How are we 1/3 done with 2021 already? Few are sitting on their hands as the months roll on. Exxon had its first profitable quarter since 2019. Fannie Mae posted its first quarter results this morning: $5.0 billion net income for the first quarter of 2021 (compared with $4.6 billion for the fourth quarter of 2020), and its net worth increased to $30.2 billion as of March 31, 2021. In regulatory news, the CFPB took action against a reverse mortgage lender for deceptive advertising. And in IRS news, you don’t need new taxes if you enforce the old ones. Lots of loan officers made a lot of money in 2020, but you’ll need a net worth greater than $4.4 million to be in the top 1 percent in the U.S., and I mention this because the IRS and the Biden Administration believe that as much as $1.4 trillion in additional revenue could be raised with more personnel to chase down people underpaying and evading taxes. Since 2010, the IRS has lost 18,000 full-time positions, and the number of auditors is down to 1950s levels. The administration is reportedly looking to increase the IRS budget by $80 billion over 10 years, which would raise as much as $700 billion from increased enforcement over the next decade. In better news, 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

PHH Mortgage is making moves and news in correspondent. Last month the company brought on Andy Peach to lead its Correspondent Lending business and last week it announced the pending acquisition of Texas Capital Bank’s (TCB) Correspondent Lending business, which originated approximately $2.4 billion of volume in Q4’20. The transaction will potentially add 200 new correspondent clients and is expected to more than double PHH’s correspondent volume. Commenting on the announcement, Glen Messina, President and CEO of PHH’s parent company Ocwen said, “The acquisition of this platform complements our rapidly growing business very well and we expect it will accelerate our growth plans.” For more information about this exciting announcement, contact Andy Peach, SVP, Correspondent Lending, your PHH salesperson, or your TCB salesperson.

An accountant, a technologist and a Wall Street ops guy walk into an Italian bistro in Cleveland Park, DC… Sound like the start of a bad joke? Not quite. That is, indeed, how Newbold Advisors started. One client in 2006, and 15 years later, these same three visionaries are at the helm of a nationwide management consulting and professional services company still serving institutional clients in a variety of industries and verticals and sometimes they need to call the client’s baby ugly. In a time when upstarts sprout like weeds, companies are snapped up by private equity, and businesses close up shop faster than anyone wants to see, Newbold thrives under the leadership of Dan Reiman, Terry Couto and Tim Gaven. Everyone loves a birth story. Read ours here.

Mortgage brokers nationwide continue to be big fans of Homepoint, which is steadily making noise in the market with its impressive growth, and the lender’s strong pricing and turn times are two good examples of why. Homepoint’s turn times are averaging 1 day for purchases and 2 days for refinances – and their Homepoint Select refinance loans are getting fast-tracked approval in under 48 hours. Still not signed up to work with Homepoint? Get started right here.

In retail lender news, loanDepot.com, LLC, a subsidiary of loanDepot, Inc., and Texas’ LGI Homes, one of the fastest growing home builders in the nation, announced a new joint venture partnership named LGI Mortgage Solutions. Dan Peña, EVP of national joint ventures for loanDepot, noted, “Having been a preferred lender with LGI Homes since 2015, we have been extremely impressed by each other's ability to scale while still delivering industry-leading customer service." Kirk Hudson will serve as the president of LGI Mortgage Solutions, which will operate in Alabama, Arizona, California, Colorado, Florida, Georgia, Maryland, Minnesota, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, Washington, and Washington, D.C.

Lenders Compliance Group was asked about marketing services agreements (MSA) and the advice not to get into them without the guidance of highly competent compliance professionals. Evaluating MSA always bode for a few compliance concerns, including if it would survive regulatory scrutiny. Regulatory agencies have been particularly aggressive in diminishing the viability of MSA relationships. Do not get into MSAs without working closely with expert compliance professionals. There are often significant compliance defects from the start.

In related compliance news, Jonathan Foxx was asked about how the word “lender” is defined. Scanning mortgage regulations, one will find that the definition varied, depending on the regulation. Obviously, it depends on if the regulations are state or federal. He recommended using definitions as they are defined in a specific statute. It is important to know the importance of statutory and regulatory definitions. Broadly speaking, based on the federal regulations and how they may extend to state law it may be easier to describe what a mortgage lender is by describing what it is not. That may seem counterintuitive, but it really isn’t. “You’d be surprised how much litigation pivots on a judicial interpretation of what is or is not meant by a single word,” said Foxx.

Capital Markets

High production and trading volumes in Securitized Products are highlighting gaps in existing workflows. Check out BondXN‘s latest article on how technology is transforming the way people interact with each other in these markets and solving for clients’ needs.

Say what you will about Redwood Trust’s moves a year ago, ending its own purchases of loans, this year it reported very strong first quarter results driven by mortgage banking activity and asset price recovery. The increase in book value was driven by the fair value of RWT's securities portfolio increasing 5 percent and GAAP earnings outpacing the dividend due to strong mortgage banking results. The company noted that it expects to book $2 million in gains associated with exercising call options on Sequoia securitizations.

Redwood’s jumbo rate locks jumped 22 percent to a record $4.6 billion. Purchase commitments increased 41 percent from the fourth quarter to $3.5 billion. The lock mix was 95 percent Select and 5 percent Choice, and also originated $384 billion of business purpose loans (BPL), down 14 percent quarter-over-quarter. It is believed that a 20 percent ROE from the operating business is very attractive in the current environment.

