Huh? Radian was recently in takeover talks? I only know what I read in the newspapers! Sometimes I wonder if everyone isn’t in M&A talks to one degree or another, and rumors continue to swirl about a publicly-held bank in the Northwest spinning off its mortgage division. There’s a lot going on in our biz, especially with Freddie & Fannie in the present & future – more below. Even my cat Myrtle is silent, ignoring my questions about what she’s been up to lately.

Lender Products and Services

With the new integration between LBA Ware’s CompenSafeTM and the enterprise digital mortgage solution from SimpleNexus, loan originators can now receive real-time compensation notifications through the SimpleNexus mobile app. SimpleNexus provides LOs with a single, mobile-driven platform to connect with borrowers, Realtor partners and the ancillary systems and tools they use on a regular basis. The addition of compensation notifications from LBA Ware adds to the suite of milestone alerts already available through the app and gives LOs a more complete picture of their individual level of production in real time. Email Lori@LBAWare.com to schedule a meeting with LBA Ware Founder and CEO Lori Brewer at The Mortgage Collaborative’s Winter Conference, February 17-19 in Austin.

Through the expertise of third-party service providers, AIM automates the manual processes of assessing borrower assets and income. AIM reduces the burden of traditional documentation, speeds up the loan origination process and helps you close loans faster. Freddie Mac is working hard to bring you solutions that create efficiencies for your business and improve the borrower experience - giving you a competitive edge. These capabilities became available for Loan Product Advisor submissions and resubmissions on and after December 9, 2018. Gain greater efficiency in your underwriting processes with AIM – get The Freddie EdgeSM.

“Stop Losing Money in 2019! With the mortgage industry becoming increasingly difficult to survive let alone thrive, companies are in search of new marketing strategies to compete in this new era of credit. The Decision Science team at BBM has created an advanced suite of propensity data models that help professional origination marketers identify homeowners who are actively in the market for FHA, VA, Jumbo and Non-Agency loan options. Our average loan amount for active FHA/VA and Non-Agency applications exceed $350K and gross top line revenue of nearly $15,000. If you’re marketing is not reaching these levels of performance than let BBM show you how a targeted marketing strategy focused on propensity modeling and targeted revenue opportunity can change the trajectory of your company. For more information about BBM Marketing Services and about becoming an approved origination partner please contact Bill Senteno and visit www.bbm.company.”

On the heels of success with the Single Close Construction program in 2018, GSF Mortgage Corp. (GSF) is kicking off the new year strong by attending the NAHB International Builders' Show in Las Vegas, NV, through February 19-21. Highlights of our Single Close Construction program include, FHA 30 Year Fixed up to 96.5% LTV, VA 30 Year Fixed up to 100% LTV, USDA 30 Year Fixed up to 100% LTV and Conventional 30 year fixed up to 95% LTV. All loans are handled in-house the borrower does not need to requalify after the initial closing and make no interest payments during the build on most products. Eligible home types include stick built, manufactured, modular. Originators and builders are welcome to stop by GSF’s booth (#SU3048) and discuss the program and partnership opportunities with our attending Construction Division team. Please reach out to VP of Retail Lending, Frank Papaleo.

Agency News

The National Association of REALTORS® has collaborated with Susan Wachter of the Wharton School at the University of Pennsylvania and Richard  Cooperstein of Andrew Davidson and Company on new research exploring ideal restructuring of the secondary mortgage market. Pete Mills, MBA’s Senior VP for Residential Policy and Member Engagement, cabled, “We welcome NAR’s work on this issue, and clearly see a number of places where their paper aligns with the plans MBA and other stakeholders have released. There are some areas where further clarification would be helpful, especially around whether the government guarantee applies to the entities themselves, or, as MBA and others have recommended, just to the mortgage backed securities. It is important to have NAR engaged and we look forward to working with them and a diverse set of other coalition partners to continue to press policymakers to finally address the long-term future of Fannie and Freddie.”  

