10.24.22 Constitutionality of the CFPB; Curinos' John Sayre on Latest Mortgage Data; Ginnie Mae Updates Risk Based Capital Rule

I'd like to thank today's sponsor, Richey May. Recently named a Top 100 firm by Inside Public Accounting, Richey May is a recognized leader in providing specialized advisory, audit, tax, cybersecurity, technology, and other services to the mortgage industry. 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.

Transcript

There’s a lot of good-natured competition here in Nashville. Around the world, there’s a competition for everything. Eat the most hot dogs, win the World Series… the best mullet was decided a few days ago. How ‘bout economic predictions? The team at the MBA sees volume dropping 9 percent to about $2 trillion in 2023. Are you ready for “more lower volumes”? All of these forecasters talking about real estate prices going down… what were they predicting about real estate prices at the beginning of 2020? Are there legal competitions? Probably not. But decisions and penalties make headlines, especially when offenders go to prison. Here’s a “decade-long mortgage fraud scheme involving at least two dozen loan transactions, totaling $6.5 million, that resulted in more than $3.8 million in losses to lenders” in Massachusetts. The 5th Circuit recently threw a monkey wrench into the CFPB’s constitutionality last week in a highly publicized decision. Attorney and Mortgage Musings author Brian Levy discusses the decision and its possible repercussions in detail and offers his own simian analogies. Yup, the CFPB's funding arrangement (not the CFPB itself) has been ruled unconstitutional, according to a Federal Appeals Court. Elizabeth Warren's idea for the CFPB was to have it funded by the Federal Reserve, which is outside the purview of Congress. This would make it impossible for Congress to cut its funding. (Today’s podcast is available here. 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. Today’s features an interview with Curinos’ John Sayre on current data trends in the mortgage industry.)

Real estate company wanted; Jobs and transitions

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In a challenging market, forward-thinking real estate companies look for additional revenue streams, creative ways to retain great employees, and ways to prepare for when the market improves again – which it always does. If you are a real estate company considering diversifying into the mortgage business, a seasoned independent mortgage banker is looking to sell his company, and/or partner with a regional real estate firm. The ready-to-go platform comes with a warehouse line, software systems, investor approvals, and licensing in California. Open to getting licensing in - and working from - other western states such as NV, AZ, CO, UT, TX, OR, WA, and HI. For a confidential introduction, contact Chrisman LLC’s Anjelica Nixt to forward your note.

Congratulations to Steve Morse for being hired as National Sales Manager for VelocityX TPR. Velocity X focuses on the contract process, underwriting and closing of Seconds that it brings to clients. “We provide white label fulfillment on our HELOCs, 2nds, and non-QM products.” The number of Seconds is limited to 5,000 units per month. Velocity X is going to work with 4 to 6 mortgage bankers. Velocity X is also a Due Diligence provider for Agency Rated Securitizations and is actively hiring.”

The FHA has 3 job vacancies for a Senior Single Family Housing Specialist in the Quality Assurance Division, up to $150k per year: performing reviews and analyzing reports from onsite reviews of Title I and Title II lenders, assembling, correlating, and analyzing information obtained in reviews and investigations.

Broker & lender products, services, and software

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Tomorrow, the Saturn Awards will honor the best horror, fantasy, and science fiction movies of 2022. Spine-chilling screenplays may be rewarded in this edgy awards program, but unexpected twists, jump scares and ambiguous conclusions have no place in the dialogue mortgage advisors use to educate, convert and retain homebuyers. Sales Boomerang and Mortgage Coach understand that most loan originators are too busy serving their customers to develop the perfect borrower engagement scripts, so they’ve done it for you! Even when conversations with homebuyers take unexpected turns, these FREE lead conversion scripts and strategies from SB+MC can help mortgage advisors give an award-worthy performance.

When mortgage lenders face a shrinking pipeline, it's time to beef up the sales team. That means building broker relationships. Smart lenders turn to the Originator Connect Network. No one puts more originators in the room than they do. Some mortgage associations boast big conferences of a couple thousand attendees. But OCN shows count more than 18,000 live registrants this year. From Irvine, CA, to the Mohegan Sun Casino in Conn., OCN has nearly 30 live events putting wholesalers, brokers and vendors together. Find out how you can be part of the 2023 lineup of successful shows from the nation's largest mortgage connector. Email Vincent Valvo at Originator Connect Network now, before shows sell out.

