In the time I spend with loan officers (and I am fortunate to meet some top-notch producers), I hear plenty of stories about walking a real estate agent’s dog, washing their car, being asked to bring refreshments to an open house, etc. Are RE agent’s days numbered? Some home buyers are finding what they want (and saving money on commissions) by using Artificial Intelligence instead of RE agents. But don’t we prefer to interact with other humans, for better or worse?

Freddie and Fannie

The FHFA announced June 3, 2019 as the implementation date for the Single Security. Yes, 2019. The new Uniform Mortgage-Backed Security will be issued through the Common Securitization Platform. Freddie Mac has already been using the CSP for certain functions (data acceptance, issuance support, bond administration) related to single-class securities for nearly 18 months. In the middle of next year Fannie Mae will begin using the CSP, as well, and in 6/19 the CSP will also expand to include multi-class securities and commingled GSE securities. If you’d like to read up on it, see the Single Security timeline or the recently-updated Market Adoption Playbook.

F&F (the GSEs) have announced the release of new and updated supporting documents as a follow-up to the final redesigned Uniform Residential Loan Application (i.e., Fannie Mae Form 1003) published in December. New resources include use cases with XML sample files, plus updates to the FAQs, Desktop Underwriter (DU) Specification, ULAD mapping document, and more. Check out these documents and register for a live webinar on the URLA page.

Fannie Mae has updated AAA matrices in Alabama, Colorado, Georgia, Guam, Maryland, Michigan, Minnesota, Missouri, Montana, North Carolina, Rhode Island, Texas, and Virginia to align with the Allowable Foreclosure Attorney Fees Exhibit revision effective March 14. To view the updated matrices, visit the Excess Attorney Fee/Cost Guidelines page.

If you missed any of the Fannie Mae recent policy updates and clarifications, read its, “In Case You Missed It 2018” summary of Selling Guide updates, Lender Letters, and DU/Desktop Originator® release notes. Find important updates by category, highlights to changes that impact Day 1 Certainty, links to related resources, and more. Look for updates throughout 2018.

Fannie Mae issued SVC  2018-02 outlining changes that revise HomeStyle Renovation mortgage requirements by reinforcing servicer responsibilities related to contractor and subcontractor licenses, inspections, escrow closings, appraisals, and documentation. The guide has been updated allowing an increase the maximum allowable foreclosure attorney fees for several non-judicial states and update the fee for adjournment of foreclosure sales in Michigan to align with industry standards. Also, the guidelines for servicers to make post-disaster monthly principal and interest (P&I) payments like post-disaster P&I payments under Fannie Mae's Cap and Extend Modification for Disaster Relief has been clarified.

The next stage of Freddie Mac’s initiative with LoanBeam has been announced. Simplifying and automating the process for calculating income for a self-employed borrower when underwriting a mortgage through Freddie Mac’s automated underwriting system is next. LoanBeam’s technology will be integrated with Freddie Mac Loan Product Advisor and provide significant operational efficiency for lenders. It will execute automated interpretations and calculations based on the income on tax returns supplied by the self-employed borrower, in alignment with Freddie Mac’s guidelines. The offering is expected to be available to Freddie Mac’s lender clients this summer.

Fannie Mae’s Day 1 Certainty has approved ComplianceEase as a new tax transcript report supplier thus available to provide verification of income via their 4506xpress report. The report verifies Social Security, self-employed, retirement, and commission income types. For the DU validation service, review the Implementation Checklist, complete the activation process with ComplianceEase, and begin requesting vendor verification reports.

Some industry watchers are concerned about “charter creep” as Freddie Mac and Arch Capital are testing a new form of risk-sharing deal to boost investor appetite for low down payment mortgages. But the pilot with the nation’s largest MI is raising concerns about "charter creep" because it dictates private mortgage insurance decisions typically made by lenders. (Arch, by the way, is the lone MI that is not a member of USMI.) Others believe that Arch is looking to the future via trying out new risk-coverage structures that might be part of a reformed secondary market.

Paul Muolo with Inside Mortgage Finance reports that Fannie Mae “is definitely working on a single-premium mortgage insurance pilot.”

Capital Markets

Yes, the U.S. Treasury yield curve has flattened to a 10.5-year low. Against that backdrop, there are some secondary market news of note. As mentioned above, the goal of the Single Security Initiative is to reinforce the US mortgage market by combining issuance from FNMA and FHLMC. New issuance of a uniform mortgage backed security (UMBS) will be in Q2 of 2019. The new UMBS will have the same features and disclosures regardless of issuer and guarantor. UMBS will be backed by 30Y, 20Y, 15Y and 10Y fixed rate mortgages.

The MPF® Program and Ginnie Mae announced that $1 billion in MBS has been issued. The MPF Government MBS product was the result of a partnership forged by the Federal Home Loan Bank of Chicago and the Government National Mortgage Association (Ginnie Mae) to issue securities guaranteed by Ginnie Mae and backed by mortgages originated by FHLB member financial institutions, providing “mortgage lenders, particularly smaller institutions, direct access to the secondary mortgage market, and more options when creating mortgage products for their home-buying customers.”

loanDepot is launching its first mortgage-backed security, which is backed only by loanDepot loans, and rated by Moody’s Investor Service. “Mello Mortgage Capital Acceptance 2018-MTG1” has been rated. (“Mello” is from the loanDepot mello lending platform, and “mello Home” connects pre-approved homebuyers with verified real estate agents in their local market.)

