“Someone asked me to name two structures that hold water. I was like, well, damn.” As the storms continue to hit us in Northern California and Nevada, not only is my cat Myrtle ticked off, but we are reminded that it is either feast or famine in the Golden State. Take your pick, forest fires or biblical rain: Over 20 trillion gallons of water are supposed to fall on California in a two-week span. Yes, that’s with a “t.” Ratcheting back several decimal places, new estimates from the Census Bureau found that the U.S. population grew by only 0.38 percent from July 2021 to July 2022, which was the second-lowest growth on record behind just the 0.16 percent growth registered during the first year of the pandemic. The main thing increasing it was an increase in net immigration. To find comparably low rates one has to go back to the worst of the Great Depression, when growth was still a comparably robust 0.6 percent. All told, for those who don’t believe in pandemics, 24 states had more deaths overall than births. Texas, Florida, North Carolina, Georgia, and Arizona gained the most population numerically, while New York, California, and Illinois had the biggest losses. (Today’s podcast is sponsored by SimpleNexus, an nCino company and award-winning developer of mobile-first technology for the modern mortgage lender. Today’s has an interview with Ocrolus’ Rebecca Seward on investing in tech, automation, and innovation.)
Lender and Broker Software, Products, and Services
If you have to give your borrowers instructions on how to fill out your online loan application, you’ve already failed. Their experience should be straightforward and leave little to no room for questions. It should look something like this: A homebuyer on your website clicks the “Apply Now” button. They land on a page that guides them through singular, auto-advancing questions with animated iconography and dynamic messaging. Within 90 seconds, they’ve provided the essential information needed to trigger a new loan within your LOS, and you’ve got a credit authorization to act on. Your team is instantly notified of the new loan, and the borrower is already submitting their documents. You can expect this experience when you use LiteSpeed by LenderLogix as your point-of-sale solution. LiteSpeed is not your traditional bulky, 6-month-to-implement POS. It’s simple, offering what you need at a cost you can afford. Schedule a demo to learn more.
Here's how to work less and win more in 2023. Your first instinct may be to work even harder than you did last year. But 2023 promises to be another challenging year and harder just won't get it. Smarter will. Smarter means working hard at the things that only you can do, and delegate everything else. Focus your energy on the essential tasks: making one-to-one phone calls, having face-to-face meetings, and personalizing your marketing with video content. Automate tasks like prospect follow-up, loan in-process updates, Realtor and past customer outreach, thank you cards and closing gifts. Set up automated social media posts also. A truly fantastic SmartCRM system will do all this and more. Look at Usherpa's Relationship Engagement Platform, ranked number one in customer service and client loyalty in the mortgage business. Download this free Field Guide to Success and see how easy delegation can be.
“Are your correspondent investors in it for the long run? At Plaza, our National Correspondent Division has been a dependable source of liquidity through various market cycles. We bid aggressively and can close and purchase in as quickly as just a few days. Our product menu is one of the broadest in the industry: everything from renovation programs to reverse to non-QM, as well as government and conforming. The average tenure of our AEs is 10 years, so they know their business and can contribute to yours. Plaza Home Mortgage®. You’ll like our bids, but you’ll love the way we do business. Contact Plaza.”
Servicing transfers are common, yet complex processes that are essential to a healthy mortgage market. Just as mortgages are bundled and sold to investors on the secondary market, lenders often contract with third parties to manage the day-to-day details of “servicing” the borrower relationship, including payment processing, customer communications, loss mitigation and escrow disbursements. But what’s the best way to manage these intricate processes? To be successful, servicers should anticipate technical challenges, customer communication and more. George FitzGerald, EVP and chief operating officer of Black Knight Servicing Technologies, offers insights on navigating servicing transfers and avoiding potential pitfalls in his LinkedIn blog post.
STRATMOR on Bank and Non-Bank Market Share
Market conditions today likely give banks an edge over non-banks when it comes to offering certain mortgage products, according to analysis by Jim Cameron, senior partner for mortgage advisory firm STRATMOR Group. According to Cameron, the conditions are favorable for leading banks to win back some mortgage market share lost to non-banks during the refinance boom.
“HMDA data shows that bank share has dropped from 76 percent in 2010 to 37 percent in 2021, and there are many reasons for this shift,” says Cameron. “But in today’s extremely challenging market, banks may have an opportunity to regain some market share from non-banks by leveraging their liquidity and capital to offer products that non-banks are simply not able to offer.”
