“The credit card company called me to report suspicious activity... I asked what kind of suspicious activity, and they said someone made a payment.” “Well, I’ve got a job and try to put my money away. But I’ve got debts that no honest man can pay. So, I drew what I had from the Central Trust…” (Ask me some time in person about meeting and chatting with many of the folks in that band.) Debt is not fun, and in fact, is quite the opposite. Take a look at this graph from the St. Louis Fed of credit card and revolving debt, moving toward $1.1 trillion. Yesterday I spent some time at a school telling Ms. Chrisman’s 7th graders about how a bank works, what a mortgage is, and how home and credit card debt work. It was educational for them, and very educational for me in terms of what they seemed most interested in and what the 12-year-olds asked the most questions about. Financial education, and thus literacy, can’t start too young. (Today’s podcast is found here and this week’s is sponsored by Stavvy. Moving real estate beyond paper documents. Stavvy is the digital platform that helps real estate professionals grow their business and ditch the paper process. Book a demo today! Hear an interview with Stavvy’s Angel Hernandez on his vision for digital transformation, and how electronic documents are helping make that a reality.)

Lender and Broker Software, Services, and Loan Programs

MIG achieved 100% VOIE conversion improvement with Truv. MIG boosts VOIE conversion by 100% and cuts costs by 80% with Truv. Mortgage Investors Group was facing rising costs of verification of income and employment and decided to make a change that led to 80% cost savings. Learn more.

OptiFunder, the leading provider of advanced funding technology for the mortgage industry, is proud to announce a new collaboration with First American Data & Analytics to integrate their renowned FraudGuard® solution into OptiFunder's innovative Greyhound Warehouse Management System for warehouse lenders. Greyhound simplifies client onboarding, provides robust reporting, and allows easy loan ingestion and repayment from originators. The integration with FraudGuard® further enhances the security and risk mitigation capabilities of the Greyhound platform, ensuring that warehouse lenders benefit from top-tier fraud detection and compliance tools while optimizing their funding process. Together, OptiFunder and First American Data & Analytics are poised to offer the mortgage industry a safer, more efficient lending experience. Follow the journey and learn more about what OptiFunder is doing for warehouse lenders in its monthly newsletter. Catch the OptiFunder team at these upcoming events or schedule a Greyhound demo to learn more.

The LOS game has changed and it’s time for you to take the lead! The top players in mortgage lending aren’t waiting for the market to shift, they’re making bold moves now to secure their future success. Take Highland Mortgage: it didn’t just switch software, Highland transformed its operation to close loans faster and with greater accuracy. Now Highland is outpacing and outperforming the competition. Read how the lender did it. And when you’re ready to elevate your business to the next level, choose the LOS that’s setting the new standard: MeridianLink.

Ncontracts’ 2024 Exam Findings: Top Fair Lending Violations! Few things strike fear in the hearts of bankers more than the words "exam findings." What are examiners uncovering? What are the hot-button issues? Ncontracts’ latest whitepaper highlights some of the most frequent fair lending compliance exam findings and enforcement actions reported by regulators and advice on how to avoid them. What violations are tripping up lenders? Which agencies are referring the most cases to the DOJ? Download the free whitepaper to find out.

VA, FHA, and USDA Changes

Lenders are interested in the National Association of Realtors’ settlement* concerning buyer-broker compensation. Effective Aug. 17, 2024, the National Association of Realtors® (NAR) has reached a settlement* in a class action lawsuit that resulted in changes to buyer broker fees in real estate transactions. (*All the parties agreed to the terms but something may still change. So perhaps “de facto” settlement is more accurate although the Department of Justice may “upset the apple cart.” The National Association of Realtors plans to ask the Supreme Court to prevent the U.S. Department of Justice from restarting an investigation into the Chicago-based trade group’s practices around commissions.)

LOs specializing in VA loans are particularly concerned about how any commissions procedure changes could affect Veterans and service members using VA’s home loan benefits. Per the VA, the settlement will require two big changes in how buyers and sellers negotiate services from a buyer’s agent. First, when agents list homes on the Multiple Listing Service (MLS) platform, they will no longer be able to include the buyer’s agent’s compensation. The MLS is the listing program that buyers’ brokers and listing brokers use to share information about properties for sale. Second, buyers will be required to enter into written agreements with Realtors® before touring a home, and the agreement must include terms about their own agent’s fee.

“Historically, Veterans could not pay buyer-broker fees when purchasing a home with a VA-guaranteed loan. In June, VA announced an update to help ensure that Veterans using the VA-guaranteed home loan benefit remain competitive buyers. Specifically, eligible Veterans, active-duty service members, and surviving spouses who use their VA home loan benefits can pay for certain real estate buyer-broker fees when purchasing a home as of Aug. 10, 2024. This update was intended to ensure VA’s programs continue to promote access to homeownership. (For additional information about this update, please review VA Circular 26-24-14: “Temporary Local Variance for Certain Buyer-Broker Charges,” on VA’s Loan Guaranty Service Resources page.)

