Yesterday’s Commentary had a note about Atlantic Bay’s “LinkedIn traffic picking up.” I have been assured by Atlantic Bay’s CEO that the company continues to enjoy its 27 years in business and will remain independent! I apologize for any confusion yesterday’s note caused, and the Commentary continues. The conference in New Orleans also continues, with talk of repurchases, credit & verification costs skyrocketing (you’ll see it on your February 1 CRA invoice), and how servicing income “saved the bacon” of many a lender in 2023. The average elevation of New Orleans is 20 feet. Are you going to want to service, or insure, properties on the East Coast that are not only experiencing rising sea levels but also are sinking by a third of an inch a year? “Affecting more than 2 million people and 800,000 properties on the East Coast.” During a 30-year mortgage that’s “only” ten inches. (Today’s podcast can be found here and this week’s is brought to you LoanCare. LoanCare has successfully navigated clients and homeowners through market change for 40 years. The mortgage subservicer is known for delivering superior customer experience through personalization and convenience via its portfolio management tool, LoanCare Analytics™, supporting MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with LoanCare’s Eric Seabrook on consumer digital and customer experience from mortgage servicers.)

Lender and Broker Services, and Software

ACES audit volume increases 24 percent, hits record high in 2023! Despite challenging mortgage market conditions, ACES Quality Management maintained a record growth path achieved over the last few years by adding more than a dozen of the leading lenders in the U.S. to its client roster. This growth resulted in a 24 percent increase in audit volume totaling more than 7.7 million audits across hundreds of millions of dollars of real estate transactions. Other notable achievements: Launched ACES PROTECT, a suite of automated regulatory compliance tests designed to reduce audit time and enhance oversight. Introduced several enhancements to its free Compliance NewsHub website, enabling users to filter the events calendar and recent news for easier navigation. Published nearly 460 articles and over 160 calendar items to the Compliance NewsHub. Published its quarterly Mortgage QC Industry Trends Report. Read the press release.

“Processor & Underwriter Automation: Zoral’s automation platform delivers amazingly accurate results in record time! Improve processing and underwriting turn times from days to minutes. Zoral analyses, calculates, and compares LOS data to document data. Dynamic notifications and conditions provide your team with a concise roadmap of what is needed on every loan, at every milestone, all the way to CTC. Our engines accurately categorize, analyze, and calculate eligible income from all income sources, including 3rd party providers such as Account Check. Bank statements are analyzed to identify EMD, cash to close, large deposits, recurring debits, and credits etc. For the past 20 years, Zoral has been creating the most advanced, AI powered, automation solutions anywhere in the world. Our proprietary solutions are designed and built in-house and rapidly implemented. Stop messing with headcount at every turn of the market. Zoral’s automation platform will provide the elasticity to handle even the most unpredictable environments. To learn more about our automation solutions for mortgage, contact Peter Sandler.”

“Modern day lenders focused on convenience and transparency, can now use Uplist to provide prospective homebuyers instant access to rates and payments through the nCino mortgage app. If you are an existing nCino Customer or looking at nCino’s Mortgage product, call us about how to get connected and wow your homebuyers! Why stop there!? Give agents another reason to stay connected with you this year. Uplist also lets real estate agents request SmartView™ Listing Flyers right through your mortgage app. The best part is no programing or IT assistance is required for setup. Discover all the value Uplist offers and book a friendly call or email us to get started.”

Interest Rates are declining, sparking anticipation of a refi surge, yet the customer retention rate for most loan officers is below 20 percent. The dramatic rise of over 500 percent of consumers on the Milestones platform in December alone highlights the intense competition for LOs to stay top of mind for the customer’s next transaction with a personalized homeowner portal. Discover more about Milestones today.

