In Boston, “wicked pissa smart” is a compliment. I’ll argue that success in lending isn’t based on trying to predict where interest rates are going, since many predictions are a coin toss, but instead on lots of smarts, hard work, and building a business. Sometimes the subject comes up, “My lender ‘owns’ Agency tickets. Are they worth anything?” Yes, there is a dollar value, and STRATMOR’s current blog is titled, “Doing Business with the Agencies: The Golden Ticket?” Certainly the Agencies, namely Freddie Mac and Fannie Mae, were in the news yesterday. Yes, the loan level price adjustments based on DTI have been rescinded. Now all those borrowers can rush out and buy… uh, well, check back in several years while the inventory of houses for sale picks up. Even if rates were 0 percent, if there are no houses to buy, good luck. And after the good news had spread, those who actually read the announcement noticed the last statement: “Additional details about the upcoming Request for Input (RFI) on the single-family guarantee fee pricing framework will be released shortly.​” Investors reacted quickly: more below. (Today’s podcast can be found here and this week’s is sponsored by SimpleNexus, an nCino company and the homeownership platform that unites the people, systems, and stages of the mortgage process into one seamless, end-to-end solution. Part two of an interview with FundingShield’s Adam Chaudhary on protecting against wire and title fraud.)

Lender and Broker Software and Services

Are you looking to reduce fallout in today’s challenging market? Consider adding products from Housing Finance Agencies (HFAs) to your lending toolbox through the Optimal Blue PPE, which includes products from 54 state based HFAs, and counting. HFAs provide affordable homeownership options to low- and moderate-income borrowers, including down payment and closing cost assistance and reduced mortgage payments. With seamless access to HFA investors through the Optimal Blue PPE, you can work toward retaining more leads, reaching new customers, and reducing pipeline fallout – all while helping more homebuyers access affordable financing. Learn how to get started.

“It's like if Zillow and your lender had a baby! With HomeDashboard, your Loan Officers deliver property data and live mortgage products to homeowners and homebuyers, building trust and deepening relationships. Realfinity onboards retail lenders at no cost. We directly engage with your Loan Officers, giving them full access to our enterprise solution now, including recently launched features such as Client Self-Registration, Live/ Adjustable Pricing, Realtor Co-branding, and Single-Sig-On. Help your Loan Officers to keep their clients in a closed ecosystem, increasing referrals and expanding their databases. Contact Luca Dahlhausen to get the integration set up asap, for free. We take care of the rest!”

Don’t miss the valuable opportunity to attend a complimentary webinar on HUD's Mortgagee Letter 2023-03. Servicing compliance expert Donna Schmidt, CEO of DLS Servicing, will share advice and practical solutions for addressing HUD's latest requirements, which companies are finding a challenge to understand and tackle. The 45-minute event begins at 1pm EST on Tuesday, May 16th, and will end with an invaluable Q&A session. Don't miss out on this opportunity to enhance your knowledge and gain an edge when it comes to HUD compliance. Register now to secure your spot. Seats are limited.

“Sagent goes global, expanding talent with 120+ servicing fintech experts! Sagent is thrilled to announce the opening of Sagent India, our new office in Chennai, India, which supports our newly incorporated software engineering team resulting from our partnership deal with Mr. Cooper. In that deal, we bought key tech and teams from Mr. Cooper, and they became a Sagent customer to power their $800B+ servicing portfolio. Opening our India operation grows our fintech talent by 120+ and enables us to build the future of America’s $13T servicing sector even faster. Sagent is the only major fintech firm with a global team of this size building net-new software for the mortgage servicing industry, and, of course, incrementally improving today’s platforms. Read the full details here, and please reach out to connect with us!”

For more than 30 years, Clayton has been a market leader in loan due diligence, helping mortgage and capital market clients see and evaluate risk in their portfolios. Now Clayton’s best-in-class service and expertise will be supported by its new digital platform, Focus, which will set a new standard for Clayton. Focus allows clients to efficiently access deal information and seamlessly upload, validate, and work exceptions…all in one place with a single sign-on. The platform offers clients real-time views of the deals in their pipelines, lets them drill down into loan status and enables them to search, filter and export reports. Aggregators will be able to give correspondents viewing and transacting rights to their specific pipelines, while monitoring performance across all counterparties. Focus, Clayton’s enabling digital platform, is supported by the same experienced people and signature service you count on. The Clayton team will be demoing the new client platform at the upcoming MBA Secondary: email Tom Coffey to learn more or to schedule a demo.

