Remember a few years ago when lender’s IT departments were thinking that blockchain was the answer to… whatever problem they thought it would answer? Every day blockchain talk has died down, perhaps because its application to residential lending is complicated, at best. But security is critical, and cutting theft and fraud is more important than ever given the lack of lender profits. I am a simple capital markets guy whose sense of value is even strained by record-setting baseball card values, and certainly can’t quite grasp the intricacies of blockchain, nor those of NFTs (non-fungible tokens), and when you combine them, well, count me out. But a report by the blockchain analysis firm Elliptic states that more than $100m worth of non-fungible tokens were stolen in a variety of scams between January and July of this year. I’ll continue to hang my prints of clowns on velvet and dogs playing poker on the wall where I can admire them. And just as easy to understand is the Fed’s take on interest rates. Federal Reserve Chairman Jerome Powell gave a brief and blunt message that the Fed plans to keep raising interest rates. The world hopes that its moves don’t accelerate a downturn… although economic downturns and lower inflation lead to lower rates.
Lender and Broker Services, Software, and Programs
Lenders need help protecting their high-value resources from wasting time on low-value, repetitive FAQs or tasks. Sound familiar? By shifting traditionally manual work to Capacity, lenders can increase throughput and efficiency, scaling their support for LOs, brokers, and customers alike. Capacity is an AI-powered support automation platform that connects your entire tech stack to answer questions, automate repetitive support tasks, and build solutions to any business challenge. See how it works. The Capacity team is heading to some exciting events, including the National Mortgage News Digital Mortgage Conference in Las Vegas, TMC Conference in Chicago, and Mortgage Bankers Association in Nashville. If you’ll be in Vegas September 13-15, join us on the main stage Tuesday, September 13th at 10 AM PST for a live demo of Capacity. Interested in increasing operating margins? Contact us to set up a time to learn more.
HELOC. It’s the mortgage industry’s current buzzword. According to Black Knight, homeowners have almost $10 trillion in aggregate home equity. That’s a lot of home improvement projects on the horizon! So there’s no doubt we can expect a continued shift from the purchase market to a HELOC market. Consolidated Analytics (CA) is an agency-approved Third-Party Review Firm (TPR) with comprehensive loan level and portfolio due diligence services that cover a range of asset types, including HELOC asset review. CA is also a National AMC with extensive, compliant valuations products from traditional and hybrid appraisals and our HELOC valuation product, Evaluation. All valuation products have a tiered QC process to ensure the highest quality appraisal the first time. Contact sales@ca-usa.com
“The market has slowed, but appraisal turn times continue to be a struggle for many lenders. If you’re waiting too long for your AMC to deliver reports now, what happens when it gets busy again? Since Spring, Incenter Appraisal Management’s average turn time across all 50 states was 6.7 days, and in many markets, we can do regular appraisal work in less than five days. RemoteVal Desktop Appraisals average 3.9 days from start to finish. What’s the secret? Great tech, a great team and, most importantly, great appraisers. Because we treat them with respect, and offer unique perks like 24-hour pay, appraisers keep us at the top of their ‘fulfill first’ list. Lenders looking for fast turnaround times on forward mortgage, private lending, and commercial property appraisals should contact us.”
As rate lock activity continues to decline across all loan-purpose types (purchase, cash-out and refinances), you need innovative ways to boost your originations and maintain a healthy pipeline. But how can you do this in such a challenging environment? Find out by viewing Black Knight’s recent webinar “How to Boost Your Pipeline in Today’s Market.” During this complimentary webinar on demand, you’ll learn how intelligent data and analytics can help you convert more prospects to customers and allocate marketing dollars on more productive campaigns. Don’t miss this important on-demand webinar: view it here today.
Ncontracts Offers Advice: DOJ & CFPB Follow Up on Promise for “Vigorous” Redlining Enforcement with $24 Million Mortgage Company Settlement. Last fall the Justice Department (DOJ) promised it would “spare no resource” to ensure “vigorous” fair lending enforcement as part of its Combatting Redlining Initiative. Now a Delaware-based mortgage company has settled a joint DOJ and Consumer Financial Protection Bureau (CFPB) redlining suit for $24.4 million, the second largest redlining settlement in DOJ history and the first against a non-bank lender. What went wrong? In his latest article, Ncontracts’ Rafael DeLeon covers three redlining enforcement takeaways for mortgage companies to ensure they don’t make big mistakes that lead to even bigger fines. Check it out here!
Division I college football starts this weekend with “Week Zero.” A new semester means new empty nesters are wondering if it’s time to downsize… Or perhaps to move closer to the university where they’re spending all their money. Who within your database may be looking to relocate now that their kids are out of the house? With Life Event Alerts, mortgage advisors are notified when a borrower or prospect experiences a major life change that could alter their financial situation and/or goals. Whether it’s a marriage, divorce, childbirth, high school graduation or a death in the family, life happens, Sales Boomerang and Mortgage Coach want to make sure you’re ready when it does. Don’t let your borrowers’ life events pass you by.
Servicing: What’s in Your Wallet?
People are winning in niche plays. Did you know that as many deals are happening with an origination date from 2 years ago, as deals that are happening with an origination greater than 9 years ago. Is your marketing company helping you to identify the older pockets of data that are in the money? What does this mean for you? There's still so much untapped potential in these spaces. In this market, it is highly critical to utilize focused data, and identify where consumers are transacting at the highest rates. Want to know more about what is actually working out there? Where to put your marketing dollars in such uncertain times? Let us know, we'd be happy to schedule a call to discuss.