Meet your customer’s needs. Make it easier for them to work with you. That’s what grows your business. LoanCraft offers a suite of Loan Automation services to help with its PPE having services for LendingTree pricing, interactive pricing tools, a pricing API, and a robust suite of testing tools. Their Best Offer Wizard platform (patent pending) helps you and your loan officers offer the program that best fits the customer’s needs, delivered via API, the Virtual Loan Officer tools (ViLO), and interactive tools for loan officers. LoanCraft’s income services give you insured income calculations for all types of source documents from the easiest to the hardest – paystub/W2, tax returns, bank statements, P&L, and tax transcripts. Email or book a time with Jessica West.

Broker and Correspondent Loan Programs

“If you’re originating closed-end second mortgages and not working with Newfi yet… you are MISSING OUT! Our brand new Olympic Fixed Second is one of the best-priced closed-end second offerings in the industry today with rates in the 8’s, availability in 45 states (including TX!), and loan amounts $75k-350k. This product is offered in our wholesale and delegated correspondent channels. Want to learn more? Join our webinar tomorrow “Unlock Opportunities In Your Database: Closed-End Second Mortgages” by registering here. Contact EVP, National Production John Wise to learn about how your team could benefit from this product.”

REMN WHOLESALE’S “5 DAY HELOC PROGRAM” may be America’s #1 Wholesale Lending DIGITAL Standalone HELOC. The online application is mobile friendly. The HELOC is a full draw that is taken at closing with no prepayment penalties. Re-draws may be taken in minimum increments of $500, up to the full line amount; and no in-person appraisal. Loan amounts up to $400,000. “Approvals in Minutes, Closings in as Little as 5 Days!” Ineligible states: DE, KY, NY, SC, TX, and WV. REMN’s product offering expands from HELOC to Non-QM (REMN Access Program), expanded to include condotels; Government to Conventional; and Jumbo to Renovation Lending. REMN offers the loan products that YOUR borrowers need nationwide. REMN provides decades of product knowledge and expertise and has the most tenured Sales and Operations team in the industry! REMN WHOLESALE IS ONLY WHOLESALE… 365 DAYS A YEAR… 24/7.

STRATMOR’s Ops Workshop

Forecasters are predicting modest growth in new and existing home sales in 2024, which means we can all look ahead with cautious optimism. Now’s the time to review your operations and prepare for this modest shift back toward normalcy. Senior Operations Executives: STRATMOR Group is hosting its virtual Operations Workshop next month, February 14-16, to help you do just that. Interact with STRATMOR advisors and your peer lenders to discuss improving operational efficiency, overcoming recent challenges and pain points, and current trends in mortgage operations. Contact STRATMOR Group to learn more and sign up.

Conventional Conforming News

When the death of a property owner leaves a home without a clear title, their heirs may not be able to access the home’s equity, apply for assistance, or sell it at market value. Fannie Mae’s recent report estimates the scope of the problem in the U.S. and its impacts on homeownership rights.

Fannie Mae offers a financial hardship messaging playbook to support servicers in their engagements with delinquent borrowers, helping them either stay in their homes or navigate a graceful exit to avoid foreclosure.

In 2023, Fannie Mae continued to evolve policies to promote safe and responsible lending, furthering its commitment to serve renters and homeowners in a fair and equitable way. Check out the final In Case You Missed It 2023 to see the year in review, including Selling Guide updates, Servicing Guide updates, Lender Letters, and Desktop Underwriter® (DU®) release notes from last year.

During the weekend of Jan. 20th, DU for government loans will be updated with changes for FHA loan limits and VA county loan limits. Read Fannie Mae January Release Notes for details.

Strong quality control (QC) can help your organization manage risk and improve loan quality. Visit Fannie Mae’s Beyond the Guide and hear quality risk leaders discuss the importance of managing quality risk and offer insights into leveraging this guide to help achieve a best-in-class QC program.

The Federal Housing Finance Agency (FHFA) has adjusted the cap on average total assets that is used in determining whether a Federal Home Loan Bank (Bank) member qualifies as a “community financial institution" (CFI) to $1,461,000,000, based on the annual percentage increase in the Consumer Price Index for all urban consumers (CPI-U), as published by the Department of Labor (DOL). These changes are effective as of January 1, 2024. View the posted FHFA Notice of Annual Adjustment of the Cap on Average Total Assets that Defines Community Financial Institutions.

