As the U.S. faces nationwide flight delays, one must ask if there are processes in place for the FAA to deal with them. “Trust the process” is a common thing to hear, but attorney Brian Levy reminds us of why process is important in the actions of government in light of the FHFA’s rescinded DTI pricing. The CFPB knows a thing or two about the process, and the Consumer Financial Protection Bureau issued an order against Nebraska’s ACI Worldwide and one of its subsidiaries, ACI Payments, for improperly initiating approximately $2.3 billion in unlawful mortgage payment transactions. ACI’s data handling practices negatively impacted nearly 500,000 homeowners with mortgages serviced by Mr. Cooper (formerly known as Nationstar). “By unlawfully processing erroneous and unauthorized transactions, ACI opened homeowners to overdraft and insufficient funds fees from their financial institutions. Today’s order requires ACI, among other things, to pay a $25 million civil money penalty.” (Today’s podcast can be found here and is sponsored by Visio Lending. Visio is the nation's premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Through its top-rated Broker Program, Visio brokers can earn up to 5 percent. Hear an interview with Visio Lending’s Jeff Ball on all things rental lending and debt service coverage ratio – DSCR - lending.)

Lender and Broker Services, Products, and Software

“Need a third-party reviewer for your 2023 MERS® Annual Report? Look no further than Falcon Capital Advisors. Only our review team consists of former members of the MERS legal, operations, membership, and compliance departments, who have first-hand experience developing, reviewing, and enforcing the requirements of the Annual Report. The MERS® Annual Report is not due until 12/31, but the submission window has already opened. Don’t delay. Contact Tim Renner today to learn more about how Falcon can put our unmatched experience and expertise to work for you. Discounted pricing available to those who sign up by September 1.”

Hey there, mortgage industry movers and shakers! Let's talk tech, baby! Technology has been revolutionizing the mortgage industry, from LOS systems and underwriting systems to cloud-based credit reports. But wait, there's more! Artificial Intelligence (AI) is on the horizon, and we're here to explore how it's going to shake things up. Love it or hate it, understanding its potential is crucial to staying relevant in the industry. Our free eBook is your ticket to discovering how AI can take your customer experience to the next level, boost productivity, slash costs, keep you compliant, streamline workflows, and give you a crystal ball into your borrowers' future. Don't miss out! Download Artificial Intelligence: 7 Ways AI is Transforming the Mortgage Industry today. Follow Birchwood Credit Services to gain access to a plethora of industry-related news and informative content that will aid you in closing more loans at lightning speed!

Own Up is the nation’s only mortgage concierge marketplace enabling mortgage companies, banks, credit unions and brokers to access exclusive, high intent and highly qualified borrowers. A recipient of numerous accolades, including Fintech Breakthrough's "Best Digital Mortgage Platform," Own Up is currently onboarding select lenders to further its national expansion. Own Up seamlessly integrates into all major lender CRMs, lead management systems and pricing engines. Lenders interested in acquiring qualified leads with industry-leading conversion should reach out to lenders@ownup.com to learn more.

Servicing Products and Tools

It’s time for a quick riddle! Every company wants this, but few achieve it. And when you have it, it speaks for itself. The answer? CREDIBILITY. Mortgage servicers of all sizes trust their portfolios to MSP®, Black Knight’s loan servicing system – and for good reason. MSP has consistently set the industry standard for delivering best-in-class functionality and fully integrated solutions that support every servicer's unique needs. No need to take our word for it, though, just check out what MSP clients are saying. Credibility speaks for itself. If you want to learn more about the proven system capabilities to transform your servicing operations, contact our team today.

Top mortgage subservicer PHH is asking “what if?” What if you could reduce your servicing complaints by 75%? What if you could save more than $1 million per year just by switching subservicers? What if your subservicer could help reduce defaults and increase recapture? What if your customers loved your servicing technology, including mobile apps, videos, and online chat capability? No other servicer has been more highly decorated for servicing excellence over the past two years than PHH with top awards from Fannie Mae STARTM and Freddie Mac SHARPSM. Clients like Curtis Dair, CFO of Sierra Pacific Mortgage Company, said “PHH has shown an unwavering commitment to providing the highest levels of customer service.” In 90-120 days, PHH can help you make the jump to the next generation of subservicing: cost savings, customer-centric tech, and award-winning service. Find out how to join the PHH Mortgage family, starting with a call or email to Chris Sabbe at 415-828-1222.

