As rumors of correspondent, wholesale, and retail company cutbacks or closings continue to bounce around our biz, how about this non-mortgage tidbit. During his off hours in New York, Ira S. found yet another fun and fascinating website: a map of the U.S. that one can zoom in/out of, and it will list the resident looked up most on Wikipedia (they had to be born, lived in, or somehow connected to the city). Much less fun is the fact that Capital markets staffs have turned their attention, due to recent rate drops, to renegotiations in the primary markets with LOs and AEs. In the secondary markets, of course, Wall Street firms don’t renegotiate hedge positions. In other words, one can’t call up Morgan Stanley or BAML or Multi-Bank Securities and whine, “Uh, remember that MBS we sold you three weeks ago? Well, rates have moved, and we want a better price or else.” In fact, I’ve even heard nervousness from lenders about margin calls from broker-dealers, especially if we continue to see bond prices rally and rates drop due to an economic slowdown. Will the Fed raise rates too much, dampening consumer spending and increasing the odds of an actual declared recession? Right now employment is still strong, as are family and corporate balance sheets especially after refinancing trillions of dollars of debt in 2020 and 2021. Heck, even fancy coffee places like Starbucks, which reported record revenue yesterday, are seeing increased sales of premium cups of coffee. (Today’s podcast is available here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services in the mortgage industry and in banking. Listen to an interview with Seth Sprague on the current mortgage servicing rights (MSR) market.)
Lender and Broker Services, Programs, and Software
How much are you spending from the time a loan funds until it sells? The average IMB spends more than $1,000 per loan on interest and post-closing expense. Leveraging OptiFunder can cut that cost by 20%. “Reducing funding expense with optimized allocation decisions and automation for funding through loan sale is always a good idea, but now it’s essential. Our solution is proven, and our clients are surprised and elated with their savings”, states Michael McFadden, Founder and CEO of OptiFunder. We can help you strategically utilize your warehouse lines to achieve objectives such as specific funding targets, best ROE, or lowest cost of capital, while automating tasks for funding through loan sale. Don’t wait to see what lift you can get from the industry’s only Warehouse Management System. Contact us to request a demo, case study or try-before-you-buy with a back test of your own data to see the savings you could realize with OptiFunder.
“Down Payment Assistance (DPA) – AFR Wholesale is committed to finding creative solutions to make quality housing more affordable. One of our endeavors, our Down Payment Assistance Program, helps do just that by providing a wide variety of eligible borrowers with a grant for 2% or 3.5% of the home price. This nearly nationwide program allows for both Lender Paid and Borrower Paid Compensation and can be used with the FHA 203(b) program, as well as many of our FHA Renovation programs. What’s more, this simple, one-step process is coordinated by AFR with no repayment requirements and no need for a second lien. Together we can bring more families home with an affordable solution. For information about becoming a partner, go to afrwholesale.com, email or call 1-800-375-6071.”
“‘Game on’ pricing continues at UWM! 50-100 basis points lower across the board. Giving brokers the tools to compete against retail and win is what we do every day at UWM. Turn times up to 3x faster than the industry average. Tools and technology that let you work smarter. Services that connect you with real estate partners, past borrowers, and hot leads. And now, we’ve dropped rates across the board by 50-100bps. Every loan. No exceptions. If your borrower has a 620 FICO or higher, there’s no need to look anywhere else. Price a loan today!”
Servicer convenience fees, aka “junk fees,” have been a point of contention for some time, with lenders maintaining they are necessary and regulators arguing they are unfair. But now the CFPB is taking a much harder, much more definitive stand against pay-to-pay fees. Clayton’s Servicing Oversight group is advising clients on the new CFPB advisory opinion released at the end of June and is also revising testing protocols to help investors and servicers reduce the risk of any enforcement actions. For more information, contact Josh Fieldgrove, Clayton VP, Servicing Oversight or 307-752-4817.