AmeriHome Mortgage Product Announcement 20240104-CL reminds Sellers that effective on and after January 26, 2024, for all GSE loans with appraisals, AmeriHome will require a Successful Summary Submission Report (SSR) from both Fannie Mae and Freddie Mac included in the Mortgage Delivery File.

Effective with loan deliveries on or after 2/15/2024, as stated in Announcement 24-01, Pennymac is aligning with Freddie Mac’s updated guidance requiring that all borrowers must occupy the subject property for cash-out refinance transactions when secured by a primary residence.

Effective with new commitments taken on or after January 8, 2024, mortgage loans with a Desktop Underwriting® (DU®) Fannie Mae Value Acceptance + Property Data accepted offer are eligible for purchase. See AmeriHome Mortgage product announcement 20240102-CL for details.

Recently, Fannie Mae published SEL-2023-11 and DU Release Notes announcing changes to several topics, including a new Income Calculator, VVOE alternative options, restricted stock units and restricted stock as an eligible income source. See AmeriHome Product Announcement 20240108-CL for details.

Effective immediately, Citizens has improved pricing for non-owner-occupied properties. These adjustments will be effective for Conventional Conforming and High Balance Fixed products (not available on Home Ready and Home Possible). Citizens Correspondent Enhanced Investment Property & 2nd Home Pricing.

Capital Markets

With many mortgage market participants in New Orleans, it was a quiet start to the week. On the economic front, the Leading Index for December showed a 0.1 percent decrease, which was better than expected.

This week will have some news to watch for: New home sales and GDP on Thursday and pending home sales and Personal Incomes / Outlays on Friday. The first estimate of real GDP for the fourth quarter of 2023 is expected to show that growth moderated after a robust 4.9 percent annualized increase in Q3. For 2023 as a whole, real GDP likely rose 2.4 percent, much better than expected at the beginning of 2023. The GDP price deflator, measuring the cost of all goods and services produced in the U.S., is expected to moderate, further evidence that inflation is moving back toward the Fed’s target. The Personal Income / Outlay report contains the Fed’s preferred measure of inflation, the PCE Price Index, and will likely show another month of strong spending on goods and services, with incomes growing solidly (though not quite as fast as spending). Spending will eventually have to slow and come in line with income growth, which is part of why real GDP growth is expected to moderate in 2024. Inflation is expected to have held steady in the personal consumption expenditures price deflator in December, slowed by the core PCE deflator. In six-month annualized terms, both total and core PCE inflation were likely very close to the Fed’s 2 percent target for a second consecutive month.

There won't be any Fed-speak this week as we are in the quiet period prior to next week's FOMC rate decision. There is a near-universally held view that the FOMC will leave the fed funds rate and pace of quantitative tightening unchanged at the conclusion of its upcoming meeting on January 31. The Committee is expected to buy time to determine if inflation is indeed on a sustainable path back to 2 percent and the meeting serves as an opportunity to build consensus around the conditions for eventual policy easing. Markets are much more concerned with the March meeting, where fed funds futures are now pricing in a better-than-50 percent chance that the Fed will keep rates at current levels and not cut. To begin 2024, there was around an 80 percent chance of a rate cut. Futures are still somehow pricing in 150 basis points in rate cuts as the most likely scenario, and the resilient strength of the U.S. economy continues to reinforce the idea of a soft landing.

Today’s economic calendar is under way with Philadelphia Fed non-manufacturing surveys for January. Later today brings Redbook same store sales for the week ending January 20, Richmond Fed surveys for January, several Treasury auctions, headlined by $60 billion 2-year notes, and more earnings from Wall Street. Overnight, the Bank of Japan will be out with its latest monetary policy decision (deciding unanimously to keep interest rates at -0.1 percent) with investors looking for further clues regarding a potential exit from NIRP. Today is also 48-hours for Class D MBS. We begin the day with Agency MBS prices slightly worse and the 10-year yielding 4.12 after closing yesterday at 4.09 percent. The 2-year is up to 4.40.