A “google” is the large number of 1 with 100 zeroes after it. For lenders, a billion is a large number, and it would be unheard of for a lender to save $1 billion in costs. But that is what Google’s parent Alphabet Inc. is saving, per year in costs, because employees are working from home, not traveling, not paying for company promotions, travel, or entertainment. (Wing is also a company owned by Alphabet, and is a drone company delivering Girl Scout Cookies to an area in Virginia.) While lenders are focused on the cost to manufacture a loan, and CEOs are busy educating their staffs about existing costs and reducing them, other people are… trying to sell an island in Florida at $3 million per bedroom? Hope your plumbing doesn’t back up, or that you forgot to buy basil for that pasta sauce you’re making tonight. Don’t forget that the audio version of today’s commentary is available here and is sponsored by Capacity, a mortgage automation platform that works in parallel with your LOS to support your borrowers and staff.

Lender and Broker Products and Services

The Correspondent Lending Channel at Citibank, N.A. is thrilled to introduce our Portfolio Jumbo product. The Jumbo offering is a key component to our multi-year mortgage growth strategy as we look to grow market share and strengthen existing relationships while adding new sellers. Backed by Citi’s strong balance sheet our competitively priced offering with loans to $3 million is a perfect tool that gives your originators the confidence to compete in any market. Our Jumbo offering is just the latest example of our commitment to our sellers; in 2021 we have introduced a CRA tool that helps best effort sellers drive incentives to consumers, rolled out a new Correspondent Portal designed to increase delivery efficiencies and have strengthened our pricing on Agency High Balance.  We invite you to be part of our growth by contacting our National Client Services Team at 800-967-2205 or completing the Prospective Correspondent Questionnaire.

Making the transition from broker business to a mature mortgage bank is a goal for many in the industry. Whether the catalyst is increasing regulations, a weariness of feeling like the “middleman,” or the hope of more sustained profitability, a significant number of brokers have been encouraged to consider the transition to banking. It can be a daunting task to shift from an operation focused almost solely on loan origination to one that also underwrites, documents, closes, funds, settles and sells its loans into the secondary market. The latest blog from MCT outlines the steps necessary to make that transition in the most successful manner. These include staffing up, setting policies, and getting warehouse and investor approvals. If you have already made the transition, MCT is here to help you determine your best investor set and maximize your profitability. 

The refi boom is slowing and demand for home purchases is growing. In fact, the MBA is forecasting the purchase market to be 75% of origination volume by 4Q21. Originators need to be ready by having access to the right programs and the right tools to navigate options, simply and easily. LoanNEX gives originators that access and the confidence to deliver solutions with the most robust pricing and eligibility platform serving the Non-Agency market. LoanNEX is the leading Non-QM solution with 25 lenders and investors’ programs available. Just this month, LoanNEX reached a record 5200 loans priced, that is over $3B in volume! To learn more about purchase market trends and how to be differentiated in this market, attend the LoanNEX webinar Growing Your Business in a Purchase Market, hosted by LoanNEX and Industry Experts; Robert Senko, Paul Jones, Lisa Schreiber, and Eloise Schmitz. 

Are you struggling to navigate the novel territory of e-closings? You need a title partner who offers expert product lines designed to support your operational efficiencies in this digital landscape. Transform your closing process and enhance consumer experience with Vantage Point Title Inc., a national leader in RON, RIN, and Hybrid closings. Our e-closing and instant title engines decrease turn times down to a matter of hours, so your loans move through the pipeline quickly and proficiently. Don’t let scalability challenges hold you back, make a move on innovation and contact John Contreras & Nelson Genteel.

A year ago, when the pandemic impacted the secondary market and strained the balance sheets of mortgage bankers across the country, Comerica Bank remained committed to its warehouse lending customers.  Since that time, Comerica Bank continues to expand its warehouse lending program through a customer-centric and collaborative approach. Comerica Bank and its employees pride themselves on integrity, excellence, agility, diversity, and involvement in the community. At Comerica Bank, these are the core values that dictate everything they do.  Since 1965, Comerica Bank has provided warehouse lending solutions to mortgage bankers across the country. More importantly, Comerica Bank is a reliable, flexible, and consistent warehouse partner. To see how Comerica Bank can raise your expectations of what a bank can be, contact Von Ringger at (313) 222-9285 or Trey Worley at (214) 462-4279. Member FDIC. Equal Opportunity Lender. Loans subject to credit approval.

