Remember the concerns of chaos prior to the UK leaving the European Union? Despite Brexit, the average London house prices increased 2.3% in 2019, the highest since 2017. In the rest of England, home prices were up 2.2% y/y. In this country, lenders’ pipelines are swamped as a surge in coronavirus cases outside China (highly transmittable, but fortunately not too virulent) has accelerated investors' flight to havens, sending the 10-year US Treasury yield to 1.31% and the 30-year yield to 1.80%, both record lows. Mortgage prices have lagged, as they always do, and many lenders are extending out rate lock periods to deal with the influx of volume. Capital markets crews are keeping an eye on the future of the Agencies. Per Treasury Secretary Steven Mnuchin, the Treasury Department expects to continue "limited and tailored government support" of Fannie Mae and Freddie Mac after their departure from federal conservatorship. "Stability in the housing finance system is crucial, and there should be no disruption to the market as a result of Treasury's recommended administrative reforms." More on F&F below.

Lender Services and Products

Angel Oak Mortgage Solutions is on the road across the country in March, demonstrating how brokers and correspondents can experience more with Angel Oak. Kicking off the month, Angel Oak will be at FAMP Gold Coast followed by AIME’s first event of the year, AIME Activate on March 5th. A sponsor of AIME since its inception, Angel Oak is proud to support the broker community by continuing their relationship with the group in 2020. Chief Marketing Officer Steven Winokur is presenting “Get On The Non-QM Train Before It’s Too Late” at the Atlanta Mortgage Expo while Regional VP of Sales Jamie Bellingham is presenting at the Carolinas Connect Mortgage Expo. To check out where else Angel Oak will be in March, visit its blog. 

Three established lenders recently joined talk’uments (a multilingual, digital, home loan guide) to furnish Spanish LEs and CDs for their Spanish-speaking applicants. Are you neglecting Spanish-language loan potential? Do you have compliance risk? The Harvard Joint Center for Housing stated that by 2025, 75% of household formations will be created by minorities. This number jumps to 85% by 2035. Currently, Hispanic people make up 18% of our population but accounted for 63% of homeownership growth over the past decade. Forward-moving lenders use talk’uments to address sales, business development, and compliance concerns; especially for strategies that involve multilingual advertising to source loans. As more loans originate online, successful lenders use talk’uments—the only digital home loan guide of its kind—to meet the changing preferences of Millennials and GenXers. For more info contact George Baker.

Independent mortgage brokers trusted Quicken Loans Mortgage Services with more volume in 2019 than the previous five years combined! To help continue the incredible momentum and support the broker community at the highest level possible, QLMS announced it is hosting FLIGHTPATH, a two-day world-class event in the heart of Quicken’s Detroit campus. This event immerses partners in QLMS’ culture, award-winning technology and differentiating products it offers to its nearly 7,000 mortgage broker partners. Guests will also sit down and collaborate with operations team members and QLMS’ senior leaders to align their goals, becoming even Stronger Together in 2020. Click HERE to register for Flightpath.

“Nothing slows down the loan process more than having your processors call in for routine requests and updates. Avoid waiting and close a loan file faster using Informative Research’s Action Center. With the IR Action Center, clients never have to call in for two of their most requested needs. Now, users can instantly remove a duplicate flag on a credit report and check the status of rescore and supplement orders;  it’s automatic and you can do it on YOUR schedule whenever you want. And keep an eye out for more updates with even more functionality coming to the Action Center later this year! To learn more, just click here or call us at 800-473-4633.”

Conventional Conforming Forecasts and Changes

Huh? What’s this rumor that no one from Freddie or Fannie (aka, the GSEs) can sponsor or speak at industry conferences? Certainly these activities have been noticeably reigned in. We are reminded: the first rule of GSE Reform is don’t talk about GSE Reform.