Fannie Mae & Freddie Mac reported great earnings, again, yesterday. Do away with them? I don’t think so: throughout 2018 the two companies together funded approximately 3.2 million mortgages. In the fourth quarter, Fannie had net income of $3.2 billion, and Freddie had $1.5 billion which will be swept into the U.S. Treasury in March while continuing to retain a slim capital buffer of $3 billion each. (Recall that the “net worth sweep,” set up in 2012, forces the two companies to divert profits to taxpayers but allows them to take capital draws in any quarter in which they had a loss.) Delinquencies are less than 1% in the 4th quarter.

Yesterday the Trump administration’s pick for head of the regulatory agency, the FHFA, overseeing Fannie and Freddie, Mark Calabria, found himself facing the Senate Banking Committee. If you’d like to read his testimony, here you go: the hearing before the Senate Banking Committee of Mark Calabria.

Mr. Calabria avoided being too controversial to annul his appointment. His questions on the mortgage market offered nothing new or provocative in his answers, as he deferred on conforming loan limits saying authority lies elsewhere adding that the 30-year mortgage would still be there when his term ends, despite room improvement (appropriate regulatory structure to control the risk). He favors a larger capital buffer for the GSEs but still supports affordability and low down payment options with caveats.

Of course each promoted their strengths. Earlier this week I attended Wells Fargo/Freddie Mac Affordable Housing sessions, and Freddie’s earnings noted that first-time homebuyers made up 46% of mortgage purchase loans in 2018. Nearly all of the apartment rental units it helped finance were for low- and moderate-income Americans. Fannie states that it is committed to “providing support for both affordable and workforce housing,” which it accomplished by having 56% of its mortgage funding go to low- and moderate-income households.

New research from Freddie Mac (OTCQB: FMCC) finds that if the U.S. housing supply continues to fall short of demand, home prices and rents are likely to outpace income and household formation will fail to reach potential. Housing supply has been a major challenge facing the housing market in 2018 and will continue to be for years to come, according to its latest Insight.

The Freddie Mac Guide Bulletin 2018-26 updates servicing requirements related to: State foreclosure timelines and compensatory fees, the Servicer Success Scorecard and Mortgage servicing contract rights.

Freddie Mac released two white papers detailing the important role that the Low-Income Housing Tax Credit (LIHTC) program plays in rural Middle Appalachia and Indian Areas. The research shows that the LIHTC program supports a relatively high percentage of multifamily rental housing due to the limited viability of market-rate rental housing and a market need for lower income housing. The white papers, along with other research in both the single-family and multifamily markets, are a part of Freddie Mac’s three-year Duty to Serve plan to increase rental and homeownership opportunities in historically underserved markets throughout the nation.

Capital Markets

The bond market yesterday actually reacted to U.S. news instead of overseas news for a change! Rates dropped a little Thursday (the U.S. 10-year closed yielding 2.66%) after the release of a weak December Retail Sales report (actual -1.2%; expected 0.2% - the largest monthly decline in nearly 10 years!). The weakness wasn't isolated to gasoline station sales but was pretty broad-based across discretionary spending categories like furniture and home furnishings, electronics and appliance stores, clothing and accessories, miscellaneous store retailers, non-store retailers, and restaurants. Federal Reserve Governor Lael Brainard said that the retail sales report is a reminder of downside risks, adding that she believes the balance sheet run-off should end later this year.

Internationally, South China Morning Post reported that U.S. and Chinese officials remain far apart on agreeing to a verification mechanism that would ensure that China is implementing structural reforms demanded by the U.S. However, negotiators are reportedly considering the removal of the 10.0% tariff on $200 billion worth of imports from China while maintaining a 25.0% duty on $50 billion worth of imports. China reported a larger than expected trade surplus for January, but imports from the U.S. fell nearly 39.0% YoY while exports to the U.S. increased 1.9% over that same period. Separately, Japan reported a modest expansion in Q4 GDP to avoid a technical recession, but external demand decreased. Germany flash GDP reading for the Q4 showed no growth, but the weak reading was good enough to keep the country out of a recession for the time being.