Prepare to act on your servicing portfolio when delinquencies increase! Do you have the right team in place to help manage your servicing portfolio when borrowers become delinquent? When it comes to mortgage delinquencies, getting in front of distressed borrowers is important. Velocity Servicing™, a LoanCare® division focused on specialty servicing and investor ROI, can provide you with critical and specialized support for your distressed loan portfolio. Within 12 months, Velocity achieved a 36% lift in loan resolution compared with traditional servicing models for their specialty servicing clients. We accomplish return on investment earlier through an intelligent network of triggers, exceptions, and loan-level conditions to keep your most distressed customers’ loans on their pathway to performance. Velocity’s team prioritizes maximizing opportunities to return your distressed loans to performing portfolios faster by using an award-winning data analytics platform to drive payment success. Click to learn more or call today: 646-361-6808.

STRATMOR on Artificial Intelligence

Let’s face it: AI is part of our industry’s future, and we’d all like to have insight into its potential impact. In the June issue of STRATMOR Group’s Insights Report, STRATMOR experts including Senior Partner Garth Graham, Senior Advisor Brett McCracken and Principals Jennifer Fortier, Jennifer Smith and Kris van Beever answer questions about artificial intelligence and its future in our industry. For the AI perspective, STRATMOR went to ChatGPT, the current poster child for AI, and asked it the same questions posed to STRATMOR’s team. On some questions STRATMOR and ChatGPT agree; on others, the experts with decades of mortgage experience show why AI isn’t the be all, end all answer. Read, “The Rise of AI: STRATMOR Experts and ChatGPT on Artificial Intelligence in the Mortgage Industry,” for a glimpse into what may be a best-case scenario for how we share the future with these powerful new technologies in the June Insights Report.

Cybersecurity and Protection

Kris Van Beever with STRATMOR observes, “Everyone needs to be ultra-diligent in watching out for fraudulent texts and emails. With the availability of highly functional AI, perpetrators of fraud are now able to leverage this new tech to eliminate many of the things that used to give them away. All employees should be trained in looking for misspellings, poor grammar, and otherwise inappropriate tone. ChatGPT and similar tools now eliminate all the obvious telltale signs of fraudulent messages. They can even mimic the style and tone of humans with references that are near impossible for us to decipher. We may be heading into an electronic world where we have to use complicated multi-factor authentication for all interactions. I am not claiming the sky is falling... It has fallen.”

Along these lines, FundingShield announced a partnership with Mastercard. “As payment related fraud spikes, we are addressing the cybersecurity-based challenges with solutions that deepen our ability to serve the mortgage and real estate sector but provide industry agnostic payment verification tools. FundingShield entered a partnership with Mastercard to leverage its open banking platform delivered by Finicity, a Mastercard company. FundingShield provides live, source data-based technology products and SaaS solutions that have been used to secure the funds of over $2.5 trillion in mortgage closings.”

FundingShield CEO Ike Suri shared, "FundingShield has over 95% coverage of licensed service providers in the real estate, mortgage, closing and settlement space in our live repository. This partnership with Mastercard allows us to leverage its open banking connectivity of over 95% of U.S. based deposit accounts for consumer-permissioned access to real-time, bank-sourced data to expand our B2B and B2B2C payment verification solutions for clients.”

“FundingShield’s solutions manage risk for B2B and B2B2C firms facing a surge of cybersecurity threats like hacking and fraud. FundingShield’s payment verification solutions support bank account ownership that is confirmed with consumer-permissioned data from the banking institution where the account is held, using Mastercard’s open banking platform. This source data is then used to help approve payments ahead of a FundingShield client initiating a wire, ACH, or other payment method from the customer’s banking institution.”

Capital Markets

Economies have so far proved more resilient to rate hikes than most had expected, with the Fed's benchmark rate now north of 5%. There are several explanations for the phenomenon, ranging from pandemic-era forces and tight labor markets to wage gains and consumer spending. It also takes time for higher rates to filter through the economy, with many economists still anticipating a recession over the next six to 18 months if central banks extend their hiking cycles. The yield curve between the 2-Year Treasury (US2Y) and 10-Year (US10Y) has even widened by more than 100 basis points, marking the greatest disparity between the two instruments since late 1981. But…

Looking forward, expectations stubbornly call for a recession starting in a few months, but various economic data are telling a far different story. Stronger than expected durable goods orders data and an above-consensus and highest year-to-date Consumer Confidence report for June released yesterday morning helped harden sentiment that the Fed will remain hawkish, with rates subsequently rising as a result. It was a busy day for data, most of which depicted continued strength and resilience in several corners of the U.S. economy, including the May New Home Sales report that came in at 763k, easily beating 665k estimates. That was the fastest annual rate of new home purchases in more than a year, and up 15.5 percent compared to May of last year. Markets also responded to the day's $43 billion 5-year note auction, which met weaker demand than Monday's stellar 2-year note sale.

