“We all get the same 365 days. The only difference is what we do with them.” In 2024 a lot of lenders buckled down every day. Time to take a breather? Maybe not: mortgage bankers still face pressure on profit margins. In today’s Advisory Angle at 11AM PT, powered by the Chrisman Commentary, STRATMOR Senior Partner Garth Graham, Principal Advisor David Hrobon, and Senior Advisor Rob Chrisman discuss managing margin compression, including cost management techniques, improving operational efficiency, and optimizing loan product offerings. In a sense, homeowners have “profit margins” in terms of what makes sense to do ahead of a sale. Pass this along to your real estate agent clients interested in improving curb appeal: A new garage door cost on average $4,513 in 2024, but added $8,751 to the resale value of the home, a 194 percent cost recoupment and one of the best things one can do to juice the sale price. Other clever and cost-effective renovations include replacing an entry door (adds $4,430 to resale value at a cost of $2,355), dabbling in landscape maintenance or lawn care, or refinishing hardwood floors. Some renovations are bad bets: remodeling a kitchen might cost $158,530 but only add $60,176 to resale value, recouping just 38 percent of the cost. (Today’s podcast can be found here and this week’s is sponsored by CoreLogic. CoreLogic gives mortgage professionals the tools they need to establish long-term relationships with their clients, helping them keep future business in-house and transforming the way they do business. Today’s has an interview with Bank of Oklahoma’s Chris Maloney on MBS issuance, the money supply, neutral interest rate, and his predictions for future Fed moves.)

Lender and Broker Services, Software, and Products

NEW EBOOK: Tailored to Your Needs: How to Choose the Right Mortgage POS for Your Unique Business Challenges. Are you confident your POS will deliver in 2025? If you have free technology that falls short or a pricey option that fails to integrate with your systems, it's time to explore new options. Maxwell created its latest eBook to simplify your mortgage POS search. In this eBook, you’ll learn the 5 non-negotiable boxes your POS should check, why customization is vital (and how to achieve it cost effectively), and examples of how lenders have seen real results by finding the right POS partner. By the end of this read, you and your team will know exactly how to pursue POS technology to solve your unique business challenges. Click here to download Tailored to Your Needs: How to Choose the Right Mortgage POS for Your Unique Business Challenges.

“NO WAREHOUSE? NO PROBLEM! Button Finance, your trusted Home Equity Lending partner, understands the challenges of working with warehouse partners to fund home equity loans. That’s why we’ve launched the Button Finance Warehouse Program exclusively for our non-delegated correspondent partners. With this program, you can now sell loans to Button Finance without needing a warehouse line or balance sheet. Our non-delegated program offers up to a 3% premium on loan sales plus 5% borrower-paid compensation. As your one-stop shop for home equity solutions (including Closed-End Seconds, HELOCs, and 1st Lien HELOCs) we close loans in under ten days, with loan amounts up to $500K, 85% CLTV, 50% DTI, and FICOs as low as 640. For more information, please contact your AE: Rob, Brock, Doug, or George, or email us.”

HMDA data collected in 2024 is required to be submitted by March 3, 2025. Don’t wait until the last minute, start your review process now. Not only do regulators use this data as a key to assessing compliance, but investors, competitors, and vendors also reference this data for contract pricing, due diligence, and as a major KPI to gauge scorecard performance. Firstline Compliance can help you ensure that the story your HMDA data tells is an asset for your business, not a liability. Reach out to Josh Weinberg to discuss Firstline’s HMDA review services and how Firstline can help before the deadline.

Even Matthew McConaughey playing the bongos thinks credit report costs are high. Fortunately, smart lenders are getting better at capturing those fees using Fee Chaser's integration into Encompass® by ICE Mortgage Technology™. Fee Chaser lets you capture credit reports, appraisal, and even condo doc fees without the manual headache. Check out Fee Chaser and book a 10-minute demo with the team.

