Besides Janet Yellen’s In-N-Out foray, it is a rough environment out there: Hope you don’t want a Wells Fargo HELOC. Or just ask Citizens who is exiting the wholesale channel; More below on that. Many lenders are reporting unit volumes dropping by 50-70 percent, in part due to higher rates caused by inflation expectations. Buying stuff in the holidays will be more expensive this year, and here’s a personal tale of inflation. I happened to be near a See’s Candy store recently. Knowing that my daughter enjoys a treat from time to time, we went in and, without looking at the prices, bought a can of Toffee-ettes and a small box of mixed chocolates. It turns out that Sees’ prices are up to $32/pound for the mixed and the can of toffee was $29. The total was $48.00. I may-as-well have been buying Kobe beef. Holy smokes! (Today’s podcast can be found here, sponsored by LoanCare, the mortgage subservicer known for delivering superior customer experience through personalization and convenience. Its award-winning portfolio management tool, LoanCare Analytics, supports MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with LoanCare’s Eric Seabold on the current servicing market and what to be excited about as we close 2023 and move into 2024.)

Lender and Broker Software, Products, and Services

Earlier this month “Now and Then” became the first new Beatles song released in nearly three decades. The feat was accomplished with the help of machine learning technology that made it possible to extract clean vocals from a muddy recording John Lennon committed to cassette before his death. For examples of artificial intelligence in action that are more directly applicable to mortgage banking, be sure to sign up for nCino’s AI webinar taking place today, November 15, at 11 am EST. You’ll learn how financial institutions of all sizes are using AI to optimize operations, enhance risk assessments and foster personalized customer experiences.

At Optimal Blue, we’re BIG fans of our interim CEO Scott Smith, and it turns out we aren’t the only ones. Join us in congratulating Scott on being recognized in the entrepreneur category of Inman’s 2023 Best of Proptech Awards. Scott holds an impressive 20+ years of experience in real estate and mortgage technology, giving him real-world expertise that perfectly lends itself to Optimal Blue’s standing as the leader in secondary marketing technology. Scott is committed to Optimal Blue’s culture of innovation (did you know we deploy 300+ releases per year?), and if you’ve had the privilege of meeting Scott at one of the recent industry events, you know he’s equally as dedicated to Optimal Blue clients. Congrats on the well-deserved recognition, Scott!

In a world where rates are at the forefront of every homebuyer's mind, it's crucial for mortgage advisors to help them see the bigger picture. In 2022, Homeowners Financial Group added TrustEngine's Mortgage Coach to its arsenal, empowering loan officers to provide borrowers with a broader perspective on loan options and pricing details. Even in a tough market, the results have been astounding with Homeowners Financial Group seeing up to 20 additional closed loans each month, 9 percent increase in lead conversion, and a 16 percent reduction in pricing exceptions! See how Mortgage Coach is helping Homeowners Financial Group guide borrowers to smarter mortgage decisions. Read about their success in the case study.

Single women home buyers have grown dramatically to transact 22 percent of home purchases: Here’s how to become their go-to lending resource. Against the tough housing landscape of the past two years, single women home buyers have emerged as a distinct bright spot, increasing by 10 percent. Despite their rise, this demographic tends to feel uneducated about loans and dissatisfied with the lending process. Mortgage solutions provider Maxwell surveyed 1,000 single women home buyers to dig into these borrowers’ goals, challenges, and lending preferences. Some of the findings are surprising: For instance, single women are 50 percent more likely than their male counterparts to choose a local lender. Want to learn more, and become the go-to resource for this growing segment? Click here to download Maxwell’s 2023 Single Women Home Buyer Report.

As lenders and servicers continue to fine tune their tech stacks to save money and increase efficiency, many are finding great benefit in using the same technology platform for both loan origination and servicing. MortgageFlex recently published a white paper outlining the benefits of a unified platform, built on the latest technologies and software architecture to serve a single database-of-record, and it’s getting a lot of attention. Many servicers have been locked into the same old software for close to 50 years and they are ready to trade up. When they do, they will gain more by having one platform that can do it all, especially when it allows them to own all of their own data. Find out more by downloading the MortgageFlex white paper today or call us directly to get a demo.