National MI is now integrated with the Mortgage Cadence Platform (MCP), the newly-released, cloud-based digital lending platform from Mortgage Cadence. The integration enables mutual lender customers to obtain price quotes and order National MI’s real-time, risk-based mortgage insurance through its Rate GPS® tool instantly, without having to leave the MCP platform. National MI’s state-of-the-art API platform allows lenders and loan origination system (LOS) providers to quickly and seamlessly retrieve accurate mortgage insurance quotes through Rate GPS. For more information on all of National MI’s technology integrations, please visit National MI here.
Conforming Conventional News
Sure, home loan programs like FHA, VA, jumbo, non-QM, and HFA/bond account for a percentage of current production. But Freddie and Fannie still “rule the roost” in market share and let’s take a look at some recent lending news.
In terms of demand for what lenders are producing, the Federal Reserve is closing up the Quantitative Easing and leaving private investors to absorb all new mortgage bond supply as well as any roll off from its massive $2.7 trillion worth of agency MBS holdings. But at least the Fed is choosing an opportune time to do so because the supply has dropped. Bank of Oklahoma’s Chris Maloney reports that, “July gross issuance of all agency mortgage bonds came to $129.5 billion, it lowest since June 2019, according to Bloomberg's Collateral Performance Research data. Last month's supply comes to just about half of what we were experiencing at this point in 2021.
“Gross issuance year-to-date now stands at $1.2 trillion, and we still forecast for it to end the year at around $2 trillion. While this would be above the $1.3 trillion annual average seen during the 2000 through 2019 period, it would also be far below the $3.3 trillion average seen in 2020 and 2021.”
Effective July 27, Fannie Mae updated the Attorney Authorization Approval (AAA) matrix to add the new California Post-Sale Bid Process allowable fee and remove the Texas Home Equity Judicial Foreclosure allowable fee as the same service is included in the Texas Judicial Foreclosure allowable fee. Visit the Excess Attorney Fee – Cost Guidelines page.
Remember that for Freddie Mac income validation, ineligible income types with LPA income assessment include (1) military pay, (2) borrower employed by family member, the property seller, real estate broker or other interested party to the transaction, (3) employed income from foreign sources and (4) income reported to the IRS on 1099 form.
Learn how valuation modernization is changing collateral underwriting, Fannie Mae’s webcast is now available for on-demand viewing. Featuring insights on how modernizing the valuation process is driving efficiency and providing new solutions to industry challenges, a must-see for underwriters and appraisal reviewers. Plus, you’ll get tips for underwriting different valuation types and hear the latest valuation policy updates.
AmeriHome Correspondent summarized previously published changes made during July, recent Agency and regulatory news and additional changes made with the General Announcement 20220708-CL.
AmeriHome Correspondent–posted update #32 to the summary of temporary measures provided by Fannie Mae, Freddie Mac, FHA, VA, USDA, and the CFPB to address the impacts of COVID-19. See Product Announcement 20220705-CL for details.
AmeriHome Correspondent provided information on recently published Guide Bulletin 2022-15 Freddie Mac which addressed multiple topics. Impacts to AmeriHome guidelines as a result of these changes are posted in Product Announcement 20220706-CL.
At the other end of the mortgage process, depositories' market share of Fannie Mae and Freddie Mac servicing increased to 43 percent in the second quarter of 2022, ending a nearly uninterrupted two-year slide, according to a new Inside The GSEs ranking and analysis. “GSE servicing by banks was up 3.1 percent from the first quarter and 5.4 percent since the same time last year. Megabanks expanded their market share to 18.6 percent from 18.0 percent paused their recent decline yesterday after San Francisco Fed President Daly pushed back against speculation about the rate hike cycle nearing its end and the Fed easing later next year. Minneapolis Fed President Kashkari has also recently said that the hiking cycle is "nowhere near" to being done. Job openings fell by 600k in June, according to the JOLTS jobs report, showing that the labor market is beginning to cool off. Most of the decrease came in retail, as consumers are beginning to curtail their spending due to rising prices for necessities.
