I'd like to thank today's sponsor, Richey May. Richey May is a recognized leader in providing specialized advisory, audit, tax, technology and other services in the mortgage industry and in banking. The firm has also consistently been recognized as one of the fastest growing firms in the country, and has been named to the HousingWire Tech 100 in Mortgage, Accounting Today Firms to Watch, and the Fastest Growing Firms. The firm has also received multiple awards for Excellence in Firm Culture from Inside Public Accounting. To experience how Richey May can help you transform your mortgage business, visit richeymay.com.
“I’d listen to their forecasts about as much as I’d listen to Aerosmith’s Steven Tyler dispense advice on monogamy.” Regardless of who this LO was talking about, predictions are dicey business. Thank you to Julie W. who sent, “Why So Many COVID Predictions Were Wrong.” We all knew rates would move higher, but not at this pace. And companies have reacted. Layoffs, reductions in force, cutbacks, whatever the politically correct term is these days, are not confined to lenders. Blend made headlines last week with its layoffs. (Resumes for those displaced can be posted here for free.) The drop in volume has allowed companies to focus on cutting costs and maximizing hedging performance and secondary marketing execution. Along those lines, today’s podcast, available here, features an interview Eric Connors, SVP of Product Strategy and Management at ICE Mortgage Technology, on the ICE futures contracts. This week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology, and other services in the mortgage industry and in banking.
Jobs, new hires, and an award
“Assurance Financial, an aggressive and expanding full-service mortgage banker, has continued to enjoy gains in production and profitability while also adding dynamic branch managers and mortgage loan originators: three new markets and branches in 2022 so far! Our commitment to providing exemplary service during the past few months has been the difference-maker, especially to our Realtor and purchase money clients, with underwriting turn-times super-fast/accurate. Assurance is looking to add dynamic entrepreneurial-minded producing branch managers in all good markets: Southeast, Southwest, and Eastern states. If you are a true leader and want to go to the next level with your career; to lead, run and grow your own market; and, enjoy a great life/work balance environment, contact Paul Peters, CMB or Assurance MLO for more details.
Victorian Finance announces that industry strategist and award-winning marketer Jason Frazier has joined the VicFin family as EVP of Marketing. Frazier will lead and execute VicFin’s growth and marketing strategy across VicFin’s family of companies. “I couldn’t be more excited to join such a strong culture-oriented company such as VicFin and be given the opportunity to build a ‘Different first, better second’ marketing platform,” said Frazier. “Mr. Frazier has proven himself many times over with his extraordinary marketing, technology, and leadership skills,” said E.H. “Sonny” Bringol, Jr., CEO of VicFin. “We are honored to have his motivation and talent join our family and leadership to continue our effort to build a world-class marketing platform.” On top of his duties for VicFin, Frazier is also a Marketing Coach for Next Level Loan Officers and serves as an executive advisor to various FinTech companies in Real Estate & Lending.
“AmeriHome Mortgage, a leading lender in the industry is looking to add to its already amazing team! With Remote Retail Loan Officer positions opening up nationally, your future is here. Having a diverse suite of products ranging from FHA to Portfolio products and competitive Jumbo non-QM options, we have many tools to help our Retail Loan Officers succeed! We have been voted Top Workplaces in 2021, 2020, and are still thriving and growing in 2022! See our Careers page to learn more about working with us at AmeriHome.”
“Keystone Funding’s Wholesale Channel is expanding its product offering where Non-QM will be launching SOON! Along with our Conventional, Government and Non-Agency Jumbo products, we will be adding the following Non-QM products: Bank Statement Qualification, Alternative Jumbo Options, DSCR and 100% LTV Doctor loans. As we continue to expand our Wholesale Channel, we’re looking for experienced Account Executives and Non-Agency Underwriters. All positions are remote, apply now by emailing firstname.lastname@example.org. View our Rates, Products and Partner with Us Today by visiting keystonebroker.com.”
Congratulations to Steve Smith! Recently retired as EVP of Production & Sales, from Tennessee’s Mortgage Investors Group, Steve received a Lifetime Achievement award at the Nashville Mortgage Bankers Association. As he should: Certified Mortgage Banker, Ernest P. Schumacher Lifetime Achievement Award, President of Tennessee Mortgage Bankers Association, 1999-2000, Fannie Mae’s National Advisory Council Member, Tennessee Housing Development Agency Advisory Member, NMBA Herschel Greer Memorial Award, TNMBA President’s Award, 2009 & 2014.
Lender & broker software and services
Looking to drive revenue while interest rates rise? Referrals, whether they’re from realtors or past customers, can be a key source of leads without spending a lot on marketing. That’s why the experts at Matic Insurance, a digital insurance agency built for the mortgage industry, created a free guide to help you attract new leads from referral partners and past customers, create a great customer experience so your borrowers rave about you later, and market yourself as a choice lender across social media, email, and more. Download the guide here. Matic’s embedded insurance solutions were built for mortgage lenders and LOs. Through our network of 40+ A-rated insurance carriers, we help your borrowers save time and money by matching them with the right policy, making you their trusted advisor and helping you control the home insurance process, so you can focus on the loan and get clear to close, faster. Contact us for information on partnership opportunities.
