Life is full of decisions. One space or two after a period in a sentence? Move to a state with no state income tax, or stay put? Wells Fargo is no longer the largest bank in the U.S. based on workforce, and I imagine trimming overhead was a conscious decision on Wells’ part. If you’re in the wholesale or correspondent channel, is there enough profit margin left to beef up your compliance department or to set aside money for potential liabilities and buybacks in the future? Or do you decide to make other moves? Fiscal Year (FY) 2022 funding for Rural Development’s Single-Family Housing Guaranteed Loan Program is available. The funding is authorized by H.R. 5305 the “Extending Government Funding and Delivering Emergency Assistance Act” of FY 2022. (Today’s audio version of the commentary is available here. This week’s is sponsored Candor Technology, helping underwriters and company improve underwriting effectiveness.)

Services 

What is Enterprise Hedge Optimization? Remember illiquidity in the capital markets initially caused by COVID 19 during Q1 & Q2 2021? Rising inflation, market volatility and recent rise in interest rates is bringing back bad memories for some. Mortgage Capital Management’s (MCM) client-partners, however, avoided “aggregator risk” by acquiring and/or leveraging Agency Securitization resources and servicing capabilities. Since many IMBs lack the portfolio to counteract the changes of mortgage servicing rights, MCM has refined its core offerings, technology, and service to include servicing hedging and valuation. Whether you plan to hold servicing for the long haul or sell servicing rights in the not-too-distant future, we can set our hedge parameters around your desires and coverage needs. Heading to the MBA Convention next week? Compare before you buy! Contact sales@mortcap.com or call 858.483.4404, Ext. 220.

The Myth of the single ecosystem. A number of LOS vendors are trying to convince the marketplace they have one system for the entire loan manufacturing process. The crux of the issue is, if these systems were acquired, they were not developed organically with a single development methodology model in mind. As a result, while billing may be easier, the idea that these disparate solutions will all seamlessly interchange with no issues is something that lenders need to consider when looking at all in vs. best of breed. It may not be much different but there is more at stake for each of the individual companies to perform. Having an open SQL database with strong APIs and good integration partners may yield the same or better results. Contact SVP John McCrea or visit MortgageFlex at booth 503 next week in San Diego to learn more.

“Do you need to sell loans your company no longer needs or desires to hold? NASB Whole Loan Trading works with mortgage lenders and sellers of all sizes across the country to facilitate whole loan trades, whether it’s a reaction to historic volume from 2020 or adjusting to the new Government Sponsored Enterprise (GSE) purchase caps, we can help. NASB Whole Loan Trading has a dedicated loan purchasing team which provides a quick turnaround along with competitive pricing. Regardless of if it’s “scratch and dent” seasoned or non-seasoned loans in your portfolio, we buy both scenarios. NASB purchases* in bulk or even potentially individual loans. We buy residential property loans (1-4 units), mortgage loans in 1st lien position (excluding HELOCs), and loans underwritten to Agency standards but are non-salable. Contact NASB Whole Loan Trading Today! *Purchase approval subject to NASB’s purchase loan due diligence review. NMLS ID: 400039, EHL, & Member FDIC.”

Western Alliance Bank’s Specialized Mortgage Services Group continues to be solution-oriented in changing markets in providing various financing vehicles. Warehouse Lending finances a wide spectrum of loan types including Agency, FHA/VA/USDA, Jumbo and Non-QM, funds until 2:30pm PST and works with borrowers to customize terms to meet investor and execution needs. MSR financing provides lines of credit that leverage Fannie Mae, Freddie Mac and Ginnie Mae collateral. Lines can be annual revolvers or longer-term interest only draw periods followed by term finance. Flexible structures provide solutions to accommodate originators’ MSR retention strategy. Additionally, the Specialized Mortgage Services Group provides Note Financing, Treasury Management Services, Working Capital Lines and Commercial Real Estate solutions across the country. Member FDIC.

