When Costco rolled out its mortgage option to members, many lenders were very concerned. But despite great potential, Costco/First Choice has not become the #1 lender in America. I heard something interesting last week: Costco doesn’t make much money selling products, it makes all profits from membership fees. Despite Bank of America’s great quarterly results this morning, lots of lenders aren’t making much money selling their products either, unfortunately, and the number of residential lenders who haven’t adjusted their headcount, compensation plans, or business models in reaction is dwindling. (The latest example is job cuts at State Farm.) If a branch or channel hasn’t been profitable for a while, ask what’s going to happen, if anything, to reverse that? CEOs are asking, “Unless revenue moves higher, or costs lower as we wrap up summer and head into autumn, why hang on to that branch or division?”

Digital world marches on

Here we have the “first fully-recorded Blockchain real estate transaction in U.S. history. The Bitcoin-to-Bitcoin sale of 10 acres of land in Southern California was processed through Propy's Transaction Platform. A California licensed realtor, Kate Fomina, represented both Luke Carriere, the buyer, and Diana Dominguez, the seller. Carriere paid Dominguez in BTC for 10 acres of vacant land in Kern County, California. When the transaction began, Fomina was in Hong Kong, Carriere was in New York, Dominguez was in Northern California, and the escrow agent was in the San Francisco Bay Area. Aside from the notary signing for the seller, the entire cross-border purchase process occurred online through Propy’s Transaction Platform, and the title deed was recorded on the Propy Blockchain Title Registry and therefore on the public Ethereum blockchain.”

LendingQB has partnered with STRATMOR Group to provide lenders the MortgageSAT Borrower Satisfaction Program. This integration helps customers of LendingQB survey every borrower within 24 hours of closing. Direct, instant borrower feedback, along with deep insights about the loan process and the people involved, enables lenders to pinpoint sources of borrower dissatisfaction and quickly take corrective action. MortgageSAT scores everyone (the LO, Processor, Underwriter and Closer) and measures the borrower’s perception of the entire loan process with analysis by region, branch, and individual employee. Through this integration, lenders who have previously been limited to measuring success based only on internal measurements and historical results now have access to benchmarking data that shows how their satisfaction and Net Promoter Score (NPS) compare to their peer lenders. MortgageSAT’s National Benchmark data is available 24/7 in a real-time web portal.

Fannie, Freddie and DACA

Shifting F&F from government conservatorship isn’t a hot election topic in November. And remember that only Congress (remember Congress?) can privatize Fannie and Freddie, but the Administration's government reorganization plan is looking to do just that. Under the plan, mortgage-backed securities issued by Fannie Mae, Freddie Mac and their competitors would have a federal guarantee only "in limited, exigent circumstances," the OMB plan states. Only Congress can privatize Fannie Mae and Freddie Mac, and no bills have been introduced that would do so.

Not that DACA loans are a huge percent of any lender’s business, but it is good to know policy. “Rob, a group of us recently returned from the Fannie Mae Conference in San Diego. DACA was a big topic of discussion. The Fannie Underwriting leadership preempted the conversations by saying that we would be disappointed that they will not give a definitive yes or no. They continued to say that their guidelines are not always ‘prescriptive’ (that was the term they used to say that you had to follow an exact list or process). DACA falls into the non-prescriptive category. If a lender acts in good faith and believes that DACA people are ‘legally present’ then they simply need to provide the appropriate documentation. The reasoning behind not having a prescriptive guideline to this is that they do not always know ALL the possible documentation to substantiate legal presence. They further elaborated saying that DACA is not a ‘gotcha’ land mine of Fannie’s. The entire DACA issue boils down to the lender documenting a legal presence. The group consensus was that since DHS views DACA as ‘lawfully present’ that it fits Fannie’s criteria of being ‘legally present’.”

“Hi Rob, thank you for the information regarding DACA / C-33 applicants. We learned that Fannie identifies the attached federal court document serves as the reasonable basis for determining such NonPermResidents are legally present in this country. Our most recent applicant in this category wasn't utilizing Conventional financing but instead was utilizing his VA eligibility, as he served two tours in Iraq and was issued his Certificate of Eligibility by the VA.  The Certificate of Eligibility is literally the document confirming the Vet is eligible for a VA home loan.”

For the court case, find Case 3:17-cv-05211-WHA Document 234 Filed 01/09/18 Page 1 of 49. This is the DACA opinion out of California. The court opines that DACA recipients "are not considered unlawfully present", which written in the double-negative renders DACA recipients to be legally present. The court also says that DACA recipients who have work authorizations are allowed “to become part of the mainstream workforce and contribute openly to our economy,” which certainly indicates that they are here legally.

Rates

Inflation, although much-discussed, hasn’t been a problem for decades. Yes, consumers see price increases of various things periodically, but overall it has been tame. CPI likely rose a predictable 0.2 percent in June amid steady gains in the core index, as solid demand and rising input costs point to inflation firming. The upward climb began in the middle of last year and has continued, despite soft data. Inflation has become a much lower hurdle on the Fed’s path to normalize policy over the past year. But the inflationary trend remains higher amid solid consumer spending and businesses facing higher input costs for materials and labor. Core CPI trending higher is consistent with the Fed’s more closely watched core PCE deflator running at 2 percent, which it finally hit in May.

Rates dropped slightly on Friday, with the 10-year closing down 2bps at 2.83% as the day was relatively light in headlines. The Federal Reserve did release its semiannual Monetary Policy Report which showed little concern over recent strength in the U.S. dollar and did not point to discomfort among policymakers about staying on the tightening path. Fed Chairman Powell will appear before the Senate Committee on Banking, Housing, and Urban Affairs on Tuesday to deliver the semiannual report and answer questions from lawmakers. The University of Michigan's preliminary Consumer Sentiment Survey for July dipped, revealing negative concerns about the impact of trade tariffs are rising among the top third of the income distribution, who account for half of consumer spending. Additionally, consumers under the age of 45 are anticipating the largest income gains since July 2000. Import/export YoY changes showed an uptick in inflation trends, same as the PPI and CPI reports for June.

