Many believe that 3-D printed houses will be the wave of the future in construction, and there’s someone in this article talking about printing 1,000 a day. I’m sounding like my Mother when I ask, “Where are they going to put them all?” Not in my backyard, right? In other related news, in the year ending in March, merely 9.8 percent of Americans moved. That’s the smallest fraction of Americans who moved in the entire history of the Census tracking the statistic, which goes back to 1947. In the 1950s, a fifth of Americans moved in a given year. It’s the first time that stat has fallen below 10 percent. Young people have been the main movers, but high costs of movement meant that while 29 percent of 20- to 24-year-olds moved from 2005 to 2006, just 20 percent of that age group moved last year.

Lender Services and Products

Lender and Servicers are all working toward a more digital, scalable and streamlined solution to decrease cycle time and cost. The problem? Resources. With Sutherland, our Business Process Transformation unlocks this challenge by providing a turn-key solution for introducing design practice, consulting, automation and business process outsourcing. By leveraging innovation such as Sutherland’s very own Robility solution and the expertise in mortgage processes, a digital road map is closer than you think. To learn more about a discovery day to design your road map, contact Neil Armstrong, AMP.

Volly was awarded Top 10 Most Promising CRM Solution Providers by MyTechMag. This prestigious award recognizes the best CRM solutions across all industries. “We are honored to receive such a distinguished recognition of the Volly CRM” says Jerry Halbrook, CEO of Volly. “While the CRM is only a single component of the available Volly fully integrated suite of technology products, we feel privileged to receive so great a distinction among CRM providers.” Volly’s CRM combines a complete view of each loan officer’s prospects, customers, and referral partners with lead management capabilities and seamless integration of email and direct mail marketing and communication campaigns. The Volly CRM solution additionally offers users access to a fully branded, customized, web-based marketing store, a fully integrated mobile application, and a library of uniquely created, branded marketing content—all supported by a team of creative marketing professionals. Click here to learn more about Volly’s premier CRM.

Walking through a pitch-black room is scary. It’s also scary not knowing what is going on with your loan. QLMS is turning on the lights! Unlike most lenders, QLMS obtains vendor items, like homeowners insurance and VOE’s, for their partners. QLMS partners can see, on their PC and smart phones, the status of every loan’s vendor items. Introducing “Vendor Visibility” – another major innovation from the most cutting-edge lender in the country. With 24/7/365 visibility into their loans, QLMS’s partners have real-time certainty as to where each loan stands. If you’re tired of stubbing your toe in a dark room, click here to let QLMS shine the light of visibility on your precious loans.

Floify, the mortgage industry’s most flexible point-of-sale solution, will soon release the newest version of its web-based, interview-style loan application. Version 3 of Floify’s embeddable and fully customizable 1003 will continue to deliver all the same functionality and integrations that have helped lenders become more profitable and productive, but will soon include all-new features like multilingual subtitles and support for the redesigned URLA. These powerful enhancements will set the stage for soon-to-follow innovations inspired by feedback from top-producing loan originators who use the platform. To get the inside scoop on the upcoming release of Version 3 of Floify’s 1003 and see how its system helps lenders and originators create the ideal digital mortgage experience for their borrowers, request a live demo!

There was much talk at the MBA Accounting and Financial Management Conference around what to expect in 2020 - from the trade war to the upcoming election, there are so many factors that can and will affect the mortgage industry. Luckily, Loan Vision is making it easier to prepare for the financial future with their new Advanced Budgeting & Forecasting module. To learn how the module gives lenders the ability to test possible disruptions due to industry conditions, inspiring better financial decision making and aiding profitability, join us on November 25 for an overview of the module. You can register here for the webinar or reach out to Carl Wooloff for more information.

FormFree is rolling out paystub collection and verification as an available feature for new and existing customers at the end of this month, a development the company announced at MBA Annual. By using AI to corroborate paystubs against public and proprietary data sources, FormFree enables lenders to confirm a borrower’s assets, employment and income with an extremely high level of confidence. The paystub capability becomes even more interesting within the context of a new Digital Mortgage Application Prefill solution powered by FormFree and LexisNexis Risk Solutions, which automatically populates the Form 65/1003 with a laundry list of data points including two-year address history, assets and other real estate owned, employer information, monthly income and combined housing expenses. In addition to improving the customer experience, both new features stand to boost lender efficiency and pull-through in a competitive market. Talk to Gregg Palmer to learn more or schedule a demo.