How to win the 2022 “purchase war”: Purchase loans will be 75% of the market next year (vs. 47% this year), and there are only 4.79 million purchase loans to go around. To win, you must convert more pre-approved buyers. ComeHome.com by HouseCanary, a national real estate brokerage, makes your firm, and your salesforce, the most modern home search and homebuyer engagement player in the game. Here’s How! Going to MBA - stop by #429. hello@housecanary.com

Every lender knows they should be collecting upfront fees because it gives the borrower an incentive to close the deal. But unfortunately, most lenders have a pretty terrible process. Some have loan officers complete a form with the borrower's credit card number (until the regulators find out). Others still have borrowers write checks that are manually deposited (come on, people... it's 2021). Eliminate all that headache with Fee Chaser by LenderLogix. Fee Chaser lives in your LOS, and when it's time to collect a fee, the borrower gets a text message where they can securely pay on their device. Once complete, receipts are automatically uploaded to the LOS. Up and running in weeks, immediate ROI, no PCI headaches. So head over to LenderLogix and put your fee collection on autopilot today.

Looking for an exceptional VA/FHA purchase or refi experience with a winning price? As the #1 VA and FHA Lender*, the Freedom Mortgage Wholesale Division  is proud to offer 2 business day Underwriting on ALL VA and FHA transactions, and a (.250) LLPA Incentive for all VA Purchases. Plus, offer more buying power for eligible VA borrowersFor eligible veterans, service members, and survivors with full entitlement who are borrowing over $144,000 on a purchase or cash-out refinance, there is no down payment requirement. Maximum loan amount for such loans is subject to credit approval. For IRRRLs, VA will continue to guaranty 25% of the loan amount without regard to the Veteran’s available entitlement and/or county loan limits.

Attending MBA Annual next week? Maxwell will be showcasing its suite of mortgage solutions and the team would love to meet you. Maxwell provides local lenders solutions that address the entire mortgage process, including point of sale, loan fulfillment, diligence, and now capital markets. The company employs a team of experienced veterans that understand industry challenges and partner with forward-looking lenders to innovate solutions. Lenders can utilize these solutions alone, or as a powerful mortgage optimization platform. Maxwell will be demoing its solutions at MBA Annual October 17-20. Stop by booth #715 (directly across from the Mortgage Bankers Association booth) to meet the Maxwell team in person, or click here to learn more about Maxwell’s solutions.

“With the non-QM market making a significant comeback this year, now is the time to leverage LoanScorecard’s decisioning technology. LoanScorecard’s automated underwriting system allows lenders to take the inconsistencies out of the underwriting process and make loan decisions quickly and confidently. Our powerful automated underwriting engine enables you to efficiently underwrite loan programs to your specific guidelines while mitigating fair lending risk and ensuring accuracy. Visit us at Booth 624 next week at MBA Annual and learn more!”

Stack ranking a mortgage company based upon the number of MLOs and the volume they produced that left that company, and all the MLO's and their volume who joined that company against all other mortgage companies for any period of time, would be valuable in determining who's growing and who's shrinking. Ingenius is a data analytics company for mortgage and real estate that blends sixteen different sources of data in a patent pending process that filters, blends and sequences the data, making it very granular and very accurate. In addition, Ingenius integrates into mortgage CRM's such as Total Expert's Experience platform allowing you to act off those analytics and automate your recruiting marketing. Reach out to Ingenious CEO Jeff Walton to schedule a meeting at the MBA annual in San Diego.

Processing, Policy, and Underwriting Changes

PennyMac updated the Delete Option for portal users, view Announcement 21-74 for details.

Effective October 1, the 90-day Best Effort Lock Term was no longer be eligible with Caliber Home Loans Correspondent.

Flagstar Bank Conventional Underwriting Guidelines were updated with changes to Property Assessed Clean Energy Loans (PACE) and requirements for borrowers with less than 25% ownership in a business, effective immediately.

Upcoming changes to Early Payment Default and suspense fees are covered in the Fifth Third Correspondent Lending Communiqué, edition 10-8-21.

Citi Correspondent Lending Bulletin 2021-12 includes various updates including notifications that the loan limit ceiling for Best Efforts transactions is being removed from CRA premium eligibility criteria. Clarifies updated EAD classifications eligible for NPR transactions. Credit policy updates on the following: student loan payments applicable to Agency & Non-Agency transactions, Non-Agency large deposits, use of Credit Card Reward Points for Source of Funds, Agency Delayed Financing Policy, Prohibited Practices on Rate/Term Refinances, and Electronic Closings.

