“There's a fine line between a numerator and a denominator. Only a fraction of people will find this funny.” Our business is a business of numbers. My son Robbie and I were fortunate to spend some time with the MBA’s Chief Economist Mike Fratantoni, Ph.D, earlier this week who mentioned that there is $500 billion in home equity debt compared to about $33 trillion of total home equity in the U.S. You gotta figure that many people who own their homes free and clear aren’t going to obtain a home loan. But still, there’s a lot of room for 2nds and HELOCs! In other primary market supply news, there are fewer loans to find buyers or portfolios for: we recently learned that single-family home building decreased by 6.8 percent and building permits decline 4 percent. (In the primary markets, this is bad news for home buyers as they continue to struggle with the lack of supply.) Want some good news? FHA delinquencies are now above the pre-COVID book, but FHA foreclosure levels are still very low. (Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a Warranty, eliminating repurchase worries. Hear what Robbie says is one of his favorite interviews year-to-date, with Imperial Fund’s Jared Neale on all aspects of residential mortgage-backed securities, from how they are packaged to current market demand.)

Lender and Broker Software and Services

Prudent AI is the default income intelligence platform powering the top non-QM lenders, including Angel Oak, Newfi, Change Lending, Kind Lending, Logan Finance and several others. Its cutting-edge AI and intuitive interface enable lenders to pre-qualify borrowers instantly with one-click income verification using three key X-factors. 1. Xpress: Prudent AI’s lightning-fast data extraction engine processes 24 months of bank statements in under 2 minutes with 100 percent accuracy. 2. Xray: AI-powered fraud detection runs comprehensive checks to flag suspicious activity while minimizing false positives. 3. Xpert: The customizable income analysis with real-time scenario modeling allows lenders to tailor outputs to their specific underwriting criteria. Prudent AI is poised for explosive growth as it continues to transform the lending landscape. Its roadmap includes aggressive expansion into new market segments, strategic partnerships with industry giants, and the development of groundbreaking AI solutions that will redefine the way lenders operate. Prudent AI is not just shaping the future of lending, it is creating it. For information reach out to Paul Gigliotti, Head of growth and strategic partnership (415-846-2023).

“We're thrilled to introduce the New AFR! This is more than just a fresh look. It's a complete restart, with a renewed focus on our valued partners. AFR has brought on board world-class talent, meticulously refined our processes, and redeveloped key tools to enhance your experience. The feedback from our partners has been instrumental, and we hope you're not just noticing the changes, but truly feeling the difference in every interaction. This is a journey you won't want to miss out on. We're charging ahead at full steam, ready to deliver unparalleled service and support. Whether you're a long-time partner or new to AFR, now is the perfect time to connect with us. Let's navigate this exciting new chapter together! Reach out to us today, call 1-800-375-6071, or visit here. We can't wait to hear from you! (NMLS 2826)”

“This just in! Newfi Correspondent just hit a record-breaking month and is growing throughout the country! With exceptional service, competitive pricing, and unique non-QM and second lien mortgage solutions, it is growing rapidly. Didn’t have a chance to meet with our team at the Western Secondary Conference in Palos Verdes, CA this week? No problem, connect with Newfi Correspondent’s EVP, Sales John Wise or click here to set up a meeting with him today.”

We’re all focused on “likely rate cuts” from the Fed… It’s been a long haul for everyone in our industry. While the refi market shows promise, it’s vital to stormproof your business for any future market. One key factor? Don’t put a pause on growing Realtor relationships. With new Realtor commission structures, it’s more crucial than ever to emphasize your commitment to providing value. Usherpa equips you with the tools to stay ahead: automated marketing campaigns, co-brandable Local Housing videos with monthly stats for 100 major metros, business-building alerts, and lead-generating property flyers and microsites. Maximize visibility and strengthen your referral network by utilizing Usherpa’s SmartCRM to maintain strong relationships as the market shifts, ensuring your success in any environment. Schedule a demo today!

For the second year, OptiFunder has earned a spot on the Inc. 5000 list as the fastest-growing private mortgage technology company in America, a recognition that underscores the achievements of its entire team. Building on remarkable growth during its first three years, OptiFunder has continued to excel despite operating in one of the mortgage industry’s most challenging markets. The Inc. 5000 class of 2024 highlights companies that have driven rapid revenue growth while managing inflationary pressures, rising capital costs, and significant hiring challenges. Despite these obstacles, OptiFunder has maintained its momentum, fueled by a commitment to client and partner feedback. Over the past year, the company celebrated its one millionth loan funded through its Warehouse Management System (WMS) and introduced Greyhound, a modern-day management system for warehouse lenders. OptiFunder remains dedicated to equipping mortgage professionals with essential tools for success and fostering new connections across the industry. Catch up with the OptiFunder team at these upcoming events.

Support Your Local Sheriff

Or how ‘bout your state or regional organization? After all, they help you earn your income through advocating for lenders, helping educate your staff, and providing a plethora of networking chances. Let’s check in with a couple organization chiefs.

