Plenty of capital markets folks, senior management, and the usual cadre of vendors are here in Manhattan, doing the macarena until 2AM. Okay, just kidding. They’re actually talking about some pretty serious stuff. For example, MCT writes, “We are seeing, from our clients, that current market roll costs and the ultimate effects on execution are the biggest concerns for secondary marketing heads,” and is spelled out in this MCT article. Trying to wring every basis point out of a loan or servicing sale is another topic. Small steps by Freddie Mac and Fannie Mae are having some positive impacts while they continue to manage credit risk and use pricing as a tool to guide business. Agency shifts will continue, and some of the talk includes policies about including rental payments in the credit decision, helping the “green” channel with policies regarding solar panels, affordable housing programs, protecting borrower information, and the impact of climate change on pricing and policies. Stay tuned! (Today’s podcast is available here and this week’s is sponsored by Candor. With Candor’s Machine as an Underwriter, lenders modernize their manufacturing infrastructure making them immune to margin, capacity, and staffing challenges forever. Today’s has an interview with Rida A. Sharaf, Chief Strategy Officer, US Real Estate Services (USRES) and Res.net Systems on REO inventory, the end of moratoriums, and the restart of evictions and foreclosures.)

Lender and Broker Software and Services

Time really is money, and neither borrowers nor lenders want to waste either. Fortunately, FormFree offers trouble-free digital verification solutions that reduce origination costs, accelerate cycle times, and increase operational efficiency for lenders of all sizes. FormFree’s benefits are clear to borrowers as well: a streamlined homebuying experience and the ability to authorize lender assessment of income using direct-source bank data. According to Freddie Mac’s Cost to Originate Study, lenders using digital verification of income (VOI) report providers like FormFree’s AccountChek save around $2,200 per loan and compress production cycles by five days. Schedule a personalized demo and see for yourself how FormFree’s VOI and employment offering can provide cost savings of 75% or more for your business.

With rates spiking, margin compression and declining origination volumes, originators are looking for ways to drive new volume. Cash-out refinancing and Home Equity Line of Credit are predicted to surge in 2022. Skyrocketing home values in 2021 mean that homeowners gained new wealth through their properties, with an average increase in equity of nearly $57,000 per borrower from Q3 of 2020 to Q3 of 2021, according to property data analytics firm CoreLogic. To seize this new market opportunity originators must master Cash-out Refi's to drive volume in today's mortgage market. On Thursday, May 19 at 1 pm ET / 10 am PT, join Josh Friend, Founder of Insellerate to learn the best way to counsel and advise the clients in these types of transactions and leverage technology to streamline the processes. Register for the National Mortgage Professional webinar "Mastering Cash-out Refi's to Drive Volume in Today's Mortgage Market” here.

Did you miss Computershare Loan Services’ (CLS) Compliance in the Post-COVID Era webcast? View the full recording or browse its Q&A snippets to hear CLS’ thought leaders (Jeff Johnson, Chief Operating Officer, and Leesa Logan, Servicing General Counsel) discuss a range of compliance issues tailored for servicers. Topics include: CLS’ approach to risk management, how CLS helped borrowers who struggled to make payments post-forbearance, what post-pandemic litigation trends could look like, and what lenders should consider before servicing their own loans. Contact CLS to learn how they help clients thrive, even in the face of heightened regulatory scrutiny.

“Always striving to be the best partner to our clients and their homeowners! How do we provide the best homeowner experience? By being a trusted partner to both our clients and their homeowners. That’s a much higher level of servicing because it’s not just about transactions but about the relationship formed by continuously working to meet the needs of homeowners throughout the lifetime of the loan. Whether it's onboarding a new loan, escrow, payments, or year-end, you can be certain that our talented team of mortgage servicing professionals are delivering the best homeowner experience that is responsive, anticipatory, and always caring. Let’s discuss how Cenlar can meet the mortgage servicing needs of your organization. Call 1-888-SUBSERV (782-7378) or visit us here. We want to be your trusted partner, each and every day.”

