I have good news and bad news, which do you normally prefer receiving first? Today (7/11) is Slurpee Day at 7-Eleven (good news), where Citigroup executives might want to head to cheer themselves up after the Federal Reserve Board on Wednesday fined Citigroup $60.6 million (bad news, at least for them) for violating the Board's 2020 enforcement action, insufficient progress in remediating its problems with data quality management, and failing to implement compensating controls to manage its ongoing risk. When I think of enforcement actions, I think of the CFPB, and yesterday the CFPB was also in the news, issuing a Notice of Proposed Rulemaking related to the mortgage servicing rules in Regulation X. The proposal, if finalized, would require mortgage servicers to focus on helping borrowers, not foreclosing, when a homeowner asks for help. More on that below. And if you’re looking for opinions on that news, check out Last Word tomorrow at 10am PT/1pm ET hosted by Kevin Peranio and Brian Vieaux. (Today’s podcast is found here and this week’s is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender, uniting the people, systems, and stages of the mortgage process. Hear an interview with Professor Subodha Kumar on the features of future smart homes.)

Lender and Broker Software, Services, and Products

“All DPA roads lead to Essex! Essex Mortgage is pleased to announce that they now offer a new 5 percent Down Payment Assistance program, along with improved pricing on 3.5 percent DPA forgivable option. But that’s not all! Essex is also proud to be the master servicer for an innovative FHA loan program. This unique product allows a Government Entity to purchase a property and offer a lease option to consumers who may not qualify for traditional financing. Clients can now secure equitable title after 18 months, opening new doors for homeownership. An added benefit of this program is it allows realtor partners to close their sale as part of the process. Don’t miss out on these exciting opportunities: reach out to your Account Executive today.

Did you know: the normalization of house price appreciation in today’s market is the result of ‘higher-for-longer’ mortgage rates reducing affordability and slowing demand, but it’s also driven by the increase in the number of homes for sale? It’s true! In case you missed it, First American Data & Analytics recently released its May Home Price Index (HPI) report where you can receive the most current insights into home price changes at the national, state, and metropolitan CBSA levels. In this report, First American Chief Economist Mark Fleming says, “The longer we go with higher rates, the less the rate lock-in effect constrains sellers because moving decisions continue to happen regardless of mortgage rates due to the ‘Five D’s’ of life events: diapers, diplomas, divorce, downsizing, and death.” For more information, download a full copy of First American’s report.

Looking for a subservicer with systems, processes, and expertise that are turnkey and ready for you to leverage, including the rigorous regulatory infrastructure of a full-service bank? Flagstar checks all the boxes, dedicated to providing a stellar customer experience and has demonstrated the ability to navigate the complexities of the mortgage servicing business. After all, Flagstar has been doing it for over 35 years, refining its systems and processes along the way. And with eight recognitions as a Fannie Mae STAR Servicer under its belt, Flagstar has proven it “gets” subservicing. Let Flagstar manage your loan portfolio, using your brand, so that you can manage your business and take it to the next level. Follow Flagstar Mortgage Subservicing on LinkedIn to get updates on the latest news and services. And check out Mortgage Subservicing | Flagstar for more info about the benefits of partnering with Flagstar.

In a changing interest rate environment, mortgage businesses might think the only certainty is uncertainty. But Western Alliance Bank offers options. Its Specialized Mortgage Services Group continues to invest in Treasury Management tools that specifically benefit independent mortgage bankers. One key element they advise all businesses to adopt is a commercial card program, which offers an easy way to automate travel and expense (T&E) reporting and AP spend. You’ll benefit from faster, more secure processes with quick reconciliation and reporting. Plus, all spending through Western Alliance Bank’s program earns valuable revenue share to help turn your cost center into a profit center. Imagine what your team could achieve with the additional time savings, added flexibility and convenience this provides. See all of Western Alliance Bank’s Treasury Management tools, or reach out to find out more about what its team can do for you. Western Alliance Bank, Member FDIC.

