“I’ve started investing in stocks: beef, chicken, and vegetable. One day I hope to be a bouillonaire.” There might be a few less “bouilonaires” owning PennyMac stock after yesterday. If you want to know what the market thinks of lenders/investors/servicers, public companies like PennyMac are a bellwether. And its price was down yesterday over 40 percent at one point. (Take a gander at the one month graph; CRT exposure? HUD suspending foreclosures for 60 days, impacting servicers?) Impac has suffered a similar fate, down more than 50 percent from earlier this month. Any lender with servicing rights, well, good luck. In the primary markets, retail organizations with branch networks are shutting down the branches and requesting LOs work from home or common areas. Lenders everywhere are keeping their “work from home” staff apprised of developments. For example, LendUS CEO Rob Hirt sent out this video discussing the company’s policy and procedure moves, “the latest on the LendUS family,” and how it is navigating the effects of the coronavirus. Other good news? I’ve worn the same set of sweats for three days in a row now. And I’ve stopped shaving my legs!

Lender Products and Services

“Are you ready for VA IRRRL and purchase opportunities in this market? Considering VA mortgage lending for the first time? Join Freedom Mortgage Wholesale for our final live webinar primer on VA mortgage products and origination processes. Plus, learn more about the recently enacted Blue Water Navy Vietnam Veterans Act of 2019, which has provided new mortgage benefits for jumbo borrowers, active duty Purple Heart recipients, and more.  Freedom Mortgage is a leading VA lender and our Wholesale Channel’s No Down Payment VA Jumbo program enables eligible jumbo borrowers to exceed published FHFA county loan limits without a down payment requirement! No jumbo overlays or loan limits! Sign up for a VA Mortgage Product & Process Primer on 3/20.”

Informative Research (IR) announced earlier this month its integration with Blend where lenders will be able to order IR’s TriMerge Credit Report and SoftQual solutions directly on the digital platform. “Our goal at Informative Research is to get our clients as close to a true digital loan process as possible,” stated Matthew Orlando, Head of Client Success and Strategy at IR. “Our integrations ensure that lenders can speed up the process, so integrating with Blend is a huge step for offering that improved digital experience.” Through Blend, users can order Informative Research’s comprehensive TriMerge Credit Report, along with SoftQual, which will be available soon. SoftQual is IR’s pre-qualification solution that lets lenders pull a soft inquiry on an applicant’s credit report before pulling a hard inquiry. Through prequalification, lenders can save up to 70% on upfront credit costs and avoid getting their leads poached. Read more about the integration here!

With COVID-19 and higher than usual loan volume, what’s going on with mobile notaries? According to Marc Trachtenberg at Silk Title Co., notaries and attorneys they work with have been proactive putting safety first by calling borrowers before arriving to explain steps they will be taking to ensure a safe closing experience. “So far, we see the majority of closings being completed as scheduled. We are receiving more phone calls though from lending executives asking about steps they can take now to convert to digital closings by switching to RONs and eClosings,” said Trachtenberg. Definitely a good time to consider options. For questions, you can email marc@silktitleco.com.  

Ellie Mae and Optimal Blue recently announced the expansion of their strategic partnership to include collaboration on multiple next-generation, API-based integrations between the Ellie Mae Digital Lending Platform and Optimal Blue’s Marketplace Platform. With their mutual focus on creating a seamless, end-to-end workflow between lenders and investors, Optimal Blue’s unrivaled Hedge Analytics and Loan Trading solutions now join Optimal Blue’s Product & Pricing as recommended solutions in the Ellie Mae Marketplace. Initiatives are already underway to enable a completely automated data and document exchange between lender and investor clients. The companies plan to collaborate on these new integrations and efficient workflow improvements throughout 2020 to create the most comprehensive, end-to-end offering for the mortgage industry.

ARMCO is presenting a live webinar: “Understand Your Loan Quality, Control It and Convey It - How Leading Consumer Lenders Are Leveraging Quality Control Automation to Achieve Optimal Loan Quality.” In response to the recent global pandemic, conference cancellations and mass transition to a remote work environment, ARMCO has scheduled a live webinar targeting Consumer Bankers encapsulating all major Quality Control topics we planned on covering at the CBA Live conference which was recently postponed. Why QC is critical in today’s volatile market conditions, the importance of loan quality across multiple product lines, and how to achieve loan quality through QC automation.