“Homebuyers will now be required to sign a written agreement with their agent before touring a home. This contract must explain the buyer-broker fee, as negotiated by the homebuyer and the agent, and the specific services that will be provided by the agent. The buyer’s written agreement must include the following four components regarding the buyer-broker fee: A prominent disclosure of the amount or rate of compensation the real estate agent will receive and how this amount will be determined; Compensation must be objective (e.g., $0, X flat fee, X percent, X hourly rate) and not open-ended; A term that prohibits the agent from receiving compensation for brokerage services from any source that is over the amount agreed to with the buyer; A prominent statement that broker fees and commissions are fully negotiable by the homebuyer and agent involved and not set by law.

“The seller may agree to offer compensation to the buyer’s agent, but the offer cannot be shared on the MLS. Buyers may also ask sellers to pay the buyer’s agent’s compensation, even if the seller’s agent did not advertise seller-paid compensation on a platform other than the MLS. Buyers can still accept concessions from the seller (up to 4% of the appraised value of the property), such as offers to pay closing costs. Also, because buyers’ agents cannot receive compensation over the amount negotiated with their client, any seller-paid offers of compensation higher than the amount negotiated by the buyer may be negotiated as a seller concession to defray the buyer’s closing costs.

“What does this mean for sellers? Sellers can offer compensation to buyer brokers. However, the seller’s agent must clearly disclose and document the seller’s approval of the payment, or offer, that will be made to the buyer brokers. This compensation amount cannot be included on the MLS listing. The seller’s agent may advertise the listing on other social media, flyers, and websites other than the MLS platform. Sellers can still offer buyer concessions (up to 4% of the appraised value of the property), such as offers to pay closing costs.”

The VA tells buyers “When finding an agent to work with, make sure to ask questions about compensation and understand what services are included. It is also your right to negotiate the fees prior to signing a written contract. You should work with your agent to understand how the VA-guaranteed home loan benefit applies to your situation, with the full range of choices when both buying or selling a home.” For more information on VA home loans, please visit VA’s Loan Guaranty Assistance page. (For other resources, click here.)

FHA posted an enhanced draft version of the Modernization of Engagement of Borrowers in Default Mortgagee Letter (ML) on its Single Family Housing Drafting Table. This enhanced version includes line numbers in the left margin to easily cross reference to the feedback worksheet. No other changes were made. FHA makes this enhancement to better serve all its stakeholders. The review period to provide feedback on the draft ML ends on September 13, 2024.

FHA published Mortgagee Letter (ML) 2024-17, Interim Procedures for Nonjudicial Foreclosures with Secretary-Held Liens, which establishes an interim process for releasing FHA subordinate Secretary-held liens following the completion of a nonjudicial foreclosure sale where there are no surplus funds available to satisfy HUD’s subordinate lien. The guidance in this ML is optional and applies to all FHA Title II Single Family forward mortgages. The provisions in the ML may be implemented immediately.

USDA Rural Development issued a bulletin announcing an interest rate decrease for SFH Direct Programs, effective September 1, 2024.

On August 5, 2024, USDA published PN 621 providing multiple updates to Handbook-1-3555, Chapter 11: Ratio Analysis. These changes became effective upon issuance of Procedure Notice (PN) 621. AmeriHome Mortgage Announcement 20240814-CL provides revisions that impact the AmeriHome USDA Guaranteed Rural Housing Program Guide.

On August 6, 2024, Fannie Mae, Freddie Mac, and FHA announced an extension of the required implementation date for the new ROV guidelines until October 31, 2024. See the

AmeriHome Mortgage Product Announcement 20240811-CL for details.

Capital Markets

Traders awaiting today’s payrolls report, which should give clarity on the size of the Fed’s first rate cut, were treated to several labor market indicators yesterday. The ADP Employment Report showed private-sector job growth of just 99k in August, the lowest since 2021, falling short of expectations. Job gains were concentrated in medium- and large-sized businesses, while small businesses shed 9k jobs. Job openings fell to 7.7 million in July, down from 7.9 million in June and significantly lower than the peak of 12.2 million in March 2022, signaling a continued cooling in the labor market. The labor market is gradually slowing but not collapsing, as companies are still cautious about reducing their workforce amid economic uncertainties.

30-year mortgage rates held steady while the 15-year rate hit another fresh year-to-date low and lowest since February 2023 in Freddie Mac’s Primary Mortgage Market Survey. For the week ending September 5, the 30-year mortgage rate was unchanged versus the prior week at 6.35 percent, lowest since March 2023, while the 15-year mortgage rate slipped 4 basis points to 5.47 percent. The rates are now respectively 77 basis points and 105 basis points lower than a year ago.

Today brings the all-important August payrolls report. Headline payrolls increased by 142k versus 160k expectations and 114k in July with back month revisions downward. The unemployment rate was 4.2 percent when it was seen holding steady at 4.3 percent. August's job growth was projected to be modest following a weaker performance in July due to Hurricane Beryl. Hourly earnings were +.4 percent. Given Fed Chair Powell’s recent emphasis on the labor market, many in the industry now contend that this report will dictate whether the Fed cuts by 25 or 50 basis points. Two Fed speakers are scheduled for later today: New York President Williams and Governor Waller. Additionally, today will bring August’s prepayment speeds, with Fannie Mae 30-year speeds expected to increase by 15 percent due to recent rate drops and favorable seasonal trends. Ginnie Mae 30-year speeds rose in July, particularly among higher-coupon loans. We begin Friday with Agency MBS prices better by .125-.250 from Thursday, the 10-year yielding 3.68 after closing yesterday at 3.73 percent, and the 2-year is at 3.67.