Capital Markets

How elite investors buy homes & loans: As home demand shifts with plateauing list prices and short supply, Wall Street’s top buyers of homes rely on HouseCanary Solutions for real-time decision making. With the power of our newest solution, Acquisition Explorer, you can filter MLS listings tailored to exactly your Buy Box preferences. Learn more about Acquisition Explorer here.

The Federal Reserve is looking to avoid a taper tantrum, which was the reactionary panic that happened in 2013 causing a spike in U.S. Treasury yields, and thus mortgage rates. By tapering slowly and predictably this time, the Fed believes rates won’t get out of hand. The announcement the other day that the Fed may start scaling back its $120 billon of asset purchases a month, part of the central bank’s pandemic response, by $10 billion in Treasuries and $5 billion in MBS as early as next month, amounts to only a slight initial reduction.

Using back of the napkin calculations, the Fed is buying 40 percent to 60 percent of Agency MBS that are being produced every day. These are really simplified numbers, but if we produce $2.5 trillion of Agency MBS a year, 250 working days, that equates to roughly $10 billion a day. If the Fed is buying $5 billion a day, that is roughly half. Considering the Fed purchases an average of $5 billion Agency MBS a day, or roughly $100 billion a month, $5 billion only amounts to a 5 percent reduction in purchases.

Looking at some economic releases from yesterday, the September Producer Price Index report showed the highest year-over-year increase (8.6 percent) in producer prices since the start of the series in 2010, though the increase was not as large as the market had feared. There was little response in Treasury yields and MBS prices, meaning that market participants are viewing this as peak inflation. First-time U.S. unemployment claims dropped to the lowest level since March 2020, but September was the slowest month of job growth this year. The Primary Mortgage Market Survey from Freddie Mac saw fixed rates rise, with the 30-year rate at its highest since the week ending April 8 and the 15-year rate highest since late June. Finally, Black Knight reported another significant drop (-10 percent) in the number of active forbearance plans this week, as the first wave of final expirations continues. The 143k overall reduction since last Tuesday follows last week’s 177k drop.

Today’s calendar is already under way with Retail Sales (+.7 percent, +.8 percent ex-auto, stronger than expected), import & export prices (+.4 and +.1 percent, respectively) and Empire manufacturing (-14.5 to +19.8, lower than expected). Later this morning brings August business inventories and the University of Michigan consumer sentiment After releasing a new purchase schedule yesterday containing the same mix of coupons and agencies as the prior schedule(s) targeting 30-year 2 percent and 2.5 percent and 15-year 1.5 percent and 2 percent with two operations per day which alternative between UMBS30 and GNII 2 percent and 2.5 percent ($5.8 billion) and 15-year and 30-year conventionals ($4.9 billion), today’s schedule targets up to $4.9 billion of conventionals. We begin the day with Agency MBS prices worse/down .125 and the 10-year yielding 1.55 after closing yesterday at 1.52 percent.

Employment 

Evergreen Home Loans™ celebrates its Core Conviction of Growth with recent noteworthy associate changes. John Endres, who joined the company in 2019 as a branch manager and senior loan officer for the Seattle office, was promoted to area manager. Endres will manage loan production for the Seattle market, as well as support recruitment and retention of loan officer talent in Idaho. In addition, the company named Crystal Adair as its new vice president of loan fulfillment to oversee several key departments and workflows in processing, underwriting, funding, and post-closing, as well as the management of technology initiatives that support company goals for automation and efficiency. Evergreen is excited to see both Endres and Adair grow in their new roles and help expand opportunities for loan officers to increase their business. If personal and professional growth are important to you, check out the Evergreen Careers page.

Assurance Financial is continuing to grow production, add retail branch origination offices, and expand its production reach into the midwestern U.S., particularly the Colorado, Arizona, Kansas, Missouri, and New Mexico markets. “We are searching for an established Regional Production Manager to help create and develop mortgage origination branches in the new midwestern territory… Someone who is an outstanding talent and proven retail sales leader with a demonstrated track record of hiring and managing multiple production offices across several states. We are a profitable and well-capitalized full-service mortgage banker offering an entrepreneurial, customer-focused sales support environment, FNMA/FHLMC/GNMA direct status, and well-positioned to compete for more growth with state-of-the- art operations/support technology. This new Regional Production Manager position will report to the CEO. If you are interested in joining a dynamic group of mortgage bankers and building a first class production team, please contact Paul Peters, CMB or visit AssuranceMortgageLO.com to learn more.”