Any capital markets person will tell you, “What’s a surefire way to double your money in a casino? Fold it in half and put it back in your pocket.” I am in Las Vegas for First Colony’s Loan Officer Retreat, watching the tragic air news from Washington, and the MBA’s IMB in Austin has come to a successful conclusion. Yesterday the talk in the hallways was about “Donald Trump rescinding his OMB freeze. (There are other ways to accomplish his goals.) At the IMB, innovation is alive and well. How about a bank that shows you your carbon footprint on your statement? (Contact Dawn S. with questions about CI&T Bank.) There’s newzip, a “centralized real estate platform.” (Reach out to Casey H. with questions) There’s AMC Encore, sister company of RSDS Appraisal Diversity for appraiser training. (Contact COO Randy F. with questions.) Of course, the future of the CFPB’s focus is at play, as well as its action against Draper & Kramer Mortgage Corp. for discriminatory mortgage lending activities that discouraged homebuyers from applying to Draper for homes in majority-Black and Hispanic neighborhoods in the greater Chicago and Boston areas. (Really? Lenders discourage potential customers?) (Today’s podcast can be found here and this week’s is sponsored by Figure. 50 percent of the top IMB’s use them, and if you haven’t examined your HELOC & HELOAN strategy recently, it’s time to get on it. Hear an interview with Depth’s Kerri Milam on relationship management and brand awareness for individuals and companies in the mortgage industry.)
Broker and Banker Products, Software, and Services
Despite being one of the largest fixed-income markets in the world, the mortgage-backed securities (MBS) market has historically suffered from broad and disorganized data regarding valuations and modeling of MBS performance. This is a direct result of the highly fragmented nature of the overall mortgage data landscape, creating immense obstacles for investors. ICE’s robust loan- and property-level data breaks down the barriers that divide property and mortgage assets, helping to provide data visibility of the entire end-to-end housing finance ecosystem from pre-origination through the other side of prepayments. Being able to access more granular data from a single source is a huge game changer for investors, mortgage loan buyers and securities issuers as it enhances transparency and decision-making efficiency. To learn more about how capital market participants can leverage ICE’s improved mortgage data to draw market insights and better manage risk, check out The DESK’s interview with Julian Grey, ICE’s Executive Vice President of Data & Analytics.
“In 2024, Servbank navigated the evolving financial landscape with innovation and steadfast commitment. From strategically expanding our senior leadership team to adopting the newest technology, Servbank has been at the forefront of providing stability in an ever-changing market. Servbank’s dedication to delivering a best-in-class experience is reflected in our achievements, including boarding 148,000 new loans, and establishing 10 new client partnerships. With record-high satisfaction rates and NPS scores from both clients and customers, Servbank’s 2024 Year in Review blog offers an insightful look at a year of milestones. See how our mission of creating excellence in all we do, and is setting the stage for an even more successful 2025. Read the full Year in Review here.”
AI will undoubtedly have profound implications for the mortgage industry, especially within capital markets. Join the upcoming webinar: MCT's AI Blueprint for the Future of Mortgage Capital Markets Technology on February 20th to learn how MCT is extending its legacy of innovation and technology stewardship by sharing its assessment of both the promise and the perils of this new revolutionary technology. Register for the webinar to hear MCT’s Phil Rasori, Andrew Rhodes, and Paul Yarbrough discuss MCT’s Generative AI journey over the last 12 months, the pros and cons of LLMs, and MCT’s rollout of AI workflows that focus on data security.
Why did point-of-sale become so complicated? All we really wanted was a sleek, mobile-friendly loan application, an auto-generated (and loan-officer-tweakable) Needs List for borrowers to sign and upload documents, plus some simple text notifications. Instead, we ended up with a second LOS. It’s time to check out LiteSpeed by LenderLogix, built for lenders using Encompass® by ICE Mortgage Technology™ and supported by a team you'll know by name.
Lender Fraud Survey
Secure Insight polled 112 lenders nationwide about identified fraud incidents in 3rd and 4th Q 2024. Lenders reported that suspected loan fraud issues increased from 7% to 9% in the 3rd Q and 8% to 11% in the 4th Q from 2023 to 2024. Top fraud concerns included: business email compromise, wire fraud, LLC fraud and fraud for housing. Lenders are also concerned about data privacy and security requirements, which are being adopted by various states and include obligations to protect consumer data from theft.
