“Great news! I got the whole plane to myself! The large group going to the psychic’s convention all cancelled at the last minute.” (No, this didn’t happen my flight to Orlando last night. It was, however, delayed four times for 90 minutes.) But speaking of news, frankly, I don’t see how the senior management of lenders and vendors keep up on the news with everything that is going on. Tomorrow on TMC’s Friday Rundown is Shelley Leonard who will be discussing the rationale behind the credit report costs as well as the acceptance of the tri-merge/bi-merge move. Many LOs remember when the FTC banned certain noncompete agreements. Well, fuhgeddaboudit. A ruling by US District Judge Ada Brown has halted the Federal Trade Commission's ban on noncompete agreements, citing the agency's lack of statutory authority. The ban was intended to promote competition and prevent wage suppression. My guess is that an appeal is in the works. (Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a Warranty, eliminating repurchase worries. Hear an interview with Steve Richman on public speaking trials and tribulations, the unpredictability of entrepreneurship, and what is important to originators now, based on his travels around the nation.)

Lender and Broker Software and Services

Revolution Mortgage cuts verification costs from 8 to 3 basis points. This is efficient operations, says Femi Ayi, Revolution Mortgage. Save up to $20K/month and reduce costs by 80% with Truv. See Truv in action.

Enhance the value of your non-agency investments with Planet's Guide to Non-Agency Servicing. Uncover strategies to optimize portfolio performance and elevate ROI through our deep expertise and industry insights. Learn how we help clients nimbly adapt portfolio strategies and explore new asset classes, ensuring investors stay ahead in a dynamic market. Unlock these valuable insights today from the fastest-growing non-prime servicer in IMF’s Top 20. Download the guide.

“It Takes a Village”: How a Top 30 Home Lender Scaled without Sacrificing Quality! In today’s lending landscape, not only do lenders have to adapt to changing audit expectations but also uncertain lending volumes. Many ensure top notch audit quality without sacrificing speed by bringing on a QC partner for overflow auditing needs. Over the last decade, Lower, LLC has found continued success partnering with QC Ally for their changing audit and risk needs. Lower’s SVP of Quality Control, Misty Skelton, said, “I’m able to scale with you whereas I’m not so much able to do that in-house. I can still partner with QC Ally to perform the level of auditing and quality that you always deliver, and the speed in which you deliver.” Watch the interview here.

Spring EQ’s Wholesale division has a lot of positive buzz as of late with the launch of its new loan interface, EMMA, which gives partners visibility into the AVM at registration, and the recent introduction of their one-of-a-kind product, the FIXLINE (fixed-rate HELOC). Register for the upcoming webinar where management will share recent enhancements to EMMA and demonstrate just how easy it is to price and register loans. They’ll also touch on the value of their FIXLINE product, which provides the flexibility of a HELOC with the stability of a fixed-rate loan. Click here to register and be sure to join on Tuesday, August 28th at 1:00pm ET. Interested in a wholesale partnership? Click here. Interested in a correspondent partnership? Click here. Second mortgages are Spring EQ’s specialty, so think of them first for all your seconds!

STRATMOR’s Virtual Customer Experience Workshop

Your consumer experience is an outcome and reflection of your CX Vision and Strategy. Without the clear guidance of a CX vision, each employee interprets customer centricity in their own way, leading to conflicting definitions and behaviors. Curating your own CX Vision and Strategy will be crucial to both security and growth through coming market shifts, and it is one of the main areas of focus for our upcoming workshop. Join STRATMOR Group for its virtual Customer Experience Workshop, September 17, 18 and 19, to learn from STRATMOR customer experience experts as well as peer lenders how to optimize your loan processes to maximize repeat and referral business and achieve your growth goals. Learn more and register today.

Trigger lead Changes Ahead?

“Rob, what’s the scoop on any trigger lead legislation?” First of all, you should read the legislation to see what may be eventually voted on. This brings us to some good news. Namely, through the work of our MBA, the House and Senate versions have been melded into one, not always an easy task given the egos of those sponsoring the bills. The Bill has been “attached” to the Defense Authorization Bill, so the odds are pretty good that it will be passed.

The MBA urges members to contact their Senators to vote for the Hagerty/Reed amendment (Senate Amendment 2358) that would add the Homebuyers Privacy Protection Act of 2024 to the Fiscal Year 2025 National Defense Authorization Act (NDAA).

The Consumer Finance Protection Bureau and Fay Servicing

“The Consumer Financial Protection Bureau (CFPB) ordered Fay Servicing to pay a $2 million penalty for violations of mortgage servicing laws, as well as for violations of a 2017 agency order that addressed its illegal foreclosure practices…”

Mike Wojcik, Chief Marketing Officer with Fay Servicing, broadcast, “Fay continues to strongly disagree with the CFPB’s claims in this matter, but we made a business decision to settle. We have helped thousands of homeowners across the country stay in their homes using borrower-friendly processes that are at the center of this matter, and that were disclosed to the CFPB as far back as 2017. However, after a decade of cooperation and transparency with the CFPB, including throughout this investigation, we were faced with a choice: engage in a lengthy litigation process to defend our record, or agree to a resolution that, without admitting to the Bureau’s claims, would allow us to move forward. We chose to settle this case so that we can focus our time and efforts on supporting borrowers.

