The US taxpayer has been bearing the credit risk of 90% of all new origination over the past 10 years. What about property/collateral risk? Yesterday FEMA issued a new opinion disallowing new or renewal flood insurance policies during the partial shutdown of the federal government. NAR weighed in. “Today’s ruling comes contrary to Congressional intent and is in conflict with FEMA’s decision to allow NFIP operations during the 16-day government shutdown in 2013. NAR and its 1.3 million members are extremely disappointed by this abrupt and ill-conceived change of course. Last week, Congress passed legislation to fully reauthorize the NFIP through May. The surprise FEMA ruling, however, jeopardizes tens of thousands of home sales across America, as NAR estimates up to 40,000 closings are disrupted each month that the NFIP cannot issue flood insurance policies.”

Vendor News

According to this site there are 1,446 vendors that touch the mortgage biz. How does anyone keep track? Let’s play some catch up on what a random sample have been up to!

Secure Insight has teamed up with DocMagic Inc. to develop and host an online training program to teach attorneys, title agents, notaries and other entities how to accomplish clear, compliant and completely paperless eClosing transactions. “Getting over the adoption hump starts with ease of use and adequate training so users feel comfortable conducting business within the eMortgage ecosystem,” stated Andrew Liput, president of Secure Insight. “We partnered with DocMagic because their Total eClose solution is one of the easiest and most intuitive in the industry, which is conducive to adoption for title agents, attorneys and notaries to understand and leverage.”

Finicity has been selected as a service provider for the new Freddie Mac Loan Advisor automated income and asset assessment capabilities. Due to its established expertise within the mortgage lending industry and its innovative digital lending solutions, Finicity’s ability to source loan application data across a borrower's’ financial accounts provides Freddie Mac with a faster, easier way to verify data upfront.

IDS announced it has built a brand-new interface with mortgage loan origination and servicing technology provider MortgageFlex Systems that operates on the MISMO® Version 3.3 data standard. Developing a new integration based on this advanced data standard ensures joint IDS-MortgageFlex customers can fully comply with a host of regulatory requirements that operate off the MISMO Version 3.3 standard, including TRID 2.0 and the Uniform Mortgage Data Program (UMDP). Joint users can complete all document preparation functions within MortgageFlexONE Origination, ensuring it remains the system of record throughout the transaction and eliminating potential data transfer errors. In addition, users also have access to additional functionality within idsDoc from the MortgageFlexONE Origination platform, including hybrid eClose and eSign capabilities and a full range of state and federal compliance audits.

AFR Wholesale has partnered with Floify. By utilizing Floify’s point-of-sale integration, AFR’s broker partners will be able to quickly and easily process borrower loan applications, securely send and receive supporting documentation, automatically deploy status updates and reminders via email and SMS, and more – all from a single, intuitive user interface. Floify’s point-of-sale platform has been shown to improve the loan origination experience for brokers and borrowers via the solution’s native automations, saving as much as 15 hours of processing time per loan.

Vendorly launched its Contract Management feature to enhance insights into contract terms, performance and spend analysis within the vendor management solution. Contract Management is available as a new feature for existing customers using the Vendorly platform, or as an independent software-as-a-service (SaaS) offering. Its platform also offers its customers managed vendor oversight services including vendor due diligence, document management, annual assessments, information security assessments, financial condition reviews and on-site audits.

After winning the 2018 Ellie Mae Hall of Fame award for Digital Mortgage Excellence, TruHome Solutions executives are excited to further improve the experience for their customers by using the new LendingConnect solution allowing TruHome to simplify the online application process for its clients’ members. “LendingConnect is the perfect digital beginning to the mortgage process,” said Shara Wessel, VP of Mortgage Solutions, at TruHome. “The software fully-integrates with our loan origination systems.”

Genworth Mortgage Insurance has launched its GenRATESM, a proprietary risk-based pricing engine providing lenders with a more granular approach to pricing for borrowers pursuing homeownership. With the introduction of GenRATE, lenders can opt-in to this proprietary pricing solution or choose from Genworth’s standard published rate card. “Demand for more dynamic pricing is growing, both in our industry and more broadly. Offering lenders the option of either rate card or risk-based pricing is the best way to show lenders that we understand and can continue to meet their evolving needs,” said Rohit Gupta, President and CEO, Genworth Mortgage Insurance. “Maintaining our standard rate card to complement GenRATE allows us to still offer the transparency and simplicity some lenders prefer while addressing other lenders’ shifting prioritization towards more dynamic pricing.” LOs can obtain GenRATE MI quotes quickly through their Loan Origination Systems, Optimal Blue or Rate Express.

Shutdown Update

As best I can tell there has been no identifiable progress in funding deal talks. Of course, the lack of government spending impacts GDP, and roughly 25% of the federal government could remain shuttered into 2019. As we know the new Congress is set to begin on January 3, which will give Democrats the House which makes funding for a border wall less likely.

The FHA has issued FHA Info Bulletin #18-52 which provides additional clarity for HUD mortgagees regarding which systems are operational, and which FHA customer support operations are functional, though limited. The FHA’s reverse lending program has been put on hold along with USDA mortgage insurance endorsements.

As noted in the first paragraph, regarding flood insurance, policies that were in force before midnight on December 21, 2018 remain in force and the NFIP will process and pay claims under those policies as usual but will not have authority to borrow any additional funds from the U.S. Treasury. During the shutdown, the NFIP will not issue new policies, increase coverage on existing policies, or issue renewal policies. Some private flood insurance may be an acceptable alternative for the GSEs and other investors, but not for FHA loans.

