It has been interesting talking to residential lending folks around the nation about their mix of business and how it has changed - if at all. It turns out that 49 percent of people who have refinanced their home in the first quarter of the year did cash-outs. That's the highest rate in the post-recession economy, up from 12 percent in mid-2012. To put things in perspective, in the run-up to the recession, that figure was often over 80 percent.

Vendor M&A and news

News broke yesterday that Optimal Blue is acquiring Comergence Compliance, "the mortgage industry's leading third-party oversight platform." "Comergence provides an array of third-party originator (TPO), appraiser, and social media risk management solutions that verify third-party compliance in real-time, a capability unmatched in the industry...innovations in due diligence automation and ongoing surveillance services." Michael Stallings, Executive Vice President of Comergence said, "Recent Comergence innovations, including an analytics tool to help account executives identify new TPO opportunities and a breakthrough solution for social media risk monitoring, strongly complement Optimal Blue's existing product offering."

Mortgage document preparation vendor International Document Services, Inc. (IDS), announced its Uniform Closing Dataset (UCD) XML file has been certified to meet all UCD requirements by both Fannie Mae and Freddie Mac ahead of the GSE's September 25 deadline for UCD delivery. To have its UCD XML file certified by the GSEs, IDS underwent an extensive testing process to ensure the dataset was delivered in a GSE-acceptable format.

The National Association of Women in Real Estate Businesses (NAWRB) is proud to announce Ten-X as a Premier Strategic Partner.  A real estate technology industry powerhouse, Ten-X recognizes the importance of growing the community of women and women-owned and small businesses in the housing ecosystem. "Partnering with NAWRB connects us with one of the fastest growing business segments in the country," said Rick Sharga, Ten-X Executive Vice President. "On average, women have started over 1,000 businesses a day since 2007; this strategic partnership will assist Ten-X in expanding our business relations while contributing to the sustainability, homeownership and success of women entrepreneurs."

Coming this fall: Equifax, Experian, and TransUnion VantageScore 4.0 scoring. "VantageScore 4.0 is the first and only tri-bureau model that leverages trended data to take into account the trajectory of borrower behaviors, engages patent-pending machine learning techniques to generate a more accurate score for those with sparse files, aligns with the removal of tax lien and public record data under the National Consumer Assistance Plan (NCAP), aligns with NCAP's exclusion of medical debts for 180 days (allowing time for insurance payments), and as with VantageScore 3.0, this new model generates a score for 98% of all consumers with a credit file. This translates into a scoreable universe 30 to 35 million greater than conventional models, including 12 million more African Americans and Hispanics. Also like its predecessor, VantageScore 4.0 excludes paid collections including paid medical collections."

Cascade Financial Services, a manufactured and modular home lender, has selected Alight Mortgage Lending for continuous reforecasting and planning. With Alight Mortgage Lending, Cascade will be able to better measure the excess servicing for future securitization purposes. Because Alight is cloud-based-accessible from anywhere, anytime and from any device-management will be able to make decisions in real time.  "We need to be able to provide our private equity investors accurate and meaningful financial forecasting and modeling daily," said Michael Jones, CFO, Cascade Financial. "We'll use Alight's scenario analysis to better understand the ripple effects of changes in pull-through rates, as well as expense and revenue triggers, to maximize profitability."

Capital markets

Freddie Mac has been busy with enhancements to Deep MI CRT Program, its second front-end credit risk transfer offering. Through a forward credit insurance policy provided by a panel of mortgage insurance company affiliates, this structured transaction provides additional coverage beyond the primary mortgage insurance on 30-year fixed-rate mortgages with 80-97 percent LTVs -- which is placed immediately upon their sale to Freddie Mac. Transactions are executed via a competitive, transparent auction process.

FINRA Rule 4210, which establishes margin requirements for Covered Agency Transactions, are set to take effect in December and mortgage originators are already preparing for the rule's implementation. Some of the proposed solutions for mortgage originators include applying structured mortgage financing or transacting in futures instead of the TBA market, but Incenter has introduced an alternative option: Enterprise Margin Offset. From a recent Incenter Brief on the subject: "Enterprise Margin Offset seeks to optimize originators' existing balance sheet assets on hand and margin at the enterprise level. Ultimately, by leveraging retained MSR that they already have on balance sheet, originators can leverage MSR portfolio hedging techniques to further reduce their overall income statement volatility and now, just as importantly, reduce their overall cash margin burden." (And no, this is not a paid ad.)

Looking at the bond markets, and thus interest rates, we had a little rally yesterday (prices up, rates down) after Core PCE inflation fell to a 1.5% year-on-year pace in April. Contrast that with Fed Governor Lael Brainard's statement that another rate hike would likely be appropriate soon. Take your pick: Fed optimism on the growth and inflation fronts versus investor pessimism. The different opinions have served to flatten the yield curve and the 2-year/30-year Treasury yield spread has narrowed to 158 basis points, near a post-election low.

Housing? En fuego! If you believe the Case-Shiller numbers, home prices rose at their fastest rate since 2014. The Case-Shiller 20-City Index of U.S. home prices was up 5.9% y/y in March, in line with February's growth rate. MBS closed higher and mostly wider with treasuries better bid.