Historical statistics reflect that loan fraud is likely to occur seven times more often in a down market than in a booming market. This occurs because of (a) less stringent underwriting focused on closing business to bring in volume, (b) loan officers more likely to fudge data to get deals done and earn dwindling commissions, (c) reduced staff increases opportunities for email compromise and wire fraud, and (d) reduction in costs often eliminates fraud prevention and deterrence tools. For more information visit www.secureinsight.com or contact info@secureinsight.com.
There’s Plenty of Equity Out There with Homeowners
ATTOM, a leading curator of land, property data, and real estate analytics, today released its fourth quarter 2024 U.S. Home Equity & Underwater Report, which shows that 47.7 percent of mortgaged residential properties in the United States were considered equity-rich in the fourth quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values.
That level was down slightly from 48.3 percent in the third quarter of 2024 and from a recent peak of 49.2 in the prior three-month period. However, it was still up from 46.1 percent in the fourth quarter of 2023 and remained at historically high levels that again showed one of the most profound benefits of the nation’s 13-year housing market boom.
The same holding pattern continued for the portion of home mortgages that were seriously underwater. Just 2.5 percent of mortgaged homes fell into that category during the fourth quarter of 2024, with combined estimated balances of loans secured by properties that were at least 25 percent more than those properties’ estimated market values. That was the same as in the third quarter and almost unchanged from the 2.6 percent level recorded in late- 2023.
Hey, while we’re on reports, the Community Home Lenders of America (CHLA) released its yearly research study report titled, “CHLA 2024 Report on Independent Mortgage Banks.”
In addition to its key finding that IMBs originate the vast majority (83%) of all single-family mortgage loans, the study also revealed that IMBs outperform bank loans to minorities and other underserved borrowers. IMBs, particularly smaller ones, have almost no taxpayer or systemic risk, and the loans they offer provide consumers with greater protections than bank mortgage loans. The study also highlighted last year’s significant public policy advocacy successes for IMBs, including replacing GSE repurchase demands with indemnifications, more Ginnie Mae flexibility, and a CFPB focus on exploding third party provider costs.
“This year’s findings underscore what the CHLA has known for years: IMBs are having a tremendous, positive impact on the mortgage industry and they should no longer be overlooked,” said Scott Olson, Executive Director of CHLA. “Our hope is that members of Congress will carefully weigh these findings and use them to shape public policy regarding mortgage lending in the months to come.”
The CHLA conducts this study and publishes its annual IMB Report to educate both the public and federal officials about the important role that IMBs play in the U.S. housing market. It is proud to represent and support IMBs in their ongoing effort to help individuals pursue the dream of homeownership.
Capital Markets
The Federal Reserve kept monetary policy unchanged in its first Federal Open Market Committee (FOMC) meeting of 2025, aligning with market expectations. The Fed cited strong economic growth, a robust job market, and inflation still above target as reasons to maintain the current federal funds rate. Quantitative tightening continues as planned.
With no major changes in the statement, attention now shifts to upcoming speeches for clues to future rate cuts. The Fed acknowledged inflation remains elevated, slightly adjusting its previous language on progress toward the 2 percent target. President Trump’s tariff policies pose potential inflation risks, adding uncertainty to future rate decisions.
The first look at Q4 GDP (+2.3 percent annualized) and jobless claims (207k) kicked off today’s calendar. Expectations were for GDP to increase 3.1 percent, unchanged from Q3, with final sales and the core PCE deflator increasing 3.0 percent and 2.5 percent versus 3.3 percent and 2.2 percent previously. Personal Consumption was +4.2 percent on an annualized basis. Later today brings pending home sales for December, Freddie Mac’s Primary Mortgage Market Survey, the latest policy decision from the ECB, and more earnings from Wall Street. We begin Thursday with Agency MBS prices better than Wednesday’s close by .250-.375, the 2-year yielding 4.20, and the 10-year yielding 4.50 after closing Wednesday at 4.56 percent.
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