For servicers, strategic borrower engagement is a must-have for loss mitigation. Tom Millon, the CEO, and Jeff Johnson, the COO of Computershare Loan Services (CLS), highlight key ways their sub-servicing team identifies high-risk defaults and uses data trends with human interactions to resolve payment challenges. article and learn more about how CLS delivers effective customer care that helps protect clients’ portfolios. Contact CLS to learn how their unique sub-servicing expertise can help you protect your servicing portfolio.
Xome®, the premier asset management provider, offers data-driven solutions for mortgage servicers and the expertise required to optimize portfolio execution and reduce credit losses. With a massive audience at the ready, and an auction platform built for scale, Xome can help get you the quickest sales, at the highest price, possible. Benefitting not only you, but also our communities, by helping facilitate a healthy, stable housing market. Xome’s solutions include multi-channel disposition strategies, a leading nationwide auction marketplace, analytics, and loan recapture solutions. Xome also offers affordable housing solutions, including First Look programs for homeowner, owner-occupants, community development nonprofits, HUD-approved nonprofits, and governmental entities. Learn more about how Xome can help you build capacity & optimize efficiencies.
Ginnie, FHA, and VA Changes
I haven’t heard the “FHA is just like subprime” exclamation lately. In fact, FHA and VA loans continue to be a noticeable portion of loans, accounting for 20-25 percent on applications over the last several weeks.
On the hind end of the mortgage manufacturing process, FHA servicing has been in the news lately. More specifically, according to a story (NOT a Newsflash) Wells Fargo’s third-party servicing business may downsize, which includes the servicing of Federal Housing Administration (FHA) loans. Know that mortgage servicing rights (MSRs) are treated as an asset by banks that generates revenue. According to Wells SEC filings, Wells Fargo valued the servicing rights on its balance sheet at $10.39 billion as of the quarter ended June 30, 2022.
Ginnie Mae amended its capital requirements for federally insured credit unions and state housing finance agencies (HFAs). Ginnie Mae recognizes that capital requirements imposed by federal prudential regulators strengthen our industry partners and satisfy our need for appropriately capitalized counterparties. Also, by exempting state HFAs from the capital requirements, Ginnie Mae is recognizing that the state sponsorship of these agencies enhances their counterparty standing.
FHA and Ginnie Mae published a Request for Information (RFI) to seek public input on their Title I Manufactured Housing Programs. The RFI supports the ongoing efforts of the Biden-Harris Administration to increase the supply of affordable housing options through manufactured housing. Interested stakeholders are encouraged to provide input on the RFI prior to the conclusion of the comment period, which ends on September 26, 2022. For instructions on how to submit input, stakeholders must follow the instructions outlined in the RFI also available on Ginnie Mae's Newsroom web page. For more information, read Ginnie Mae's press release.
Recall that for August PRMG improved Government Fico LLPA’s. The improvements range up to +50 bps and “we expect these new improvements will help you better compete in this current highly-competitive market.”
Pennymac Correspondent posted Announcement 22-49 - FHA DTI Ratio Update.
FHA and Chenoa Fund FHA Profiles have been updated. View PRMG Product Update 22-42.
Capital Markets: the Fed Aiming for a “Soft Landing”
During his Jackson Hole speech last week, Fed Chair Powell said that the Fed will continue raising interest rates and hold them at a higher level until it is confident inflation is under control. He noted that reaching an estimate of the longer-run neutral rate is not a place to pause or stop. "Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy," he warned. Looking ahead, Powell said the June FOMC projections suggest overnight rates would rise to just below 4% through the end of 2023 and that historical accounts warned against loosening policy too soon.
Fed Chair Powell’s eagerly anticipated comments from Jackson Hole on Friday were relatively brief and focused on getting inflation down. He then identified three lessons the Fed has learned from periods of high and low inflation in this country: central banks “can and should take responsibility for delivering slow and stable inflation,” the importance of inflation expectations of the public in determining the path of inflation over time, and the persistence to do what is necessary until the low and stable inflation level has been met. His comments were hawkish enough to shift expectations back toward a 75-basis point hike at the Fed’s September meeting as markets continue to flip-flop between whether the Fed will continue to remain aggressive with another 75-basis point rate hike or move rates 50-basis points.
That comes as last week’s PMI data showed the U.S. economy moving further into contraction territory. The service sector, which accounts for the majority of economic activity, fell to 44.1 in August from 47.3 in July. New orders fell at their quickest pace over the last two years. Meanwhile, Q2 GDP was revised up from a decline of 0.9 percent to a decline of 0.6 percent as consumer spending was higher than originally estimated. Residential investment shrank 16.2 percent last quarter as higher interest rates and higher prices reduced demand. Mimicking the Consumer Price Index, the personal consumption expenditure index fell from a 6.8 percent annualized rate in June to 6.3 percent in July.
To the surprise of no MLO, Bankrate reported that mortgage rates increased to their highest levels since July and the housing sector in a clear slowdown with residential investment plummeting 16.2 percent in the second quarter. Purchase mortgage applications were 21 percent below last year’s pace in July. While home price appreciation has slowed, it has not declined, however, which means many homeowners have record equity that may be bolstering consumer spending. Additionally, real disposable personal income was up 0.3 percent last month as tight labor market conditions continue to boost wages.
This week’s economic calendar will be headlined by the August jobs report on Friday. However, there are several other key month-end indicators including home prices, consumer confidence, JOLTS, the resumption of ADP employment, Chicago PMI, productivity, and factory orders. Kicking off the calendar later this morning is Dallas Fed manufacturing for August. The NY Fed will purchase $2 billion MBS today through Thursday with today’s operation targeting up to $756 million UMBS30 4 percent through 5 percent. We begin the week with Agency MBS prices are worse .250 and the 10-year yielding 3.11 after closing last week at 3.04 percent given the hawkish rhetoric by the Fed.
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