Processing and Fulfillment Tools

With the new year approaching, there are several exciting events to look forward to, including MBA’s Independent Mortgage Bankers Conference. If you're an IMB facing tough challenges, join the Computershare Loan Services (CLS) team from January 22 – 24 in New Orleans. Computershare’s originations fulfillment, co-issue MSR acquisition, subservicing, and mortgage cooperative solutions can help you navigate the ever-changing mortgage industry. Contact CLS today and let their versatile team help you stay one step ahead.

Is your to-do list piling up faster than leaves in autumn? Meet wemlo®, your loan processing powerhouse here to lighten the load. At wemlo, we're dedicated to making your life easier and our loan processing services are designed to adapt to your needs. When business is booming, we're there to help. If the market slows down, our services can easily be paused. We're like your loan processing concierge, without the hefty price tag! Available in 47 states plus Washington D.C., our highly qualified processors are trained to work with a cornucopia of loan products and lenders. Ready to simplify your loan processing operations? Let's chat one-on-one about your mortgage brokerage’s specific goals and how wemlo can help provide support. Book your call today. NMLS ID 1853218

“Is the Mortgage LOS you contracted last decade still the best solution to lead your financial institution today or, more importantly, in the years to come? If there is any uncertainty in your answer, the health of your mortgage business could be at risk. Join our upcoming webinar to learn how you can elevate your experience (and ROI!) with MeridianLink® Mortgage: Your Future-Ready LOS! Register today for tomorrow’s webinar.”

Not the First, and Won’t be the Last

Some companies zag when others are zigging and eliminate retail and move entirely into wholesale. For example, today’s “Mortgage Matters: The Weekly Roundup” presented by Lenders One at 11AM PT, features Eddy Perez of Equity Prime Mortgage.

But others zig.

“After careful consideration, Citizens has made the difficult decision to discontinue originations in the mortgage wholesale channel. With this decision, the contract between Citizens and your company (and all branches associated with this broker ID, if applicable) has been terminated according to the terms of our Agreement after close of business Wednesday, December 6, 2023.

“All broker submissions received after close of business Wednesday, December 6, 2023, will not be processed. Any submissions received prior to close of business Wednesday, December 6, 2023, will be processed through the normal course of business. Citizens will continue to service all existing mortgages in accordance with our existing processes. We are committed to providing the unmatched customer service and support you have come to expect from Citizens. If you have any questions, please do not hesitate to reach out…”

Citizen’s correspondent clients, initially spooked, later received, “As you may be aware, Citizens made the difficult decision to discontinue originations in the wholesale mortgage channel. We are reaching out to inform and assure you that we will continue to operate nationwide in the correspondent channel and remain committed to offering the stability, expertise, and best-in-class service and support you have come to rely on.”

Conventional Conforming News

Next years’ loan limits traditionally don’t come out until after Thanksgiving, but that doesn’t mean there isn’t a lot going on out there!

Are you ready for something that combines repurchase news with a new acronym to learn? Freddie’s Pilot site notes, “To work with Sellers on improving the quality of performing loans, the company will pilot a replacement to its current repurchase policy for defective performing loans. The pilot will use a fee-based structure that is more efficient, transparent and rewards lenders that deliver high-quality loans. Specifically, lenders will not be subject to repurchases on most performing loans and will instead be subject to a fee-based structure based on non-acceptable quality (NAQ) rates.” The MBA’s Sasha Hewlett stated that Freddie’s results would be shared with Fannie.

Yesterday Fannie Mae announced, with the usual bevy of senior management platitudes, a series of leadership changes following decisions by two veteran executives that they will soon retire from the company. President David C. Benson announced that he will retire in early to mid-2024 after 21 years of serving in a wide range of positions, including Interim CEO, Chief Financial Officer, Executive Vice President – Capital Markets, and Treasurer. And Chief Administrative Officer Jeffery Hayward announced his intention to retire as of December 31, 2023, after 36 years with Fannie Mae during which he also led the company’s Multifamily business and its National Servicing Organization.

