To the best of my knowledge my cat Myrtle, despite being at the top of the food chain, has never hunted eagle… But who can resist a good live bald eagle cam from California? Anyone who has looked at a map knows that Lake Tahoe and Reno are west of Los Angeles. (Repurchase concerns stretch coast to coast, and are the focus of today’s L1 interview with attorney James Brody.) That Maine is south of Paris. That the majority of Canadians live south of Seattle. If the world’s population wanted to live with the density of New York City, all 8 billion could fit in Texas. (And Texas is less than half as big as Alaska!) Geography and demographics fascinate many. The National Zoning Atlas wants to compile all of America’s zoning rules into one database. Why does this matter? Some will tell you that zoning rules are a piece of the nation’s housing affordability problem, and getting more transparency might help provide a solution. (Found here, this week’s podcast is sponsored by Lender Toolkit. With Lender Toolkit’s AI-powered AI Underwriter and Prism borrower income automation tools, you’ll be able to get loans approved in under two minutes. Hear an interview with Mike McAuley and Brett Brumley on the current mortgage industry’s woes and solutions.)

Lender and Broker Services, Products, and Software

“Mortgage brokers work their magic in front of borrowers. At wemlo®, our processors work their magic behind the scenes. It’s simple: brokers quickly onboard with wemlo and then start passing loans off to processors who hustle to get loans cleared-to-close as quickly as possible. Think of wemlo as a vanishing act that delivers real results. In addition to offering award-winning support, wemlo offers processing support in 47 states plus Washington D.C. for dozens of loan products and lenders. Ready to say presto to efficient processing? Book your demo today. NMLS ID 1853218.”

Most lenders are painfully aware of rising loan origination costs, which is a common trend in a down market. But certain costs like credit (surging by 400 percent) and verifications (up by 141 percent) have soared disproportionately, with incumbent providers exploiting their market dominance as virtual monopolies. Yet some lenders are fighting back… Like Lower, which has found a way to save as much as 80 percent on these operational line items and win more loans. Sign up for this exclusive webinar taking place on March 21 at 2pm ET, featuring James Duncan and Donielle Geiser (Lower), Richard Grieser (Truv), and Rob Chrisman where they’ll share their take on today’s market and how they’ve reduced costs on operational line items previously thought to be beyond a lender’s control. RSVP today!.

Attending ICE Experience 2024? Make The Connection with FirstClose at Booth #612. Decades ago, FirstClose designed and developed the first and only home equity system. Today, it continues to be the only platform built solely for this purpose, which is why it is smarter, better and faster than any other solution on the market. Learn how FirstClose’s fintech platform streamlines the origination and closing processes for HELs and HELOCs. And don’t forget to stop by the Dog Park and unwind with some pups from the Nevada SPCA! Schedule a meeting today.

Introducing Maxwell Blueprint Builder: Game-Changing Configurability for Mortgage Lenders. Maxwell is pleased to announce the launch of Blueprint Builder, a first-of-its-kind feature in the Maxwell Point of Sale that allows lenders to fully customize workflows, business rules, and user experiences. With the Blueprint Builder, mortgage lenders can connect to over 60 third-party integrations to create a tailored workflow suited for their unique needs. Plus, lenders can adapt their digital experiences to the operations processes that work best across their products and channels, without the cost of hiring developers. To learn more about the Blueprint Builder, schedule a call with the Maxwell team.

“What’s your current mortgage LOS really costing you? If you're grappling with arduous maintenance tasks, resource-heavy operations, escalating costs, or a combination of these factors, the total cost of ownership may be more than you think. Mortgage lending faces unique demands and evaluating how well your LOS aligns with these demands, as well as the associated costs, is essential to knowing if your mortgage technology is effectively evolving alongside your borrowers and business needs. MeridianLink® understands how the thought of changing systems may feel overwhelming, so we’re sharing this guide to help make the process more manageable and informed! Read the blog.”