Ever wondered how to hedge a mortgage pipeline? Hedging one’s mortgage pipeline typically produces the greatest return over long-term macroeconomic cycles, which is why it is considered an essential step in the growth of a mortgage lender. In MCT’s whitepaper, Mortgage Pipeline Hedging 101, its experts explain what hedging is and why it is a valuable strategy for maximizing profitability in the secondary market. The whitepaper also reviews information on moving to mandatory loan sales, the strategy of hedging, the benefits of hedging, and how to determine if you are ready. Download the whitepaper or join MCT’s newsletter for upcoming releases.

Did you know that Polly is the rate engine for HousingWire's Mortgage Rates Center? Operator of the industry’s first cloud-native, commercially scalable PPE, Polly offers the same capability to display live rates on lender websites, helping borrowers better assess their competitive edge against other lenders. This live data ensures that as the market fluctuates, prospects get real-time insights into their rates. It signals transparency, allowing potential borrowers to make informed decisions faster, without needing to supply personal information. This convenience can significantly increase your site’s engagement and drive more volume your way. On the flip side, not displaying live rates may deter potential borrowers, as they could perceive higher costs or simply prefer quick access to this information. Polly's robust Lender Intelligence platform will help keep lenders' rates ultracompetitive, ensuring they stay at the forefront of their peers. Connect with the team at Polly to learn more.

Company Sponsored Webinars

Happening today! Operations leaders don’t miss this! To maximize ROI of new technology, gaining buy-in from loan originators, underwriters, processors, management, owners, and all team members is crucial. Mortgage Investors Group (MIG) faced rising costs of verification of income and employment and decided to make a change. Join J.R. Huber, EVP of Sales and Production, as he discusses how MIG was facing rising costs of verification of income and employment and decided to make a change that led to 80 percent cost savings and 100 percent conversion improvement on VOIE. Richard Grieser, VP of Marketing at Truv, will unpack J.R.'s experience choosing and implementing Truv, including how MIG changed its tech stack, rolled out the solution to the organization, and gained adoption from operations, sales, and production teams. Secure your spot to take part at 1 pm CT (July 11 - today) Register Now!

We are just around the corner from the next installment of AmeriHome Correspondent’s quarterly webinar alongside Freddie Mac Single-Family! Don’t miss “Property Insurance 101” on Wednesday, 7/17 at 10am PDT. Join for a discussion moderated by AmeriHome’s Managing Director of Correspondent Sales, Steve Kolker, as he speaks with Brian Saltmarsh, Insurance Policy Lead for Freddie Mac Single-Family. Be a part of the conversation as they discuss general property insurance requirements, how to ensure compliance with policy changes, and more! Click here to register. Check in with your AmeriHome sales rep or schedule a meeting with AmeriHome in person at the CMBA Western Secondary Conference to hear AmeriHome’s big plans for the remainder of 2024! For more details on where you can find AmeriHome, take a look at AmeriHome’s Upcoming Events, find your sales rep here, or email them to find out more about what AmeriHome can do for you!

In today’s housing market, the journey to homeownership can sometimes feel like navigating an obstacle course: issues from rising costs to credit challenges litter the path to getting those house keys in hand. But with the right technology and personalized strategies in place, homeownership can be much more accessible! Join MeridianLink® and STRATMOR Group’s Jim Deitch on August 6 for a special webinar event exploring steps you can take to help aspirant homebuyers overcome this mortgage maze. Discover advanced solutions and methods to address common barriers and help more people make their dream homes a reality: Register today.

CFPB News and Regulations

The CFPB yesterday proposed a new rule (Streamlining Mortgage Servicing for Borrowers Experiencing Payment Difficulties: Regulation X) to make it easier for homeowners to get help when they are struggling to pay their mortgage. The CFPB claims that proposed changes will also make it simpler for servicers to offer assistance by reducing paperwork requirements, improve communication with borrowers, and ensure critical information is provided in languages borrowers understand.