We are in challenging times. The spread of Coronavirus mixed with the current low rate environment has caused a groundswell of uncertainty in the mortgage industry. Some lenders are better prepared for this than others. At QLMS, their team members are all working from home – practicing social distancing to mitigate the spread of coronavirus. What is truly amazing about that is it has gone on without any disruptions or changes in service for its partners and their clients. QLMS is not turning away partners or their clients due to capacity issues. If anything, it understands that rates may dip again and QLMS is extremely prepared to handle any surge in volume. Click HERE to become stronger together with QLMS and join a lender who is ready to jump over any hurdle that comes its way.

“At Finance of America Mortgage we provide our Chief Xperience Officers, or CXO’s, with the tools they need to succeed, including: an industry leading technological platform, products that fit our borrowers' needs, and an arsenal of educational and marketing materials at your fingers tips.We are creating a complete “Two-X Platform” for our CXO’s. We’ve invested tens of millions into a new proprietary suite of tools, including websites, CRM, POS, and more. This advanced suite of technologies allows us to execute our usual services, even in the face of today’s challenging and unprecedented circumstances. Our loan process is transparent, mobile, and instant for every Finance of America Mortgage employee who touches that customer. And for the entrepreneur in you, Finance of America Mortgage believes in providing you with the autonomy you need to succeed in your own way. Click HERE to learn more.”

Digital transformation can sound overwhelming, but in practice, it doesn't have to be. Join Bob Meara (Celent), Eric Somers (BMO Harris Bank), and Alden Seabolt (Blend) for the CBA webinar "Leveraging digital transformation to nail customer acquisition." They'll demystify what it means to transform your organization with strategies that support seamless customer onboarding experiences. Sign up here.

Corporate Shifts

As always, questions regarding polices and procedures should be directed to the companies involved. That said…

There are certainly shifts in warehouse lending. For example, recently Texas Capital Bank shut off refinances.

And in a separate incident, “UWM has decided to discontinue our relationship with Independent Financial AKA Goldome. We are working on winding down our relationship with them over the next 45-90 days. We will fund all loans in the pipeline with them until May 31st, 2020 to not harm our clients. UWM will continue to support all other warehouse providers and our Correspondent partners. If you are in need of a different warehouse provider please feel free to reach out to me or my team and we will assist you in finding one. Simmons Bank, First Funding, Coastal States Bank and others are all great partners that we feel good working with for the long term.”

Andrew Liput with Secure Insight sent, “Today I read a title binder with new language included: ‘The Company reserves the right to raise exceptions and requirements or determine that it will not issue a title policy based upon the details of the transaction, a review of the closing documents, and changes in recording and title searching capabilities resulting from the COVID-19 virus.’

“This language raises serious questions whether a lender will be able to obtain a timely title insurance policy to complete a loan file for sale into the secondary market. Also without a marked-up binder or some other proof, a lender will not be certain what is insured and what is omitted from coverage. The language is very broad and is not simply focused on recording delays. It implies that any defect at closing in documents, in the transaction, in the suspicion and sole determination of the title company, could result in NO POLICY ISSUED. Lenders need to educate themselves regarding this change and the title industry needs to be clearer about when they might determine not to issue a policy.”

On the topic of remote notarization, David Burner, Strategic Planning and Partnership Manager with Notarize, sent, “MISMO's RON workgroup developed industry standards for compliant remote online notarization (RON). This group of industry stakeholders that included lenders, Fannie/Freddie, title agents & underwriters, notaries, vendors like Notarize and anyone else with a stake in making sure eClosings are done properly & safely.

“Within those standards are requirements around 'credential analysis' to prevent fraudulent IDs from being used. Software is used to identify if an ID is real or fake before the signer can join the audio/video session with the notary. Prior to that process is knowledge-based authentication (KBA) challenge questions that are based on the signer's unique experiences. Borrowers are required to answer these questions correctly within 2 minutes, such as past addresses or the make/model of a car you financed a decade ago! Finally, all RON transactions require a full, uninterrupted audio/video record of the signing process.

“Potential fraudsters would have to commit their crime while being recorded. It'd be like robbing a bank vault while staring at the camera the entire time. MISMO's RON workgroup went out of their way to solicit feedback for over a year while these standards were being developed, and I would encourage everyone to read them here.” Thank you, David.

No More Foreclosures (in the near term)

The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac to suspend foreclosures and evictions for at least 60 days due to the coronavirus national emergency. The foreclosure and eviction suspension applies to homeowners with an Enterprise-backed single-family mortgage. Earlier this month, FHFA announced that the Enterprises would provide payment forbearance to borrowers impacted by the coronavirus. Forbearance allows for a mortgage payment to be suspended for up to 12 months due to hardship caused by the coronavirus.

