandatory spread index to help lenders understand their opportunity; 2.) Valuable Resources to help lenders accurately calculate and manage interest rate risk, including a white paper titled “A New Metric for Hedging Mortgage Pipeline Fallout Risk”; 3.) Enterprise Hedge Automation Platform that includes seamless integrations to Optimal Blue’s industry-leading PPE and digital loan trading platform; and 4.) Unrivaled Client Service delivered by strategies that have guided scores of lenders through successful delivery transitions.

You can finally hit the snooze button on your client’s ticking rate lock clock. QLMS is launching Padlock, a one-of-a-kind program giving its partners FREE rate lock extension days. Just like airline miles - the more loans you close, the more extension days you receive for your clients’ loans. Partners are granted 3 free extension days for every closed loan, up to a maximum of 750 rate lock extensions days in the bank. That’s a lot of snooze buttons! QLMS is launching Padlock by giving every Partner 20 free extension days, whether they’ve used QLMS recently or not. Start using those free extensions, and keep earning more. Your clients can rest easy knowing they have options, and you can relax knowing you empowered them. If you aren’t already working with QLMS, and banking rate lock extensions, click here to connect with them and give your clients the experience they deserve.

August Trainings and Events

Today, August 13th at noon (PST), real estate attorney Lorena Roel will be presenting a free webinar about holding title to property in California, specifically focused on Joint Tenants and Tenants in Common.

Land Home Financial Services is offering a free webinar, Reverse Mortgage 101, today.

Register for FHA’s “Quality Assurance Update” on August 21st. This free, online webinar will provide an update on the results for the most recent quarter, as well as specific information on indemnifications. There will also be a live Question and Answer session at the end of the webinar.

Today’s manufactured homes (MH) can help ease the nation’s affordable housing shortage, address borrowers’ evolving needs, and provide a new business opportunity for many lenders. Fannie Mae’s MH Advantage® mortgage makes purchasing MH with site-built features more attainable, with down payments as low as three percent, and interest and MI rates similar to site-built homes. Join Fannie Mae for a webinar on August 21 at 2:30 p.m. ET to learn more about how MH Advantage fits into your portfolio.

We have Arch MI’s August Webinars.

Plaza's August Webinar Calendar includes trainings on USDA, 203k, Non-QM, Schedule E, Sales, Manufactured Housing and Reverse.

Join Indecomm on Thursday, August 15th 1:00 ET for a free webinar titled "Solving Loan Set Up Challenges With Automation". Learn about best practices and automated solutions for solving loan set up challenges and have the opportunity to ask questions at the end of the presentation. Registration is free but space is limited.

Join Indecomm on Wednesday, August 21, at noon ET for its free “Ask Me Anything” webinar focused on "Mortgage Policies and Compliance." Indecomm subject matter expert, Joy K. Gilpin, Vice President of Learning and Compliance, will answers your questions related to managing mortgage policies and compliance.

XINNIX will host a live Leadership Lessons webinar, The Engagement Dilemma: An Executive Wake Up Call on Wednesday, August 21 at 2:00 PM. Register today!

NAMMBA is offering a Webinar on Thursday, August 29th at 2:00 ET. Grow Outside the Box Using Non-QM will be presented by Angel Oak Mortgage Solutions.

Capital Markets

Market participants say there is greater likelihood of U.S. Treasury yields turning negative (a possibility once considered unthinkable) after a recent drop in the yield on the 30-year U.S. Treasury. Negative yields are now common in Japan and Europe and are supported by central bank policies.

My cat Myrtle, a big fan of MLOs, looked ticked off yesterday. And I knew what was causing it: although they will probably eventually catch up, mortgage rates aren’t “participating” in the big Treasury market rally of the Summer of 2019. Why not? Given that the 10-year is down in the 1.60% range, why aren’t 30-year mortgage in lock step?

First, Agency mortgage rates track the mortgage-backed security (MBS) market, which in turn loosely tracks the Treasury market, with its 10-year yield as a gauge, but not exactly. Wall Street traders try to hedge the difference in price movement between Treasuries and MBS, others try to make money off of it. Coupon swaps have gone awry, which is a little “in the weeds” for many.

Prepayment risk is a big issue: who wants to pay 105, with a 5-point premium, for something that pays off a short while later. (“I pay you $210,000 for that $200,000 loan, and in four months you give me $200,000 back? Let me run that by my boss.”) Many investors don’t even offer to pay the premium, resulting in price compression. (“Why should I pay you more for a 4.5% 30-year Fannie loan than a 4.25% loan; they’re both going to prepay.”) And when loans prepay, often the cash is put into the Treasury market, with the demand driving prices higher and yields lower for securities that don’t pay off early.

