“Last night I was a hero! I rescued some beer that was trapped in a bottle.” All of our lives are changing, and thank you to Lydia O. for sending along, “Six Key Takeaways From Pandemic Data on American Households.” (“From mortgages to mental health…”) People are out “protesting in person against voting in person.” Others accuse President Trump of using government email and government mailing lists to campaign for office, in this instance using HUD’s distribution list for an opinion piece. Loan officers are talking about a recent email from the NMLS. In a week… “the State Regulatory Registry (SRR), which manages NMLS on behalf of state agencies, will conduct a survey to obtain input from current, state-licensed mortgage loan originators (MLOs). Through this survey, which will be open for four weeks, SRR will gather information from state licensed MLOs regarding their roles, responsibilities, and job functions, and will use the information to update the National Test.” Just be thankful that you don’t work for a utility: Due to an aging power grid, climate change, and shareholder budget issues, the United States now claims the title of having more power outages than any other developed country.

Lender and Broker Products and Events

“Home Point Financial is one of the fastest-growing lenders in America, and the company is quick to point out that its rapidly increasing numbers are a byproduct of all the success that its wholesale and correspondent partners are achieving, themselves. Home Point’s partners aren’t bashful about their affinity for the nation’s second-largest wholesale lender, either. From Nick Hunter, President & COO of River City Mortgage: ‘[Home Point] is not strictly a 9-to-5. I’ll get emails from our rep late at night sometimes. I know that’s not customary and it’s not necessarily expected, but you feel like they care about us as an account, and also our customers. It really does feel like a partnership, that we’re aligned in the same direction and walking the same path together.’ To learn more about Home Point and to become a TPO partner, click here.”

“Technology is wonderful, but all the automation, AI, and other systems cannot account for the person to person nature of the mortgage transaction. Eventually, someone will be engaging with the borrowers individually. Mortgage Sentinel leverages secret shopping to protect lenders from the inherent risks that these interactions create. Through our proprietary reporting and analytics, we help originators grow their sales revenue, improve their training, and reduce compliance risk. Learn more at www.mortgagesentinel.net. Or, see us live at #NEXTSUMMER20’s virtual Technology Showcase on August 25.”

For the third consecutive year, Total Expert has been named to the elite Inc. 500 list of fastest-growing private companies in America. Total Expert’s end-to-end solution combines intelligent automation with human connection, empowering mortgage lenders to maximize production and create customer-for-life relationships. The fintech company behind the first fully integrated experience platform purpose-built for mortgage lenders also claimed the spot for 3rd fastest-growing company in their home state of Minnesota, and one of the top 40 fastest-growing software companies in the nation. Read the full announcement here.  

Future-proof your business. Learn what it takes to be able to respond to market conditions, regulatory changes, and rising consumer expectations with swift action. Forward, Blend’s virtual summit, brings together industry leaders and Blend executives and partners to unpack tactics lenders can use to master digital agility. Reserve your spot at the September 22-23 summit.

XINNIX is seeing amazing year-to-date-results across their suite of Performance Programs for both experienced loan officers and new mortgage professionals. For months, we’ve been talking about XINNIX’s New Talent Solutions like the award-winning ORIGINATOR Program for new retail loan officers and SOAR, which builds new mortgage operations professionals in as little as 10 days. Year-to-date, ORIGINATOR students are averaging 5.4 applications in their first 30 days of business. Even in today’s high-volume market, experienced loan officers are proving they can still be more productive. Year-to-date, XINNIX EDGE students are seeing an average 56% increase in applications while IGNITE students have seen an average 353% increase in “face-to-face" meetings (even while working from home). Schedule a call today with a XINNIX Account Executive for more information on how your team could see results like these. 

KBW came out with analysis of recent results and predictions for several players in the private mortgage insurance business as we move into through the third quarter of 2020. Although much of this information has already been mentioned in this Commentary, it is good to hear KBW’s analysts discuss the news.

Radian’s June delinquency metrics saw a higher default-to-claim rate assumption on new defaults in Q2, which caused an earnings miss. This was due to a generally more conservative approach versus the other MIs which used lower default-to-claim rates versus their pre-COVID assumptions. Management reminded investors there is plenty of judgment that goes into the analysis. The company also added that the credit outcomes through this cycle should be very similar for all the MIs given the legacy books are so small now, so the bulk of the industry's insured portfolios are fairly similar vintages. Lastly, while there have been analogies made between COVID and natural disasters, the company reasoned that the broader economic impact from COVID is likely to be much longer in duration. Higher incurred losses also reduced the profit commission contribution to net earned premiums.

