Now that we’re more than halfway through the third quarter, how’s it shaping up for lenders? Yes, the industry has reduced its ranks, therefore cutting costs. In terms of production, with $1.6 trillion expected this year, we are seeing fewer refis (but they’re still out there, and account for 39% of apps) and more purchase biz. But the Mortgage Bankers Association trimmed its third-quarter outlook for total business slightly, and now is expected to hit $443 billion this quarter, $370 billion in the 4th quarter, and $328 billion in the 1st quarter of 2019. The trend is not our friend.

Upcoming Events and Training

Do you need to accelerate your digital mortgage journey? Register for an exclusive webinar presented by the CMBA Mortgage Technology & Marketing on August 22nd, to discover how to find the ‘E-Mortgage’.

Register for the MWF webinar, Thursday, August 23rd, to learn about the Energy Efficient Mortgage.

On September 12th-14th, join over 500 REALTORS® at RANM Fall Conference. Register for the 2018 New Mexico Housing Summit.

The MMBBA has a variety of events scheduled for the month of October. Events include its Mid-Atlantic Lender Conference, Baltimore County Executive Political Debate, MBA’s Annual Convention & EXPO, GBBR Realtor Fair and more.

If you are interested in supply, demand, and pro-cyclical forces impacting housing markets and finance, register for the 7th Annual AEI-CRN Conference on Housing Markets and Finance. This free event is scheduled for October 24th and 25th at AEI in Washington, DC.

Join Jerry Godfrey, WEestern Regional Manager, Sierra Pacific Mortgage for its hosted Renovations Loans Training/Presentation September 5th from 9-11AM in the River City Ballroom at The Embassy Suites Riverfront in Old Town Sacramento. The training is free and welcomes all Mortgage and Real Estate professionals. Anyone interested can contact Jerry (916-932-1753).

On Saturday, October 20, 2018 more than 1,500 independent mortgage brokers, loan originators and processors will join at the AIME Fuse 2018 National Conference to learn from industry experts about how they can access the best technology, originate more loans each month and become a marketing expert for their own business. AIME Fuse will unite the nation’s most passionate mortgage professionals around a singular focus: to celebrate and enhance the value of independent mortgage brokers. This is the inaugural national event for the Association of Independent Mortgage Experts (AIME) and will be held at Bellagio Las Vegas. Use code FUSEEARLY18 to register for only $75 ($125 value) until August 31st. Register for AIME Fuse 2018 here.

Chenoa

Saturday this commentary included Fannie’s announcement regarding funding down payments and approving programs, which in turn led to a reader’s letter regarding Chenoa, its pricing structure and profit margins, and role in the industry.

The reader’s thoughts prompted the president of Chenoa, Rich Ferguson, to send, “Chenoa Fund™ is a down payment assistance program offered by CBC Mortgage Agency, a federally chartered, public-purpose driven, governmental entity with a mission to increase affordable and sustainable homeownership opportunities for credit-worthy individuals who lack down payment funds. All revenues generated by CBCMA inure to the benefit of the Cedar Band of Paiutes, the sole owner of the agency. Assistance is provided on both conventional and FHA insured loans. CBCMA is not approved by any Agency, but it is committed to ensuring that its second mortgages are Agency compliant and that the borrowers it assists perform well.

“To this end, CBCMA does the following. All loans purchased by CBCMA undergo a rigorous credit, underwriting, calculations, and legal review of all aspects of the manufacturing process of each loan by an independent 3rd party. All borrowers receiving assistance from Chenoa Fund receive 12 months of post purchase education and counseling from Hope Loan Port. CBCMA created the CRA note exchange, an innovative and effective way for any government entity to obtain capital to provide compliant, down payment assistance.

“For more a more complete treatment regarding the issues raised in a recent blog, click here. We thank our lending partners across the nation who join CBCMA to make the dream of homeownership possible for credit-worthy households who would otherwise remain unserved.  With your continued support, CBCMA will work to make down payment assistance more affordable and positively contribute to our industry.”

Capital Markets

Sellers of loans to the GSEs, such as Fannie Mae and Freddie Mac, report that they are buying differently, taking on fewer loans than they otherwise would have expected to. Looking at capital markets in general, in the loan activity they're processing, there's a trend toward interest rate buyers becoming savvier in putting together their offers. Previously, there was very little negotiation on price for properties, and details such as repair costs weren't a point of focus. Now, more mortgages are subject to a back-and-forth negotiation regarding price, and even home repair and other minor details are also a sticking point. In a rising interest rate environment, if indeed we are in one, that trend isn't likely to slow any time soon – fixed income securities tend to lose value.

There's also, with some investors, little appetite to expand the "credit box" and take on more risk. Even with a trend toward lighter regulation, measures put in place after the financial crisis drove lenders to be much more conservative in terms of how they deemed creditworthiness. That position is going to continue for the foreseeable future. Capital markets investors, who like regulation, are watching the significant consolidation among independent mortgage providers, which could impact consumers' ability to qualify for a mortgage. Supply and demand!

Like it or not, President Trump has expressed criticism of Fed tightening and foreign exchange policies on several occasions since becoming president. But markets have noticed his language is becoming more pointed and direct. In the Reuters article earlier this week Trump said he “wasn’t thrilled” with Powell’s rate hikes and urged the Fed to “be more accommodating.” Trump also repeated his accusations that the EU and China are manipulating their currencies). The U.S. dollar suffered its largest one-day dip in a month.