Servicing and Customer Retention Tools

Homeowners value stability and clarity, but servicing transfers often leaves them feeling stressed and overwhelmed. Working with a new company, unfamiliar payment system and limited transparency can cause confusion. ICE helps you support your customers and stay hands-on during the loan hand-off, with tools like a new “transfer tracker” dashboard that makes it easier for homeowners to understand what’s happening as their loan is moved to a new servicer. Read the first part of a two-blog series, as EVP of Servicing Product Innovation Sandra Madigan shares how ICE is smoothing out the servicing transfer process and helping you give your customers more control and peace of mind.

“Is your subservicer a true partner helping you succeed or are they just your ‘vendor’? At Servbank, we pride ourselves on being more than just a subservicer, we’re your dedicated partner in building growth and increasing profitability. With servicing expertise, complete transparency, and advanced technology like SIME, we provide the tools and support you need to thrive. “With Servbank, we’ve gained a deeper understanding of the delinquency and loss mitigation process, which has been invaluable for trading MSRs and growing our balance sheet and profitability. Its transparency, follow-up, and true partnership have made all the difference. The detailed insights offered by SIME, including the ability to hear every call and access comprehensive notes, have transformed our operations. Their customer-facing teams are professional and well-trained, consistently delivering exceptional service, even in challenging situations." (Greg Walker, President, RanLife.) With Servbank, you’ll experience a higher standard with unparalleled transparency, guidance for MSR trading, and best-in-class customer experience. Partner with the nation’s premier bank subservicer and drive your business forward.”

Timing is everything in a complex and crowded mortgage environment. Rates are still higher than we’d like, and inventories are still lower than we need. New borrowers are eager to find their first home. And current homeowners are impatiently waiting to refinance. But that doesn’t mean the opportunities aren’t out there. People's lives are still moving forward regardless of the rate environment. You just need the right tools to help you find and engage in those opportunities before your competitors do. Total Expert Customer Intelligence lets you know the moment your contacts signal intent to make their next mortgage-related decisions with automated alerts for credit pulls, equity thresholds, rate qualifications, and MLS listings. Learn how to stay one step ahead.

FHA, VA, and USDA Changes

Over the last few weeks the FHA share of total applications was 16.6 percent, the VA share of total applications was 15.7 percent, and the USDA share of total applications was 0.4 percent, for a total of about one-third (33%) of all applications being based on government policies, procedures, and rates. So, it’s important to know who’s doing what.

Ginnie Mae’s mortgage-backed securities portfolio (comprised mostly of FHA and VA loans) reached $2.68 trillion in November. Read the Press Releases post for details.

Ginnie Mae published the Fiscal Year 2024 Annual Financial Report demonstrating financial performance and expanding pathways to homeownership. View the Press Release for more information.

The Single-Family Housing Guaranteed Loan Program (SFHGLP) issued an Important Reminder. Closing a USDA Single Family Housing Guaranteed Loan prior to receipt of Form RD 3555-18, Conditional Commitment for Single Family Housing Loan Guarantee, from the Agency is a violation of the regulation found at 7 CFR 3555, Section 3555.107(f). Closing a loan prior to obtaining a Conditional Commitment from the Agency will result in the lender not receiving a Loan Note Guarantee (LNG) and may affect their approval status to participate in the program.

Please note, a loan recommendation from the Guaranteed Underwriting System (GUS) does not constitute the issuance of a Conditional Commitment.

FHA posted the draft, Establishment of the Optional Reimbursement Claim Alternative (ORCA) Mortgagee Letter (ML) on its Single Family Housing Drafting Table ) for review and feedback. If finalized, this policy would allow mortgagees to seek reimbursement for costs associated with their advances for taxes and insurance on defaulted FHA-insured Single Family Title II forward mortgages after the borrower’s escrow has been exhausted but before the final claim payment is made. This draft ORCA policy is intended to support lender liquidity. Interested stakeholders are encouraged to thoroughly review the draft ML and provide feedback through March 3, 2025. Instructions for viewing and providing feedback on the draft ML are available on the Drafting Table. FHA will carefully consider all feedback received before publishing a final ML.