“Are you tired of having to adjust head count every time the market changes? The Mortgage Automation Suite, brought to you by Richey May and Zoral, can help. With scalable automated solutions that improve accuracy while reducing repurchases and costs, your business will be well-equipped for any market cycle. Leveraging this powerful automation will allow your team to close loans more easily, helping to retain your best staff. Plus, it adds the extra layer of stability needed during difficult times; something we could all use a bit more of these days! Find out how the Mortgage Automation Suite from Richey May & Zoral can help you today. Email us.”

Correspondent Products

“Planet’s Correspondent sales team will be at the InterContinental New York Times Square Union Square Park Ballroom during the MBA Secondary & Capital Markets Conference. Be sure to schedule a meeting before appointments are filled! Why meet with us? We’re the #4 correspondent lender and #3 government correspondent lender, according Refinitiv. And a Top 10 lender overall, says Inside Mortgage Finance. Contact your Regional Sales Manager or SVP Correspondent Sales Jim Loving (414-270-0027) to learn what the products, pricing, and people behind those numbers can do for you.”

AmeriHome Correspondent, the 2nd largest correspondent investor in the country and a wholly owned subsidiary of Western Alliance Bank, continues to deliver on its tag line of Relationships-Reliability-Results. With a powerful combination of resources from these two best-in-class industry participants, AmeriHome and Western Alliance are a “must-have” relationship for your mortgage banking needs! They offer a full suite of Conventional and Government loan products with both Delegated and Non-Delegated options, Warehouse Lending options, MSR Financing, and a Treasury Management team uniquely staffed with seasoned mortgage experts ready to assist clients. Interested in learning more about the benefits of partnering with AmeriHome? Then don’t miss the opportunity to connect in New York at the MBA National Secondary Conference or one of the many upcoming conferences across the country. Check out its Upcoming Events page for details and reach out to find out how AmeriHome will benefit your business.

Reaction to Recission of DTI Pricing

So yesterday we had the news from the Federal Housing Finance Agency. Right out of the gate investors and lenders reacted. For example…

“Kind Lending will no longer be charging for a DTI >=40 percent on any FNMA or FHLMC loans. If you have an affected loan that is in process now, we will automatically remove this price adjustment and will send out a new lock confirmation.”

And the Pennymac Correspondent Group has posted a new announcement: 23-33: Updates to Conventional LLPAs (click to view).

Earnings, Along With Another M&A Deal

UWM Holdings Corporation, the publicly traded indirect parent of United Wholesale Mortgage, announced its results for the first quarter ended March 31, 2023. Total loan origination volume for the first quarter was $22.3 billion, of which $19.2 billion was purchase volume. UWM reported a 1Q23 net loss of $138.6 million, inclusive of a $337 million decline in fair value of MSRs (mortgage servicing rights). “Margins improved significantly at United Wholesale Mortgage in the first quarter of 2023 but a markdown on mortgage servicing rights led to a loss for the quarter.” The first quarter’s loss follows a $62.5 million loss from the prior quarter. MSR markdowns were a factor in both quarters, including a $337.3 million negative mark for the first quarter of 2023.

Loan Depot originated $4.9 billion in the first quarter of 2023, which was a 23 percent decrease from the fourth quarter. That said, the gain on sale margin increased substantially from 145 to 243 basis points. President and Chief Executive Officer Frank Martell said, "…We expect to continue to benefit from seasonally higher revenues and our ongoing cost reduction program. Assuming the expected benefits of continuing seasonal volume increases and cost productivity, we expect to deliver improving financial results over the course of the second and third quarters of 2023." The company is forecasting its gain-on-sale to improve again in the second quarter to a range of 240 to 280 basis points.