In 2021, Procter & Gamble won the title of largest advertiser in the world, spending a jaw-dropping $8.1 billion on ads. While the company’s monumental ad budget is impressive, enterprising individuals who find creative ways to succeed with limited resources are doubly inspiring. Mortgage brokers are a perfect example of these types, as the majority of these lone wolves have to juggle customer service, relationship management, marketing, processing, compliance and more. To help brokers run their one-person show more effectively, the Surefire team at Black Knight has compiled an eBook detailing the marketing strategies and tools needed to succeed in a high-cost market. Download A Mortgage Broker’s Comprehensive Guide to Mortgage Marketing now for free.

The subservicing team at Computershare Loan Services (CLS) gives clients a whole new level of portfolio protection and operational agility. They’ve spent the last 20 years perfecting their prime and default servicing operations and can help you with even your most complex loans. But they do more than safeguard your servicing portfolio. Their stellar reputation for tightly managed processes and air-tight compliance has made them one of the highest-rated residential mortgage servicers in the US. The most recent reports from Fitch Ratings included upgrades in Prime, HELOC, and 2nd Lien product categories. Now is the right time to tap into Computershare Loan Services’ strength as an expert subservicer. Contact CLS to learn more about their unmatched protection and how they improve their clients’ bottom lines.

“Keeping sensitive information out of the hands of cyber criminals has become more challenging in recent years. According to CyberEdge’s Cyberthreat Defense Report, 85% of organizations experienced a cyberattack in 2021. Richey May’s team of cybersecurity experts delivers services designed to help lenders identify and mitigate the risks presented by their people, processes, and technology. Read our latest blog on Cybersecurity in the Mortgage Workplace to learn 4 steps that lenders can take to better protect themselves against cyber-attacks. Contact us today for help assessing and defining your cybersecurity program for greater visibility and resilience.”

The Work Number® Instant Income and Employment Insights Help Mortgage Lenders Stay Efficient and Flexible Amidst Volatile Markets. Country singer Darius Rucker, who will be taking the stage at MBA Annual, has achieved multi-platinum status in the music industry. He has accomplished what very few artists have been able to do: he made the leap across music genres. This adaptability and drive to succeed, even in down market times, is something that lenders in the mortgage industry strive for. The Work Number provides seamless access to a broad scope of trusted, secure, and instant income and employment verifications, which can deliver powerful insights that help provide a more complete picture of a consumer's financial profile. And its technology can help lenders automate their origination processes and streamline costs. Stop by booth #719 at MBA Annual to learn how Equifax can help lenders close more loans for more borrowers.

Innovative technologies are making our lives easier in countless ways, from self-driving cars to a robot that folds laundry at record speeds. However, it's important to remember that automation is not the best solution for every human responsibility. Relationship building, whether personal or professional, will always be a uniquely human endeavor. Powerful digital mortgage technologies like those offered by SimpleNexus, an nCino company, cannot replace relationships, but they can certainly help lenders build and maintain strong relationships in this challenging economic landscape! While you're learning about the latest fintech advancements at MBA Annual this week, take a moment to read SimpleNexus' guide to 'Leveraging Digital for Smarter Referral Strategies.'

MortgageFlex and Nations Companies, a premier provider of fulfillment services to the mortgage origination and servicing community, today announced a new strategic relationship where Nations will be a customer and partner with MortgageFlex. This unique arrangement will allow Nation’s to leverage the MortgageFlex product suite to include the TPO Loan Acquisition Portal, Consumer direct bilingual portals, MortgageFlexONE Origination and Servicing Platforms for a newly created Nation’s business unit. Modern, efficient, cost effective and quick to market were all items that MortgageFlex checked off during Nations search for a platform. On the partnership side MortgageFlex will be extending APIs for the Nation’s suite of products for appraisal, home inspection, title and closing so that these services are available to existing Flex customers. Stay tuned for an upcoming press release for more information or stop by booth 1233 in Nashville to learn more.

Ginnie notes

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The vast majority of FHA and VA loans find their way into Ginnie Mae securities, so it is good to know about news from the capital markets.

Ginnie Mae will soon be in the cloud.  The migration of Ginnie's platform aims to "enable more efficient operations with business partners and provide agility and speed in current and future planned operations," said Barbara Cooper-Jones, senior vice president of the Office of Enterprise Data and Technology Solutions at Ginnie Mae, in a written statement.

