People have a choice in financing their home: debt or equity. (Debt, of course, is what supports our industry. Equity, however, has been experimented with for many years, with varying degrees of success. Here’s the latest on that. Skeptics say, “It’s all fun until the market heads south.) People don’t have a choice about eventually dying. No one lives forever, despite gym time, plant-based diets, or plastic surgery. The U.S. Census Bureau released a new report on projected life expectancy from 1960 to 2060. If anyone reading this cares, by 2060, life expectancy for the total American population is projected to increase by about six years, from 79.7 in 2017 to 85.6 in 2060. Increases in life expectancy are projected to be larger for men than women, although women are still projected to live longer than men do, on average, in 2060. All racial and ethnic groups are expected to live longer, but the greatest gains will be to native-born men who are non-Hispanic Black alone and non-Hispanic.

Lender Products and Services

“Tidal waves continue at Vendor Surf, the only search engine in the industry, with unmatched reach and credibility. UPDATE: Over half of our traffic now comes from internet search engines (Google, Yahoo, Bing) via organic SEO. If they can trust Vendor Surf, we hope you will too.  Now in its third year showcasing the most innovative solutions and recognized brands, taking countless days out of your initial due diligence, Vendor Surf is the premier destination for decision makers at banks, mortgage companies and credit unions. Sourcing committees, and operations leaders alike, rely on Vendor Surf as the digital hub that intelligently connects them to desired vendor partners. Searchers can 'Find 'em Fast,' on-screen and in real-time, via over 3,000 search filters. See who joined the revolution in 2019.”

Patty Arvielo, Co-Founder and President of New American Funding,  joins the “Clear to Close” Podcast for Ep 004 from Maxwell. The influential leader and the usual pod crew have an amazing discussion around diversity and inclusion in the mortgage industry, the impact it has in our day-to-day lives, the profitability booster it can be for businesses, and what the future holds for the industry. A great listen for all in the industry, download and subscribe from your favorite podcast platform: Apple, Spotify, Google Play, Soundcloud, or listen in your browser here

AIME Activate on Thursday, March 5th, in Irvine, CA is an interactive marketing workshop designed specifically for independent mortgage brokers and LOs. Learn alongside hundreds of wholesale mortgage industry professionals with hands-on video coaching techniques, renowned keynote speakers and innovative training sessions that will provide tangible strategies toward improving your marketing skills to better attract and retain customers. Mortgage brokers and LOs will walk away with the confidence needed to build successful partnerships with real estate agents, enhance client engagement and strengthen referral networks. Whether you’re new to the industry, a seasoned broker or part of a growing business, this event will help you take your overall communication and personal branding efforts to the next level. As AIME Activate quickly approaches, secure your tickets immediately to be a part of this innovative, once-a-year experience. Register now here.

HomeBinder (new Encompass plug-in) gives originators a way to ensure they aren't forgotten post close. Join the growing number of mortgage originators giving HomeBinder to their clients. Show borrowers how to care for their greatest asset. Give them a reason to remember you with a branded complete home management suite of tools. The relationship doesn't end with a closed loan for you or Agents you work with. Don’t get forgotten by your mutual clients. Co-brand and share the wealth! Call 800-377-6915 or email Alec in Support. If you are interested in a 3-minute demo video, click here!

Did you know that TMS has consistently provided amazingly fast 24-hour turn times on Initial Funding Review for three years running? In fact, TMS has hit its 24-hour turn times so often that, last fall, the company started guaranteeing a complete initial funding review in 24 hours, or the funding fee is waived. No other lender does this. They call this the TMS Turninator. Check it out on TMS’ blog and learn how you can partner with them to take advantage of their fast turn times today!

Fun With Credit, Non-QM, and Program Changes

Underwriters know that Fair Isaac Corp., creator of FICO scores, will soon start scoring consumers with rising debt levels and those who fall behind on loan payments more harshly. It will also flag certain consumers who sign up for personal loans, a category of unsecured debt that has surged in recent years. The changes are intended to create a bigger gap between consumers deemed to be good and bad credit risks. Consumers with already-high FICO scores of about 680 or higher who continue to manage loans well will likely get a higher score than under previous FICO versions. Those with already-low scores below 600 who continue to miss payments or accumulate other black marks will experience bigger score declines than under previous models. The changes are a departure from recent years, when FICO and credit-reporting companies made changes that helped increase scores for some consumers, such as removing some negative information, including civil judgments, from credit reports.