Cloud-based LoanMAPS, a fully integrated digital processing and underwriting system, will eliminate your need for a POS, a LOS, a CRM, report writer, and income calculator. Do you know your costs of your full-time employee? Does your Fintech truly improve their work process and reduce your cost to produce? LoanMAPS does. With LoanMAPS you can have confidence you will start the loan with an agency compliant AUS underwrite, and our workflow will have entry level mortgage bankers closing in no time! “LoanMAPS is not about replacing people, it is about using technology to its fullest potential so that your employees can reach theirs.” – Take3Tech! In conjunction with our partner DocMagic, users can finish closing documents in 15 minutes. See more about how you can reduce your cost to close with the LoanMAPS Closing Module! See all the time and cost saving features of LoanMAPS by requesting a demo today.

Memorial Day is quickly approaching and if you’re still planning to be on-call for your referral partners, you’re doing it all wrong. You’re probably rolling your eyes and saying “but I can’t lose their business… I have to make myself available.” Maybe that was true five years ago. But today, you can give your Realtors QuickQual by LenderLogix. This adjustable pre-approval letter gives Agents & borrowers the ability to run their own scenarios and generate letters on the fly. So when they want to know what 5% down would look like instead of 3%, or need a letter for $275k instead of $270k, they can crunch the numbers themselves. Because let’s be honest, your Realtors do not want to call you on a holiday just as much as you don’t want to answer them. The most successful referral relationships are driven by efficiency and fast communication. Get a sample QuickQual sent to your phone to learn more!

In this rising interest rate environment, do you have the right tools to grow your business and help ALL your clients? Sprout Mortgage’s 40-year loan with a 10-year interest only period, the “I/O 40 Advantage,” allows for increased purchasing power as home prices skyrocket, by keeping the monthly payment lower than that of a comparable 30-year loan which includes both interest and principal. A 40-year loan with a 10-year interest only period also helps property investor clients improve cash flow by lowering the carrying cost of the property for the first 10 years. Consider tapping into the power of one of Sprout’s uncommonly good mortgage solutions, by clicking here.

SimpleNexus has unveiled transformative partnerships, rolled out innovative new products, and grown substantially over the last year. But just as exciting as what the firm has accomplished is what lies ahead. In case you missed out on the insights (and majestic mountain views) of SNUG 2022, SimpleNexus has published its inaugural Mini Mag to loop you in on executive perspectives and keep you current on what the company is doing to drive innovation. Download the free Mini Mag for the scoop on digital mortgage innovation.

Thoughts From the National Secondary

Garth Graham, Senior Partner with the STRATMOR Group, checked in from here in New York. “Being in New York for secondary is like a flash back to pre-covid days. Crowded, face to face, and everyone is looking for every penny in execution.

“I actually did some digging through the data and found some interesting statistics related to correspondent lending (i.e. loan purchasing) vs agency delivery. In 2018, the aggregator’s share of the IMB market was 40%, and last year it was 25% because so much was delivered to the agencies. Of course, delivering to the agencies and retaining servicing is a good strategy when you want to defer the earnings into future years AND when you have plenty of cash.

“Well a lot of IMB’s find themselves in a different market today. And that’s without proposed IMB capital rule changes that will make it even harder for companies with light balance sheets to retain servicing. So, I expect that the delivery to correspondent aggregators will grow in the next year (the share will grow) even as the total market goes down. I think this was part of the investment thesis for Planet in their decision to buy the Correspondent channel of Home Point: More capabilities for correspondent sellers will be a plus in this market.

“By the way, there are certainly some big lenders active in the M&A space who sort of communicate an alternative strategy, that they are long on servicing and consider that as a strategic advantage to retain the customer relationship. I know in several M&A deal we have done recently, that ability to retain servicing was a big factor.” Thank you, Garth.

Capital Markets

Obviously, a big discussion point here in New York is interest rates. The end of a chaotic week last week saw some soothed frayed nerves, thanks to a little help from various Fed speakers who indicated bigger rate hikes are off the table for now, including reassurances from Fed Chair Powell’s that bigger rate hikes are not in the Fed’s plans for the next two meetings. He did add that if data turns the wrong way, the Fed is prepared to do more. The overall tone was hawkish and Treasury yields pulled back to end the week, though the 10-year yield ended the week down 18 basis points from where it began.

Last week’s reading on consumer inflation showed prices increased at 8.3 percent for the preceding twelve months. While this is a small decline from March’s data, it was still above analysts’ estimates and still very elevated. Cost pressures also abound for businesses: producer prices were up 11 percent over the last year. 70 percent of businesses reported raising prices in April to combat higher input prices. A quick reminder that the Bureau of Labor Statistics approximates home price changes within CPI in a manner known as "owner's equivalent rent" (OER). OER attempts to capture price changes by asking homeowners what they think their home’s potential rental price would be, and the past few years of out-sized home price changes means CPI fails to accurately account for it. That is not helpful for the FOMC in attempting to determine its stance of monetary policy.