IRS Tax transcripts are unavailable during the shutdown — investor requirements may differ regarding funding of loans with a signed 4506-t but no actual transcript pull.  Lenders should verify investor requirements prior to funding.

Individual lenders and investors have various polices and procedures, depending on a variety of factors (their appetite for risk, how long they think the shutdown will last, if they offer portfolio products, and so on). For example, First Community Mortgage published its wholesale policy, Freddie Mac’s, Mortgage Solution Financial’s correspondent and wholesale policies,  

Capital Markets

There are certainly those who believe that “the real” economy is not being reflected in the statistics that the markets, and the Fed, are seeing. For example, the first wave of statistical releases during the fourth quarter continues to paint a positive picture of the US economy with many metrics near multi-decade highs. US unemployment officially remained at 3.7 percent for the third consecutive month however rounding to two decimals saw the rate drop from 3.74 percent to 3.67 percent. When the unemployment rate touched 3.5 percent in December 1969, a recession was right around the corner in January 1970 and by the end of the year unemployment had risen to 6.1 percent. The rate always moves in a cyclical pattern of highs and lows with the average gap from valley to peak being 3.7 percentage points during the last 10 cycles. The largest gain since World War II occurred during the 2007 to 2009 cycle which saw unemployment rise from 4.4 percent to 10.0 percent.

While the unemployment rate is a lagging indicator, telling us where we’ve been, initial unemployment claims are considered to be a leading indicator. Since dropping to a low of 204,000 in September, initial claims have trended up. While it may be too soon to tell if the uptrend will be sustained, it is a signal worthy of one’s attention; especially given recent layoff announcements from some large employers. For 2019 housing remains a concern as both new and existing home sales have trended lower since peaking in 2017 and a continued increasing rate environment challenges affordability.

Rates yesterday moved higher, a little intra-day volatility aside, regardless of maturity. U.S. Treasuries ended the midweek session with losses across the curve. The $41 billion 5-yr Treasury note auction was viewed as weak, which doesn’t help, although the S&P Case-Shiller 20-City Home Price Index increased 5.0% in October (about as expected), and the 10-year T-note closed yielding 2.80%.

Besides incredible stock market volatility, for thrills and chills this morning we’ve already had the usual Initial Jobless Claims (216k, about as expected). Ahead are the FHFA House Price Indexes for October, consumer confidence for December (expected to decline), new home sales for November (expected to increase), and a $32 billion 7-year note auction by the Treasury. This morning starts with rates lower, mostly because of risk aversion/flight to quality given the stock market volatility: the 10-year is currently at 2.75% and Agency MBS prices better than last night by .250.

Lender Products and Services

As Zillow and others enter 2019 focused on real estate and mortgage collaboration, one home-resource portal seems to be out in front with their own innovative collaboration model.

YourHome1Source.com launched in 2015 by home industry and ecommerce execs is growing rapidly. The innovative web portal offers resources and solutions across 20+ home buyer/home owner categories. Many home industry brands are already participating. YourHome1Source® attracted home-product business mogul, Kathy Ireland and kathy ireland® Worldwide became a YH1S partner in 2018. If your organization is seeking collaborative strategies to reach today’s digital homebuyer, this may be your solution. “Some companies may fall behind, spending millions of dollars developing independent online strategies when they could move ahead now and benefit significantly from our growing Alliance. We offer an immediate, cost-effective digital solution. Opportunity is at the door, says CEO, Sean Stockell.” Inquire here.

The holiday break is here and time to re-evaluate your process and how technology can help improve your efficiency in 2019. Digital mortgage providers like Maxwell can be impactful tools to drive efficiency for your team. Maxwell is specifically designed for small- to mid-size lenders where customization is desired and personalization from the loan officer is critical to achieving a satisfied borrower. Today, the Maxwell team reports that lenders on their platform are closing loans 45% faster than the national average, collecting docs 73% faster, and driving NPS and satisfaction up 25%. These numbers highlight how Maxwell increases efficiency, drives agent referrals, and offers true ROI on technology. To experience Maxwell, click here and set up time for your customized demo. Cheers to better lending in 2019!

Simplify your underwriting process with Loan Product Advisor® asset and income modeler (AIM). Through the expertise of third-party service providers, AIM automates the manual processes of assessing borrower assets and income. AIM reduces the burden of traditional documentation, speeds up the loan origination process and helps you close loans faster. Freddie Mac is working hard to bring you solutions that create efficiencies for your business and improve the borrower experience - giving you a competitive edge. These capabilities are available for Loan Product Advisor submissions and resubmissions on and after December 9, 2018. Gain greater efficiency in your underwriting processes with AIM – get The Freddie EdgeSM.

Non-QM origination volume continues to grow at a robust pace, and as we near the finish line for 2018, the velocity of growth, interest in the product, and capital investment are at an all-time high. Deephaven Mortgage is committed to helping the industry continue its upward trajectory. To help originators & executives learn more about the Non-QM marketplace, Deephaven has partnered with NMP on several informative webinars that you shouldn’t miss: “What & Why of Non-QM” and learn about “How to build a Non-QM focused business.” Find out more about how Non-QM can help you grow your business by contacting us at brokerinfo@deephavenmortgage.com (Wholesale) or sales@deephavenmortgage.com (Correspondent).