Continuing, the proposed rule would streamline existing loss mitigation requirements to provide borrowers with quicker loss mitigation solutions, add foreclosure procedural safeguards that begin as soon as a borrower requests loss mitigation assistance, revise certain early intervention requirements, and provide borrowers with access to certain mortgage servicing communication in languages other than English. The proposed rule also requests comment on various servicing issues, including comment on servicer furnishing practices for consumer reporting.

The American Bankers Association (ABA) and Mortgage Bankers Association (MBA) issued the following joint statement in response to the Consumer Financial Protection Bureau’s (CFPB) proposed rule:

“We have long advocated for modernizing the loss mitigation framework under Regulation X and appreciate the Bureau’s efforts to simplify and streamline the process. Servicers have helped more than eight million families stay in their homes since the beginning of the COVID-19 pandemic while adapting to new and rapidly changing loss mitigation programs implemented by government agencies. Servicing practices to help struggling homeowners have evolved since 2014, and we support updates that inform borrowers of all their options in a clear and timely manner, remove unnecessary barriers, better prepare for future national emergencies, and ultimately facilitate seamless resolutions for those who need it.

“The Bureau’s proposal represents a substantial overhaul of the current framework, and we hope they will take into careful consideration the recommendations and feedback from our members who are serving millions of borrowers every day. We look forward to reviewing the specific details of the proposal – including the items pertaining to Limited English Proficiency – to ensure any updated framework is operationally feasible and does not negatively affect consumers.”

Questions were quick to follow: “How much will the proposed rule increase the rest of America’s mortgage rates? People go into foreclosure because they cannot make the payment, and job loss is the number one reason. As unemployment increases due to the Fed’s tighter monetary policy, something the central bank wants, foreclosures will inevitably increase. So, is the Fed okay with driving inflation down with higher unemployment even if the side effect is homes lost?

Capital Markets

Ahead of today’s all-important CPI report that will have a large influence on the timing of the Fed’s first rate cut of this cycle, markets yesterday continued this week's trend of mostly sideways intraday action despite a strong $39 billion 10-year U.S. Treasury note reopening. Fed Chairman Powell completed his two-day testimony on monetary policy in Washington D.C., and his appearance before the House Financial Services Committee neither produced any surprises nor altered bets the Fed will cut interest rates likely once, but up to two times, this year. Bottom line: the Fed will make its decisions on a meeting-by-meeting basis, and inflation data still needs to come in lower.

That evidence could potentially come in the form of today’s June consumer price report. The U.S. Bureau of Labor Statistics tells us that CPI was again cooler than forecasts in June, with all items down 0.1 percent and core up .1 percent. Analysts anticipated annualized headline inflation softened by 0.2 percent versus May to a flat reading for the month of June. Overall, inflation remains on a downward trajectory through the month-to-month noise. It dovetails nicely with the cooling employment picture in the overall narrative that the Fed is almost ready to cut rates. Average employment growth over the last three months slowed to the lowest since the start of 2021, there has been a sharp decline in job openings this year, and a growing number of people filing for unemployment benefits.

Inflation slowed sharply in the second half of 2023, so unless inflation slows even more dramatically in the next few months, the headline year-over-over measure of prices is likely to hold little changed. Shelter costs are an exception, and likely rose at a slower year-over-year pace in June than in May.

We’ve also received initial and continued jobless claims, which fell to 222k and 1.852 million, respectively. Later today brings Treasury announcing the auction sizes for next week’s auctions that include reopened 20-year bonds and new 10-year TIPS, before auctioning $22 billion reopened 30-year bonds, Freddie Mac’s Primary Mortgage Markets Survey, the June budget statement, and remarks from Atlanta Fed President Bostic and St. Louis Fed President Musalem. We begin the day with Agency MBS prices better by .250 versus yesterday and the 10-year yielding 4.19 percent after closing yesterday at 4.28 percent.