There are a variety of factors that tilt the scales in favor of banks, according to Cameron. Key factors include the level of interest rates, the trend line for rates, the regulatory environment, capital requirements, and the mortgage servicing rights market, just to name a few. In his December Insights Report article, “In Times Like These, It’s Good to be a Bank,”
Cameron identifies several products that create advantages for banks in the current market. “In many cases, banks are just better positioned to deliver the loan products customers need now, whether it is HELOCs, non-QM, construction, ARMs or non-core non-agency loans,” says Cameron. “By leveraging their natural advantages in certain product segments, banks may be able to regain at least a modicum of lost market share from non-banks in the near term.” Want to talk about your product mix, be ye bank or non-bank? Reach out to Jim at STRATMOR.
Wholesale News for Brokers
The industry continues to digest the credit-cost changes spurred on by (unofficially) Fair Isaac’s tiered price increases that are flowing directly through to borrowers. FICO has reportedly set up the tiers based upon volumes, and certain tech software that some of the lenders utilized. Rumors also have Fair Isaac stating that the costs were the same for all CRAs (Credit Reporting Agencies), and no tiers existed at that level, thus creating, in their mind, an even playing field.
The residential lending industry, especially the broker side of the residential biz, continues to ruminate on United Wholesale’s “Credit Report Solutions.” UWM has partnered with CoreLogic Credco to offer this product to its brokers, asking brokers to pay for the credit reports. Critics believe that this is a violation of FICO’s terms, and the bureau’s agreements in terms of being a reseller of a reseller. It is rumored that Fair Isaac is in touch with leading CRAs (Credit Reporting Agencies) to discuss existing contractual arrangements especially in terms of broker/wholesale relationships.
PRMG TPO Resource Center Updates 23-01 includes updates to PRMG Appraisal Fee Schedule, Credit Refresh-Lookback Policy, TPO eConsent and eSign Consumer Connect Platform (Wholesale), and VA LGY HUB User Registration. Additions include Instructions for Requesting SSA-89 Validation, High-Cost and QM Guide Training Video, Broker Approval/Renewal Information and Forms (Wholesale). Not to mention clarification that Rural Properties are not allowed on Choice DSCR, and clarifies to reference LTV/Product grid for minimum DSCR requirements. Expanded Access Form 1007 Schedule of Rents is required for all Non-Owner-Occupied transactions, Updated Investor Solution label of DSCR Tier 4 matrix.
Hometown Equity Mortgage Foreign National product offers borrowers with documented income or asset qualifying, who live outside the United States, flexibility when purchasing or refinancing a 2nd home or Investment Properties.
Excelerate Capital Interest Only Loan now has the option of a 40-year term.
Effective immediately, Sun West Mortgage Company, Inc. will apply LLPA waiver on Conventional loans if all of the following criteria are met: At least one borrower on the loan is a first-time homebuyer, Total qualifying income is at or below 100 percent of the applicable AMI for non-high-cost areas, and 120 percent for high-cost areas.
Up to a 75 BPS price improvement with Carrington Correspondent’s January pricing special. *Loans must lock in January*
Effective for loans originated on or after January 1, 2023, CFPB’s Final Rule updates the dollar amounts for provisions implementing amendments to Truth-in-Lending Act (TILA) under the Home Ownership and Equity Protection Act (HOEPA) and the Dodd-Frank Act. Accordingly, Sun West Mortgage Company, Inc will be updating sections of its Implementation Guide.
Citizens Correspondent National Bulletin 2023-01 includes information on 2023 Loan Limits on FHA & VA Products.
Gina McLeod, VP and Senior Residential Loan officer in the Private Banking Division with City National Bank, writes, “Brokers should contact me on behalf of their clients since City National Bank offers a 80 percent CLTV on both primary and 2nd homes. Maximum line is $2MM at 80 percent CLTV, but we offer “no cost” up to $1MM: full appraisal, escrow/title and CNB fees paid by us! Our no-cost HELOC program is ending Feb 1st. There is a need to preserve equity regardless of what rates or property values do. As an accommodation for broker’s clients, and many can use the HELOC to buy more investment properties which helps the broker on a new 1st TD loan. To lock in a borrower’s equity is huge, especially because my no cost HELOC program is ending.”