From the Northwest, Andy McDonough writes, “Joining the Washington Mortgage Bankers Association (WMBA) provides individuals and companies with a unique opportunity to actively participate in shaping the housing industry in Washington State and beyond. By becoming a member, you gain access to valuable resources, networking opportunities, and industry insights to help you stay informed and competitive in the ever-changing mortgage landscape.

“One of the key benefits of joining the WMBA is the partnership with a dedicated lobbyist, Jessica Fortescue, who works closely with the WMBA and our Washington State Legislators to advocate for policies that support homeownership and the mortgage industry. The WMBA's mission to be the voice of the mortgage industry community underscores the importance of collective action in promoting homeownership and positively impacting the communities we all serve. Join us at WMBA to educate, connect, and inspire positive change in the housing industry.”

(Andy reminded me of the Pacific Northwest Mortgage Lender’s Conference, the “early bird” pricing of which ends today. The theme is "Innovate to Elevate: The Future of Mortgage Lending," this year's conference “promises to be an insightful and enriching experience for all participants. Our organizing committee has meticulously curated a program filled with value-added sessions, expert voices, and engaging discussions that will undoubtedly shape the future of mortgage lending in the Pacific Northwest region and beyond.”)

From the Midwest (yes, that term coined in the 1800s has stuck when everyone lived on the East Coast) Joanne Misuraca, CEO of the Michigan Mortgage Lenders Association wrote, “With all the legislative and regulatory changes affecting the industry, being a member of your state or local organization is the best way to keep up with it all! Participating on its committees, attending its educational events, and networking with other members helps you stay connected and informed. The association provides the real estate finance industry access to the Legislature and state regulatory. It also provides educational opportunities and social events that allow members to network and build bonds with others in the industry. The MMLA maintains timely contact with its members through newsletters, email legislative alerts and the MMLA website and social media platforms to relate industry trends and developments.”

Non-Agency Investor and Wholesaler Updates

Effective with Best Efforts locks completed on/after Monday, July 29, 2024, Citi Correspondent Lending is making changes to Non-Agency state geographic adjusters. Colorado is changing to (0.500) from (0.375) and Texas is changing to (0.250) from (0.125).

Effective with Citi Correspondent Lending Best Effort locks completed on/after Monday, August 12, the HomeRun Program loan level pricing adjuster (LLPA) was increased to 3.000 from 2.750. Reminder: To remain eligible for this LLPA, loans MUST receive full Citi underwriting approval of the credit package a minimum of one day prior to the note date. If the note date reflected in the closed loan package submitted is on or before the date of Citi’s full underwriting approval of the credit package, the loan remains eligible for purchase, but the HomeRun LLPA will be removed.

AAA Lendings offers its flagship 'Non-QM' loan products. “Securing a loan can pose various challenges, but AAA Lendings is armed with a rich 'Loan Arsenal' to address these obstacles.”

Effective for new applications taken on or after August 30th, 2024, Pennymac is updating AUS Jumbo requirements. Details available in Announcement 24-80.

As a reminder, AmeriHome is providing some best practices and tips for successfully executing the new IRS Form 4506-C as another resource for Sellers. Find out more in AmeriHome Mortgage Product Announcement 20240805-CL.

Provide senior borrowers living in manufactured homes with a financial solution that meets their unique needs with reverse loans from Plaza Home Mortgage®. Discover how reverse mortgages can be an excellent fit for your clients and help them secure their financial future.

Newrez announced an update on the implementation of the HUD Section 184 Program on August 5, 2024. Lenders and Underwriters must be fully approved by HUD to offer this product.

Wholesaler NewFi rolled out the first Shared Appreciation Mortgage product that is a bona fide mortgage. EquityChoice is a 2nd lien mortgage carrying a below market fixed rate, presently 4.25%, that negatively amortizes until a balloon payment date in 10 years. The borrower owes no monthly mortgage payments until maturity in exchange for sharing in a percentage of their future home price appreciation, to the extent appreciation occurs, as measured based on the repeat sales index for homes in their neighborhood using CoreLogic.

“Under NewFi’s EquityChoice, the borrower may make partial prepayments or payoff early without penalty. EC is not an HEI, HEA or option construct… Quite the opposite in fact. We designed the product to be REG Z/TRID compliant, REMIC Eligible, and Capital Efficient to benefit the borrower to promote market growth, assure broad investor participation and create a superior product for the consumer. EC is not a high-cost mortgage. Nevertheless, we limit what the borrower may owe given future HPA to effective rates at the prevailing High-Cost limits.” (Any questions should be directed to NewFi’s Pat Doyle.)

