Think there’s no creativity allowed in the down payment help arena? Think again. Loftium pays up to $20,000 towards your down payment and offers monthly mortgage assistance if you agree to Airbnb one of your new home's extra bedrooms for 12 to 36 months." And nope, this isn't an ad...and when did "Airbnb" become a verb?

Products: are lenders and investors preparing for ARM, jumbo, 2nd, and HECM competition? Who knows, although the secondary markets have noticed that adjustable rate mortgages are not included in the single securitization platform. Maybe some day...

JMAC Lending is revving up its jumbo mortgage products this spring. One of the most popular products for the Southern California-based wholesale and correspondent lender is the Newport Non-Agency Jumbo Loan. Some of the flexible features include a 40-year fixed-term with interest only, up to 95% LTV with no mortgage insurance, unlimited cash out, 2-years seasoning for short sales and bankruptcy, and 3-years seasoning for foreclosures. Look for the jumbo elephant on the site above.

Out of Virginia comes news that Navy Federal Credit Union announced the marketing of its 5/5 Adjustable Rate Mortgage (ARM) product to large institutional investors. The ARM product is pooled into Freddie Mac mortgage-backed securities. "The product has a history of growth and stability at the credit union. Since 2015, the Navy Federal 5/5 ARM loan volume has grown by 11 percent and is expected to trend upward. Institutional investors benefit from the value Navy Federal and its members add through lower than industry average default and prepayment rates."

Effective as of January 25, NewLeaf Conventional 3/1 Hybrid ARM products were discontinued.

Agency loan transactions through AmeriHome involving Mortgage Credit Certificates (MCCs) meeting the applicable Agency requirements are eligible without overlay. Non-Agency Hybrid ARM and Expanded QM loan transactions involving MCCs that meet the Fannie Mae standard are also eligible. Core Jumbo loan transactions involving MCCs remain ineligible.

NYCB Mortgage Banking has made significant improvements to its High LTV LLPA for Jumbo Fixed 30 Year and Standard Jumbo ARMs (5/1, 7/1 and 10/1) Purchase and Refinances. It has eliminated the separate "High LTV" LLPAs (-1.000 for 80.01-85% LTV and -2.000 for 85.01-90%) and conveniently combined the new, improved LLPAs for each LTV/CLTV/FICO scenario into one LLPA.

Angel Oak now offers a 12-month personal bank statement program. Contact your Account Executive for information.

2nd liens are available with PRMG Mortgage. Full guidelines are available for review.

FHA published Mortgagee Letter 2017-05, Home Equity Conversion Mortgage (HECM) Claim Type 22 Assignment Requests. This Mortgagee Letter consolidates policy found in various existing Mortgagee Letters and Handbooks for mortgagees submitting HECM assignment requests by initiating a Claim Type 22 (CT-22) in HUD's Home Equity Reverse Mortgage Information Technology system. This Mortgagee Letter does not contain new policy specific to assignment eligibility; however, the stacking order of items needed for the various documentation packages has changed.

Capital markets: supply and demand rule the roost

True or false? The Fed's eventual tapering of their MBS holdings will transform the demand in the mortgage market into one that is dominated by private investors. Pre-crisis environments provide some guidance as to the equilibrium level of spreads absent the Fed. The 2004-05 period may be the best analogy, a period of strong bank and foreign purchases. Knee-jerk reactions aside, experts think spreads could end up at least 10bp wider than today's levels, though the initial reaction to tapering could be far more severe.

So as if there isn't enough going on in the political and regulatory environment, MBS investors are worried about  what happens to MBS when the Fed stops re-investing maturing proceeds from its QE (Quantitative Easing) portfolio. The role of the Fed includes the stability of the U.S. economy, and began buying agency MBS several years ago. At its clip of $1-2 billion a day the Fed has been the biggest buyer of MBS paper for years and if that were to cease then the laws of supply and demand dictate that the lower demand for mortgage backed securities will translate into higher mortgage rates - compared to Treasury and other rates.

But hey, there has been no chatter about the NY Fed selling bonds, just not buying them anymore. Analysts once again point to the pre-QE spreads between MBS and Treasuries - which surprisingly aren't much different than they are now! Sure MBS spreads vary over time, but they have historically been around these levels. Do they really make a difference to a young family wanting to buy a home in a particular school district? 

On the supply side of things, Fannie's trading desk gauged that last week originators reported that "overall lock activity was flat to just slightly lower week over week. The posted 30yr primary rate remains in the 4.125-4.375% range. Using 4.25% as the prevailing 30-yr rate, the primary/secondary spread is 107bps down from 115bps the previous week. While overall locks are down, a couple of lenders have reported recent pickups in their pre-qualification pipeline which could be a leading indicator to a better spring buying season."

Supply is certainly impacted by loans paying off early, and we had prepayment speeds come out recently. To the surprise of no one in the industry, rising rates on home loans and plunging refinancings are slowing the pace at which mortgage bond investors get their principal back. Unexpected changes in prepayment rates can reduce returns for investors in mortgage-backed securities. Monday's agency prepayments showed a surge in net issuance as speeds generally fell near expectations (average 20% decline) following the post-election surge in rates, hawkish Fed rhetoric and lower day count all contributing. And no one will disagree that most homeowners that were eligible to refinance have already done so, and rate & term shops have moved to focusing on cash out.