Fannie Mae again boosted its single-family mortgage origination outlook for 2019, 2020 and 2021 due to persisting low interest rates in conjunction with economic and wage growth. Compared to projections from the end of 2019, Fannie’s mortgage production estimate for last year was up $36 billion. Its estimates for 2020 and 2021 also were up by $17 billion and $13 billion, respectively. Most of the increases can be attributed to the expected refinance share of loan volume. Fannie now projects annual originations to total over $2.18 trillion in 2019, $2.06 trillion in 2020 and $1.97 trillion in 2021, huge jumps from the year-ago outlook.

Bloomberg (the news service, not the candidate), reports that FHFA Director Mark Calabria told investors in Freddie Mac and Fannie Mae that there will be no huge payday after the two raise capital from new investors as part of a plan to free them from U.S. control. “The shareholders will be heavily diluted when we raise capital. So at the end of the day I am not focused on whether there’s a windfall, because I don’t think there’s really going to be that big of a windfall.” In fact, Calabria stated, as he has in the past, that investors should have been wiped out after Fannie and Freddie were seized by regulators during the 2008 financial crisis, and said that current shareholders could be wiped out in the future “were we to find ourselves in the situation where they’re insolvent again.” It is up to Treasury to determine how existing shareholders are treated.

Recall that FHFA hired investment bank Houlihan Lokey to figure out specifics such as whether Fannie and Freddie would go to market at the same time or sequentially. As of September both are now allowed to retain a good chunk of their profits with the goal of both being recapitalized. Director Calabria said that he expects the FHFA to announce another proposal “at the end of the first quarter.”

With the new regulatory focus for the mortgage industry. October Research took a deep dive in understanding the market, the GSEs’ impact on technology and eClosings, with expert insight from inside the agencies themselves. The New GSE Focus special report is available as a Free Download for industry professionals.

During the weekend of April 18, Fannie Mae will implement an update to the close-by date for employment validation within the Desktop Underwriter® (DU®) validation service.

Mountain West Financial, Inc. (MWF) is bringing the latest in risk-based pricing technology that provides borrowers with the lowest MI rate applicable. Effective February 24, 2020, MWF will obtain automated risk-based MI quotes through Price My Loan (PML) from MGIC, Radian and Genworth. The Risk-Based Training Video will walk the user through the simple steps. If, during the processing of the loan, there are no changes in the borrowers qualifying strength, the initial rate quote is honored by the MI company for 90 days.  For transactions already in the pipeline with a previous rate-card quote that is lower than the risk-based quote, the MI company will honor the lower rate-card quote for 90 days as well.

PRMG issued Product Profile Updates on the ordering requirement for VOD for 2-4 Unit properties in New Jersey as part of QC process. Clarified that split MI is allowed on CA CalHFA Conventional products, CO CHFA FHA single unit condo approvals are eligible and single Unit Condo Approvals are now allowed on WHEDA Advantage FHA. Also noted, Chenoa FHA Edge and FHA Rate Advantage now have updated loan limits to reflect 2020 limits, clarification that loan can be locked upon Conditional Approval and clarified all credit documentation has a 120-day expiration date.

Capital Markets

As a worthwhile reminder to capital markets staffs, MBS Live sent a note out addressing the change in mortgage backed securities. “Freddie MBS no longer exist except inasmuch as they've become universal MBS (UMBS) along with Fannie MBS. Freddie's line items on our real-time pricing table and indeed all other references to FHLMC MBS coupons will be going away. Loans underwritten in LP and securitized by Freddie will still become MBS, but they are now UMBS, as are Fannie loans. FNMA and UMBS are one in the same (and they have been since UMBS launched). In other words, Freddie had to tweak a few things to fit Fannie's mold and they are both now going into the UMBS bucket. Data providers and traders have simply continued to use Fannie's designation codes to refer to UMBS since Fannie's specifications didn't have to change.”