MGIC reported a miss driven by higher loss provision. Cumulative loss expectations remain roughly unchanged, though the market sentiment on credit names still appears uncertain. The July delinquency rate ticked down from June. MGIC used a 6.6 percent default-to-claim rate on new notices, down from 9.0 percent last quarter. Management explained the use of a lower claim rate assumption as attributing some benefit to borrower financial positions from being able to defer payments for 12 months via the forbearance option. 67 percent of the delinquency inventory at quarter-end and 80 percent of the new notices during 2Q were forbearance-driven. Absent the forbearance option, management noted the assumed claim rate would have been higher.

NMI Holdings operating beat was driven by lower credit losses and lower operating expenses. PMIERs excess capital jumped to $609 million from $158 million last quarter, benefiting from the equity raise and new debt during 2Q, while an ILN transaction post-quarter-end should increase that further. The delinquency rate rose from 0.38 percent at March 31 to 2.90 percent at June 30 and again to 3.78 percent at July 31. Forbearance-driven delinquencies comprised 87 percent of the delinquent inventory in June. Because of the interpretation of two missed payments, NMIH's July 31 data corresponds to June 30 data from the other MIs. Given that a couple pf other MIs have also reported July 31 delinquency rates that declined slightly from June 30 levels, NMIH's delinquent inventory should improve slightly in August. The company used a 7 percent default-to-claim rate assumption on new defaults in 2Q, which is lower than pre-COVID because of their expectation that forbearance, repayment modification, and other assistance programs will allow borrowers to avoid foreclosures and ultimately lead to higher cure rates. Management expects to increase the reserve for forbearance-driven defaults as they age, though likely not to the same extent as pre-COVID defaults. It appears all the MIs are still fine-tuning their approach to this subject.

Essent missed earnings expectations, driven by higher loss provision, partially offset by higher net earned premiums, higher other revenue, and lower operating expenses. PMIERs excess capital dipped to $1.1 billion (77 percent cushion) from $1.2 billion (9 percent cushion). Capital levels benefited from the June equity raise. Essent's IIF growth compares to the aggregate of the 5 MIs to report so far of +7 percent quarter over quarter annualized and +9 percent year over year. The average premium margin ticked down slightly. The company maintained its quarterly dividend, which should trigger a fairly neutral reaction given the broad range of expectations on provisioning for loans in forbearance. Currently, management is not planning to increase reserves for each forbearance-driven delinquencies simply because they age from the 2-3-month bucket to 4-6 months, etc.

Arch MI released its quarterly Housing and Mortgage Market Review report, which examines why housing remains a bright spot amid the uncertain economy as COVID-19 is fueling demand for homes and price growth. Dr. Ralph DeFranco, the Global Chief Economist at Arch Capital Services Mortgage Group, explains in the report why housing and market data during this economic recession is different from the 2008 financial crisis. With low inventory and record low mortgage rates, consumers are flooding the housing market amid the pandemic, which could keep home price growth positive for the year.

Per Dr. DeFranco, the pandemic is boosting housing demand for homes with additional room for home offices, gyms, and remote learning. Increasingly, buyers are looking for primary or second homes located outside big cities, but still within driving distance of their workplaces. They are leveraging historically low mortgage rates to buy properties with more indoor and outdoor space. 2020 began with a large housing shortage, pushing home prices up in all 50 states over the past year, with the fastest growth occurring in Idaho, Arizona, Montana, New Mexico, and Wyoming. The slowest growth rate in home prices occurred in Hawaii, Illinois, North Dakota, Alaska, and Iowa. 