Is PA reconciliation using up too much of your team’s bandwidth? There’s a better way, as Terra Johnson, SVP Controller of Highlands Residential Mortgage, finally found out. After years of reconciling PAs the error-prone, time-consuming manual way, she discovered Richey May’s intelligent automation solution. A managed, fully supported standalone offering by Richey May in partnership with Zoral Group, Purchase Advice Automation lets you manage PAs and clear warehouse lines for thousands of loans a month, barely lifting a finger in the process. As Johnson put it, “Hiccups are so much less than doing it manually. We don’t need to reconcile as much at month end. We may have one or two manual jobs now versus hundreds.” Johnson’s team uses Purchase Advice Automation for reconciliation, which in turn created efficiencies with closing the books and month-end reporting. Why wait? See it in action for yourself. Sign up for a demo today.
Dominic Wilcox invented the Nose Stylus as a means to be more productive while multitasking in the bathtub. Or perhaps he’s just a fan of Pinocchio? Either way, mortgage advisors at Premier Nationwide Lending don’t need a gadget on their face to drive productivity. They rely on Sales Boomerang’s automated borrower intelligence and retention alerts to do the heavy lifting for them! In 2021, one in six (16.48%) prospects that triggered a Sales Boomerang loan opportunity alert submitted an application to Premier Nationwide Lending within 15 days, and nearly 1 in 3 (29%) alerts converted in 45 days or less. The perfect addition to your mortgage tech stack is right under your nose! Read the case study to learn more.
Can you imagine if you had to call Amazon’s support number to give them your credit card information in order to purchase what’s in your cart? No? Then why ask that of your borrowers when it comes to collecting upfront fees? Whether they’re looking at houses or shoes, today’s buyers expect a digital way to process their payments. With Fee Chaser by LenderLogix, you can text and email borrowers a unique link right from your LOS to pay their fees. The link launches a secure web browser where they can put in their card information and pay their fees in a matter of seconds. The receipt automatically loads into the eFolder once the payment is received and no one has to manage that financial information. Quick. Easy. Painless. Compliant. Give your borrowers the 1-click payment experience they deserve. It’ll save them time and you money. Book a demo to learn more!
Miscellaneous changes around the biz
Effective at the close of business on Friday April 22, PCF Wholesale will no longer accept wholesale submissions or any new rate lock requests, until further notice.
PCF Wholesale will continue to honor all current interest rate lock commitments in the wholesale channel and will continue to process and fund all locked loans currently in the wholesale pipeline. In accordance with our current lock policy, rate lock extension requests will be subject to discretionary approval and pricing.
Remember that, effective with new Best Efforts rate locks, Citi updated state geographic adjusters across all conventional loan products. View the Citi Announcement for more information.
loanDepot Wholesale added content to Appraisal Condition and Quality Ratings of its Conventional Lending Guide.
Correspondent Delegated Clients of PennyMac Correspondent Group have the option of TBD locks for clients looking to lock while searching for the perfect home. For more information, view PennyMac Correspondent Group Announcement 22-28: TBD Locks.
As of April 11, closing VOE’s for broker loans will completed by the Flagstar VOE team. View Flagstar Bank memo 22035 for details.
Flagstar Bank has taken a proactive approach to ensuring Settlement Agents are eligible earlier in the process. Agent selection and eligibility status can be viewed as early as the time of registration in the Request CD/Closing section on tpo.flagstar.com. Agents must be eligible and selected prior to Final Approval Clear to Close for all table funded loans. Effective for all loans moving to Image Package Received status on or after April 4, Prior to Close underwriting condition will populate as stated in Flagstar Bank memo 22034.
Effective Monday, April 25, Flagstar Bank will remove the minimum credit score requirement for the two products listed in memo 22036.
eSigning the URLA is coming soon for all loans that PRMG will lender disclose. View the PRMG eSign URLA on the TPO Portal announcement for information on what to expect with this new change.
Due to current market conditions pricing on the Chenoa products may not be available on a daily basis, and if pricing is not available the product will not appear in OB, however this does not mean the product is discontinued or suspended. View PRMG Announcement - Updates regarding the Chenoa FHA Down Payment Products.
Due to current market conditions and in keeping with industry standards, Mountain West Financial Inc. has updated its lock policy, effective immediately. Loans can be extended for a maximum of 30 days from the original expiration date. If an extension is needed beyond 30 days, the loan will be subject to relock at worse case pricing.
