“I got stuck in a conversation with some wealthy people and one woman asked me how my investments were doing. I replied that both avocadoes should be ripe by tomorrow.” Food prices are an everyday reminder of inflation on the spending side of the equation, but on the flip side, plenty of people don’t know where to put their savings these days. One can pick up additional income on savings in places like the perfectly safe TreasuryDirect account and earn over 4 percent on as little as $100. (I would like to think that money won’t change me, but I won $5 on a scratch-off lottery ticket and used it buy name-brand aluminum foil.) The Fed has been, as usual, in the headlines this week by raising the target Fed Funds rate (what banks charge one another for overnight loans). Chris Whalen penned a piece titled, “FOMC Doubles Down on Market Risk.” One picture is worth a thousand words, and here’s a nice chart of Fed Funds to help keep things in perspective. (Today’s podcast, with a slight delay due to travel, can be found here and this week is sponsored by Black Knight, Inc. As a premier provider of innovative, high-performance software, data and analytics for mortgage and home equity lending and servicing, Black Knight, Inc. is transforming the mortgage industry through its best in class solutions.)

Lender and Broker Services, Products, and Software

Fact: All 3,143 U.S. counties have at least one down payment assistance (DPA) program, and more than 2,000 counties have 10 or more DPA programs. If you’re not offering DPA because it feels like you need to be a PI to vet local programs, Down Payment Resource has your back. DPR’s tools make it easy to identify and curate DPA programs, review benefits and requirements and match borrowers with assistance. If you’d like a glimpse into Down Payment Connect, Innovative Mortgage’s Pam Marron provides an insightful overview of the product in a recent blog. Or, if you’ll be at MBA Tech April 2-5, schedule a meeting with Down Payment Resource’s Tani Lawrence and Rob Chrane.

Millennial homebuyers do not want to call you. That’s it… That’s the whole message today. Give them QuickQual by LenderLogix, the immediate answers they want that produce the conversions you’re looking for.

“NewRez Wholesale has big things coming for your business, giving you greater resources, access to our expertise, tools you need to promote your business, and support through innovative technology. We’re excited to announce that we’ve redesigned our broker recognition program to bring you the highest quality of service, sharp pricing, and more, so you can close faster with confidence. We call it RezClub, and it’s coming soon! Learn more about how you can earn your way onto the RezClub team by contacting your NewRez Wholesale account executive today, or email us.”

“’Fair Housing is not an option… It is the law.’ Carl Harris. Fair housing plays a critical role for lenders, real estate appraisers, AMCs, and most importantly, buyers and sellers. On March 15, NAN (Nationwide Appraisal Network), hosted ‘Fair Housing and What It Means for Appraisers’ with Steve Sussman, NAN’s Chief Business Development Officer, Stacy Caprioli, NAN’s Chief Appraiser, and Melissa Malpass, Consumer Finance and Fair Lending Attorney at Alston & Bird. This was the first of a four-part, virtual discussion series as part of NAN's Bias, Inclusion, Ethics, and Diversity (BIED) initiative. Each quarter, NAN's leadership team and special guests will discuss relevant industry topics and gather important feedback from the appraiser community. To catch up on the valuable insights shared by our panel of industry experts at the webinar, and to stay up to date with the latest information, best practices, and upcoming events, visit us.”

Registration opens today for The StorySeller Virtual Summit on April 19 with nine guest speakers including master FBI negotiator Chris Voss: How to Uncover Hidden Opportunities in Life and Business, NAR chief economist Dr. Lawrence Yun: How to Overcome Objections About Today's Housing Market, and industry legends Tim Braheem and Carl White on Your Inner Story and the Habits of Top Producers. The event is hosted by best-selling author and Momentifi CEO, Gibran Nicholas. The theme of the event is How to Grow an Epic Business and Find More Meaning in Your Work. Registration is free, but you can also sign up for a VIP All-Access pass that includes Momentifi's personally branded homebuyer education tools and other member benefits. This is a great way to kick off the Spring Home Buying Season with your team and referral partners. Click here to learn more or sign up. You can also click here to inquire about group tickets.

“A suite of precision, tech-forward, customized mortgage finance banking solutions. It’s what you need. And it’s what Flagstar Bank delivers. Flagstar’s mortgage solutions live under one roof and one philosophy: clients first. Flagstar’s highly personal warehouse-lending approach has made them the 2nd-largest warehouse lender in the country. Flagstar can fund your MSR purchases to maximize MSR value over time, regardless of portfolio size. They can ease the burden of servicing advances in your portfolio and manage your liquidity with servicing advance financing. And in terms of subservicing, Flagstar’s nearly 1.4 million borrowers in home loans are testament to their award-winning capabilities, which are geared to minimize risk and maximize returns. Flagstar is built for best-in-class service that always keeps our client's integrity and needs top of mind. Contact Jeff Neufeld or Patti Robins to discuss what Flagstar can do for your business.”

FHFA, Fannie, and Freddie Updates and Program Changes

Yes, volume is down (the MBA is predicting a $1.8 trillion year versus well over $4 trillion a few years ago) but the lion’s share of production continues to head down the conventional conforming path. Let’s take a look at how the Agencies are directing lenders.

The FHFA announced a Public Engagement Process for implementation of updated credit score requirements.

Nearly 80% of single-family homes in the U.S. are at least 20 years old and more than half of them were built before 1980. Home renovation financing solutions like Freddie Mac CHOICERenovation® and CHOICEReno eXPress® mortgages can help address aging housing inventory.

Listen in to latest Power of Partnership podcast, where Freddie Mac joins Polly, its valued Secondary Market Advisors (SMAs), to discuss how technology innovation brings efficiencies to lenders to better support capital markets despite the challenges of market volatility.

