“Rob, are we heading back to loans with LTVs greater than 100%?” I doubt it, but certainly there are some high LTV programs out there, over and above down payment assistance programs. For example, and this is not an ad, but United Wholesale Mortgage gives borrowers 2%: "Borrower puts 1% down, UWM contributes 2% toward the down payment, giving them 3% equity at closing." And Quicken began offering a 1% program earlier this year. More down payment news below with FirstREX.

Vendors appealing to residential lenders are on the rise.  The OCC issued vendor management guidelines, followed by the FFIEC in 2015. As a result, the time has come for lenders & community banks to put their vendor management efforts to the test in regulatory audits. Not all vendors are created equal. While you have to perform due diligence on all vendors, and many experts say it's a sound practice to divvy them up into a few buckets to break them into groups based on the level of analysis required.

The first bucket should consist of critical vendors. These are vendors that could cause significant risk to the lender or bank by failing to meet expectations. Critical vendors also could have substantial effects on customers or have a major impact on lender operations. This group requires the greatest level of analysis because the impact can be so large. Many lenders create a basic evaluation checklist that consists of items including a business impact analysis, insurance verification, clear service level agreements and a signed contract. You'll also need to designate an employee to serve as the vendor relationship manager.

Next, once you separate critical vendors from the pack, identify those vendors who work with sensitive or confidential data. This group needs to have enough capital to remain a going concern, and have strong enough risk management practices and controls to make you comfortable. The level of regulatory scrutiny has increased here so if you don't know or haven't done this yet it is a good thing to do quickly and thoroughly to identify weak players. For your general bucket of vendors, following the evaluation checklist will probably also be enough to satisfy regulators. For vendors who work with sensitive or confidential data and those that are critical, you will need to analyze whether they are maintaining proper E&O and cybersecurity insurance, proof of regular third-party audits, review of financial statements, inquiring into compliance history and establishing ongoing relationship monitoring.

The third bucket of vendors to group together are those that are more general in nature and don't fall into the other categories. These should have a lower risk profile overall, so analysis on this group can be much higher level and faster in most cases. Far too often lenders and banks don't have an up-to-date complete inventory of current contracts, meaning many don't have a good handle on contract terms and conditions. Getting these records in order is a must so you can be confident contracts meet current regulatory, accounting and business requirements.

Tim Cox, Chief Strategy Officer with MQMR, writes, "Vendor management and CMS assessments are important topics for discussion at both the State and the Federal Level, and with Fannie, Freddie, and Ginnie. In a series of Supervisory Highlights, spanning over the last several years, the CFPB has reiterated the importance of robust compliance management systems. Rumor has it that several states have made vendor management a focus of their exams, including testing of the vendor management program to understand a lender's risk methodology, proof that ongoing reviews are being performed, and that vendor management isn't just a checkbox and background check, but rather a true risk assessment of the vendor. 

"Lenders need to ensure they've put a program in place, starting with tiering their vendors to understand the criticality and impact a vendor may have on the organization.  In our dealings with lenders, it's evident that most struggle on where to start, how to implement a comprehensive program, and perform ongoing monitoring.  With each vendor tier having multiple data points and documents to be collected, validated, and tracked, efficiency is absolutely critical.  This need for efficiency is moving lenders away from spreadsheets and to technology which provides a single system of record to manage risk tiering, due diligence, and all annual activities."

So what are vendors doing that lenders are interested in?

How about DTC customer satisfaction? Josh Friend, President of Insellerate, writes, "We have all seen 'Rocket Mortgage' and we now know where our industry is heading: to the 'Digital Mortgage Experience'. Who will sell these? More than likely someone hundreds, if not thousands, of miles away in a consumer direct call center. We see the continued growth in this channel as it now accounts for over half of all refinances, and 20% of the purchase market, and continues to grow. Our borrowers are asking for it so we will have to deliver it. How are we doing so far as an industry? How is your company doing? Find out by participating in InSellerate's 3^rd annual 'Speed to Contact' survey (click here). Or, you can view the past survey results here.

During the loan processing "Lendsnap automatically collects authoritative borrower qualifying documents for brokers and lenders. By linking to financial and payroll institutions, we securely deliver original W2s, pay stubs, bank statements, and full tax returns in minutes instead of days. Lendsnap is the only account linking solution to deliver actual bank statements instead of VODs based on third-party transactional data. Our lightweight solution works with your current process and keeps your portfolio completely liquid on the secondary market. Lendsnap, a Y Combinator funded company and a 'security-first company," have completed rigorous SOC I (formerly SSAE 16, SAS 70) auditing and hired hackers to test our defenses." (For more information, please contact VP of Business Development, Mike Romano.)

Secure Insight has been in discussions with several large mortgage lenders and warehouse banks about adopting the SSI agent registration number as an industry standard identifier for settlement agents. The company's database, which is expected to include nearly all active title and settlement professionals including attorneys throughout the country by year-end, was the first live repository to include unique identification numbers covering all the different groups who manage this function nationwide. SSI president Andrew Liput said that he hopes to begin to feed all agent data warehoused in their system, including these Identifiers, to lenders through LOs platforms on a transaction basis beginning 1st Quarter 2017.