Capital Markets

We received a decent bit of “good” news yesterday, though MBS and Treasuries spent the trading day retracing some of Friday’s pullback rather than actually paying attention to the news. Actually, I’m not so sure the news was so good, but everything is relative in 2020, so I’m all about silver linings. Domestically, stimulus talks continued in Washington, as House Speaker Pelosi called members back from August recess, but agreement still appears a September hope. The Trump administration will tighten restrictions on Huawei and will prevent it from obtaining semiconductors without a special license, as well as restricting another 38 of its affiliates in 21 countries from accessing commercially available chips in an effort to limit adoption of the company's 5G tech. Despite Washington’s decision, and the cancellation of the August 15 trade meeting between U.S. and Chinese officials due to scheduling conflicts with no new date set, White House trade advisor Peter Navarro said the China trade deal is on track during a CNBC interview.

As far as economic releases went, we had a few after the release of yesterday’s commentary. The August NAHB Housing Market Index came in well above expectations, and was also above July’s reading. Unfortunately, the August Empire State Manufacturing Survey, which was already expected to drop from July, declined well beyond expectations. The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 23 bps to 7.21 percent of servicers’ portfolio volume as of August 9, 2020. According to MBA’s estimate, 3.6 million homeowners are in forbearance plans. What’s the opposite of a silver lining? A lead one? Federal Housing Administration mortgages, the affordable path to homeownership for many first-time buyers, minorities, and low-income Americans, now have the highest delinquency rate in at least four decades.

Today’s economic calendar is just about done and dusted. We’ve had July housing starts (+22.6 percent) and building permits (+18.8 percent). Later this morning brings Redbook same store sales for the week ending Aug 15. The Desk is scheduled to conduct just two MBS FedTrade operations, the only day with two operations on the current schedule, starting with $2.821 billion UMBS30 2 percent and 2.5 percent followed by $766 million UMBS15 2 percent and 2.5 percent. We begin the day with Agency MBS prices up/better a few 32nds and the 10-year yielding .68 percent, unchanged from yesterday’s closing despite the powerful housing numbers.

Employment and Transitions

“Newfi Wholesale is looking to expand our sales team that can offer Fully Delegated Jumbo, Non-QM, Agency, Government both FHA and VA, loan programs. Newfi Wholesale is seeking skilled Wholesale Regional Account Executives for established territories in select geographic areas which are San Francisco Bay Area (East Bay, South Bay) and LA/Ventura County, CA. Newfi Lending is reshaping the mortgage experience through a combination of proprietary technology and innovative product offerings. Our headquarters are located in Emeryville, CA. We are utilizing virtual interviews and onboarding processes and have successfully hired new Team Members. It is an incredible time to join a company with passion for growth and culture. Contact Steve Abreu with resumes or for more information and visit our website.”

Thrive Mortgage is expanding again while also continuing to smash production records and closing speeds. Adding to its high-level production talent, Thrive is pleased to announce the additions of Ben Hawkins, Branch Manager in Wilmington, NC, and Steve Hebeisen, Branch Manager in Shreveport, LA. Both Ben and Steve are bringing extensive industry expertise as well as top-performing teams to Thrive. “The Operational Support my team and I receive at Thrive is outstanding!” stated Hawkins. “There is a high degree of care and concern for each client we serve, and it comes through in everything we do.” Hebeisen added, “Making a transition to a new organization is always daunting, much less during our current environment. But the folks at Thrive made it more seamless than anything I’ve ever experienced.” If you’d like to learn more about available growth opportunities at Thrive, please visit join.thrivemortgage.com or reach out to recruiting@thrivemortgage.com.

Embrace Home Loans, a top-ranked national mortgage lender, is actively recruiting loan officers, underwriters, and loan processors to meet the growing demand for its mortgage products. Embrace has seen its production increase 100 percent so far this year. Embrace is hiring in three origination channels. In Direct-to-consumer, Embrace is hiring mortgage loan officers and mortgage loan associates to add to its current team in Middletown, RI, the company’s headquarters. In the Financial Institutions Group, Embrace is adding more loan officers to its partnership program for banks and financial institutions. In its Retail channel, Embrace is aggressively hiring retail loan officers in its current branch footprint along the East Coast. The company is also considering strategic growth by opening branches in new markets along the East Coast. In addition, Embrace is seeking branch-based processors, remote underwriters, and closers to be located in Middletown. Visit Embrace’s Careers Page to learn more.  

Congratulations to Jim Wilson who was recently appointed President & CEO of Northeast Home Loan to oversee all aspects of Northeast Home Loans mortgage banking activity, a wholly owned subsidiary of Passumpsic Bank headquartered in Vermont.