Do whatever you want to your clock, it doesn’t change the feeding time of your pets! Friday’s a holiday… Want to help out your vet (veteran, not veterinary) clients? There are plenty of good things that businesses and services are offering to veterans… My USN (1942-1962) Dad would have loved them. Check them out. Does your client have an existing VA insurance policy? You can add value by pointing out that with VA's online Instant Loan Approval service, Veterans with certain insurance plans may borrow up to the value of their policy. In our general industry, there’s a lot going on out there. STRATMOR’s current blog is, “Supply and Demand are Still Driving Mortgage Pricing.” Mr. Cooper’s laying off 800 employees. (As always, displaced employees can post their resumes here for free and employers can view for several months for the low fee of $75.) UWM and Rocket released earnings with much fanfare. This week lenders and borrowers are all, either directly or indirectly, impacted by election results. The U.S. election this week will steer some attention away from investors locked in on the Federal Reserve. The consensus expectation is that a divided government between the White House and Congress will lead to more political gridlock and a potential slowdown for some of President Biden's agenda. (Today’s podcast is available here and this week’s is sponsored by SimpleNexus, an nCino company and award-winning developer of mobile-first technology for the modern mortgage lender. Today’s features an interview with Jon Giles, Head of Consumer Direct Lending at TD Bank, on insights into what home equity data means for consumers as we approach the end of the year.

Lender and Broker Services and Products

The 1951 Explorer's Club annual dinner purported to serve a 250,000-year-old piece of wooly mammoth meat. While not engaged in such exotic activities as dining on extinct animal steak, digital mortgage explorers SimpleNexus, an nCino company, and Celent have released a report on the industry's transition to digital closing practices by surveying lenders on their use of eClosing tools. Access the full report, State of Digital Mortgage eClosing Adoption, free on the SimpleNexus website. While you're there, check out SimpleNexus' groundbreaking Nexus Closing, which supports multiple closing workflows, and helps lenders achieve greater operational efficiency, security, liquidity, and long-term cost savings.

ActiveComply, a leader in social media monitoring and website archival for the financial industry, recently announced that it has officially launched its highly anticipated Remote Office Inspection Tool. This unveiling comes on the heels of recent updates to national and state-by-state remote work requirements. ActiveComply’s Remote Office Inspection Tool ensures remote worker and branch compliance with state-by-state remote office requirements through a series of checks and balances; including VPN confirmation, network quality assessments, and geolocation tracking. This product is the newest addition to their range of mortgage compliance resources to protect financial institutions from costly compliance mistakes. Learn more about managing your compliance confidently with ActiveComply or schedule a free demo today!

According to MBA's Q2 Mortgage Bankers Performance Report, the cost to originate a loan has soared to an all-time high of $10,937. With rising costs and declining origination volume, now is the perfect time to outsource your processing, underwriting, and closing functions to Computershare Loan Services (CLS) and turn your fixed origination costs into variable costs. CLS can help you with your entire pipeline, from conventional, non-QM, and FHA loans, to multiple product types, including HELOCs. CLS can fulfill one part of the originations process or all of it! Contact Computershare Loan Services to learn how their originations expertise and discipline can change everything.

Lenders looking to cut costs and increase margins might be missing a high-impact, low-lift area to improve: the appraisal process. Revenue leakage, lapses in communication, and manual order management all hurt the borrower experience and the bottom line, but Reggora has a simple solution. Learn how lenders can reduce their cost per loan file by $258 and other benefits from appraisal management technology in the Reggora white paper, The High ROI of Appraisal Innovation.

“Don’t wait: it’s time to truly understand your MSR portfolio financial results, refine your MSR strategy and optimize the path forward through dynamic market conditions. At Richey May, we begin with a deep analysis of your MSR portfolio, a review of the overall servicing retained/released strategy plus a review of the production side of the business. Ongoing support with sale selections, Letters of Intent and Contracts, and periodic calls to discuss MSR conditions can also be included. Contact Seth Sprague, CMB to learn more about Richey May’s Mortgage Banking Consulting Services.”

Freddie and Fannie Updates

Yes, applications are down significantly. But people are still buying and financing homes, and the majority of that production is conforming conventional. Around Thanksgiving we’ll hear the 2023 loan limits. But that isn’t delaying the Agencies from announcing changes. Let’s take a look at what they’ve been up to lately.

Help borrowers find the financial assistance they need to purchase a home by directing them to Fannie Mae’s down payment assistance search tool. The tool helps homebuyers find down payment assistance programs for which they may qualify based on information such as where they’re looking to live and the type of home they’re looking to purchase.

Freddie Mac’s Guide Bulletin 2022-23 announced multiple updates including Loan Product Advisor® (LPASM) enhancement regarding borrower cashflow assessment, credit card reward points as an eligible source of funds, and Community land trust (CLT) mortgage property eligibility.

Freddie Mac is expanding community land trust (CLT) mortgage loan delivery options with the addition of Guarantor or Fixed-Rate Cash execution to provide more flexibility. Learn more about Freddie Mac Community Land Trust Mortgages.

Fannie Mae issued Lender Letter (LL-2022-05) regarding updates to LLPAs in response to FHFA’s Oct. 24 announcement regarding targeted changes to Fannie Mae and Freddie Mac's pricing framework. LL-2022-05 details the waivers of loan-level price adjustments (LLPAs) for certain borrowers and affordable mortgage products and changes to LLPAs for some cash-out refinance loans.