Servicing and Pay-Off Product News

Did you miss the MBA Servicing Solutions Conference & Expo? The “Executives Discuss Their Challenges, Goals” session validated where we are as an industry and what we can do to refresh our strategies. Delving into customer pain points, weighing the cost-benefit of analytical tools, and the potential impact of Basel III, the real 2024 takeaway was unexpected…. servicing executives promoted taking a pause from past monotony to fully analyze and refresh business processes. Clarifire’s current blog, “Mortgage Executives Share Their Biggest Challenges and Solutions,” breaks down these obstacles and elaborates on the solutions available to mortgage servicers. Find out how you can reimagine your approach to servicing, leveraging no-code readily, deployable software combined with proven servicing automation. You, too, can pivot from a defensive to an offensive game plan, delivering seamless automation with a better approach, better results, and better software. CLARIFIRE®, truly BRIGHTER AUTOMATION®.

Once a loan has been paid off, the clock starts running on how quickly the lien must be released. Miss that deadline and you’re not only jeopardizing your relationship with the borrower but risking a penalty from your regulator. PerfectDocs®, from NTC, is a user-friendly, web-based platform that enables servicers and investors to efficiently manage a payoff process or an assignment of mortgage for both MERS® and non-MERS loans using their own resources. Come by the PerfectDocs/NTC kiosk at the upcoming ICE Experience (March 18th- 20th) and learn how to use PerfectDocs to create, review, fully execute, record, and track all documents required for payoffs, default requirements and/or loan transfers. Also, learn how eRecord coverage is maximized with NTC’s partnership and integration with ICE’s Simplifile®. Click here to schedule a meeting.

Sagent’s new 7-year partnership with CMG Financial: Team Sagent is excited to announce its latest multi-year partnership with CMG Financial to power its servicing ecosystem implementing the following into their existing system: LoanServ (system of record), CARE (homeowner experience), and DataScape (cloud-based data reporting and insights). CMG is making major strategic moves as they double down on controlling lifetime customer experience by bringing their servicing business in-house, and Sagent is ready to enhance their homeowner-first strategy, helping build better relationships with today’s homeowners and buyers. Check out the full press release with all the details here.

MBA Sums Up Agency Repurchase News

Repurchase concerns were a huge worry in 2023 as hits to lender’s balance sheets for buying back loans, often performing or with minor defects, hurt, and are the focus of today’s L1 interview with attorney James Brody. The MBA’s Sasha Hewlett, AVP of Secondary & Capital Markets, published a good update on what Freddie Mac and Fannie Mae are doing regarding lender repurchases.

“Fannie Mae reintroduced its Notice of Potential Defect (NOPD) process to provide sellers additional time to mitigate manufacturing errors and reduce repurchase requests. The NOPD, similar to the retired Loan Quality Defect Notice, provides lenders a 30-day window to correct specific identified defects before Fannie Mae initiates a repurchase demand. This change comes after extensive engagement between MBA, FHFA, and the GSEs to improve the quality control process and mitigate the harmful impact of performing loan repurchases.

“In a statement addressing these recent moves, MBA President Broeksmit expressed appreciation for Fannie Mae's announcement, and also highlighted MBA's support for a recent Freddie Mac pilot program that more fundamentally rethinks the process to reduce or eliminate repurchases on performing loans, particularly for small lenders. The MBA acknowledged that while Fannie Mae's early notification aligns with some of MBA's recommendations, there is further work Fannie Mae can undertake to improve the loan repurchase process.

“Fannie Mae also announced new capabilities in Desktop Underwriter (DU) that will further streamline the mortgage origination process and could provide enhanced repurchase risk relief. Effective March 29, 2024, Fannie Mae single-family lenders can use a single 12-month asset verification report in the DU validation service to identify recurring deposits in the applicant's digital bank statement data to automatically validate income, employment, and assets. The same report can be used to identify and consider the applicant's positive rent payment and cash flow history, which may benefit more qualified borrowers who have limited or no credit history. Fannie believes these enhancements will improve loan quality control, reduce cycle times, lower costs, and reduce repurchase risk.

“Lastly, information that was presented to our Risk Management Committee last week indicated that both Fannie and Freddie have made some QC improvements.

“Freddie Mac created a Seller QC Council to get feedback that informed areas for improvement of their internal processes. Those include improving their process to accelerate changes to the Guide, implementing independent recheck process before issuing repurchase letters, strengthening underwriter training with respect to rating loan quality defects, and initiating an effort to improve QC speed and efficiency through technology and vendor tools.