LendingQB, a provider of mortgage loan origination technology solutions, announced the successful implementation of its web-based loan origination system for Inlanta Mortgage, Inc. "The Brookfield, Wisconsin-based mortgage lender attributed its smooth and rapid implementation experience to LendingQB's comprehensive deployment process and a focused effort by both Inlanta's and LendingQB's staff." (Inlanta Mortgage employs over 250 mortgage professionals and has gained recognition as the top FHA and USDA lender in the state of Wisconsin.)

Guild Mortgage, announced an agreement with FirstREX for introducing the REX HomeBuyer program to Guild's California, Washington and Oregon borrowers. Under the program, FirstREX contributes up to half of a 20 percent down payment in combination with a Guild Mortgage loan to empower more people to buy the home they really want.

First Cal and FirstREX also inked a deal. The REX Homebuyer program, which FirstREX is now rolling out for the first time in combination with conventional conforming and super-conforming loans, is initially available in California and Washington, with more states to follow. The REX HomeBuyer program contributes up to half of the down payment on a home purchase. The combination of REX HomeBuyer investment with a First Cal mortgage loan means a buyer can borrow less, make a smaller monthly payment and avoid paying the mortgage insurance required if they had put down less than 20 percent.

MISMO announced the release of its new HMDA Implementation Toolkit. Designed to help companies implement the new CFPB HMDA rules, the Toolkit offers a comprehensive collection of guidance, mapping documents and other information about the rule and the use of MISMO in meeting rule requirements.

Aspire Financial signed with Alight to provide real-time reporting, analysis and continuous reforecasting. Alight gives management teams the ability to see the impact of every decision, before they make it. "We see Alight as the answer to our financial reporting needs as it integrates all our existing systems to give us a real-time forecasting solution," said Jason Spooner, COO of Aspire Financial.

Turning to the markets, we had a bit of a rally/price improvement Friday as retail sales and producer price index data for July came out well below expectations. If one looks at the news from the last few weeks, the job market is healthy but production, spending, and business fixed investment are weak. Still, jobs and housing drive the economy... Fed rate hike odds continue to drop: the odds of a September hike are now 6% and only 40% in December.

We have a new helping of economic releases this week. We've already had August Empire Manufacturing (sinking below 0 to -4.21), coming up is some housing news - August's NAHB Housing Market Index. Tomorrow we'll have the July Housing Starts and Building Permits numbers, July CPI and Core CPI, and July Industrial Production and Capacity Utilization. On Hump Day we have the MBA's application figures for last week but also the release of the Federal Open Market Committee minutes from its last meeting. Thursday we have Initial Jobless Claims, August Philly Fed, and July Leading Indicators. There is zip on Friday.

For numbers, on Friday the 10-year note price rallied by .5 (the yield ended the week at 1.51%) the 5-year note improved .250, but current coupon MBS prices were only up about .125. This morning the 10-year is at 1.53% with agency MBS prices roughly unchanged.

Jobs and Announcements

In job news, Chief Financial Officers should take note that Cascade Financial, an independent mortgage banker located in Gilbert, AZ, is looking for an experienced top tier CFO to its executive team. Originating & servicing loans in 35 states, Cascade has recently been acquired by a private equity group who is positioning the company for nationwide strategic growth. We are willing to relocate someone who would be a good fit to our team and who wants to work with a motivated group building and leading a high-performance finance organization. Someone with the skills to integrate loan-level forecasting from credit model into corporate model, develop detailed long term business forecasts, implement best practices in measuring and reporting monthly financial performance, lead negotiations & relationships with key lending counterparties, and lead securitization process and reporting and discussions with ABS investors. Experience working in both small and large finance organizations is a plus. E-mail resumes to Cody Pearce, President.

"Are you a business owner and finding yourself focused more on compliance, platform, technology and HR considerations than the activities that will grow your business and income? AnnieMac Home Mortgage is actively looking for M&A opportunities for well-run firms with entrepreneurial leaders looking to reduce risk, increase net worth, provide job stability for their Operations teams and allow their originators to grow their book of business. In today's burdensome regulatory environment your capital is more at risk than you might think by any number of regulators that now govern our industry. AnnieMac's origination and servicing platform is specifically designed to allow the true entrepreneur and their teams to make more money with less risk while running your business the way you always have. Find out more about partnering with one of America's fastest growing privately held mortgage banks by contacting SVP of Business Development Paul Zinn."

IRS tax transcripts are a hot topic these days. NCS, founded in 1978 and a leader in risk mitigation solutions, had the distinction of being the first organization in 1994 to offer IRS tax transcript solutions (4506-T) nationwide. On July 15^th the IRS implemented a "Re-verification" program for all participants using the Income Verification Express Service, (IVES), and 100% of NCS' direct clients were compliant and accessing TRV® Services throughout the implementation period. NCS offers advanced verification products and services to the financial industry with the customer service mantra of, "beyond the expected." (NCS will be attending The Mortgage Collaborative conference in Denver coming up 8/21-8/22. Reach out to Kimberlee Foster or Casey Hughes to secure a meeting or learn more about NCS and its full suite of product offerings.)