Capital Markets
The higher Fed Funds rate is starting to impact the economy and there are signs of economic weakness and a possible recession. Bond yields have dropped and mortgage rates have followed suit. Those in our industry know that the Federal Reserve doesn’t set mortgage rates, but the Fed’s moves do affect other debt like home equity loans, credit cards, car loans, and other consumer and corporate debt. Mortgage rates are down overall since hitting an average of 6 percent in mid-June. There are many that believe that the Fed, through its bond buying program, artificially kept rates too low for too long in late 2021 and into 2022. Rates reached record-breaking lows during the pandemic, in part, contributing to the home-shopping and refinancing frenzy of the past two years. And higher mortgage rates are helping return the market to something approaching normalcy. Slowing home shoppers down could lead to more inventory, which has been historically low, as well as fewer bidding wars and lower prices.
Rates paused their recent decline yesterday after San Francisco Fed President Daly pushed back against speculation about the rate hike cycle nearing its end and the Fed easing later next year. Minneapolis Fed President Kashkari has also recently said that the hiking cycle is "nowhere near" to being done. Job openings fell by 600k in June, according to the JOLTS jobs report, showing that the labor market is beginning to cool off. Most of the decrease came in retail, as consumers are beginning to curtail their spending due to rising prices for necessities.
With the recent decline in mortgage rates, MBA reported that mortgage applications increased 1.2 percent from one week earlier in the latest Weekly Mortgage Applications Survey following four straight weeks of declines. Later this morning brings the final July S&P Global non-manufacturing PMI reading, ISM non-manufacturing PMI, June factory orders, and Treasury announcing the details of the Quarterly Refunding. Three Fed presidents are on tap: Philadelphia’s Harker, Richmond’s Barkin, and Minneapolis’ Kashkari. The Desk will purchase up to $839 million UMBS30 4 percent through 5 percent. We start Wednesday with Agency MBS prices worse .125 and the 10-year yielding 2.79 after closing yesterday at 2.74 percent.
Jobs
The Joe Gabrione Group (JGG), a division of Celebrity Home Loans announces branch expansions with locations in Illinois, Indiana, Florida, Ohio, Kentucky, Tennessee, Georgia, South Carolina, North Carolina, Oregon, Arizona, California, and Washington. JGG has grown significantly by building a company culture that is family first while providing solutions so mortgage professionals can build a successful and sustainable mortgage practice. JGG is headquartered in Oakbrook Terrace, Illinois and is actively hiring Branch Managers and Mortgage Loan Originators throughout the United States. “The JGG division has built an environment that leverages great products, industry leading technology, world-class marketing resources, and business planning solutions that allow mortgage loan originators to develop new relationships, increase referrals and repeat business all while building a better life for their family. Our Executive team believes that now is the time to double down on infrastructure and support so that mortgage professionals can find growth opportunities in a purchase driven market” says Division President, Joe Gabrione. For more information, please contact Dan Sulaski (773-447-1128).
New American Funding is #1 in customer satisfaction according to the latest J.D. Power 2022 Mortgage Servicer Satisfaction Study. The company’s overall satisfaction index was the highest among all 31 mortgage servicers that qualified for publishing. Each of the company’s 4,200+ team members are continually working together to provide the best customer service possible. The award is recognition for the company’s experienced servicing team, striving to make every customer interaction helpful and meaningful, building satisfaction, and cultivating trust. It takes a team, and now you have the chance to join the company that’s #1 in Customer Satisfaction Among Mortgage Servicers (according to J.D. Power 2022) and #18 on the Fortune 100 Best Companies to Work For® in 2022. If this sounds like the right opportunity to advance your career, contact Jordyn Dexter at 800-450-2010 x7651 today! EOE
“Acra Lending continues to prove itself as the industry’s leading private mortgage lender! Join our growing team and experience the growth that is driven by our employees as much as by our programs! Acra is currently hiring for Wholesale Account Executives, MLOs, Fix and Flip Account Executives, and more. Come build your career with a company that is committed to helping you achieve success. Visit Join Acra or email us learn more about the opportunities we offer.”
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