“Rob, I think we’re going to make it.” Thus began a note I received yesterday from the owner of a small retail lender in the mid-Atlantic region. “We’ve moved from 90% refi to 70% purchase, have deep roots in the community, and 80% of our business is high margin govie production that is profitable. Yes, we’ve trimmed some staff, and yes, we’ve had to sell some servicing, but the income from the remaining servicing helps us make ends meet.” That was a good note. I wasn’t going to bring up the “servicing income supporting production” issue, but I did reply that it was a good thing the company has roots in the community because one can bet Wells, Chase, and other banks are continually looking at cranking up FHA origination (risk/return, cost/benefit, reps and warrants, changing regulatory environment). And if large bank retail groups start offering a competitively-priced FHA product, you can bet that will impact volumes and margins elsewhere. Not saying they will, just that it’s a concern of small lenders.

IT and Vendor Updates

Does your IT team have a seat at the strategy table? In the new issue of STRATMOR Group’s Insights Report, CEO Lisa Springer tackles the relationship between IT and business in her article, “May IT be with You: Unleashing the Power of Business Level Agreements.” Springer provides data from a STRATMOR poll of mortgage IT leaders in which only 28 percent of IT executives (CIOs and CTOs) said they felt their organization viewed their team as the “greatest ally for driving change.” In this same poll, 69 percent said their organization “sometimes but not consistently” collaborated with IT to orchestrate business process improvement. Five percent said that their organization never collaborated with them at all.

“In most mortgage companies, IT is guided primarily by internal and external Service Level Agreements (SLAs) leaving out the business measures needed to give IT a voice in, and responsibility for, achieving enterprise business goals,” says Springer. “The business metrics used to measure business performance should be the same metrics on which IT’s success is measured, and STRATMOR supports the creation of Business Level Agreements (BLAs) in addition to traditional SLAs for IT projects to help make this happen.” Check out this article that also offers insights from two IT giants, STRATMOR Senior Partners Len Tichy and Michael Grad, and a second article from Dr. Matt Lind, “Aligning Back Office Compensation with Achieving a Superior Borrower Experience.” STRATMOR Insights Report

Built Technologies has partnered with First National Bank of Middle Tennessee to provide a digital management solution to its high-risk construction loans. “By utilizing Built’s collaborative cloud-based software, FNBMT customers will be able to collaborate with their loan officers, construction inspectors and builders in an online portal for faster draw requests and more transparency.”

LoanLogics has helped increase Planet Home Lending's correspondent division productivity by 300 percent. By using LoanLogics IDEA™ for indexing loans and LoanHD® platforms for loan reviews, Planet Home Lending has raised the division's monthly loan volume and reduced the time needed for loan reviews, without adding staff.

Stearns Lending LLC has selected ClosingCorp’s SmartFees as its rate and fee data solution. SmartFees provides more than 4,000 Stearns brokers with vendor-verified rate and fee data from thousands of service providers located throughout the nation. SmartFees integrates loan file information, transfer tax and recording data, service provider fees from more than 70,000 rate cards, and lender business rules and requirements into a single, seamless process and platform.

Cloudvirga has added a digital mortgage integration with Radian to deliver instant and accurate mortgage insurance (MI) rate quotes and streamline the ordering of MI certificates for lenders. “The advanced integration with Cloudvirga delivers Radian’s precise MI pricing in seconds, without the need for lenders to rekey data or leave Cloudvirga’s Consumer POS or Enterprise POS systems.”

Mountain West Financial has enabled a new LendingQB (LQB) feature providing a less time consuming and more efficient process for submitting loan scenarios to LPA. The Seamless LPAintegration removes the need to login to LPA directly to submit the scenario. All data input into the LQB loan file is transmitted seamlessly to LPA. Any changes to the data necessary for processing must be made within the loan file prior to submitting to LPA. In MWF’s LendingQB, linking mortgage liabilities to REO’s functionality is now available in BOLT.

The Regulatory Sandbox allows firms to test innovative products, services or business models in a live market environment, while ensuring that appropriate protections are in place. Since its inception, 'Innovate' has had over 1,200 applications and has supported more than 500 firms. Twenty-nine recent new companies were just accepted: Fineqia Limited, the U.K. subsidiary of Fineqia International with its blockchain based digital platform that enables companies to issue and administer debt and equity securities, including bonds backed by cryptoassets. Also added was Fractal, an Insights platform using distributed ledger and artificial intelligence technology to power SME financing by digitizing credit applications and connecting loan issuances to the underlying financial data and Meet Mia, a chatbot on Facebook Messenger that allows customers to buy and manage travel insurance. Group discounts and automated claims handling will also be available. For investors looking at how to participate in the innovation in fintech represented in this program, there are a range of stocks from small to large that are now accepted.

Capital Markets

The U.S. 10-year closed at 2.82% yesterday. Did the news of President Trump's former attorney Michael Cohen pleading guilty to eight criminal charges, including a violation of campaign finance laws, move rates? Perhaps. The reaction to the afternoon release of the latest FOMC Minutes, which noted that risks to GDP, unemployment, and inflation are balanced while trade, housing, and emerging markets pose downside risks, was largely muted. Many participants were of the belief that another rate hike will be appropriate "soon," causing the 2s10s spread to flatten to 22 bps, the lowest since 2007.