Trump’s language probably won’t have much bearing on the Fed’s actions and it seems like we’re a long way from Trump making outright staffing threats. To the extent markets begin worrying about Fed independence, this language from the White House will undermine broader market confidence.

For bonds, and therefore interest rates, U.S. Treasuries ended Tuesday on a lower note. You’d expect to see a bounce from Monday’s unexplained bond rally/rate drop, and the 10-year went out yielding 2.84%. Who knows more about short-term rates than the Federal Reserve, and Dallas Fed President Robert Kaplan said he expects neutral rates to be reached after three or four more rate hikes.

This morning, besides the legal headline news from the Trump Administration, we’ve had the MBA’s read on last week’s applications (+4.2%). Coming out after I send this commentary out will be July Existing Home Sales (expect a slight uptick) and then at 2PM ET the August Federal Open Market Committee meeting minutes will be distributed. For now, we have the 10-year yielding 2.82% and agency MBS prices better a couple ticks (32nds).

Lender Products and Services

“Does your pricing seem a little bit too high? Are you losing deals over rates? Is your ability to earn money limited by your company's high pricing? If you answered yes to any of these, chances are your company has too much padding or extra margin built into their rates, costing you money, deals, and possibly even referral relationships! Even worse, some companies build even more padding into your rates when their business slows down to keep their ‘high-profit appetite’ fed. Now there's a way to see 'behind the curtain' to make sure you’re getting the best deal possible. Check out this "Pricing Lie Detector" - a free tool that shows you in 10 seconds how much money you may be leaving on the table due to over-inflated rate sheets from your company.”

Do you use LoanCare as your subservicer? Richey May & Co., a public accounting firm recognized as the leader in providing audit, tax, compliance and oversight services within the industry, will once again be conducting a review over LoanCare in early September to assist companies with their monitoring and oversight responsibilities. Richey May’s oversight report is over 120 pages and includes interviews with all servicing departments as well as compliance, internal audit, QC, IT and Vendor Management. They also offer loan-level testing specific to a client’s portfolio in numerous and varied servicing areas. To learn more about Richey May’s comprehensive oversight review program and the upcoming review over LoanCare, or to participate in the oversight reviews already conducted earlier this year over Dovenmuehle and Cenlar, please contact Kevin Lohry.

Hard to believe it’s already been two months since our friends at Floify, the mortgage industry’s leading point-of-sale system, rolled out their latest integration with eSignature and disclosure partner, DocMagic. Since the rollout, a lot has changed! Initially, Floify’s DocMagic integration was only available to enterprise lenders who also utilized a Floify LOS connection to manage their loan processes. Until now… Floify recently made several tweaks that now allow single LOs and small teams to take advantage of the power of the DocMagic-Floify combo! And their new Disclosure AutoSend feature for enterprise lenders is sure to speed up the origination process even more. So now, no matter the size of your mortgage operation, your borrowers can enjoy eSignature functionality directly within the same end-to-end point-of-sale they know and love. To learn more about Floify’s suite of integrations and how they can boost your productivity, request a live demo.

HomeScout®-HBM’s mission is to help lenders be more successful in a volatile purchase market by making the mortgage and home buying process a better experience for them and their customers.  For over 22 years they have helped thousands of loan officers by providing proven technology solutions that introduces buyers to real estate search, and the ability to monitor their search activities and nurture those relationships, from the beginning of the home buying process to closing. Building buyer retention and conversion through online engagement is a cost-effective method to stay one step ahead of the challenges that lenders, both large and small, are experiencing.HomeScout-HBM provides business development and technology solutions that attract and help keep the top-producing talent needed to succeed in today’s real estate lending and mortgage origination environment. Find out more by contacting them HERE  and scheduling a demo or give them a call at 952-831-0623.  

Employment, Business Opportunities, Promotions

Are you looking to take the next step in your sales career with a national Top 20 wholesale lender? If so, Home Point Financial may be the perfect fit for you. Home Point strives to give its Account Executives every edge they need to perform and succeed - like fast loan closings, diverse loan products, dedicated operations support and cutting-edge technology. Strong compensation plans, full benefits…are you ready for a position with a real future? To view the details, click here. Contact Melissa Graves (704.710.8238).

“A nationwide appraisal management company with its own proprietary technology is looking to acquire a partial interest in lender owned or in-house managed appraisal services. We offer a completely white labeled end to end service including all quality control, assignment and payment to the appraiser.” Please email me to forward your note.

For the past several years, Cornerstone Home Lending has commissioned the services of Energage, a national Culture Tech specialty company that helps large companies build stronger cultures through an Employee-Centric approach. On an annual basis Cornerstone uses Energage’s vast experience to survey and assess the feelings and solicit feedback from Cornerstone’s 1,600 team members throughout the country. Per Cornerstone’s CEO Marc Laird, “We have a key Core Conviction to encourage Team Member input and ideas because WE CARE about what our Team Members think, and we value their input. These annual surveys provide us an in-depth look from our team members’ perspectives on what we must do to make our company even better.” The results: Cornerstone is consistently recognized as a TOP WORKPLACE year after year in its many market locations. Hats off to Cornerstone for investing the money and the time to listen to their people! Contact Tom Lott about Cornerstone.

Congratulations to Stan Kuczynski who has joined Alta Mortgage Bankers as its Midwest Regional Sales manager. Located in Chicago, he brings over 28 years' experience of mortgage sales and will be the Regional Sales Manager for the Midwest responsible for managing all AEs and sales efforts in the Midwest States of Minnesota, Wisconsin, Michigan, Indiana, Illinois & Ohio.