Investors were very interested in what Moody’s opinion is of non-QM pools. Many investors, seeking higher yields, have increased the demand for these securities. 2008 all over again? Moody’s says that variations in underwriting criteria for some non-QM programs pose risks to RMBS backed by non-QM loans, but believes that lender controls, technology and regulations offset some underwriting-related risk. “Securitizations of non-qualified mortgages (non-QM) have grown in recent years, with weak underwriting variations creating risk, particularly for non-prime residential mortgage-backed securities (RMBS). However, strong lender controls, technology, regulations and other factors partly mitigate this risk.”

Yup, there is no DU or LP standard for these loans. Bank statement underwriting standards vary across originators along several dimensions, such as the number of bank statements used, the source of the statements, and how revenue and expenses are identified. “The quality of compensating factors and degree to which lenders consider past financial behavior in addition to FICO scores also affect credit quality. Also, the credit strength of investor loans will depend on the degree to which the lender’s guidelines reflect a property's actual cash flow.”

But wait, there’s some positive news. Moody’s research indicates that lender controls, technology and regulations offset some underwriting-related risk. “Robust fraud and loan production controls and the use of technology in risk modeling and oversight should mitigate the risk of higher loan defaults from alternative documentation programs. In addition, post-crisis regulation and improved industry practices promote risk avoidance and awareness.”

The MBA reported its Mortgage Credit Availability Index (MCAI) slipped 0.2 percent in January after a 3.5 percent decline in December. Though the MCAI is down by 4.2 percent from June 2019’s record high, it is still higher by 1.6 percent versus a year ago. The tightening in credit came from a dip in the Conforming MCAI and Jumbo MCAI components, due to the reduction of low credit score, high-LTV programs. Credit supply has diminished the last two years and prospective buyers are consistently held back by housing supply constraints in lower price ranges. It doesn't seem any major changes are on the horizon. The Federal Reserve’s recently released January Senior Loan Officer Opinion Survey indicated that the bank respondents expected lending standards to remain basically unchanged from current levels regarding GSE-eligible loans and nonconforming jumbo loans. And Fannie Mae’s Q4 Mortgage Lender Sentiment Survey noted that most lenders expected no major changes to lending standards in Q1 2020 versus the prior quarter.

On Feb. 18, Fannie Mae and Freddie Mac (the GSEs) published a credit score solicitation to request applications from prospective credit score model developers. This complies with the requirements of FHFA’s Validation and Approval of Credit Score Models Final Rule that was published last year.

Angel Oak Mortgage Solutions Jumbo Platinum program can help a borrower who just missed qualifying for prime. This program was created to help clients capture more Prime Jumbo business with flexible pricing, features and benefits of non-QM programs. Find out more information on the Jumbo Platinum program.

loanDepot published a summary of recent and upcoming changes specific to its Credit Advantage Matrix, Advantage Lending Guide, VA - LGY HUB and LDW Appraisal Fee Schedule.

loanDepot has a new Credit Advantage Asset Depletion program. Program highlights include borrower does not have to be currently employed, SFRs, Condos, PUDs & 2-4 Units, monthly income established based on liquid assets, eligible loans: 30 year fixed and 5/1 & 7/1 ARMs, Purchase, Rate/Term and Cash Out and Interest only options available.

In a recent Mountain West Financial Wholesale bulletin, improvements regarding the recently released Open Doors Product. Borrowers may now receive up to 6.5% in down payment and closing cost assistance with the Open Doors program: A 4.50% grant option for borrowers with FICOs >660 and debt-to-income (DTI) <45% has been added. For borrowers with a FICO under 660 and/or >45% DTI, a 3.50% grant option has been added. The “no grant” option has been eliminated. Additionally, the borrower’s debt-to-income ratio now has a cap of 55% with AUS approval.

Plaza Home Mortgage now offers its AUS Non-Conforming program for correspondents, a non-QM program that is easy to qualify with a simple approval process using DU®. View Plaza’s information page to learn more about this program.