When the proverbial dust settled Tuesday the 10-year risk-free T-note price had improved nearly .375 and closed yielding 2.22% and the 5-year note had improved .125. Agency mortgage backed securities were all over the place, but for the most part had improved about .125.

We've had our usual MBA survey of last week's locks: -3.4%, and -14% from a year ago. Coming up are the Redbook Same-Store Sales Index, Pending Home Sales, Chicago Purchasing Manager's Index for May, and the Federal Reserve's latest Beige Book at 2PM ET. Out of the blocks this morning rates are almost unchanged: the 10-year is yielding 2.22% and agency MBS prices are worse 1 or 2 32nds - not much.

Training and Events:

Tomorrow (6/1) is the California Mortgage Expo in Southern California.

MGIC is offering skill building training programs and special events available throughout the month of June.

Plaza's newest webinar will help you identify common fraud trends and schemes, the red flags that alert you to potential fraud and the tools available to help you combat fraud. Register now for Plaza's June 1st webinar.

If you would like to refresh your knowledge on the latest processing, appraisals, underwriting self-employed borrowers and other essential lending topics, view the Arch MI course catalog of June webinars.

It is not too late to register for the National Settlement Services Summit (NS3) being held June 7-9 at the San Antonio Marriott Rivercenter. One hot topic of discussion slated is has PHH changed RESPA compliance? RESPA experts address the state of compliance today considering the ongoing case of PHH Corp. v. CFPB.

Learn more about Fannie Mae's proposed Underserved Markets Plan, developed in support of the Federal Housing Finance Agency's Duty to Serve rule. Housing experts will review the actions Fannie is proposing to help the manufactured housing, affordable housing preservation, and rural housing markets identified by Duty to Serve. Fannie Mae welcomes your questions and will share how to submit formal comments on our plan. Click on the links to register for a session and add it to your calendar: Tuesday, June 6, 10-11 a.m. ET or Thursday, June 8, 3-4 p.m. ET. To learn more about Duty to Serve, visit the Duty to Serve page.  

Jobs, events, products, non-profit work

A 15-year-old, well capitalized, non-depository lender in the is looking for an experienced CFO. The company is a Fannie, Freddie, and Ginnie approved issuer and servicer with a servicing portfolio. The company retains 50% of its servicing and the company is currently funding $1.5B per month in loan originations through retail origination and third-party origination channels. Candidate should have experience with all aspects of loan origination. If you are interested, please forward your resume to me. Please specify opportunity.

Mortgage 1 is very proud to announce the hiring of Vince Parlove as President of Business Development. Parlove brings with him over 25 years of mortgage lending experience in both the retail and wholesale channels, most recently as President at Michigan Mutual for the past 10 years. "Vince is a high energy mortgage professional and we are really excited to have him on our team" states Mark Workens, CEO of Mortgage 1. Parlove will be joining the executive team, with his primary focus of adding branches in three key states: Florida, Ohio, and Texas. "I'm extremely excited to help this already successful company grow" Parlove states. If you are interested in discussing an opportunity feel free to contact Vince directly at 248-943-3709 or visit the Mortgage One website at MortgageOne.com.

When opportunity knocks...Caliber Home Loans, Inc., the premier Non-Bank Purchase Lender (#2 in IMF rankings) is interested in growing its retail purchase franchise. Caliber offers a leading edge proprietary mortgage platform, extensive marketing support and deep product offerings. We are aggressively expanding our footprint and are committed to our well-established realtor and builder relationships. In addition to originating loans, we have a large and sophisticated Servicing operations. Caliber is committed to hiring retail loan officers and to discussing acquisition opportunities with companies interested in increasing their scale and marketplace presence. 

"Mastermind Summit in Vegas is around the corner. Not too late to book an appointment with Scott Harris, CEO of SocialSurvey and find out what all the buzz is about. Find out why nearly 50 mortgage banking companies including Churchill, Inlanta, PRMI, OnQ, New American Funding, and Embrace have signed on with SocialSurvey in the past 9 months. Enterprise Reputation Management is a new term that lenders are figuring out. Better to be ahead of the curve than playing catch-up. Meet up with Scott in Vegas to learn more. Remember, if you are not actively managing your online reputation, your unhappy borrowers will be happy to do it for you!"

Gateway Mortgage Group, a mortgage banking firm with over 145 locations nationwide, has signed a national partnership with Folds of Honor, a 501(c)(3) that provides educational scholarships  to dependents of fallen or disabled military service men and women. "Freedom isn't free and more than two million dependents of disabled and fallen soldiers live with this every day," said J. Kevin Stitt, CEO of Gateway Mortgage Group. "We have chosen to stand with our military heroes, and their families, who have made the ultimate sacrifice while serving our country courageously." Since 2007, Folds has awarded more than 13,000 educational scholarships in all fifty states, including more than 2,800 in 2016 alone. Beginning on June 1, 2017, Gateway will make a donation to Folds for every mortgage loan originated and closed in their Retail channel for the next twelve months. In 2016, the Gateway Mortgage Group funded more than 15,000 loans in its retail channel and should surpass 20,000 new loans this year. For more information on this program, please contact Mark Revard via email or by calling 918.392.8580.