Reverse Mortgage and HECM Chatter

In late 2018 plenty of “forward” lenders were looking at alternative products, such as non-QM or bond/HFA programs, to help bolster their volumes and margins. One such product was reverse mortgages, with a subset being comprised of the FHA’s HECMs (Home Equity Conversion Mortgages). In addition there are “proprietary reverse products.” After all, 10,000 people a day in the U.S. turn 62, a demographic trend that won’t let up any time soon and will continue to provide new clients for years to come. And conversely the industry has seen its share of reverse lenders begin originating forward mortgages to remain profitable. Yet nationwide HECM production has not come back to its 2009 high of nearly 115,000 loans. (California always leads the nation in production, triple or quadruple the next nearest state, usually Florida or Texas.)

The FHA released its annual report on the financial status of the Mutual Mortgage Insurance Fund. The current MMIF capital ratio is 4.84%, an increase from 2.76% a year ago and remains above the 2.00% threshold mandated by Congress for the fifth consecutive year and is at its highest level since 2007. Another way to think about “MMI Capital” is its “net economic worth.” The $27.5 billion increase in MMI Capital is derived from total MMIF capital resources increasing by $8.7 billion in FY 2019, plus an increase of $18.8 billion in NPV of future cash flows.

The health of the HECM portfolio improved dramatically in FY 2019, though HECMs remain a drag on the health of the combined fund. The capital ratio of the HECM portfolio is negative 9.2% (an improvement from negative 18.8% a year ago), with MMI Capital of negative $5.9 billion. The negative $5.9 billion in MMI Capital is derived from $1.7 billion in total capital resources, offset by a negative $7.6 billion in NPV of future cash flows. And HECM volume fell by over 17,000 endorsements relative to FY 2018, a decrease of more than 35%. The average Maximum Claim Amount increased to more than $347,000 from just under $335,000, and total claims paid increased to $9.6 billion from $6.1 billion. The average Principal Limit for HECMs fell to 51.5% of the Maximum Claim Amount, a decrease from 55.3% in FY 2018 and 59.7% in FY 2017.

Looking at the primary markets, here is a recent article: “Why Retirees Should Consider Using Reverse Mortgages.”  “Reverse mortgages are enormously unpopular in the U.S., with less than 2% of eligible borrowers taking up the products in most years, according to one study. Consumers are rightly skeptical, given high up-front fees and elevated foreclosure rates. But reverse mortgages are also one of the more promising ways to protect against both falling home prices and outliving assets. And they can be a lifeline for retirees with a lot of home equity and not much else.”

There is a psychological issue with potential clients with “equity release” products. The American dream of home ownership is alive and well, with the vast majority of home buyers financing their house through a forward mortgage: Obtain financing, buy a home, make payments every month for years, and pay off your house. Paying a mortgage for 30 years is a habit, and Americans are taught to pay down their debt on their home, not to borrow. The average person does not want to borrow, and taking on debt, even if it improves their lives, needs to be position in a way to not trigger a fear of loss or a feeling of risk. So reverse mortgage counselors must understand the psychology of the borrower, as well as that of their family.

Psychology aside, just like with forward mortgages, reverse mortgages are marketed to different people in different ways. Risk averse clients won’t borrow in retirement, but may refinance. Is someone, or their family, afraid of losing their home? Reverse lender’s marketing efforts are directed at education and tailoring programs to individual’s taste in risk and financial well-being.

Proponents point to reverse mortgages, specifically HECMs, helping retirees stay in their homes and age in place, along with providing income. Just as there are in the forward market with unique products, the reverse biz has “proprietary” loans. Some products don’t have mortgage insurance, making them less expensive than HECMs.

As with the forward market, the National Reverse Mortgage Lenders Association (NRMLA) notes that interest rates, an expanded range of proprietary products, technology, and governmental action are what folks are focused on. It is rare for one company’s proprietary product to be rolled out to any other companies.

Politicians know very little about the product, other that they should remain available to their constituents. There is still fear and confusion about the product, however, from both politicians, the lending community, and the public. Those in the reverse mortgage business are trying to educate regulators and politicians about the product.