Turning to this week, today we’ve had June Retail Sales (disappointingly unchanged at the core level), July Empire Manufacturing (a shade higher than expected), and May Business Inventories (prior 0.3%) due out. Tomorrow sees June Industrial Production (prior -0.1%) and Capacity Utilization (prior 77.9%), and the July NAHB Housing Market Index. Wednesday reveals the figures for the MBA Mortgage Applications Index (prior 2.5%), June Housing Starts (prior 1350K), and Building Permits (prior 1301K). We will also have the release of the June Beige Book. With nothing due out Friday, Thursday sees Weekly Initial Claims (prior 214K). We begin Monday with rates little changed from the end of last week – the summer doldrums continue – and the 10-year is yielding 2.85% and agency MBS prices are a couple ticks worse.

Lender Products

TMS Wholesale continues to Grow Happiness for its broker partners by creating a unique digital mortgage experience. The latest from TMS is a new online LE feature that allows brokers to generate and disclose an LE in a matter of minutes—and in just a couple of clicks—inside their proprietary LOS system KISS (Keep It Super Simple) for all new submissions starting July 2, 2018. As an added benefit, TMS has announced they will continue to accept external LEs, generated in the broker’s LOS. According to James Hooper, TMS SVP of Wholesale Sales, “We understand some clients like that control and, in today’s market, it’s all about ease of use. We also love to give clients options to keep them happy.” Visit wholesale.themoneysource.com to learn more or contact James Hooper SVP of Wholesale to learn more.

Effective today, Alight, Inc. — parent company of Alight Mortgage Solutions, the leading provider of cloud-based applications for budgeting, forecasting, financial reporting and scenario analysis for the mortgage industry — has changed its name to Riivos, Inc. “Unlike most software companies, Riivos is dedicated to the unique needs of specific industries, combining cutting edge cloud technology with the insight of industry experts, and our name change is part of a broader strategy designed to position Riivos for continued success. In mortgage, Riivos connects your organization to the data that comprises the mortgage value chain — GL, LOS, payroll, BI and other systems — allowing you to see your whole business in a way that is natural to you, enabling collaborative discovery, exploration, analysis, and tracking of opportunities that optimize financial performance and value creation. At Riivos Mortgage, we are committed to the mortgage industry and building a stronger future for our mortgage customers. Want to see for yourself why our bank and non-bank customers choose Riivos? Contact us to schedule a demo with Scott Walker.  

“Rising mortgage origination costs!” and similarly discouraging headlines seem to be a common theme in our industry lately. LOs, branch managers, and major enterprises are under increasing pressure to decrease costs to make their mortgage operation more profitable and competitive in a marketplace that is steadily transitioning to high-ROI, digital point-of-sale solutions. Fortunately, industry leaders like Floify have made this move easier than ever. With Floify, mortgage pros are instantly creating new efficiencies and reducing workload by automating the mortgage origination process between LOs and their borrowers. In fact, Floify’s point-of-sale has become so efficient that many LOs have eliminated the process of emailing borrowers to request their supporting documentation, which until now, was a process that hindered productivity and increased origination costs. To experience the power and efficiency of Floify, and how it can improve the ROI of your mortgage operation, request a live demo.

Jobs and Personnel Moves

Nations Direct Mortgage is pleased to announce the addition of three veteran Regional Sales Managers: Colin Field (West), David Grosteffon (Mountain), and Brian Gillespie (Northeast). NDM specializes in residential mortgage loans including FHA, conventional, USDA, 203K, VA, Non-QM and jumbo through its Broker and Mini-Corr offering. Despite today’s market challenges, NDM continues to grow each month by leveraging its skilled operations team that closes loans at an average of 20 days. EVP Rey Maninang, states “We’re proud to have a best-in-class AE comp plan, positive atmosphere and honored to be named a Top Workplace in Orange County for the past three years. Adding these high caliber sales leaders further strengthens our growth strategy.” If you’re interested in joining a talented team that truly values their employees, send your resume to Director of Lending, Martin Warren.

Better Mortgage Corporation, #NMLS 330511, is seeking experienced mortgage underwriters, processors, and closers in New York City and San Francisco. “We are a fast-growing, tech-driven lender looking to disrupt the mortgage industry. We’ve funded over $1B in home loans since our launch in 2016, and we’re just getting started. Come work at an amazing company with great people (4.5/5 on Glassdoor), career opportunities, and highly competitive salaries and benefits! If you’re interested, please apply directly through our careers page or submit a resume to recruiting@better.com. Better is an Equal Opportunity Employer. All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, national origin or disability.”

National employee survey results conducted on companies throughout the U.S. by Hearst Publications named Cornerstone Home Lending to its exclusive list of TOP WORKPLACES in Houston, San Antonio, Dallas, Denver, Oklahoma City and Austin. In addition, CEO Marc Laird was honored as the Houston company CEO of the year. Cornerstone’s President and COO Judy Belanger says, “What an honor to win these awards based upon our team member ratings. Having a written Mission, Vision and Convictions statement as our guide, continuously seeking valuable input from our team members, and implementing their ideas for company improvement are the keys to Cornerstone’s ongoing success -- with the added benefit of Happy Team Members!”

Congrats to Debra Montgomery who Union Bank Home Loans has added as managing director and Pacific Northwest region manager for its private mortgage division. She will be managing the team of private mortgage consultants who specialize in offering home lending products and services to the bank's private bank clients and prospects.