“Fannie Mae highlighted the following near term efforts they are taking in response to industry issues: Adjusting treatment of Covid-forbearance delinquencies under 36-month clean pay representation and warrant relief rules, reinstituting advance notice of loan quality defect, expansion of repurchase alternatives for appraisal related defects, reduction in repurchase alternative fees, and continue discussions with FHFA on how to improve the repurchase remediation process across the GSEs.

“Fannie is also doing an expansion of Day 1 Certainty validation services and tools via implementing a self-employed income calculator in DU in 2024, increasing Appraisal Waivers through Value Acceptance plus Property Data Collection, and offering a single Source Validation (SSV) migration from pilot to standard Selling Guide offering in 2024.” Thank you, Sasha!

Capital Markets

I realize that this Commentary focuses on residential lending, but another asset class has been attracting headlines lately. Stock markets around the world have all hit record highs in recent weeks, boosted by falling inflation and rate cut expectations. Economists are expecting the U.S. Federal Reserve to cut rates in June as it waits for more data to confirm inflation is sustainably near its 2 percent target. Fed chair Jerome Powell's recent testimony before lawmakers prompted traders to fall in line with Fed officials’ projections, having previously expected a rate cut as early as March.

Indeed, sticky underlying inflation topped forecasts for a second straight month, with prices jumping for used cars, air travel, and clothes. February’s CPI inflation report, which matched headline expectations (0.3 percent month-over-month) and also included a hotter than expected reading of core CPI (0.4 percent month-over-month), reinforced Fed caution about cutting rates too soon. The readings left total CPI up 3.2 percent year-over-year (versus 3.1 percent in January) and core CPI up 3.8 percent year-over-year (versus 3.9 percent in January). The index for shelter was once again the largest factor in the monthly increase for core CPI and accounted for roughly two thirds of the year-over-year increase. Excluding shelter, CPI was up just 1.8 percent year-over-year.

Yesterday's report was the last major inflation report Fed policymakers will see before next week’s meeting and does not fundamentally change that the Fed will likely cut rates three times this year. The first of those cuts is not expected next week when the Federal Open Market Committee is expected to hold interest rates steady. After that, it’s anyone’s guess. The central bank was already expected to stay the course this month, but yesterday's data may further extend the timeframe toward any cut. The fed funds futures market remains fairly confident that the initial cut will be announced at the June FOMC meeting. However, the FOMC will need to see disinflation progress to resume in the coming months before cutting.

Remember that this week’s economic calendar still contains the producer price index and retail sales. Producer prices in February likely rose less than retail prices in the month but were higher than January as more expensive diesel caused transportation and warehousing costs to jump after three monthly declines. Retail sales likely rebounded sharply as Americans spent more at gas stations, bought more new vehicles, and increased discretionary spending on durable goods after bad weather crimped spending in January. Industrial production was likely flat, with milder weather helping mining but hurting utilities.

Today’s economic calendar kicked off with mortgage applications increasing 7.1 percent from one week earlier, according to data from the MBA’s Weekly Mortgage Applications Survey. While the increase is welcome news, purchase application volume remains about 11 percent below last year’s level. The only other activity on the domestic economic calendar today will be Treasury auctions, headlined by $22 billion reopened 30-year bonds. We begin the day with Agency MBS prices slightly worse than Tuesday’s close, the 10-year yielding 4.19 after closing yesterday at 4.16 percent, and the 2-year at 4.61.

Jobs

“We've done it again! Motto Mortgage has been named to Entrepreneur Magazine’s 2024 Franchise 500® list for the fifth consecutive year. (We took the #1 spot in the Miscellaneous Financial Services category... if you’re keeping track.) The people at Entrepreneur Magazine sure do have good taste. We provide franchise owners with professional marketing content, a product mix, wholesale lender relationships, compliance support, and more. From. Day. One. Basically, we’ve put an entire business together for you and the industry is taking note. Ready to own an award-winning mortgage business? Email for all the details.”

FHA job opportunity for a Supervisory Underwriter in Santa Ana. Some duties of the position include planning and directing all technical underwriting, insurance endorsement and related functions. Monitor status of goal accomplishment. Interpret HUD technical instructions and instruct personnel in the interpretation. For more information, view Job announcement 24-HUD-938-P.