In terms of global mortgage supply, mortgage lending volume this year could be 20 percent below last year's $1.5 trillion. But industry observers are quick to point out that as refinancing business shrinks, banks could lower their lending standards. Haven't we seen that movie?

Here's an Angel Oak announcement that both lenders and investors may find interesting. "Their mortgage origination platforms have been reviewed for quality by ratings agencies Fitch and DBRS. Both ratings agencies affirmed the acceptable quality of the company's non-agency, non-qualified mortgage originations." This is a big step toward rated mortgages securitizations in the non-qualified mortgage space.

Ginnie Mae has added "Additional REMIC Factor Tranche data for December 2016."

In terms of interest rates, they continued to slide lower Tuesday: both bonds and stocks rallied. There were the usual small moves between coupons, maturities, and securities, but nothing earth shattering and not much that would dramatically move borrower's rates. The 10-year ended yesterday yielding 2.40% and agency MBS prices were a tick or two better.

This morning we've had the MBA's read on 75% of retail applications last week. Apps were +2.3% but are 23% below this week last year. (Refis are down 40% from a year ago, and are at their lowest level since 2009.) There is no scheduled interest rate-moving news, although traders will pay attention to how well the $23 billion 10-year T-note auction by the Treasury is received. In the early going, before the sun comes up on the West Coast, we find the 10-year yielding 2.36% and MBS prices better by .250 versus last night.


Jobs and Announcements

I normally post job openings, but in this case, I know of an experienced industry marketing executive seeking a new opportunity. Strong history of driving results from start-ups to Fortune 500 companies. Successful record of increasing revenue, loan growth and sales as well as improving field support and eliminating enterprise compliance risk. Built strong support teams, developed new mobile technologies, enhanced public relations, increased brand identity and driven new levels of creativity, technology adoption and marketing achievement. Willing to relocate or commute for the right opportunity.  Interested parties should send an email to me and specify this person; please excuse delays due to travel in San Diego.

And here's another person searching: a mortgage industry expert with experience sourcing and implementing robotics into mortgage operations is available for hire for the right bank or financial services company committed to investing in strategic procurement and process improvement. Innovative and forward-thinking mortgage company principals and/or regional or national bank executives looking to strategically lower expenses and improve operational efficiency should send a note of interest to me for forwarding to the individual. Mention this ad.

REMN Wholesale's dedication to same-day turn times on mortgage products has been expanded to encompass loans specifically for manufactured housing. REMN's manufactured home mortgage products are supported by the same award winning closing department and dedicated internal help desk that have made them leaders in both reno mortgages and traditional loan products. REMN is one of the few wholesale lenders offering these products with same-day turn times, an incredibly important factor in today's "want it yesterday" mortgage environment. As a part of REMN's commitment to making the closing of these home loans as turnkey as possible for all parties involved, REMN includes delivery, setup, site development, installation, along with well and septic connections, within the purchase price for each loan. As REMN continues to grow, it is looking to hire experienced, customer-focused account executives in all regions coast to coast. Interested applicants should send their resumes to AErecruiting@REMN.com.

There are just a few spots left to register for Lenders One's Winter Conference at Universal Orlando, March 5-8 at the Loews Sapphire Falls Resort. This members-only event will deliver valuable insights and includes access to brand-new 2017 Lenders One programs and services. Offering five education session tracks for you to choose what's most critical to your business, we'll cover key topics such as the impact of the recent election from a regulatory and legal perspective and how lenders are thinking about the digital consumer, include a panel discussion on e-closing, a session on finding differentiators in a market asking for scalability, millennial behaviors, leadership excellence and more. With new focused networking opportunities to share best practices and three nights of fun, this is a conference you don't want to miss. Registration will formally close on Monday, February 13 or when the remaining spots have been filled. Contact Susan Malpocker for questions or more information about Lenders One.

On the retail side from Kentucky comes news that Stockton Mortgage Corporation has added two seasoned mortgage professionals as Regional Managers to its team. Buddy Kittle (502.417.4570) will cover KY, IN, and OH and Greg Ellenburg (901.289.8366) will take TN, MS, AL, and AR. Stockton Mortgage is searching for experienced quality mortgage loan originators and branch managers to continue their selective growth in these markets. "MLOs and Managers enjoy the added benefit of direct agency relationships, no overlays, loan servicing for their clients, great compensation model, benefits and the support of a fully staffed marketing department deliver what MLOs need to offer service beyond that of their peer group driving new referral business. Our ideal candidate must maintain a high standard of integrity and honesty as it relates to customer service and consistency with the Stockton Mortgage values and ethics. SMC is an equal opportunity employer.

Congrats to Tim Cotten who has joined Texas' Starkey Mortgage as Director of Recruiting. "Cotten will lead the development of an internal recruiting team that will prospect, interview, hire and transition top mortgage talent for Starkey Mortgage. Cotten has over 10 years of recruitment, leadership and business development experience in the mortgage industry."