But in the meantime, LD posted a $91.7 million loss in the first quarter as higher interest rates crimped its ability to grow its origination base. On a sequential basis, loan production dropped 22.2 percent to $4.9 billion in the first quarter. The servicing portfolio helped: Fee income from servicing increased to $118.9 million in the first quarter from $107.2 million in the prior period. Its mortgage servicing rights (MSR) balance was relatively flat at March 31, coming in at $141.6 billion; Loan Depot valued its mortgage servicing rights at $2.03 billion as of March 31 compared to $2.04 billion at yearend.

In deal news, recall that last month Home Point Capital agreed to sell its wholesale-only production arm to The Loan Store. Yesterday news came out that Mr. Cooper announced it will buy what’s left of Home Point Capital, and its roughly $89.0 billion mortgage servicing portfolio, for $324 million in cash in the third quarter. Home Point operations to be shut down after closing. Mr. Cooper Group will assume $500 million in outstanding Home Point 5 percent Feb. 2026 notes, valued at $400 million.

So, like in banking, the big are becoming bigger. Mr. Cooper is currently the nation’s eighth-largest owner of mortgage servicing rights at $400 billion, and will pass Freedom Mortgage when the deal closes in Inside Mortgage Finance’s rankings. Home Point’s life comes to an end.

Capital Markets

In addition to FHFA announcing that it had listened to industry stakeholders and will be rescinding the DTI LLPA (some saw it as high FICO borrowers subsidizing lower FICO borrowers with the upfront fees that were announced in January and delayed in March until August), the latest inflation reading in the form of consumer prices also garnered headlines yesterday. The CPI index came in about as expected, rising 0.4 percent in April, the slowest increase since April 2021. From a year earlier, the CPI rose 4.9 percent after rising at an annual rate of 5.0 percent in March, while core CPI slowed to 5.5 percent year-over-year from 5.6 percent in March. Growth for shelter was at its slowest pace in 16 months, inviting speculation that the Fed is likely done raising interest rates and causing the entire complex to rally.

Today’s U.S. calendar kicked off with weekly jobless claims (264k, higher than expected) and producer prices. PPI increased at their slowest pace since 2021, +2.3 percent year over year, versus expectations of increasing 0.3 percent month-over-month and 2.2 percent year-over-year compared with -0.1 percent and 3.4 percent previously. Later today brings a Treasury announcement on the auction sizes of next week’s 20-year bonds and reopened 10-year TIPS, an auction of $21 billion 30-year bonds, Freddie Mac’s Primary Mortgage Markets Survey, and remarks from Fed Governor Waller. The Bank of England was also out with its latest monetary policy decision, a 25 basis points hike to 4.50 percent. We begin the day with Agency MBS prices better about .125 and the 10-year yielding 3.37 after closing yesterday at 3.44 percent; the 2-year’s yield is down to 3.83.

Employment

“A leading builder mortgage company is seeking a head of FP&A (financial planning and analysis) to provide strategic financial leadership for this newly created group. Responsibilities will include overseeing the development of long-term financial plans, forecasting, budgeting, and performance tracking with a ROI focus. We are looking for someone that can help turn financial data into actionable plans and thoughtfully communicate the data to all stakeholders. The position is ideally located in Tampa or Miami. This is an exciting opportunity to join the thriving builder sector! If you are interested, please send your resume to Chrisman LLC’s Anjelica Nixt for forwarding.”

“Our LOs are discovering their best selves with PrimeLending's One More sales coaching program! This exclusive peer-to-peer coaching was designed by PrimeLending to help our LOs compete and win in today's evolving marketplace. Led by our talented sales professionals, One More offers a dynamic, fast-paced, and results-oriented small group environment where LOs can connect, collaborate, and learn from each other. Our high-energy sessions focus on establishing personal brand, networking, and leveraging technology to drive better results. With One More, LOs gain new ideas, stronger skills, and meaningful relationships that inspire them to reach their full potential. It's just one more reason PrimeLending LOs have double the industry average tenure! Are you ready to take your career to the next level? Contact Nic Hartke today and join our winning team!”