CEO Priscilla Almodovar, who joined the company last year, will assume the additional title of President when Mr. Benson exits and will directly manage the company’s two business units: Single-Family, led by EVP Malloy Evans, and Multifamily, led by EVP Michele Evans.

Current General Counsel Terry Theologides will succeed Mr. Hayward as Chief Administrative Officer and will be responsible for a broad range of Fannie Mae’s operations, including Economic & Strategic Research, the ESG team, Government & Industry Relations, Legal, and Marketing & Communications. The company also announced that Danielle McCoy will become the new General Counsel & Corporate Secretary. McCoy currently serves as SVP, Deputy General Counsel & Deputy Corporate Secretary.

Both Freddie Mac and Fannie Mae’s Multifamily’s loan purchase cap for 2024 will be $70 billion each. The cap is set by the Federal Housing Finance Agency (FHFA) based on projections for the size of the multifamily debt origination market. Freddie Mac has also received from FHFA updated criteria for its “mission-driven” business.

MBA President and CEO Bob Broeksmit, CMB, weighed in on the 2024 multifamily lending purchase caps for Fannie Mae and Freddie Mac (the GSEs). "A cap of $70 billion for each of the GSEs is reasonable, given the challenging market conditions and high interest rate environment expected in 2024.”

Fannie Mae Phase 3B of the Uniform Closing Dataset (UCD) critical edits transition became effective Nov. 6, 2023. Lenders must remediate quality issues for fatal edits before delivering loans to Fannie Mae. For details, read the November 6 announcement. Also available, critical edits transition resources.

Effective Jan. 1, 2024, Fannie Mae is increasing the hourly attorney rates payable on all litigation, both routine and nonroutine, affecting Fannie Mae loans. The new rates are a maximum of the following: $270 for attorneys with under five years of experience, $330 for attorneys with five or more years of experience, and $100 for paralegals. Review the Attorney Authorization Approval (AAA) Matrix for options.

Pennymac will update Conventional LLPAs effective for all Best-Efforts Commitments taken on or after Wednesday, November 08, 2023, as follows: Improving the value in the ‘Loan Balance Adjustments’ LLPA Grid. This information was posted in Pennymac Announcement 23-75.

Effective October 30th, A&D Mortgage brokers began benefitting from a 25bps (0.25 percent) improvement on all Conventional mortgage loans. Additionally, A&D modified some of its underwriting guidelines for condominiums to provide brokers with greater flexibility and lending options for their clients.

Capital Markets

As indicated by the consumer price numbers this week, there are many ways in which progress has been seen regarding price pressures, while the economy and labor market remain on solid footing. Headline inflation is down significantly from the 7 percent seen at the beginning of the year, and it will take additional time to go from the current 3 percent clip to the Fed's desired 2 percent target.

Getting into the weeds, bonds and mortgage-backed security prices rose drastically yesterday, helping mortgage rates plunge after the headline consumer price index was unchanged in October and rose a softer-than-expected 0.2 percent excluding food and energy. October's CPI print is an encouraging development for the FOMC and reinforces the view that the FOMC has ended its hiking cycle and will now have to seriously examine when it should begin cutting rates.

That sentiment was echoed in the fed funds futures market, which priced out any additional rate hikes and priced in an additional rate cut for 2024, bringing the total up to four expected rate cuts next year. Morgan Stanley expects the Fed to make deep cuts over the next two years starting in June, while Goldman Sachs sees a reduction starting in the fourth quarter next year, followed by quarterly cuts through mid-2026. It’s likely a bit too soon to celebrate as inflation's return to 2 percent will continue to be a slow grind.

Today’s economic calendar does have some market moving potential and kicked off with mortgage applications increasing 2.8 percent from one week earlier, according to data from MBA. We’ve also received October retail sales (-.1 percent) and the Producer Price Index (-.5 percent, core +.1 percent). Other releases today include Empire manufacturing for November (9.1), September business inventories, and remarks from Fed Vice Chair for Supervision Barr and Richmond President Barkin. We begin the day with Agency MBS prices worse .125-.250 than Tuesday evening and the 10-year yielding 4.49 after closing yesterday at 4.44 percent. The 2-year is at 4.87.