There was some mention of the coronavirus in the minutes of the January 28-29 FOMC meeting, however the timing of that meeting was prior to the recent escalation of the virus and subsequent quarantines. While the number of confirmed cases were in their infancy, the Fed was monitoring the situation and its potential to disrupt the global economy. The bond market, on the other hand, is now pricing in the potential of two rate cuts this year and the yield curve has once again become inverted despite recent speeches by Fed officials reinforcing the Fed's current position of holding steady. The latest US economic data continues to support the Fed's case as the Leading Economic Index rose 0.8% to an all-time high in January and both the latest Philly Fed Index and Empire Manufacturing Surveys beat expectations. Additionally, housing remains strong despite a small dip in starts in January. On a year over year basis starts are up 21% aided, in part, by a warmer than average winter. Until the underlying economic data starts to show weakness attributable to the coronavirus, it is unlikely that the Fed is going to immediately change course.

Monday’s forceful risk-off trade continued yesterday amid further spreading of the coronavirus outside of Asia and cautionary remarks from the CDC acknowledging that it expects the coronavirus to spread through the U.S. President Trump sought to downplay the threat posed by the coronavirus, but investors seemed to be taking their cue from the CDC as markets cratered for a second day in a row; both the 10-year and 30-year yields hit record lows at points throughout the day. The recent drop in Treasury yields implies expectations for a lower rate path, and the Fed Funds futures market now expects a rate cut on April 29 and another cut on July 29. Interestingly enough, new data has shown that even before the virus began to spread, global trade was on a downward slope thanks to the U.S. trade war with China and Germany’s industrial slump. For example, previous estimates that showed Q4 German GDP growth flatlining at 0 percent, as exports and consumption fell and government spending remained weak.

The U.S. economic calendar is underway with data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 21. Mortgage applications increased 1.5 percent from one week earlier, with this week’s results include an adjustment for the Presidents’ Day Holiday. Later today will be January New Home Sales and $41 billion 5-year Treasury note auction results in the afternoon. There are two Fed presidents speaking: Dallas’ Kaplan & Minneapolis’ Kashkari. Finally, the Desk will conduct a GNII FedTrade operation buying up to $322 million 2.5 percent ($100 million), 3 percent ($162 million) and 3.5 percent (60 million). We begin today with Agency MBS prices worse a few ticks and the 10-year yielding 1.37 percent (versus closing at 1.33 percent last night).

Jobs and Transitions

Trinity Oaks Mortgage is proud to announce the promotion of Michael Kuentz to President from his most recent role as Chief Operations Officer. Michael exhibits company core values and the leadership acumen needed to lead Trinity Oaks Mortgage into an even brighter future. Prior to Trinity Oaks Mortgage, Michael served as CEO of Lenders One Mortgage Cooperative. He will continue to utilize his experience with innovative solutions, growth, and delivering opportunities to connect and further expedite the lending process. “It goes without saying how excited I am to continue serving each member of the team as the leader of Trinity Oaks Mortgage.”

Mutual of Omaha Mortgage is very excited to announce that Kevin Conlon has joined the company as Regional Vice President. Conlon spent the last several years as EVP with a well-known West Coast lender, and his experience in sales and operations will be leveraged to develop and enhance Mutual of Omaha’s retail production. Executive Vice President, Jeff Gennarelli said, “We feel Kevin is the perfect fit for our company and are ecstatic to have him on our team.” Click here for nationwide career opportunities.

“Following record growth, Home State Bank is seeking to further expand our retail presence in Wisconsin and Florida. Partnering directly with Senior Management, the ideal candidate(s) will be responsible for directing the growth in these markets, while having a voice in the operation of the overall mortgage division. These are P&L level positions, that will have the opportunity to share in the financial success of the organization and the markets being developed. Please send your resume to Jim Sorenson for confidential consideration.”

Stearns Wholesale Lending welcomes its Account Executives to the 2020 Gear Up For Growth Sales Rally, February 24-26. Hosted in Dallas, the event’s theme is centered around the opportunity for growth and Stearns’ unwavering commitment to the Wholesale lending channel. The Rally will boast industry insight, new product launches, new marketing platforms, and technology enhancements to set the stage for a bold future. “Bringing our Account Executives together every year is extremely important to us. It’s all about collaboration, celebration and our I Can Help You attitude,” says Nick Pabarcus, EVP of Wholesale Lending. Click HERE if you want to grow your career with Stearns.