The bond markets and many lenders are closed for the national holiday on Monday, so expect to see things slow down later today as folks head for the exit. We’ve had the February Empire State Manufacturing Index and January import/export prices (“8.8” in February, and -.5% respectively). Next up is January Industrial Production and Capacity Utilization at 9:15am with both components expected to decline from December. Finally 10:00am brings preliminary February Michigan sentiment, expected to tick up slightly. We begin today quietly with Agency MBS a few ticks worse versus last night and the 10-year yielding 2.67%.

Jobs, Promotions, Personnel Moves

Are you in need of sales management expertise? Are you looking to take your existing team to the next level? Or, is your company looking to expand into Third Party Origination (Correspondent and Wholesale) or add Non-QM products? A seasoned Sales Executive is seeking a new opportunity to help lead a mortgage company in achieving its growth goals. All institution sizes and locations will be considered. Please send inquiries to Anjelica Nixt to pass along to the candidate and specify the listing.  

“The Fed has been throwing us a number of mixed signals, but for now, the market remains very challenging, and winter’s seasonality is not helping. This message is mostly directed to Company Owners, but also to Production Teams. If your volume is less than $1 billion annually you are operating in what is probably the most difficult segment of the market today. You have to staff every operations function without enough units to create any efficiency. You are competing against companies with scale, marketing power, and better technology. Do you think your best strategy going forward is continuing to go it alone, or should you be taking a look at your options with a deep pockets partner? We have pretty much figured out that in most cases you can improve your economics, preserve your own capital, and eliminate most of your risk. For production teams I think the question is whether you feel you are in the right spot to ride out the storm? If you would like to discuss a few of your options, I can be reached at jjcmc@earthlink.net or 707-738-2666.”

A leading mortgage technology company is seeking a National Account Manager with a proven track record of success in working with consumer direct lenders. The ideal candidate will have a minimum of 3+ years in selling B2B services and technology. You may work remote, so organization and accountability are a must. Frequent travel across the US to meet and present to potential clients as well as participate in trade show opportunities will be required.  Create and deliver effective presentations. Effectively manage pipeline, sales activity, and provide accurate forecasting. You must have a proven track record of success in a high-volume fast paced role. Previous experience in technology sales selling to financial institutions and C-Level executives. Pre-existing contacts in the mortgage and banking industry are a big plus. Please send resume to Anjelica Nixt for forwarding and specify the opportunity.

Envoy Mortgage is excited to announce that Tony Taveekanjana has joined as National Head of Sales. Prior to joining Envoy, Mr. Taveekanjana built a track record and loyal following among high quality production teams as National Head of Sales for two well-known nationwide lenders. “We have spent the last year enhancing our capabilities to provide our distributed retail teams with the product, price, tools, and services they need to outperform their competitors, and now is the perfect time for a leader like Tony to help us take our existing production teams to an unparalleled level of success,” said Ron Millard, Envoy’s CEO. Envoy’s rock-solid balance sheet has allowed it to make a substantial investment in new technology, infrastructure, and leadership exclusively dedicated to serving distributed retail originators. If you are a premiere originator not getting the corporate attention and support you deserve and want to be on a winning team, check out www.joinenvoy.com to learn more about Envoy.

Stearns Home Loans announced Jim Linnane will step into the role of National Retail President reporting to David Schneider CEO of Stearns Lending. Linnane previously served as the Division President for Stearns Home Loans over the Central and Eastern regions. “Jim Linnane is an excellent leader with a strong background in production, who has a history of developing strong future leaders,” said Schneider. “Jim will continue to grow Stearns’ national presence and increase volume while expanding our business into new territories.”

Congrats to Jim Horgan, the new president of Massachusetts’s East West Mortgage.