In the primary markets, lenders don’t want their entire pipeline to renegotiate (those hedges with Wall Street firms don’t have their prices renegotiated) so many capital markets staffs set rates that are “sticky” when Treasury rates drop. No one has a crystal ball, no one knows what inflation is going to do or how long these mortgages will be on their books, and if rates shoot back up, pipelines will be filled with illiquid coupons that are hard for investors to value. How much would you pay for a 2.50% 30-year Freddie Mac loan? So there is a big premium for uncertainty.

The real driver behind the fact that the rates are not moving in sympathy with the 10 year is capacity. Lenders & investors all came into 2019 trying to shed capacity and then rates rallied and everyone is trying to build it but we are now in a 100% full documentation world: HARP is gone, and there are no streamline refinances any longer. We all have to hire actual underwriters and then train them which adds months to the lead time for a lender to ramp up. In the old days lenders would hire clerical staff to help move the streamline refinance paper around but with Dodd Frank it is all 100% underwritten and verified to be eligible for delivery to the GSEs. Investors and lenders are all trying to get our bearings.

Looking at the bond market activity yesterday, U.S. Treasuries rallied to start the week, pushing the 30-year yield to a fresh low for the year while the 10-year yield approached its low from last week (1.64%) as no good news on the U.S./China trade front again dominated the action. At current levels, more than half of the MBS market has a refinance incentive, including those at 3.5 percent, which should boost supply through the fall. Month-to-date supply is at $88 billion which suggests it could be similar to July's $132.2 billion which was the highest since December 2016.

Headlines from yesterday fueling the risk-on narrative over global growth concerns to watch the rest of the week include the aftermath of the primary election in Argentina, China reportedly preparing to deal with increased tensions and violence in Hong Kong through force, increased odds of a hard Brexit, and incidents from Kashmir/North Korea. Today’s economic calendar began with the NFIB Small Business Activity Index for July (improving). Additionally, just out is July’s Consumer Price Index (both headline and core +.3%). Redbook same-store sales for the week ending August 10 will be the only other release today. We begin the day with agency MBS prices worse .125 and the 10-year yielding 1.66%.

Employment

A large, well-capitalized wholesale lender headquartered in Orange County, CA, is looking for an experienced Capital Markets Manager. This position reports to the VP of Capital Markets and has an integral role in the daily operations of all Capital Markets functions including development and execution of pricing and hedging strategy, loan delivery and settlement, as well as management of the Lock Desk. Resumes can be confidentially submitted to Anjelica Nixt for forwarding.

Fifty Academy Mortgage Loan Officers are headed back to class this month. The independent lender will soon kick-off the fourth session of its Torch Bearer Sales Program—a three-month course of individual and group coaching led by top-producing originators. It covers field-tested sales strategies and approaches unique to Academy. Several of the past participants have nearly doubled their quarterly production. Academy’s third class of its Leadership Academy is also in full swing. This MBA-style 12-month certificate program offers case-based learning modules, forums, field workshops, and experiential team projects. Academy has been developing the mortgage leaders of tomorrow for more than 30 years. Even in a volatile market, the company continues to invest significant time, energy, and financial resources to help their People become effective leaders in their personal lives, professional lives, and communities. Contact Chad Melin, VP of National Business Development, if you're interested in growing your career and achieving your potential.

Gateway Mortgage Group, a division of Gateway First Bank, continues to experience significant growth and is looking to hire top-notch Loan Originator talent for both our retail (nationwide) and consumer direct channels (our Dallas office). At Gateway, we set our sales teams up for success! From our intuitive digital tools to our extensive suite of loan products, you’ll have the resources needed to close more loans and provide a better mortgage experience for your borrowers. If you’re looking to take your origination business to the next level, and join a team that is dedicated to building strong communities through homeownership, contact Mary Ann Arbogast, Regional Sales Recruiter (210-380-2516).

As the 3rd largest correspondent investor in the country, AmeriHome continually strives to make the client experience “hassle free.” To that end, it is excited to announce the launch of AmeriHome’s integration with Encompass Investor Connect. Encompass Investor Connect is a secure, system-to-system workflow within Encompass that directly connects you to AmeriHome. This new option saves time and minimizes risk by delivering accurate and compliant loan data and documents directly and securely from your Encompass instance to AmeriHome. It eliminates the need for multiple log ins, and allows for one-click uploads of data and documents for single or batch loans. AmeriHome is currently looking to fill several key positions in both its Westlake Village, California and Dallas, Texas offices, including client services, analytics, marketing, underwriting, and more. To find out more about joining the AmeriHome team visit the Careers Page!