­­­­­­­­­­­­­­­­­­­Fannie Mae posted the March Servicing Guide update, SVC-2023-01 providing information on changes to pre-foreclosure property preservation requirements, specifically, updates to property inspections and preservation expense reimbursement limits and guidance; and miscellaneous updates related to reimbursement requirements for electronic filing and recording expenses; maintaining seller/servicer eligibility requirements; and a correction to the Allowable Foreclosure Attorney Fees Exhibit.

Effective for loans with note dates on or after July 1, 2023, shared equity loans that are secured by properties subject to private transfer fee covenants will now be eligible for sale to Fannie Mae if they meet certain conditions. Loans with private transfer fee covenants are currently prohibited by the Selling Guide, unless permitted by the Private Transfer Fee Regulation. View Fannie Mae LL-2023-02 for details.

Fannie Mae March Selling Guide update, SEL-2023-02, introduces, as part of valuation modernization, its transition to a range of options to establish a property’s market value, with the option matching the risk of the collateral and loan transaction; provides additional guidance on the use of sweat equity and nonprofit program providers; revises timelines and expectations for lenders’ prefunding and post-closing quality control reviews; requires the use of Condo Project Manager™ (CPM™) for projects when a lender Full Review is required; and makes miscellaneous updates.

Freddie Mac developed the new, map-based Area Median Income and Property Eligibility Tool to help determine whether a loan may be eligible for a credit fee cap, as detailed on Guide Exhibit 19 and Exhibit 19A When you enter a property’s address, the tool will return pertinent information, such as the AMI% for that location and whether your low- to moderate-income borrowers meet the AMI% requirements for certain Freddie Mac mortgage products. Find out more, read the Single-Family news article.

Freddie Mac released its most recent research, Perceptions of Recent Mortgage Borrowers by Race/Ethnicity: Insights from the National Survey of Mortgage Originations. The research investigates sentiments and perceptions of recent borrowers of color getting a home mortgage. With this study, Freddie Mac continues to gain insights into the pain points of communities of color and how to leverage existing resources to alleviate them.

Freddie Mac implemented changes to warning and critical feedback messages in Loan Closing Advisor® on March 15 to help prepare you for May 1 implementation of The Uniform Collateral Dataset (UCD) Critical Edits Phase 3 transition, Qualified Mortgage (QM) Short Term Reset adjustable-rate mortgages (ARMs), Annual Percentage Rate (APR) data point. From the UCD web page, you can access release notes, a training module, and more resources to assist your critical edits transition including testing in the Loan Closing Advisor production and customer test environment (CTE).

Step into the spring season feeling refreshed and ready to take on more borrowers. Check out Freddie Mac’s March Loan Product Advisor® (LPASM) releases and give you an early view into April’s releases. Feedback Message updates coming soon.

Fannie Mae updated In Case You Missed It resource, which provides an overview of policy changes, including Selling Guide updates, Servicing Guide updates, Lender Letters, and Desktop Underwriter®/Desktop Originator® release notes.

Fannie Mae announced, effective March 29, the Seller’s Designation of Wire Transfer Instructions (Form 482) will be updated to simplify the form for Single-Family sellers to add, deactivate, or update payee codes that are used in the wiring of loan purchase proceeds. New version available week March 29. Additionally, the Certificate of Authority, Incumbency, and Specimen Signatures (Form 360) will no longer be required for instructions to transfer funds via Automated Clearing House (ACH). New version of Form 360 will be updated to reflect this change and will only be applicable for Single-Family sellers. Also available the week of March 29.

Capital Markets

Mortgage-backed securities and U.S. Treasuries ended Thursday with decent price gains (prices up, rates down) despite some intraday chop. Rate hike expectations remained volatile with the fed funds futures market now seeing only a 27.4% implied likelihood of a hike in May, down from around 50 percent earlier this week. Central banks in England, Switzerland, Norway, Hong Kong, and Philippines hiked their policy rates, and European Central Bank policymaker Nagel cautioned that more rate hikes will be needed if inflation evolves according to projections.

Of great interest to those tied to residential lending was yesterday’s news that new home sales increased 1.1% month-over-month in February to a seasonally adjusted annual rate of 640,000 units from a downwardly revised 633,000 (from 670,000) in January. On a year-over-year basis, new home sales were down 19.0%. Sales activity edged up for the fourth time in the past five months, though the February increase was assisted by a downward revision to the sales total from January.

Returning to interest rates, MBS and Treasuries are in “rally mode” and the yield curve is extending its post-Fed steepening. Why? More bank jitters reignited the afternoon trading action Thursday. Money markets are building in further easings by the Fed this year and next with nearly 100bp priced in by the end of the year. Thursday the risk-free 10-year note settled 25 ticks higher, and rallied more in the afternoon down to a yield 3.406%. Recession watchers noted that 5s/10s nearly disinverted for the first time since July! Secondary marketing staffs noted that UMBS30 4% through 5.5% ended 3+ to 14+ higher in price.

Today? Fedspeak resumes with St. Louis Fed President Bullard giving a presentation and participating in fireside chat on the economy and monetary policy. This morning we’ve had February’s Durable Orders, always volatile since one airline order can really impact things, -1.0 percent versus forecasts of -1.6 percent, ex-transportation flat. But even before that we were seeing a huge price rally in fixed-income securities: Thursday the 2-yr closed yielding 3.78 percent and it is now 3.56, the 10-year closed Thursday at 3.41 and this morning it’s at 3.30, but Agency MBS prices are lagging due to refi risk and are only up .250-.375. We have a complete re-pricing based on continued bank nervousness and the belief that the Fed will be cutting rates toward the end of the year.