What can small to midsize lenders learn from the meteoric rise of Rocket Mortgage? When studying Rocket Mortgage’s growth in the industry, it’s easy to assume their automation-heavy approach represents the future of lending. The truth is, there are pros and cons to the Rocket model. So, how can smaller lenders imitate Rocket Mortgage’s success? And conversely, how can they differentiate themselves to form competitive advantages the mortgage giant lacks? Click here to read digital mortgage platform Maxwell’s latest blog post, “3 Things Lenders Can Learn from the Rise of Rocket Mortgage.” 

Reactions to Freddie and Fannie Changes

The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (GSEs, or Government Sponsored Enterprises) will implement a new refinance option for low-income borrowers with GSE-backed single-family mortgages, resulting in a reduced interest rate. The program has a “requirement that the lender provides a savings of at least $50 in the borrower’s monthly mortgage payment, and at least a 50-basis point reduction in the borrower’s interest rate; A maximum $500 credit from the lender for an appraisal if the borrower is not eligible for an appraisal waiver (the GSEs will provide the lender a credit of $500 upon the loan’​s sale to Freddie or Fannie); and a waiver of the 50 basis point up-front adverse market refinance fee for borrowers with loan balances at or below $300,000.

Bank of America Merrill Lynch analysts note that the impact is significant, with 8 percent of loans likely impacted, facing prepayment speed increases of up to 40 percent, 3 percent mortgage rates and higher.

A nod toward fixing a problem it caused? Critics wrote that dropping the adverse market fee and offering a $500 appraisal credit for a segment of borrowers is merely an effort to undo some of the damage Mark Calabria has caused from the adverse market fee implemented back in August 2020 to contend with heightened losses.

Freddie Mac issued a statement in support of FHFA’s announcement of a new refinancing option to help low-income borrowers.

Freddie Mac today reported its first quarter 2021 financial results and filed its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission (SEC): www.FreddieMac.com/investors.

Fannie Mae updated the instructions to the Virginia Deed of Trust (Form 3047) to reflect a revised authorized change applicable to eligible refinance transactions.

Fannie Mae is launching Collateral Underwriter® (CU®) Version 5.0 on June 25. This update includes an enhanced user interface, which will incorporate the two existing versions of CU into one platform, and message updates to provide additional guidance, retire less effective messages, and add overvaluation messages. Check out the release notes for more information.

In Lender Letter (LL-2021-04), Fannie Mae updated the Impact of COVID-19 on Appraisals extending the application dates eligible for certain temporary flexibilities to May 31, 2021. After May 31, with the exception of the HomeStyle® Renovation seasoning policy, the appraisal flexibilities will end and standard Selling Guide appraisal policies will apply.

Effective May 1, Desktop Underwriter® (DU®) and Desktop Originator® (DO®) will only accept new loans submitted using the redesigned Uniform Residential Loan Application (URLA)/Form 1003 and the updated DU MISMO 3.4 file format. Loans using legacy formats with a Casefile Create Date on or after May 1 will not be underwritten by DU/DO. Read Fannie Mae’s May 1st Reminder for additional information.

Citi Correspondent Lending will be implementing a change to the Best-Efforts loan level pricing adjuster for second homes, effective with new locks completed on/after Wednesday, April 21, 2021.  The adjuster amount is changing from (.250) to (.500) and applies to all LTVs.  This change will also be reflected on the Best-Efforts rate sheet as of April 21, 2021.

Mortgage Solutions Financial posted that effective with lock requests submitted on or after April 27th, there will be an additional (0.375) LLPA charge on Conventional Investment Property and Second Home products.

loanDepot discusses VA’s expanded National Guard eligibility, Fannie Mae & Freddie Mac information on the final extension of certain COVID-19 flexibilities and use of Legacy and Redesigned URLAs, and VA’s Escrow and Waiver Requirements in this announcement.

PennyMac is aligning with Freddie Mac’s updates announced in Bulletin 2021-12, with the exception of the community land trust requirements. View Announcement 21-32 for details.

AmeriHome accepted the new guidance related to POA eligibility and documentation requirements provided by Fannie Mae in SEL-2021-02 except the use of Powers of Attorney are not allowed for transactions with the following characteristics: Title taken as trust; Identity of interest or non-arm’s length transactions; Recorded interactive session not allowed and therefore Fannie Mae permitted exceptions for ineligible agents are not allowed. Additionally, recent Freddie Mac guide updates on CHOICEHome® loans are not eligible for sale to AmeriHome.

Caliber announced an increase on its purchase money pricing special for Conventional loans, effective with Best Effort Commitment Confirmations issued on or after April 20, 2021. An updated Loan Level Price Adjustment, for applicable Conventional Products has been added to its rate sheet.

Flagstar Bank posted conventional guideline updates for Freddie Mac in Memo 21046.