FHFA announced the validation and approval of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for use by Freddie Mac and Fannie Mae. Implementation of FICO 10T and VantageScore 4.0 will be a multiyear effort. Once implemented, Sellers will be required to deliver both credit scores when available with each loan sold to Freddie Mac. In response, the GSEs published a Joint Enterprise Credit Score Solicitation Update to request applications from credit score model developers.

Freddie Mac issued Guide Bulletin 2022-22, under the direction of FHFA, that provides the following updates: (a) new credit fee caps for certain Duty to Serve Mortgages, certain mortgages for first-time homebuyer(s) and Home Possible® mortgages, and (b) fee rate changes to most cash-out refinance mortgages. Freddie Mac is also combining credits for GreenCHOICE® mortgages and Refi Possible℠ mortgages without appraisal waiver (ACE) in a new Credits for Credit Fees grid on Exhibit 19.

Borrower cash flow assessment is coming, and Freddie Mac wants to make sure you’re prepared. To help you increase homeownership opportunities for low- and moderate-income borrowers and those in underserved communities, Freddie Mac Loan Product Advisor® (LPASM) update will include borrower cash flow assessment feedback messages, effective for new loan submissions or resubmissions on and after November 6, 2022.

Homeownership remains a challenge for Native Americans across the U.S., with only a 56 percent homeownership rate in 2021 versus a 66 percent national average. Community development organizations and nonprofits in partnership with Freddie Mac have increased focus on building financial capability, housing counseling and homeownership education. We’re providing actionable information on the mortgage financing and origination processes and leveraging affordable lending solutions that can help more Native Americans become successful homeowners. Visit Freddie Mac’s Native American Homeownership Preparedness web page for more resources.

Listen to Freddie Mac’s latest Power of Partnership podcast and hear discussions on the pricing components you should consider in your loan pricing margin management. Episode: “Best Practices for Managing Loan Pricing Economics”, with speakers Amy Creason, director of sales, Secondary Market Advisors (SMA), Freddie Mac and Ted Kramer, founder and president, Innovient.

Capital Markets: Election Week

After a bit of a tumultuous news week, what with the Fed and the employment data, and looking ahead to Friday’s Veterans Day, perhaps this week will be quiet. The U.S. election on November 8 will steer some attention away from investors locked in on the Federal Reserve. The consensus expectation is that a divided government between the White House and Congress will lead to more political gridlock and a potential slowdown for some of President Biden's agenda. Historians note the stock market has outperformed with a dividend government over the returns generated in the years following the same party controlling the Senate, the House and the Presidency. Analysts warn that a scenario that could rattle the market would be any lack of clarity regarding Senate control if results are contested. Meanwhile, the economics calendar will be dominated by the October consumer price index report.

Last week saw Fed Chairman Powell doing his best to quell the dovish interpretation of the FOMC’s policy statement by saying it was too early to suggest a pivot in monetary policy and that the peak fed funds rate of this cycle would be higher than previously expected. Following September’s meeting that peak was expected to be around 4.6 percent. Now, many market participants expect that peak to be in the low to mid-5s. Ultimately the path of inflation over the coming months will impact how aggressively the Fed continues to tighten monetary policy.

While there are signs that things are beginning to cool, employment remains tight as evidenced by October’s jobs report. While the pace of hiring has slowed since the beginning of the year, 261k net new jobs is still significantly higher than the average monthly gains of 183K since the Great Recession. Commentary from both ISM PMIs suggests businesses are growing concerned about economic conditions which may lead to fewer new hirers in the coming months. Currently, the markets are split between a 50-basis points or 75-basis points rate hike in December with a slight majority leaning towards 50-basis points.

This week’s highlights include the Quarterly Refunding, tomorrow to Thursday, as well CPI on Thursday and preliminary November Michigan sentiment on Friday when the bond market will be closed for Veterans Day. Other data includes consumer credit, wholesale inventories and the October budget statement. Fed speak resumes following last week’s FOMC events. Class A 48-hours on Wednesday with Class B net out on Thursday. Of course, tomorrow is election day where current odds favor the Republicans re-taking control of the House and Senate. The Employment Trends Index kicks off this week’s economic calendar later this morning and the only other data point is September consumer credit this afternoon. We begin the week with Agency MBS prices better .375-.50 and the 10-year yielding 4.13 after closing last week at 4.25 percent… are some investors betting a period of disinflation has already begun and the midterm election results will be favorable to markets on Tuesday?

Employment

Coastal States Bank continues to expand its Mortgage Banker Finance Group and is looking for a seasoned warehouse lending professional. Available in all 50 states and the District of Columbia, Coastal States Bank provides tailored solutions to maximize the funding needs of Delegated and Non-Delegated Lenders. If you would like to join a growing Bank, committed to the warehouse lending business, please reach out to Tim Haug, Director Mortgage Banker Finance.

“Equity Resources is a family-owned mortgage banker that is actively seeking career-focused loan officers throughout our footprint. Equity is proudly celebrating our 30th anniversary in 2023 and we excited about our continued growth! Equity Resources is an agency direct lender that is currently licensed in 19 states along the east coast and mid-west. We offer a stellar marketing platform and compensation plan, as well as full suite of products (including several specialty lending programs.) For confidential inquiries to join our award- winning team, please contact Tom Piecenski, EVP of Sales and Development, at 614.327.5353.”

Interested in becoming part of the FHA workforce in San Juan, Puerto Rico? FHA has one vacancy for a Housing Program Specialist. Job duties include providing technical guidance/support to non-profits in their application for HUD approval and those approved to provide FHA secondary financing, inspecting REO properties purchased by a non-profit through an affordable housing plan, and monitoring of REO mission properties and participants to include properties sold to police officers (Officer Next Door), nonprofits, and local government agencies.