FHA has implemented new Mortgagee Administrator functionalities that allow for better management of case binder submissions for pre-endorsement reviews. Details of these revised functionalities can be found on the FHA Catalyst: User Access Management webpage, which includes the updated FHA Catalyst Mortgagee Administrator Role User Guide.

The Single Family Housing Guaranteed Loan Program (SFHGLP) issued an Advance Notice on Additional Revisions to HB-1-3555, Chapter 18. These changes are expected to be implemented on February 11, 2025 in conjunction with the effective date of the Special Servicing Options Final Rule. Copies of the upcoming revisions are available for review on the Loan Servicing page of the USDA LINC Training and Resource Library, under the “New Guidance” sub-heading of the “Loss Mitigation” section.

Pennymac posted information regarding FHA and VA increased Loan Limits for 2025 in Pennymac Announcement 24-130.

Pennymac addressed an update to VA seasoning requirements in Pennymac Announcement 24-132 and updates to Conventional LLPAs in Pennymac Announcement 24-133.

On December 19, 2024, USDA published a GovDelivery Bulletin to reduce the seasoning period for all refinance transactions from 12 months to 180 days. AmeriHome Product Announcement 20241207-CL for details.

Pennymac Announcement 25-03 issued a reminder that updates to VA seasoning requirements are now effective with new loan applications dated on or after January 17, 2025.

Credit News

Whether it is car fatalities, deaths or illness from a disease, or medical debt… how do you reduce or eliminate it? Just don’t count it. The Biden Administration has “banned” unpaid medical bills from appearing on credit reports.

Unpaid medical bills will no longer appear on credit reports, where they can block people from mortgages, car loans or small business loans, according to a final rule announced today by the Biden administration.

The Consumer Financial Protection Bureau rule will remove $49 billion in medical debt from the credit reports of more than 15 million Americans, according to the bureau, which means lenders will no longer be able to take that into consideration when deciding to issue a loan.

The change is estimated to raise the credit scores by an average of 20 points and could lead to 22,000 additional mortgages being approved every year, according to the bureau. Vice President Kamala Harris said in a statement announcing the rule that it would be “lifechanging” for millions of families.

“No one should be denied economic opportunity because they got sick or experienced a medical emergency,” she said.

Harris also announced that states and local governments have used a sweeping 2021 pandemic-era aid package to eliminate more than $1 billion in medical debt for more than 700,000 Americans.

Capital Markets

As I mentioned yesterday, the focus this week will be on the job market with key reports including JOLTS, jobless claims, Challenger job cuts, and the critical nonfarm payrolls and unemployment rate on Friday. Additionally, we’ll see December prepayment speeds, $119 billion in Treasury auctions, and speeches from several Fed officials. Treasury yields have risen 100 basis points since September, despite the Fed cutting rates three times.

The December Federal Open Market Committee minutes will be released tomorrow, offering insight into the Fed's internal discussions, especially since the latest rate cut was a “close call.” While inflation remains a concern, Fed officials are cautious about further cuts. The market is pricing in a 45 percent chance of just one or no rate cuts in 2025, reflecting shifting sentiment on rate hikes. Richmond Fed President Barkin recently suggested that inflation risks remain skewed to the upside, advocating for a longer period of restrictive policy.

The November trade deficit led off today’s economic calendar. Later today brings Redbook same store sales, December ISM services PMI, JOLTS job openings for November, and Treasury auctions that will be headlined by $13 billion reopened 10-year bonds and a buyback (liquidity support) in 20-year to 30-year coupons for up to $2 billion. We begin the day with Agency MBS prices a few ticks worse than Monday’s close, the 2-year yielding 4.28, and the 10-year yielding 4.64 after closing yesterday at 4.61 percent.