Moody’s tells us that it is a $300 million securitization of 453 primarily 30-year, first-lien, fixed-rate prime QM residential mortgages. There are 226 prime jumbo and 227 conforming high balance loans, all of which were originated by loanDepot with an average loan size is $661,866, and the largest 20 loans in the portfolio make up approximately 10.1% of the total balance. The weighted-average primary-borrower FICO score is 772 and the weighted average original combined loan-to-value ratio is 72.4%. QM stats: The WA debt-to-income ratio for the pool is 33.3%, which includes 14 loans out of 453 loans with a DTI greater than 43%.

loanDepot’s headquarters are in Southern California but the pool is spread out: 78% of the properties backing the underlying mortgages are in five states: CA, MS, WA, CO, and NJ, but about 50% are from California.

Looking at rates, after hitting a 4-year high last month, the 10-year Treasury closed below 2.80% for the second day in a row. The rally extended with 2s/10s touching their most compressed level (47.5bp) since late 2007. You’d think rates would be moving higher – but they aren’t. Influencing rates are lower equities, Atlanta Fed President Bostic’s speech in favor of continued rate hikes (he is eager to see a return to a ‘neutral' fed funds rate), the third estimate for Q4 GDP revised up to 2.9% (higher than expected), personal consumption expenditures and private inventory investment being revised higher, and Pending Home Sales increasing 3.1% in February while the January reading was revised down to -5.0% from -4.7%.

Ahead of tomorrow’s bond market closure, today rates are lower again, oddly. We’ve had February personal income and spending. Personal income was +.4% and Personal Spending/Consumption was +.2%, both about as expected. Initial jobless claims were -12k to 215k – strong. Chicago PMI, at 9:45am, is seen declining to 59.0 from 61.6. Finally, the University of Michigan Sentiment Index for March is seen holding steady at 102.0. Bond markets close early today and are closed tomorrow for Good Friday. The 10-year is currently yielding 2.76% and agency MBS prices have improved .125 versus Wednesday.

Lender Products

In the continued purchase heavy market of 2018, first-time home buyers represent an ever-important market to win over. The market represents a digitally-savvy borrower that expects a different mortgage experience compared to what is offered by many lenders today. The good news is, the loan officer is more important than ever. A newly released industry guide, “Winning in the Digital Age”provides best practices to deliver great service to the digitally-savvy borrower. An exclusive to Rob Chrisman subscribers today and a must read for all lending professionals, Download your free copy here.

“Trying to keep everyone on the same page sometimes feels a bit like herding cats, especially if you have multiple branches, multiple operations centers, and distributed staff. Staying compliant and sticking to procedures can be hard without the right tools to support you. Here’s a little help to ensure your teams stay informed, have access to the most current job aides and other corporate resources, and follow consistent simple-to-use workflows. ‘The Hub’ promises all of this, comes pre-configured with lots of mortgage-specific resources and workflows, and you can add your own within minutes. You might be surprised at how much of a unifying effect these simple-to-use tools can have on your scattered staff. The Hub is offering a free 15-day trial and they’ll waive your setup fee if you sign up before April 15th. More at http://thegrindhub.com.”

Employment and Promotions

“PrimeLending was an easy choice for our ‘Big Easy’ Mandeville branch serving St. Tammany Parish. To keep pace with a community growing by 10 people per day, Mandeville Branch Manager Leigh Harrison and team needed a fast, reliable lender with a proven track record of supporting a booming market. After considering all options, the team picked perennial industry powerhouse PrimeLending, a top ten national lender with more than 30 years of relentless dedication to perfecting the mortgage process for loan officers, customers and business partners. Equipped with a quicker, easier and more efficient mortgage experience, and an 85% pull-thru, Leigh and her team knew PrimeLending’s industry-best operations and support would go above and beyond to close every customer’s loan on time. If you’re ready to spend more time finding and closing deals, and less time dealing with obstacles, contact Dudley Strawn at (469) 737-5743 today. It’s geaux time!”

Center Street Lending is seeking a top-notch Underwriter. The ideal candidate will be meticulous with a high attention to detail, can evaluate data efficiently and assess risk, all with the success of the customer in mind. The position is based in its headquarters in Irvine, California. Center Street Lending has built a reputation as a premier private money, portfolio leader focused on residential real estate entrepreneurs and customer obsession. Established in 2010, Center Street Lending has consistently and profitably grown year over year, with volume doubling in 2017. Contact Center Street Lending via Robin Gray if you are interested in joining their growing team.

Congrats to Grant Block and T.J. Lile, who have both been promoted to the position of VP, National Accounts at National MI. Both had remarkable accomplishments and success in 2017 on the National Accounts Team and these are well deserved promotions. Grant joined the company in March 2017 in the newly created position of National Account Director bringing with him 20+ years of experience in the lending industry. T.J. joined National MI as a regional Account Manager and was promoted to National Account Manager in 2015 after quickly establishing himself in the Colorado/Wyoming territory. Grant is located in Fishers, Indiana. A native of Colorado, T.J. currently resides in Castle Rock, CO.

Home Point Financial Corporation announced that it has named existing management personnel Brian Brizard Chief Business Officer (CBO) and Lisa Patterson Chief Production Officer (CPO). Both will report directly to Willie Newman, Home Point Financial President and CEO. “Brian is responsible for creating and driving new revenue-generating opportunities (as well as) Home Point’s distributed retail, renovation lending, marketing and communications. Lisa now assumes executive responsibility for the consumer direct and TPO channels.”

And the Association of Independent Mortgage Experts (AIME) has announced that John L. Councilman is the SVP of Legislative and Government Affairs and has established a Compliance and Regulatory Advisory Council to spearhead progressive legislative and social measures.