“The CFPB’s heavy-handed approach is one our industry is all too familiar with, and in this case, does nothing to help borrowers or the industry. At the same time, the CFPB’s decision to reference our CEO in this resolution is a tactic based on an agenda item to include CEOs, albeit one that it seems to apply to smaller companies. We are proud of our record and our team’s commitment to borrowers. While we disagree with the CFPB’s positions, we are pleased to put this matter behind us so that we can remain focused on what we do best: supporting homeowners across the country, including during times of financial hardship.”

Q2 Performance and Profits

If you own or are managing a company that is making money again, does that mean thoughts of being acquired, or merging, vanish? Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a pre-tax net profit of $693 on each loan they originated in the second quarter of 2024, an increase from the reported loss of $645 per loan in the first quarter of 2024, according to the Mortgage Bankers Association’s (MBA) newly released Quarterly Mortgage Bankers Performance Report.

“Net production income was positive in the second quarter of 2024… A welcome sign after eight consecutive quarters of net production losses,” said Marina Walsh, CMB, MBA’s VP of Industry Analysis. “With a pickup in quarterly volume, productivity, and closings-to-applications pull-through, production costs dropped by about $1,800 per loan. These developments contributed to better net results, even as production revenues decreased from the previous quarter.”

“Almost 80 percent of mortgage companies in the sample posted overall profits, including both production and servicing business lines. After two of the most challenging years in the mortgage business, many companies are seeing light at the end of the tunnel.” (We all hope it’s not a train.)

Capital Markets

It’s commonly assumed that mortgage rates are directly tied to the 10-year Treasury yield, however, this isn't the case. So why do mortgage professionals monitor this note so closely? While the yield serves as an important benchmark for mortgage rates, rates aren’t based on the 10-year Treasury note. MCT’s blog, ”How the 10-Year U.S. Treasury Note Impacts Mortgage Rates," provides a straightforward explanation of how mortgage rates respond to shifts in Treasury yields, why they tend to move together, and the broader influence of Treasury yields on bonds. Staying up-to-date on economic trends with newsletters like MCT’s Market Commentary is vital to maintaining margins in your business. By partnering with a trusted capital markets partner like MCT, you’ll always be at the forefront of developments that impact your business, like the variables that impact mortgage rates.

Clues become certainties. The release of the July Federal Open Market Committee meeting minutes showed a "vast majority" of FOMC officials are in favor of a September cut. And large downward revision to payrolls figures from the Bureau of Labor Statistics combined to reinforce bets the Fed will ease in September. (Yesterday, the U.S. payrolls benchmark was revised down by 800k which suggests the labor market is cooler than originally thought.) Several Fed officials acknowledged at their July 30-31 meeting that there was a plausible case for lowering borrowing costs, minutes showed. And the number of workers on U.S. payrolls was revised down by 818k for the 12 months through March. It was the largest downward revision since 2009 and suggests that the labor market started moderating much sooner than originally thought.

With concerns that the Fed kept rates in restrictive territory for too long, traders are now pricing in about 100 basis points of rate cuts in 2024. Chatter on the street is that bond traders are taking on record risk as they bet on a Treasury rally fueled by rate-cut wagers. Of course, looming tomorrow is the big market event of the week: Fed Chair Powell’s Jackson Hole speech. Organized by the Kansas Fed, the Jackson Hole Economic Policy Symposium is one of the longest-standing central banking conferences in the world. The event will bring together economists, financial market participants, and U.S. government representatives to discuss long-term policy issues of mutual concern.

Investors who are buying mortgages want to know what they’re buying. ICE’s first look at July 2024 mortgage performance data was released this morning, and the national mortgage delinquency rate improved as expected in July following June's calendar-related spike. Improvement at the national level was partially offset by Hurricane Beryl’s impact on mortgage payment activity in Houston and surrounding areas, which resulted in roughly 10k mortgage holders falling behind on mortgage payments in the month.

ICE’s report showed that foreclosure activity (starts, sales, and active foreclosures) rose across the board in July, but that appears to be more of a result of volatility and historically low foreclosure activity in June than a signal of broader risk in the market. Foreclosures have been running historically low all year, likely due to a number of factors, including high home equity, which gives borrowers options outside of foreclosure, and a broader array of loss mitigation tools employed by servicers.

Weekly jobless claims (232k, as expected; continuing claims 1.863 million) and the Chicago Fed National Activity Index for July led off today’s economic calendar. Later today brings S&P Global flash PMIs for August, existing home sales for July, KC Fed manufacturing for August, Freddie Mac’s latest Primary Mortgage Market Survey, and several Treasury auctions that will be headlined by $8 billion of reopened 30-year TIPS. Treasury will also announce month-end supply consisting of 2-, 5- and 7-year notes for $69 billion, $70 billion and $44 billion, respectively, as well as $28 billion of reopened 2-year FRNs. We begin the day with Agency MBS prices worse .125-.250 from Wednesday’s close, the 10-year yielding 3.85 after closing yesterday at 3.78 percent, and the 2-year yielding 3.98.