In line with the Fannie Mae and Freddie Mac final appraisal extension for Conventional Conforming products, FAMC is announced Applications on and after June 1, 2021 must follow pre-COVID requirements. A reminder communication will follow during the last week of May.

Effective for all MyHome Assistance Program (MyHome) loans locked on or after April 19, 2021, the 30-year simple interest rate will be lowered from 2.00% to 1.00. View the Mountain West Financial®  Wholesale Bulletin 21W-027 for details.

Capital Markets

The Federal Open Market Committee statement yesterday revealed the central bank strengthened its outlook and signaled that downside economic risks have diminished, while keeping policy (rates near zero) and asset purchases (at $120 billion a month, or about $6 billion a day) unchanged. "Inflation has risen, largely reflecting transitory factors." Fed Chair Powell said "it's not time" to talk about tapering, but he'll let everyone know when it is. He added that the recovery "remains uneven and far from complete." Per MBA SVP and Chief Economist, Dr. Mike Fratantoni, “it is likely that mortgage rates are going to be more volatile over the next several months until the uncertainty around the Fed’s next moves are resolved.” Treasuries rose after the decision, but that movement was offset from the Biden administration announcing a plan earlier in the day to spend $1.8 trillion over ten years.

Today’s economic calendar began with two higher-tiered releases: the first peek at Q1 GDP (+6.4 percent, a shade less than forecast) and jobless claims (-13k to 553k, continuing claims +9k). Later this morning brings some housing-related updates in the form of the March pending home sales index and Freddie Mac’s Primary Mortgage Market Survey. After their weekly blackout period ahead of the FOMC meeting, Fedspeak returns with Vice Chair Quarles and New York Fed President Williams, though neither are discussing the economy or monetary policy. The Desk of the NY Fed will conduct three MBS purchase operations with one in each class totaling up to $6.8 billion. UMBS15 coupons to be purchased are 1.5 percent and 2 percent, while UMBS30 and GNII coupons are 2 percent and 2.5 percent. We start National Zipper Day with Agency MBS prices worse/down .125-.250 and the 10-year yielding 1.65 after closing yesterday at 1.62 percent.

Employment

To stand out in an evolving market like mortgage lending, lenders need to adapt. With the advantage of a single-shareholder, CMG Financial has the ability to pilot programs and offer solutions no other lenders offer. When we see a problem home buyers or homeowners face, CMG gets creative with proprietary products like the All In One Loan™ and HomeFundIt™. The All In One Loan is a first-lien HELOC that gives homeowners the financial flexibility to pay off their home loans faster and save thousands on mortgage interest. HomeFundIt is a digital down payment gifting platform that gives home buyers the chance to buy a home sooner with a larger down payment. Our customers speak for our service giving us a 4.98-Star Rating on Zillow and Testimonial Tree out of 20,000+ reviews. To work with a lender who can give your customers and partners more, apply here. 

“AmWest Funding Corp, one of the nation’s leaders in Non-QM lending, is looking for motivated Account Executives for both our Wholesale and Correspondent platforms. At AmWest Funding, our team is dedicated to helping our account executives to become successful by providing competitive pricing and a variety of products. Our product offering includes Fannie, Freddie, Ginnie, Jumbo & Non-QM with a proprietary Price Engine. Operating since 1995, AmWest has established itself as a renowned innovator in mortgage lending. If you are looking for an experienced lender that will help you to expand your territory and further diversify your product offerings with excellent service and turn times, join us today! Send your resume to Nick Choi or visit our website for more career opportunities.”

“Lakeview Correspondent is hiring! We’re seeking candidates to join our Correspondent Lending Sales Team in the East, Midwest, and Western regions. These positions will support our VPs of Business Development, and be responsible for prospecting new customers, while closely working with new lending partners and supporting our existing customer base. If you’re interested in joining our diverse and dynamic Correspondent Lending Sales Team, apply today​.”

“Caliber Home Loans is setting the gold standard for customer retention across our retail channel. Our refinance retention rate is over three times the industry standard. Because Caliber is a purchase-focused organization, our purchase retention rate is even more impressive. In 2020, over 50% of retail customers returned to their Caliber loan consultant (LC) for their next purchase. These statistics are no accident. When a loan is closed, Caliber provides an ongoing campaign that’s branded to the LC. Using vast amounts of data and AI, Caliber ensures customers can find the best LC to fit their specific needs, and the LC remains with them throughout their financial journey. Ready to join a winning purchase-centric company that keeps you and your customers at the forefront of every decision? To be immediately considered for Operations or Sales positions, email Jonathan Stanley or Brian Miller, respectively.”