The May New Home Sales figures are consistent with the recent firming in home price growth and homebuilder optimism over the past few months. Steady buyer demand and low existing home supply continue to bolster the new home market across all regions. May saw the second largest increase on record for sales of new homes that have not yet been started, which surged to an annual rate of 195k, the highest level since January 2022. Also aiding homebuyers is stalling home price growth: the Case-Shiller Home Price Index reported an annual overall decrease of 0.2 percent in April. The median new home price fell 7.6 percent on a year-over-year basis to just over $416k. The average sales price fell 6.6 percent to $487k. Separately, FHFA reported that home prices rose 0.7 percent month-over-month in April and 3.1 percent on a year-over-year basis, though there were declines in the West and the Mountain states.

On the central bank front, ECB President Christine Lagarde indicated yesterday that the European Central Bank will likely hike rates in July and that additional rate hikes may be required to thwart inflation. That largely echoes the Fed’s message that rates are likely to remain elevated throughout 2024. However, there have been some Fed members that think the Fed should stand pat, such as Atlanta Fed President Raphael Bostic. “My baseline is that we should stay at this level for the rest of the year (to assess the impacts of the Federal Reserve's rate-hiking cycle on the real economy),” he said. Market participants are slowly capitulating to the Fed’s “higher rates for longer" theme, as pricing in fed funds futures have largely priced in another 25-basis points rate hike at the upcoming July FOMC meeting. That said, markets continue to price in a nearly one-in-three chance that the Fed pulls an about-face and cuts rates by a quarter percentage point by December.

Mortgage applications from MBA kicked off today’s economic calendar, increasing 3.0 percent from one week earlier. The week’s results included an adjustment for the Juneteenth holiday. We’ve also received Advanced indicators for May with the goods trade deficit (down to $91.1 billion which could add to GDP), wholesale inventories (+.8 percent), and retail inventories (+.8 percent, strong). Later today brings remarks from Fed Chair Powell in Portugal and Treasury auctions of $22 billion reopened 2-year FRNs and $35 billion 7-year notes. We begin the day with Agency MBS prices a few ticks (32nds) better, the 10-year yielding 3.73 after closing yesterday at 3.77 percent, and the 2-year’s at 4.74.

Employment and Transitions

“Homestead Funding's commitment to community service is evident through the involvement of our Loan Originators in various volunteer activities. By living in the same areas they serve, our LOs are deeply connected to their communities and actively contribute to their betterment. Debb, for instance, selflessly volunteers her time as a driver for Disabled American Veterans, supporting veterans in need. Joel’s annual golf game raises funds for the local Boys & Girls Club, showcasing his commitment to empowering youth. Phil's involvement in National EMT Day demonstrates his recognition of the vital role emergency medical technicians play in saving lives. Mark's hockey team raises funds for Make-a-Wish, supporting critically ill children. We not only recognize the efforts of our LOs, but we provide corporate, marketing, and financial support, which helps amplify their impact and enables them to contribute more effectively. Interested in pursuing a career with Homestead Funding? Call Michele Teague (518)-368-1494.”

Agile, the industry’s first MBS fintech, has appointed a new company president, Greg Vacura, former SVP of Correspondent Pricing at Wells Fargo Funding. “He’s now been tasked with applying that deep industry expertise towards achieving Agile’s mission of creating a better MBS market… to fulfill Agile’s mission to create a better mortgage-backed securities (MBS) market through increasing liquidity and automation in TBAs, MBS pools, and AOTs.

And there was this news recently out of St. Louis: Employee-owned USA Mortgage, announced new leadership roles for three senior executives. Announcing the transition was Doug Schukar, who formed DAS Acquisition Company, LLC, (marketed as USA Mortgage nationwide) in 2001. Schukar handed off his duties as DAS Acquisition’s Chief Executive Officer to current President and Chief Operating Officer Linda Pring. (Schukar retains his role as Chairman of the Board.) Ron Mueller assumed the role of President of DAS Acquisition. And Dani Ploch, Chief Administrative Officer, succeeds Pring as the company’s Chief Operating Officer. The company has offices in 34 states and licensed in 49 plus the District of Columbia. Currently, it employs nearly 800 people at 142 locations nationwide.