Ginnie Mae extended the mandatory implementation date of the Risk Based Capital (RBC) requirement to December 31, 2024. All other aspects of the minimum financial requirements will remain the same. The RBC requirement is part of a larger set of financial eligibility guidelines released simultaneously with FHFA requirements on August 17, 2022. The RBC requirement is an important component of measuring risk, designed to strengthen and bolster the Issuers that support the government mortgage market. Ginnie Mae’s Issuer Eligibility Requirements were first published on August 17, 2022 in APM 22-09 through a joint announcement with the FHFA of amended minimum financial requirements for IMB Issuers in government securitization guaranty programs.

Put another way, Ginnie Mae is extending the mandatory implementation date of the RBC requirement to December 31, 2024. Part of a larger set of financial eligibility guidelines released simultaneously with Federal Housing Finance Agency requirements on August 17, 2022, the RBC requirement is an important component of measuring risk, designed to strengthen and bolster the Issuers that support the government mortgage market. View Ginnie Mae’s All Participant Memorandum, APM 22-11, for further details.

Ginnie Mae’s MBS portfolio outstanding grew for the 15th consecutive month in September, growing to $2.288 trillion, up from $2.265 trillion in August and $2.126 trillion last year. This growth was fueled by steady new issuance of Ginnie Mae MBS, as homeowners found value in the government-backed mortgage market. New MBS issuance for September was $42.6 billion, supporting the financing of more than 143,000 homeowners and renters. Ginnie Mae MBS supported financing for more than 64,000 first-time homebuyers in September. The September issuance includes $40.77 billion of Ginnie Mae II MBS and $1.86 billion of Ginnie Mae I MBS, including approximately $1.73 billion of loans for multifamily housing. For more information on monthly MBS issuance, UPB balance, REMIC monthly issuance, and global market analysis, visit Ginnie Mae Disclosure.

Capital markets: housing isn’t good for buyers or sellers

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The message from here at the MBA conference is clear: Some weakening in the economy, household balance sheets strong, job market strong, and inflation has moved from “transitory” to “persistent.” Most indications point to the demand for housing demand still being solid, and inventory gradually increasing. Most U.S Treasury benchmark yields hit the highest levels since 2007 to close last week as inflation and uncertainty over the terminal fed funds rate continue to scare the bond markets. Higher rates will start a chain reaction of less investment, less economic growth, less demand, and ultimately less inflation.

Closer to home, the housing market isn’t good for buyers and sellers right now. Housing continues to be the most affected by the Fed’s aggressive monetary stance and the National Association of Homebuilders’ Housing Market Index fell to its lowest level since 2012 in October as expectations for sales and buyer traffic fell. Looking back over the past year, building permits for multifamily housing are up 25.5 percent while permits for single-family homes are 17.3 percent lower. There is some hope that as those new multifamily units come online, upwards price pressure on rents will begin to subside. Existing home sales fell month-over-month for the eighth consecutive month to an annual pace of 4.71 million units as mortgage rates hover near the 7 percent range. Due to limited supply, however, nearly one-quarter of homes are still selling above list price and the average sale price continued its streak of 127 consecutive months of year-over-year increases.

Last week’s economic data showed industrial production increased higher than expected in September and capacity utilization slightly above the long-term average, both of which will continue to add inflationary pressure to the economy along with continued low unemployment claims. This last full week of October includes $144 billion in month-end supply tomorrow through Thursday. Notable economic releases include PMI October flashes, the first look at Q3 GDP and September PCE. Fed officials have entered their blackout period ahead of next week’s FOMC decision though the ECB will be out with its latest decision on Thursday. Kicking off the week was the Chicago Fed National Activity Index for September; later brings preliminary October S&P Global PMIs and Class D 48-hours for MBS is today. We begin the week with Agency MBS prices roughly unchanged and the 10-year yielding 4.20 after closing last week at 4.21 percent.

With one week until the big night, for the kids!

When does a ghost have breakfast? A. In the moaning.

What do ghosts drink at breakfast? A. Coffee with scream and sugar.

Where does a ghost go on vacation? A. Mali-boo.

Where does a ghost go on Saturday night? A. Anywhere where he can boo-gie.

Where did the ghost get its hair done? A: At the boo-ty shop.

Riddle: the maker does not want, the buyer does not use it, and the user does not see it, what is it? A. a coffin.

What do they teach in witching school? A. Spelling.

Why does a witch ride a broom? A. Vacuum cleaners get stuck at the end of the cord.

What do you call a witch’s garage? A. A broom closet.

What do you call two witches living together? A. Broommates.

What do you get when you goose a ghost? A. A handful of sheet!