Capital Markets

As Fed Chair Powell readied his speech for this morning, Treasury yields rose “across the curve” yesterday as markets bet that he will squash expectations for aggressive rate cuts. Fed officials are publicly saying they believe it’s appropriate for the central bank to begin lowering rates soon. Boston Fed President Collins said it will soon be appropriate for the Fed to begin gradually easing to preserve a still-healthy labor market, while Philadelphia Fed President Harker told multiple media outlets that the process of moving rates down should begin in September and be done “methodically.” Fed funds futures markets are once again pricing in roughly 100 basis points of easing for the remainder of 2024, but they are anything but certain.

In housing news, existing home sales increased (as expected) by 1.3 percent in July, marking the first improvement in five months, likely due to a slight dip in financing costs from the previous month. Mortgage rates averaged nearly a quarter percentage point lower in July than June, and have fallen further in August, which should help home sales over the rest of 2024. The seasonally adjusted annual rate of existing-home sales reached 3.95 million in July, although sales were still down 2.5 percent from the previous year. The median sales price of existing homes rose by 4.2 percent year-over-year to $422,600, marking the 13th consecutive month of price gains. Additionally, the inventory of unsold existing homes edged up by 0.8 percent from the prior month to 1.33 million, representing a 4.0-month supply at the current sales pace.

Mortgage rates hit fresh year-to-date lows and the lowest since May 2023 in the latest Primary Mortgage Market Survey from Freddie Mac. For the week ending August 22, the 30- and 15-year mortgage rates declined 3 basis points and 4 basis points to 6.46 percent and 5.62 percent, respectively, and are lower by 77 basis points and 93 basis points from a year ago.

Fed Chair Powell is today’s highlight when he speaks on the economic outlook before the 2024 Jackson Hole Economic Policy Symposium in Wyoming. July new home sales will also be released today, with estimates looking for 635k versus 617k in June. We begin the day with Agency MBS prices unchanged from Thursday evening, the 10-year yielding 3.84 after closing yesterday at 3.86 percent, and the 2-year at 3.99.\

Employment

Maximize Market Swings with MORE: The All-in-One Marketing System for Movement LOs! Have you capitalized on the recent market swings? Do you have a marketing system in place to help you reach potential refi opportunities? Better yet, does your company offer you these tools at no cost to you? Thanks to MORE, Movement Mortgage loan officers can emphatically answer YES to all three questions! MORE is the company’s proprietary sales and marketing platform built on Salesforce, which seamlessly integrates Movement’s loan origination system, point-of-sale, CRM, email marketing, realtor communication, and servicing portfolio. MORE has been key to unlocking opportunities for Movement LOs, with daily rate watch emails, automated annual mortgage reviews and timely refinance email marketing garnering open rates 32% above industry benchmarks. The platform also includes a proactive opportunities dashboard, pinpointing the best candidates for rate reductions, FHA to conventional conversions, VA IRRRLs, reverse mortgages and more. Interested? Learn more at MovementLO.com.

Elevate Your Career with Evergreen Partnership Channels! At Evergreen Home Loans™, we empower our Loan Officers with innovative tools to succeed. Our Evergreen Partnership Channels offer unique opportunities to build lasting business relationships while making homeownership more accessible. Evergreen Partnership Lending Program: As a Loan Officer, you can partner with businesses to create exclusive lending offers for their employees. It’s a win-win: Enhancing benefits for the business while expanding your client base. Evergreen Home Seller Advantage Program: Stand out by offering sellers strategic financing options. By jointly contributing to discount points, sellers and Evergreen can offer lower rates and fees, giving you a competitive edge when listing properties. Evergreen Builder Partnership Program: Collaborate with builders to offer lender credits and discounts that attract more customers. This program generates quality leads, strengthens your network, and drives growth. We’re hiring talented Loan Officers! Join Evergreen and leverage these programs to boost your career while helping more people achieve their homeownership dreams.

“After the 2 years of rightsizing and surviving in a high-interest rate environment, we think the proverbial ‘light at the end of the tunnel’ is finally here! Is your team confident and ready to scale up? By partnering with Agility 360, you can be assured of having the resources and tools to flex your production capacity and staff levels. Whether you need processors, underwriters, closers, LO’s or servicing staff, Agility 360 can help. With the largest mortgage database of any recruiting company in the country and over a decade of experience in delivering flexible staffing, outsourcing, and advisory services to the industry, our team is the partner you want by your side. Contact Annabeth Kline to get started. You’ll quickly learn why our clients love working with us!

“A rapidly growing, independent mortgage lender is seeking a highly motivated and strategic Business Development Director to spearhead our expansion efforts. This is a unique opportunity to join a company where culture, innovation, and support for our loan officers are at the forefront of everything we do. As a midsize independent mortgage banker, we pride ourselves on providing our loan officers with cutting-edge technology, robust marketing support, and a collaborative environment that fuels success. We are looking for a driven leader with a proven track record in recruiting top-tier loan originators, who can help us grow our footprint. The ideal candidate will have a strong network of industry professionals and the ability to strategically drive our growth initiatives. If you are excited about driving growth and building a legacy in a high-performance culture, send your email confidentially to EMAIL or to Chrisman LLC’s Anjelica Nixt for forwarding.