Caliber Home Loans has expanded it Caliber Portfolio Lending (CPL). Effective with Best Effort Commitment Confirmations issued on or after February 20, 2020, the following CPL products are available for properties located in Massachusetts: Elite Access, Premier Access, Homeowner’s Access, Professional Elite, Fresh Start and Investment. The Program Summaries for the above referenced products will be updated in AllRegs by February 20, 2020.  

LoanStream Wholesale is offering new Non-QM Pricing on Base Pricing, Full Doc, DSCR and Alt Doc. Click here to view its Non-QM Matrix.

Capital Markets

The coronavirus is having a serious effect on the Chinese economy, and in a short time it’s going to get incredibly hard to keep businesses running and keeping creditors paid amid absent sales. According to a recently conducted survey of 6,422 Chinese firms, nearly 34 percent said they will run out of cash within a month, another 33 percent said they’ll run out of cash within two months, and 20 percent will run out within three months. Private businesses account for 60 percent of the Chinese economy and 80 percent of jobs. While banks have been ordered to boost lending, the money hasn’t really shown up according to data.

As we know, originators love what global uncertainty does to rates. Rates have been pushing long-term lows off-and-on for months. In fact, we've spent more than seven months in territory that makes refinancing attractive for big contingent of homeowners who purchased or refinanced in 2017-2018, and surprisingly, borrowers who refinanced in early 2019 are already back in the money for another refi. Lenders are experiencing the strongest refinance demand since 2012.

Yesterday took things to a level not seen for several years. The 10-year Treasury yield sank to the lowest since 2016, ending the session -9 bps to 1.38 percent, and the 30-year rate hit an all-time low as investors ran for cover amid fears the coronavirus is spreading globally and will slow the world economy. The number of new cases in China is now approaching 78,000, but cases in South Korea approached 850 while the number of cases in Italy exceeded 200. Worries now surround continued uncertainty about how well supply chains will hold up through efforts to limit the spread of the disease. The IMF lowered its outlook for 2020 GDP growth in China to 5.6 percent from 6.0 percent, and a People's Bank of China vice governor hinted at another cut to the reserve requirement ratio. Expectations of Fed rate cuts here in the U.S. jumped, with two fully priced in some money markets.

Today’s economic calendar began with February Philadelphia Fed non-manufacturing indices (36.1). It will certainly be a busy rest of the day, including same store sales from Redbook for the week ending February 22, February Richmond Fed manufacturing and services indices, December S&P Case-Shiller Home Price Index, February FHFA Housing Price Index, February Dallas Fed Texas services and February Consumer Confidence. There will also be $40 billion 2-yr Treasury note auction results and remarks from Fed Vice Chair Clarida and Dallas Fed President Kaplan. We begin today with Agency MBS prices roughly unchanged and the 10-year yielding 1.36 percent.

Jobs

“A top independent, well-capitalized Mortgage Bank is in search of a new CFO to help lead a multi-channel, profitable enterprise with a large servicing book. If you’re interested in working for a fast paced company in growth mode, please send a resume to Chrisman LLC’s Anjelica Nixt.”

President and CEO Shabi Asghar is proud to announce the launch of N2Funding. Brokers and AE’s searching for opportunities should know that, operating nationwide, N2 Funding is a wholesale company that offers brokers a full menu of Fannie, Freddie, and Ginnie products complemented by Non-QM, first-time homebuyer, and down payment assistance programs. Shabi has joined forces with Chief Operating Officer Pam Scheidt in corralling the most exceptional talent in the industry. N2’s management team combined has over 100 years’ worth of experience in the industry and has a pedigree of successfully navigating some of the most dynamic and fastest-growing companies in the history of the industry. “During my career, I’ve been blessed to work with many of the best people in the industry. N2 Funding is the most talented team I’ve ever been with.” Shabi continued to say, “I 100% believe that our employees care more for each other and our customers than any other organization in the industry.” AEs and brokers looking for more information should contact Shabi Asghar. 

“ACC Mortgage continues to build on its 20-year track record. In 2019 we saw over $1,000,000,000 in Non-QM activity. ACC has expanded our product offerings and lowered our rates for 2020. To help support this growth, ACC is seeking the best AEs in the market. If you want the best people, you need to offer the best comp plans!! ACC is offering our AEs up to 75 BPS, plus a base, and other bonuses. If interested in joining our team, please send us your resume. Here is a recent article about the founder. If you want to learn more about ITIN Lending, please join the webinar March 5.”