In response to recent questions from Sellers related to APR calculations, Wells Fargo Funding
provided its observations and a list of common prepaid finance charges. For purposes of the communication in Wells Fargo Funding Newsflash C22-014, prepaid finance charges are fees that are factored into the Annual Percentage Rate (APR) and Finance Charge fields found in the Loan Calculations section on page 5 of the Closing Disclosure (CD).
I am occasionally asked, “How do mortgage rates move, and will the Fed selling their mortgage holdings move rates? And why aren’t they the same as Treasury rates?” The 30-year benchmark mortgage rate primarily reflects two components: the yield on intermediate- to longer-term Treasury securities and a spread that tends to fluctuate over time. The Federal Reserve has held Agency mortgage-backed securities (MBS) on its balance sheet since early 2009 and Fed purchases of these securities have pulled down the yield on the benchmark 30-year MBS by roughly an estimated 50 basis points since 2009.
Even though Fed officials have indicated it will allow its MBS holdings to decline in coming months, this will not necessarily cause mortgage rates to shoot even higher as markets are forward-looking. To some extent, the recent mortgage spread widening is consistent with markets accounting for smaller Federal Reserve MBS holdings going forward. Additionally, Fed MBS purchases in recent years have pulled MBS yields lower than actual mortgage rates, meaning it is reasonable to expect that MBS yields will face more upward pressure than actual mortgage rates as balance sheet runoff progresses.
Since mortgage rates are separate from Treasury yields, it is fair to ask how much higher will the yield on the 10-year Treasury note rise? While yields on U.S. Treasury securities could potentially rise even further, the recent surge in the 10-year Treasury yield should slow markedly in the coming weeks, which should dampen upward pressure on mortgage rates. There is a significant amount of near-term monetary policy tightening already priced into the market.
Longer-term, markets appear priced for a fed funds rate that is closer to "neutral." There are wide confidence intervals around estimates for both the timing and the magnitude of the impact from balance sheet runoff, and it is unlikely balance sheet runoff has been fully priced in yet. Odds are it is discounted by more than many might suspect, given that the process has not even yet begun. The past several months have shown that the economic outlook and expected path of monetary policy can change rapidly.
Lookin at bonds last week, MBS and U.S. Treasuries ended the week on a mixed note after Fed Chair Powell commented on the merits of "front-end loading" policy moves. The Fed hasn’t issued a half-point hike since 2000, but traders see the Federal Reserve raising its target interest rate by a half-percentage point in each of the next three meetings. Aggressive central bank hikes and the start of QT now has December fed funds futures implying a rate of over 2.80 percent. We saw last week that, for a brief moment, yields on benchmark Treasury Inflation-Protected Securities (TIPS) climbed back above zero.
The fact that both moves came soon after a Fed official said he wouldn’t rule out the prospect of a 75-basis-point rate hike next month shouldn’t be lost on markets. Maybe it really was a week when the Fed finally figured out it needs to get ahead of the markets and not simply guide them. Fed President Bullard saying he wouldn't rule out a 75-basis point hike suggests the Fed may be coming around to the idea that, to rein in inflation, it needs to inflict some shock and awe by tightening more and faster than expected.
Investor interest in MBS is driven by many things, including perceived credit risk. Black Knight reported that mortgage delinquencies declined 15.5 percent month-over-month in March, which has historically been the strongest month in terms of mortgage performance over the past 20 years. The latest reading puts the national delinquency rate down more than 50 basis points from February to 2.84 percent, shattering the previous record low set in January 2020. Robust employment, continued student loan deferrals, strong post-forbearance performance and millions of refinances into record-low interest rates have all helped put downward pressure on delinquency rates. Serious delinquencies, those 90 or more days past due but not in foreclosure, are still 70 percent above pre-pandemic levels. The number of active foreclosures did edge slightly higher in March (+7k), which was the first year-over-year increase in almost 10 years. That said, active foreclosure inventories remain far, far below pre-pandemic “norms.”
This last trading week of April means month-end supply ($141 billion fixed coupons) and a heavier data calendar than last week, including updates on regional Fed surveys, several-housing related ones, durable goods orders, consumer confidence, the first look at Q1 GDP (estimated at 1.0 percent) with PCE, employment costs and Michigan sentiment on Friday. Fed appearances are limited with Fed going into blackout ahead of next week’s FOMC meeting.
The week gets off to a relatively quiet start today with just some regional indices for April. Today through Thursday, the Desk will purchase an average of $2.2 billion per day, before releasing a new purchase schedule Thursday afternoon covering April 29 to May 12 and expected to total $20.0 billion. Today’s schedule sees the Desk in conventionals, $545 million 15-year 2.5 percent and 3 percent followed by $1.4 billion 30-year 3.5 percent and 4 percent. We begin the week with Agency MBS prices up .375-.50 and the 10-year yielding 2.81 after closing last week at 2.91 percent: thoughts are on a global growth slowdown.
Thank you to California’s Joe E who observed, “If you lose one sense, your other senses are enhanced. That’s why people with no sense of humor have a heightened sense of self-importance.”