Why do ducks have feathers? To cover up their butt quacks. Why did Congress pass a three-month, stopgap funding bill? To cover their… never mind. But the government continues to function, and the good news for borrowers and lenders is that the NFIP (National Flood Insurance Program) is extended until March. (If you’d like to know the difference between private and public flood insurance, here you go.) Yes, Congress acted. Congress could act by doing away with Dodd Frank, and therefore the CFPB, but that is highly doubtful. No one knows what may happen at the CFPB. Hopefully, plenty of FAQs and publishing guidelines, more implementation guidance and not regulatory guidance; advisory opinions, arguably, can change the rules. FAQs to clarify the rules: Notice and comment is a very important process. Perhaps a pause in enforcement cases, although no one wants a regulator that does nothing. Action against individual broker shops is unlikely because there are so many of them. The loans are going to organizations that are monitored by the CFPB. Brokers don’t have the resources to put up a fight. The CFPB won’t randomly sample brokers, since it doesn’t have the resources. (Today’s podcast can be found here and is sponsored by Gallus Insights, the go-to reporting and analytics platform for mortgage lenders and servicers. Gallus makes it easy to access real-time data, create custom reports, and uncover actionable insights, all with a user-friendly design. Simplify your reporting, streamline your decisions, and drive profitability with Gallus Insights. Hear an interview with Gallus Insights’ Augie Del Rio on data trends in the industry and specific case studies that highlight the importance of data.)

Lender and Broker Software, Services, and Products

Your nCino Mortgage POS just got a new SUPERCHARGED integration! Truv now offers seamless income, employment, AND asset verifications embedded directly within nCino’s Mortgage POS. Borrowers can complete verifications within the loan application (no external links or extra steps) creating a faster, friction-free experience. Lenders gain real-time access to accurate data from payroll providers and over 13,000 bank connections, streamlining workflows and boosting efficiency. Activate Truv’s embedded solution today for a simplified, seamless mortgage process! Learn more and see it in action!

An open letter from Polly Founder and CEO, Adam Carmel: "As we near the end of another incredible year, I am reflecting on Polly's mission, our vision, and what we have been able to achieve in collaboration with our customer partners. When Polly was founded in 2019, it was clear then, and even more so now, that legacy pricing technology was doing the mortgage industry a disservice. The average cost to originate a loan has increased over 500% in the last 20+ years, and yet, the mortgage industry was burdened by the same antiquated capital markets software. I thought to myself…" Read more!

“Planet is a leader in sub-servicing for RTL and DSCR loans. We combine years of experience with a specialized commercial platform to deliver what others can’t: granular portfolio insights, tailored monitoring and reporting, smooth draw administration, and proactive borrower communication. While other systems fall short of addressing RTL and DSCR nuances, Planet proves exceptional sub-servicing does exist. Book your meeting with us at IMN’s Residential Lenders Forum to discover how Planet is maximizing results for investors like you.”

Looking forward to 2025, 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 websites. 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!

Fiserv in the News

Fiserv, Inc. today announced it has entered into a definitive agreement to acquire Payfare Inc. (TSX:PAY), a provider of program management solutions with a particular focus on new economy workforces. (The transaction is subject to obtaining shareholder and court approvals and other customary closing conditions and is expected to close in the first half of 2025.) “This acquisition complements the embedded finance solutions of Fiserv with card program management, a white-label consumer app, and a microservices orchestration layer. These Payfare offerings, combined with the strengths of Fiserv in processing, bank ledgers and integrated value-added services, enhance the Fiserv solution in embedded banking, payments and lending and help meet needs of large enterprises and financial institutions.” Keefe, Bruyette & Woods is acting as Financial Advisor to Payfare Inc. on the transaction.

The Mortgage Bankers Association and Ginnie Securitization

The Mortgage Bankers Association (MBA) proposed the development of a new Ginnie Mae securitization designed to attract more private capital sources of liquidity to support Ginnie Mae issuers in the event of market stress or a severe economic downturn. “MBA’s proposed Ginnie Mae Early-Buyout (EBO) securitization would expand liquidity for government servicing through all economic cycles,” said MBA President and CEO Bob Broeksmit, CMB. “An EBO security addresses the timing mismatch within Ginnie Mae’s program, helping to alleviate an ongoing issue that has concerned issuers and regulators alike. It also has the potential to increase the value of Ginnie Mae servicing, which could translate into lower costs for FHA, VA, and USDA borrowers.”

Under MBA’s proposal, an EBO securitization would be comprised of non-performing Federal Housing Administration (FHA), Veterans Affairs (VA), and USDA loans bought out of traditional Ginnie Mae pools. Buying loans out of the pool stops the issuer’s obligation of continuing to make principal and interest payments to investors during a time they are not receiving payments from borrowers. However, because independent mortgage banks (IMBs) do not have large balance sheets to hold nonperforming loans for an extended period, buyouts are capital intensive and can create liquidity stress. The EBO security provides a new source of liquidity to help IMBs and other issuers better manage the liquidity challenges of participating in the Ginnie Mae program.

The EBO security would allow the issuer to sell pools of EBOs to private investors who would receive an accrual of the scheduled principal and interest payments when the loans resolve either through the borrower reperforming on the loan, or when the loan is foreclosed and goes to claim with FHA, VA, or the Rural Housing Service. Those agencies’ primary guarantee would repay the investors the principal and accrued missed payments.

MBA’s new white paper, Ginnie Mae EBO Securitization, introduces the proposal and describes how the inherent timing mismatch in principal and interest payment advances within the Ginnie Mae program has caused liquidity concerns and regulatory anxiety. The white paper outlines the benefits of the EBO security to issuers, investors, warehouse lenders, and consumers.

Capital Markets

It was the week before Christmas, and the Federal Reserve continued its cautious approach, making its third consecutive rate cut in December, reducing the federal funds rate by 0.25 percent and bringing the total rate reduction in the last quarter (and since the easing cycle started) to 1 percentage point. Despite acknowledging solid economic growth, the Fed noted that the labor market had softened, and inflation remained above the 2 percent target.

Looking ahead to 2025, the Fed signaled a slower pace of rate cuts, with projections now indicating just 50 basis points, down from the 100 basis points previously forecasted in September. Economic policies under the incoming Trump administration could further impact inflation and growth, making the Fed's stance more cautious.

The broader economic landscape shows a U.S. economy that remains resilient, with third-quarter GDP growth revised up to 3.1 percent, driven by stronger-than-expected consumer spending. November retail sales rose 0.7 percent, marking the sixth consecutive month of outperformance. However, the continued rise in consumer spending, outpacing income growth, has contributed to persistent inflation.

This Christmas week’s economic calendar is mostly about supply, with a total of seven T-bill auctions between today and Thursday as well as $69 billion 2-year notes today, $70 billion 5-year notes and $28 billion reopened 2-year FRNs tomorrow, and $44 billion 7-year notes on Thursday. Economic data includes consumer confidence, durable goods orders (-1.1 percent), Fed surveys and new home sales. Today’s data consists of the Chicago Fed National Activity Index for November and December consumer confidence later this morning. We begin the Christmas week with Agency MBS prices unchanged from Friday (as if anyone’s going to lock), the 2-year yielding 4.31, and the 10-year yielding 4.54 after closing last week at 4.52 percent.