Of interest was a lengthy discussion on the global trade issue and the risks posed if not resolved. All participants pointed to ongoing trade disagreements and proposed trade measures as an important source of uncertainty and risks, as a large-scale and prolonged dispute over trade policies developing would cause adverse effects on business sentiment, investment spending, and employment. Wide-ranging tariff increases would also reduce the purchasing power of U.S. households. Further negative effects in such a scenario could include reductions in productivity and disruptions of supply chains, significantly weakening the housing sector.

Today is busy. We have already received the minutes from the ECB’s July 25-26 meeting. In the U.S. we had the release of initial claims for last week (-2k to 210k). Coming up are the FHFA’s release of its House Price Indexes for June, the preliminary Markit Manufacturing and Services PMIs for August, new home sales for July, and the Kansas City Fed’s Manufacturing Survey for August. And the 2018 Economic Symposium in Jackson Hole kicks off though it does not appear that policymakers from the European Central Bank will be taking part in the event. The Bank of Japan will only be represented by Deputy Governor Masazumi Wakatabe. Thursday begins with agency MBS prices unchanged from Wednesday’s close and the 10-year at 2.82%.

Lender Products and Training

Demand for short-term loans to finance home renovations has grown due to our nation’s aging housing stock, tight inventory and limited new construction. Verus Mortgage Capital recently added to its team of specialists to expand its focus on Fix and Flip and Bridge loan programs. Verus is a leading correspondent investor committed to helping lenders succeed in the non-QM market with expansive program offerings, including Investor Solutions and Residential loans – with interest-only options available on virtually all programs. Verus has purchased over $2.6 billion in expanded, non-QM loans and completed six rated securitizations. Email Jeff Schaefer today to learn more about non-QM opportunities.

In this purchase-heavy market, a steady stream of referrals means the difference between standing out as a top performer and being at the bottom of the pack. Real estate agents still hold the keys to the referral kingdom, but top agents may be hesitant to partner with an unfamiliar lender. According to Pipeline ROI, 77% of agents only have one lender they regularly partner with, so there’s room for new relationships…if you understand what agents truly want in a loan officer. Maxwell interviewed real estate agents across the country to get their perspective on what they value in a lender. Its new eBook, “Winning Agent Business,” reveals lucrative insights from agents themselves on how to earn their trust and build a lasting partnership. An exclusive to Rob Chrisman subscribers today (and a must-read for all lending professionals), Download your complimentary copy here.  

Caliber Home Loans, Inc. Correspondent Lending is hosting the first of two webinars today at 1PM CST for clients who want to hear about the new Elite Access program! Elite Access can provide borrowers with up to $3 million in funding with no Mortgage Insurance (MI) requirement. Elite Access provides an exciting opportunity to offer a financing solution to "just miss" jumbo borrowers. Please join us for this INTERACTIVE SESSION with Will Pendleton, SVP CPL Production, Margaret Chiavini & Thom Palmer, Regional Vice Presidents. To accommodate as many as possible, Caliber is hosting a second webinar on Friday at 11:00 AM CST. Register for tomorrow’s webinar here!

Employment and Personnel Moves

GSF Mortgage has experienced 28% production growth in the first two quarters of 2018 with their Direct Originator Partner Program. This program is for originators that work from home or in a small office setting, connecting directly with the corporate office and outside of the typical branch constraints. GSF covers the home and office overhead for the originator. Because of the low overhead, the pricing and service have been exceptional and is driving growth. GSF is hiring Direct Originator Partners in 34 states. If interested, please contact VP Retail Production Frank Papaleo.

Is it time for you to spread your wings a bit? Now is your opportunity to better yourself professionally and personally by becoming a producing branch manager in your market for Assurance Financial.  Make more money with the same amount of effort and enjoy a truly supportive and committed mortgage origination environment. We’ve recently opened 4 new branches, and we’re more committed than ever to see our company grow with great people and an expanding suite of make-sense product offerings that will help you build relationships with Realtors, builders, and borrowers. Come fly with the Home Loan Experts. Contact Paul Peters, CMB (225.239.7948). Assurance Financial is a growing full-service independent mortgage banker seeking dynamic producing branch managers and MLO teams throughout the South, Southeast, Southwest, East, and Midwest, U.S.

National MI is excited to share that it is growing and adding several Sales Advisor positions in varied markets. Responsibilities include promoting the sale of National MI products, services, and programs to lenders. The highly-talented individuals will also assist in sourcing new business and will manage the relationships of specific clients by serving as a customer advocate, educator, and loan issue problem-solver. Experience in client relationship management and training is imperative, coupled with strong research, process improvement, and presentation skills. National MI is a U.S.-based, private mortgage insurer enabling low down payment borrowers to realize homeownership and has several positions available in the following areas: Account Manager in Phoenix, Arizona, and Account Representative positions in New York/New Jersey, Nebraska, Minneapolis, and the Maryland/DC area. Candidates who are looking to work for a great company and an amazing management team, visit the website for complete job postings: National MI's careers page.

Jeff Juliane has been appointed Head of Capital Markets for Altisource Origination Solutions and now leads the organization’s overall capital markets strategy. Jeff led the divestiture of the Capital One mortgage portfolio of $30B in multiple trades, including the single largest capital markets trade in the last 10 years of $18B. He also established a hedge strategy for legacy Rep and Warranty risk that exceeded hurdle returns by 500%. Prior to Capital One, Jeff worked with Fannie Mae.