Turning to the bond market, yesterday was a good reason not to hedge mortgage locks with Treasury securities, as the “basis,” or spread between Treasury and MBS prices, zoomed tighter. In practical terms, that means yesterday Treasuries didn’t exhibit much movement while MBS prices moved quite a bit, in yesterday’s case rallying in price and dropping in rate. At 6.4 percent, Q1 was the best quarter of GDP growth since 2003 as a rush of consumer spending helped bring total output almost to its pre-pandemic level. That followed a softer 4.3 percent growth rate in Q4 of last year. Personal consumption, the biggest part of the economy, surged by an annualized 10.7 percent, the second-fastest since the 1960s.

Rounding out the other economic releases on the day, the latest jobless claims report showed a small decrease from last week's upwardly revised level, and investors received a weaker than expected Pending Home Sales report for March, which increased by 1.9 percent when it was expected to be over 7 percent. The latest Primary Mortgage Market Survey from Freddie Mac saw the 30-year and 15-year rates barely changed and the 30-year rate remained below 3 percent at 2.98 percent. The 5/1 hybrid ARM rate sunk 18 bps to 2.64 percent, its lowest level since 2019. Finally, Black Knight reported the number of homeowners in active forbearance rose for the first time in nine weeks. The 20k mid-month net rise was not entirely unexpected, and plan volumes are down 228k or 8.9 percent from the same time last month.

Today’s month-end calendar consists of some highly-monitored data, and is already underway with March personal income and spending (+21.1 and +4.2 percent, respectively, about as expected given the stimulus) and Q1 employment costs (+.9 percent). Later this morning brings Chicago PMI for April and the final reading of Michigan sentiment for April. The sole scheduled Fed speaker sees Dallas’ Kaplan participating in a moderated Q&A session. The Desk will conduct two operations that will total up to $4.8 billion across UMBS15 1.5 percent and 2 percent followed by UMBS30 2 percent and 2.5 percent. We begin National Arbor Day with Agency MBS prices unchanged and the 10-year yielding 1.64 percent, unchanged from Thursday evening.

Employment

In 2020, Union Home Mortgage TPO channel secured more than $1.5 billion in funding. To continue its year-over-year growth, Union Home Mortgage Corp. is actively seeking experienced Account Executives nationwide, with a focus on AZ, NM, and TX markets. With an emphasis on expansion and responsible lending, Union Home Mortgage President and CEO, Bill Cosgrove, “is committed to be ALL IN to grow Union Home Mortgage’s broker and non-delegated space on a national level.” Union Home Mortgage supports both NDC and Wholesale Business Partners. No matter where you are in your career, you’ll receive world-class on-boarding and ongoing support as you build your business. From high-level coaching to fireside chats with leadership, you’re set up for success from the very beginning. Explore our new TPO site at uhwholesale.com and to be considered for AE positions, contact Jim Wickham, Vice President - Third Party Origination at (248) 318.8553.

“Are you looking to take the next step in advancing your career? Do you want to take your Marketing and CRM experience to the next level? Finance of America Mortgage is looking for an experienced CRM Manager to help grow our channels of business using FAM’s customized version of Total Expert. At Finance of America Mortgage, our people are the heart and soul of all that we do. The ideal candidate for this remote position is a team player that is well versed in marketing strategies and tactics and will push the limits of what a CRM can do to reach our goals. If you think this position could be a good fit for you, visit our job posting to get more information about becoming part of the FAMily.”

A midsized employee-owned mortgage bank headquartered on the West Coast is searching for an SVP of Operations to join a team where the culture is based on mutual respect and problem-solving. As a member of a congenial, hardworking team, and reporting to the COO, you’ll be overseeing a bright, dedicated Ops staff and be responsible for all facets of residential loan operations including underwriting, processing, disclosures, and funding. If your strength is in strategically analyzing established patterns, creating win-win solutions, and fostering a positive, motivated workplace where the right people are in the right seats, this may be the opportunity for you. If interested and have a minimum of 15 years of residential mortgage operations experience, including a minimum of 10 years of experience with the agencies, please contact Anjelica Nixt to have your confidential resume forwarded.

Who wouldn’t want to be kicking back on the beaches of Maui right about now? If you get a chance to go, be sure to check in with Byron Yap, who was named Branch Manager of the Axia Home Loans Maui Branch. Yap brings more than a decade of real estate and mortgage-related industry experience as a home builder, developer, and originator, and we’re delighted to have him on board! What’s Yap most excited about in partnering with Axia? “Without a doubt, I’m loving Axia’s tech, reputation for reliable closing times, and team that’s focused on excellent service and continuous improvement. And on top of all that, it’s employee-owned.” Find out more about Axia Home Loans, America’s first 100% employee-owned mortgage lender. Discover opportunities for partnering with the Axia team here.  

Are you a Retail loan originator looking to join an independent mortgage broker shop in your state? Now’s the time to make your move. Going independent lets you take control of your pipeline and your schedule. You’ll have access to technology that allows you to work anytime, anywhere, so you can move loans along, no matter where you or your borrowers are. Not to mention the advantages wholesale lending offers with more loan options and lower monthly payments for your borrowers. See how easy it is to join a fast-growing broker shop in your state and let our team at BeAMortgageBroker.com help match your specific needs to the right broker. Get started today at BeAMortgageBroker.com/contact. 

PennyMac, one of the top 5 lenders in the country, is hiring Licensed Loan Officers to join its Consumer Direct Lending team. As one of the fastest-growing lenders in the nation, the company is looking for talented, passionate, and tenacious candidates to ensure its customers receive top-notch service. With over 6,000 employees, PennyMac offers ample opportunities to learn, grow and develop a successful and lucrative career. Join a portfolio lender with nearly two million customers, delivering warm inbound leads and uncapped earnings potential. Choosing a career with PennyMac means you’re choosing a company backed by power and innovation, with a strong leadership team that supports you along the way. Apply today.