Don’t forget that the U.S. Department of Housing and Urban Development (HUD) is suspending all evictions and foreclosures on HUD-backed properties until the end of April. Impact on big Ginnie servicers?

The Federal Housing Finance Agency (FHFA) also announced it was directing Fannie Mae and Freddie Mac to suspend all foreclosures and evictions for at least 60 days for homeowners with mortgages backed by the GSEs. Additionally, Fannie Mae and Freddie Mac released servicing announcements outlining notable updates to the GSEs’ forbearance plan. The GSEs are working with mortgage servicers to ensure that borrowers are granted assistance during this time, and updated forbearance guidelines will outline specific measures that will be taken to ensure that borrowers receive adequate support during this time. The program also allows servicers to evaluate a borrowers’ situation based on updated criteria as it relates to determining hardships related to COVID-19.

Capital Markets

Optimal Blue recently co-authored an article with Andrew Davidson & Co., Inc. (AD&Co), a leading provider of risk analytics and consulting for residential lending and MBS, titled Market Volatility and the Anatomy of Mortgage Rates. This timely article examines mortgage market pricing dynamics and how they have been impacted by the recent extreme market volatility spurred by the global impact of COVID-19. These are unprecedented times and the mortgage industry is no exception: record low rates, record high volume, overflowing pipelines, and the challenges of processing and closing a loan under tight restrictions on social interactions. Things are moving extremely fast! Explore how quickly changing behaviors, market volatility, and lender capacities are all driving the dynamics of primary market mortgage rates and their determining factors.

A third of my emails yesterday were price changes for the worse from nearly every lender and investor. Current coupon MBS prices were down two points when they’re usually up or down .125 or .250. Not 2.00! Why? Despite the Federal Reserve’s moves on Sunday, the market remains illiquid. Typical MBS investors aren’t buying, and there is no demand. The basic tenets of supply and demand say that with lots of supply and limited demand, prices have to sink to find buyer interest. No one knows quite what is going on, or when it will end, certainly enforcing why lenders are pricing conservatively as nobody wants to lose money for their company with this volatility.

Speaking of volatility, the 10-year yield shot up another 27 bps yesterday to close the day at 1.27 percent as U.S. Treasury securities, and MBS, dropped pricewise for the second consecutive day. There was selling pressure even though equities had another bad day that featured a midday volatility halt. The selling was driven by a belief that the fiscal standing of the U.S. will look much worse once all planned spending measures are enacted. Administration officials provided some details about the plans, which call for $50 billion in funds for the airline industry, $300 billion for small businesses, $150 billion relief for other distressed sectors, and two rounds of direct payments that will total $500 billion. Both the treasury and MBS markets challenged the Fed efforts to restore liquidity to these sectors (including another $6.2 billion in MBS purchases yesterday) making it only a matter a time before the Fed considers increasing the current asset purchase programs.

Economic news, pre-coronavirus, means little compared to more recent news. And one hopes that Central Banks around the world consider this. We’ve already seen central bank decisions from the Bank of Japan, the Swiss National Bank, and Norges Bank. The U.S. calendar is also underway with the Q4 current account balance ($109.8 billion, as expected), weekly jobless claims (281k, up 70k!), and the Philadelphia Fed Manufacturing Survey for March (down over 49 to -12.4). Later this morning brings February Leading Indicators, a $12 billion auction of reopened 10-year TIPS, and the Desk of the NY Fed $5 billion of Uniform Mortgage Backed Securities (UMBS). We begin today with Agency MBS prices worse .5 and the 10-year yielding 1.14 percent after weekly jobless claims and Philly Fed came out.

Employment and Promotions

2019 was a year for the record books for 100% employee-owned USA Mortgage, Missouri’s largest home lender since 2014. The St. Louis-headquartered firm generated $2.45 billion in loan volume, a 41% increase over the $1.74 billion it posted in 2018. According to CoreLogic, Inc. analytics, the record-setting performance vaulted USA into the Top 100 lenders in the U.S. The St. Louis Business Journal recently took this behind-the-scenes look at the factors powering the rise of the company which now has 91 locations in 37 states plus the District of Columbia. With more than 700 employees, USA offers cutting-edge marketing and technology, a strong benefits package, an extensive portfolio of loan products and a spirited “can do” corporate culture. USA also has a charitable arm, DAS Gives, which in 2019 donated $130,000+ to charities important to team members. Seeking entrepreneurial advancement? Reach out today to USA Mortgage at joinus@USA-Mortgage.com.

Primary Residential Mortgage, Inc. announced the promotions of Brandi Hume to SVP of Risk Management and Hollie Wylie to VP of Compliance. Congratulations to both!