Despite consumer sentiment falling in May to its lowest level since 2011 due to inflation dimming views on the economy, consumer demand remains strong. Consumers expect prices to rise 5.4% over the next year, holding at a four-decade high, and their view of their current financial situation is at its lowest reading since 2013. Higher prices, higher interest rates, and a significant stock market correction led to 47 percent of consumers saying they feel worse off financially than one year ago. Many hope that inflation has peaked and the economy will gradually slow while avoiding falling into recession.

Last week saw $30.2 billion MBS submitted for sale by originators, with the Fed purchasing $9.7 billion of that. 68 percent was in UMBS30s, 11 percent in UMBS15s, and 21 percent in GNIIs. This week sees the Desk purchasing up to $8.2 bn over 10 operations. The New York Fed released the latest agency MBS purchase schedule through May 26, the fifth consecutive schedule that will not see any net additions to its balance sheet, and we will soon see reduction due to roll off. Today, the Desk will purchase up to $1.7 billion across UMBS and GNII 30-year 3.5 percent through 4.5 percent. The Fed holds between 40 and 50 percent of the 2 percent and 2.5 percent UMBS 30-year securities in the market. That number decreases as you go up the coupon stack, with the Fed holding 14 percent of the outstanding 4.5 coupon. As we approach the beginning of the Federal Reserve's third attempt to go back to an all-Treasury balance sheet, it is important to remember that the Fed has absorbed a massive $2.7 trillion of Agency mortgage bonds, leaving far less for private investors.

This week’s economic calendar includes several housing-related releases in addition to retail sales, industrial production/capacity utilization, business inventories, regional Fed surveys, and leading indicators. The Treasury will auction $17 billion 20-year bonds on Wednesday followed by $14 billion reopened 10-year TIPS on Thursday. Today’s calendar has the release of Empire manufacturing for May, New York Fed President Williams moderating a discussion before the aforementioned MBA secondary conference, and March TIC data from the Treasury, for those who care. After Friday saw Fed Chair Powell’s remarks calming markets, we begin the week with Agency MBS prices little changed from Friday and the 10-year yielding 2.92 after closing last week at 2.94 percent.

Jobs and Transitions

SWBC Mortgage is pleased to announce that Rick Long is now Senior Vice President and Mountain West Regional Manager. With over 25 years of mortgage industry experience, Rick currently manages additional territories and branches in Western states including Arizona, Colorado, Idaho, Oregon, and Washington. “SWBC Mortgage offers the support to help our loan officers grow their business,” said Rick Long. “Our processes and fulfillment teams truly allow you to ‘originate’ and not micromanage each application. Whether it is marketing, IT, servicing, products, or competitive pricing, SWBC Mortgage is one of the industry leaders amongst IMBs.” Rick is recruiting experienced professionals who want to join a successful, high-performing team. Interested in joining Rick and SWBC Mortgage, a perennial Best Place to Work? Contact Rick Long. SWBC Mortgage is also recruiting for all branches in 42 states. Learn more about SWBC Mortgage.

“Shelter Home Mortgage, part of the Newrez Family of Companies, is actively seeking loan officers in the following areas: Georgia (Midtown, Stockbridge, Sandy Springs), Florida (Tampa, Jacksonville), Alabama (Birmingham), and South Carolina (Greenville). Shelter Home Mortgage was founded in Atlanta in 1993 and has been serving Georgia for nearly three decades. Shelter’s niche is mortgage alliance partnerships with real estate companies and the company is aggressively expanding its model throughout the Southeast. “We are looking for ambitious loan officers who embody our key values of Remarkable Service, Uncompromising Integrity, and Exceptional Teamwork. We offer an incredible opportunity for these loan officers to double or triple the size of their business as they build relationships with real estate agents in our network,” said James Williamson, President of Shelter Home Mortgage. Apply now or contact James Williamson, or our recruiting team today!”

FHA has one opening for a Management Analyst in Philadelphia, PA to provide HR administrative and management advice and assistance to managers, supervisors, and employees, and develop and implement HR policies, programs, procedures and manage and/or coordinate hiring programs for Single Family Housing personnel. Salary up to $134k/year.