Capital Markets
In today’s sometimes very wide markets, experience should work in tandem with automation, especially for lenders wanting to grab every basis point possible. The slickest trading technology means nothing without an experienced trader monitoring market conditions for optimal execution. Otherwise, lenders can leave 10 or even 20 basis points on the table by simply trading into a wide bid/ask because their automated system is kicking out pricing based on an illiquid market. Experienced traders know how to uncover pockets of opportunity in markets like the ones we’re facing at the moment, and at Vice Capital Markets, our average trader has over 10 years of experience. Contact Chris Bennett or Troy Baars today for a frank discussion on best practices for trading in today’s market.
Continued digestion of Friday’s jobs report led to a bonds and MBS rally to open the week, largely on a renewed sense that the Fed may not have to raise the fed funds rate range by as much as previously feared. A couple Fed speakers remarked on the subject with San Francisco Fed President Daly saying she expects the central bank to raise rates to somewhere over 5 percent while Atlanta Fed President Bostic said that the Fed is willing to overshoot when it comes to tightening.
Economic data released over the last week reaffirmed continued growth in the U.S. economy. Job growth in December was higher than anticipated although slower than in November which is perhaps an indication of moderation as we head into 2023. With unemployment at 3.47 percent, the labor market remains tight and there are still a significant number of unfilled positions available. Hourly earnings moderated slightly in December, however the annualized increase over the last three months remains at a level the Fed views as inflationary. For the moment, markets are forecasting two more 25-basis point rate hikes in February and March. All of this depends on the path of inflation and whether the economic growth significantly slows in the first half of the year. Those hoping for a rate cut in 2023 may be disappointed as the FOMC minutes indicated no committee members forecasted a cut during the year.
NFIB small business activity kicked off today’s calendar, with U.S. small-business confidence sliding to a six-month low in December (blame inflation and worker shortages). We’ll also have some non-market moving numbers like Redbook chain store sales, wholesale inventories and sales, and a Treasury auction of $40 billion 3-year notes. Fed Chair Powell will participate in Sweden’s Riksbank International Symposium on Central Bank Independence. We begin the day with Agency MBS prices worse .125-.250 and the 10-year yielding 3.57 after closing yesterday at 3.52 percent.
Employment and Transitions
“At Homestead Funding Corp, your job is to say yes, and ours is to make it happen! Our specialty lending division works overtime to deliver niche product offerings, enabling differentiation in competitive markets and expansion into new ones. Whether it will benefit one loan originator or many, we source and tailor our products to meet the needs of our diverse clients. By doing this, our sales team feels empowered to be the go-to resource for borrowers and partners alike. And although we’re occasionally “scolded” by legal and marketing for keeping them so busy behind the scenes, the ability for you to provide top-notch personalized service to your clients makes it all worth it! To learn more about being a valued part of the Homestead Family, contact Michele Teague today by calling (518)-368-1494.”
“While the mortgage industry faced unprecedented challenges in 2022, SWBC Mortgage persevered and had a year of continued growth. We remained steady and committed to support our loan officers with the foundation and resources to succeed. Continuing to provide borrowers with an exemplary level of service has allowed our loan officers to grow their business to new heights! A Top Producer states, ‘SWBC’s diversity and proven success allow us to focus on what we do best, originating.’ SWBC Mortgage will continue to soar in 2023 and is recruiting experienced mortgage professionals across 42 states to join in the success. Interested in joining a team that puts building your business as the top priority? Contact James Clark, Director of Strategic Growth. To learn more about why SWBC Mortgage was awarded #5 Best Large Mortgage Companies to Work For in 2021, visit us here.”
Advancial Federal Credit Union (an Equal Housing Lender) offers financing options for these borrowers in all 50 states. No U.S. credit required. Loans up to $5,000,000 including unique collateral such as non-warrantable condos, condotels, and hobby farms. All forms of work authorization are considered including: Work Visas, Student Visas with OPT/CPT permits, Diplomatic Visas, EAD Cards, and more. TBD pre-approvals provided using only an offer or transfer letter. Don’t miss out on this unique market. The key to success is making contact early before a borrower is denied by another lender and signs a long term lease. Call us today for an overview as well as lead sources in your metro area (888-876-2328), visit us or email John Burkel.
Knowledge Coop announced Josh Swink as Account Executive and sales department addition, bringing his knowledge of sales, SAAS, and long-term customer success to their growing company.
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