Regulators know something about it. For example, the CFPB produced a guide on meeting reverse mortgage loan obligations after a natural disaster. The goal is for them to stay away from foreclosure, just as with forward loans. An elderly homeowner being evicted or foreclosed upon is bad press. What can go wrong? Well, when a borrower dies and the loan balance exceeds the value of the property, heirs have little incentive to take action. Or maybe there are no heirs. And the HECM market collapsed after the October 2, 2017 HUD changes, so there is always the fear of government intervention negatively impacting the business.

A few months ago (9/23) HUD put out two mortgagee letters, one modifying the requirements for assigning loans under the Mortgagee Optional Election process and the other extending the HECM Collateral Risk Assessment requirements. A September 25 report from the Government Accountability Office recommended that the FHA do a better job evaluating the performance of its reverse mortgage program and overseeing the companies that service those loans. It should be no surprise that death is the #1 reason why HECMs terminate, but HECMs insured by the FHA have seen an increase in defaults from borrowers not meeting occupancy requirements or failing to pay property taxes or homeowners insurance.

The paragraphs above are meant to be a primer. If you have questions about the NRMLA, or this segment of the lending industry, you should shoot NRMLA’s Peter Bell an email.

Capital Markets

U.S. Treasuries, and with them mortgages, saw some price movement on Thursday based on more pessimism about the U.S. and China reaching a partial trade agreement. But the markets are experiencing “headline fatigue:” how long will we talk about trade? The latest news has China confused about demands made by the U.S. while Washington is still weighing delaying the implementation of the next round of tariffs if the partial trade deal is still not signed on December 15.

Economic releases showed existing home sales increasing, but not meeting expectations as the inventory of unsold homes continues to decline. Mortgage rates and unemployment rates remain low, which should continue to put upward pressure on prices. And the Conference Board's Leading Economic Index (LEI) declined in October, the third straight monthly decline, leaving the six-month growth in negative territory for the first time since May 2016.

Today’s economic calendar gets under way later this morning with Final November Markit PMIs and Final November Michigan sentiment, before closing with the KC Fed Manufacturing Survey for November. The Desk of the New York Fed will conduct a GNII FedTrade operation when it purchases up to $530 million 3 percent and $230 million 3.5 percent. We begin the day with agency MBS prices are better by .125 and the 10-year yielding 1.76% after closing yesterday at 1.77 percent.

Opportunities

A Midwest mortgage banker is looking to accelerate recruiting in multiple markets (existing and new). The Company is searching for proven recruiters currently achieving success. These are permanent positions with growth potential for right candidates. The Company has a superior marketing department, diverse product offering, and superior operations support. For confidential consideration, please submit your resume to Chrisman LLC’s Anjelica Nixt.

Panorama Mortgage Group, LLC is looking for a new CFO. PMG is an established, well capitalized mortgage lender with multiple brands and branch offices nationwide. This position is located in the Milwaukee area, will be reporting directly to the CEO, and managing the entire finance and accounting team. The CFO should have strong previous mortgage banking experience, be very well versed in managing corporate strategy, hedging and MSR activities, oversight of asset, liability, and cash management, financial reporting, analysis, budgeting, compliance, risk management, payroll, and general accounting in accordance with GAAP. PMG is currently approved as a direct seller with FNMA, FHLMC, and GNMA. Relocation assistance is available. For a confidential conversation please send your resume to Jennifer Miller.  

Privately-owned, Oregon-based mortgage company for 21 years, Directors Mortgage has expanded its executive leadership team hiring former founder and CEO of LoanStar Home Lending, Mike Baldwin. “I’m excited to be a part of the future growth at Directors Mortgage and the great endeavors ahead,” says Baldwin. Directors Mortgage has also added former Managing Partner of Sortis Financial, Morgan Smith to its executive team to lead Direct Portfolio Lending, Director’s new full-service portfolio division. Directors Mortgage has hired 62 new team members this year and opened offices in Arizona and Utah, with offices in New Mexico and Colorado scheduled to open by Q2 of 2020. “We are focused on our client services in addition to controlled growth. With Mike and Morgan onboard, we’re expanding and innovating together,” said founder and CEO Mark J. Hanna. Learn more about working at Directors Mortgage at www.directorsmortgage.com/jobs or contact Haley Dennis, HR Manager.