2.22.23 Delinquencies, Foreclosures, and Servicing Rights; Luca Dahlhausen and Mark Mclaughlin on the Interactions Between Brokers, Real Estate Agents, Lenders, and Technology; Mortgage Rates on the Rise

Thanks to Agile, bringing the mortgage capital markets into a new digital era. From lenders to dealers, Agile is the new way to quote MBS. 

Transcript

The MBA’s servicing conference is taking place, and it is an important subject, along with the impact of the 30bp cut in MIP for FHA borrowers. Owning servicing rights certainly helped the bottom lines for many lenders last year, some would say it “saved their bacon.” There are always those warning us of impending doom and gloom scenarios regarding the trillions of mortgages outstanding. But really, come on. We may see an uptick in delinquencies and foreclosures, possibly because the numbers are so low now there’s nowhere to go but up. Borrowers have outstanding credit quality, and huge amounts of equity. And investors and the government offer many loss mitigation options. The industry has other things to worry about. Meanwhile, owners of mortgage servicing rights continue to sell packages, large and small, for various reasons, not the least of which is to raise cash. For the uninitiated who’d like to know exactly what a “servicing package” looks like, two that just popped up yesterday were a $596 million pool offered by MIAC and a $2B Government bulk servicing rights offering from Phoenix Capital, Inc, “from a well-capitalized Seller.” (Today’s podcast can be found here and this week’s is sponsored by Agile, bringing the mortgage capital markets into a new digital era. From lenders to dealers, Agile is the new way to quote MBS. Listen to an interview with Luca Dahlhausen and Mark Mclaughlin on the interaction between brokers, real estate agents, lenders, and technology.)

Jobs

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Experience the Evergreen difference! Real people helping people home… That’s who they are at Evergreen Home Loans™. A people-powered company with a passion for impacting lives through homeownership, combined with a commitment to providing high-touch service that’s complimented by innovative digital technology. This is evidenced by the feedback received from their customers throughout the past year. Surveyed customers rated their experience 4.91 out of 5 throughout 2022. One example out of over 16,000 reviews says, "Amazing experience!! Everyone was great and the process was super easy and straightforward. Would definitely use Evergreen in the future". Loan officers looking to experience WOW and give WOW, who are seeking a company where the human spirit meets inspired technology and innovative products, should visit the Evergreen Careers page.

“Looking for an exciting opportunity to join a fast-growing mortgage company in the Pacific Northwest region? Look no further than Ross Mortgage Company! We're expanding our presence in this thriving area and are seeking talented loan officers to join our team. As a member of our team, you'll have access to a comprehensive suite of tools and resources to help you close more loans, serve your clients more effectively, and grow your business. You'll enjoy competitive compensation, ongoing training and development opportunities, and a positive and collaborative work environment. With our reputation for excellence and our commitment to providing our loan officers with the support they need to succeed, joining Ross Mortgage Company is the perfect way to take your career to the next level. Contact VP of Sales, Kevin Coleman for a confidential conversation.”

“Originate without boundaries at PrimeLending. Millions of people move every year, driven by the opportunity to work remotely, the desire for more space, and better affordability according to the National Association of REALTORS®. What if you could serve your customers no matter where they want to move? That’s possible thanks to PrimeLending’s nationwide coverage that includes the ability to originate loans in all 50 states. Expanding your territory to cover the entire country can help you grow your business, increase referrals, serve customers for life, and stay competitive. This is just one of the ways we remove obstacles and make growing your business easier at PrimeLending. Imagine your business without boundaries and take the first step by contacting Nic Hartke.”

It’s a lock! To help buyers purchase new construction homes, Embrace Home Loans has partnered with homebuilders to offer discounted forward commitments. “These commitments allow a builder to lock a block of funds at a below market interest rate, then pass the rate through to prospective home buyers,” says Jason Will, SVP of market growth. “The rate being offered can be below the market by 1 percent or more.” The result? Not only are buyers’ monthly payments lower, but the income they need to qualify is less, which helps make the new home more affordable. Embrace’s partnerships with builders, Realtors and other referral sources are one of the reasons its loan officers are so successful. If you’re interested in joining learning more about the ways Embrace works with homebuilders, give Jason a confidential call at (813) 215-7100. 

Lender and broker services and products

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Big changes are brewing in the mortgage industry. Notably, FormFree is enabling lenders to adopt more inclusive financing practices with its groundbreaking Residual Income Knowledge Index (RIKI). By analyzing consumers’ monthly income and spending, RIKI unlocks doors to homeownership that were previously closed to low-to-moderate income consumers with zero credit and thin credit files. What’s more, FormFree’s Passport makes it easy for consumers to securely share their residual income data and ability to pay (ATP) with lenders who can finance their homeownership dreams. If you’ll be at ICE Experience, book a conversation with Christy Moss to learn more about RIKI and Passport.

“Have you seen the FHFA’s recent advisory bulletin regarding MSR portfolios? Some believe that Bulletin AB 2023-01 is laying the groundwork for the industry to increase the cadence and rigor of MSR valuations. MSR portfolios are commonly the largest asset on a lender’s balance sheet, yet they tend to receive far less attention than other assets. The Black Knight MSP loan servicing system and the Optimal Blue MSR Platform are now integrated to allow lenders to easily value their portfolio daily. This is a critical change that lenders of all sizes should consider. Given the increase in size and value of MSR portfolios since the COVID-19 pandemic, the increased touch points of a daily valuation can help lenders more intelligently manage today’s environment, as discussed in our recent blog post. To learn more, contact your Optimal Blue Clients Services representative or email.”

“When it comes to sky-rocketing mortgage credit reporting and verifications expenses, you have a choice. Setup a no-obligation comparison with Birchwood Credit Services to evaluate how your current service provider is performing, and let us show you how our unique pricing structures can save you significantly on your credit reporting expenses. As an added bonus, if we can’t show you significant savings on your credit and verifications expenses, we will send you a complimentary $50 Amazon gift card, just for giving us the opportunity. Let us show you what a true partnership looks like and experience our award-winning ‘Service That Delights’ customer service. Contact us today! Birchwood Credit Services has provided credit reporting and verifications solutions to mortgage lending institutions for over three decades. Our proprietary bundled pricing models guarantee all add-on fees and back-end processing costs up front so there are never any additional ‘surprise’ fees.”

Maximize your Capacity and help your customers and employees access the answers they need fast with easy-to-use AI. Capacity, an AI-driven support automation platform, deflects +90 percent of tickets from teams like yours while giving your customers quick, easy, and accurate answers. Get Capacity now for 20 percent less than you’re paying today with your current ticketing system. Interested in learning more? Let’s talk! Use this link to set up time for a quick 15-minute conversation to see if we’re a fit.

We expect to see many claims of industry disruption in the spring conferences, but most will be talking in the classical sense: "changing the rules of competition in an industry by doing things differently." MortgageFlex is taking a different approach and will be on hand at the MBA’s Servicing Solutions Conference & Expo 2023 in Orlando this month. What MortgageFlex has done is replace the half-century-old servicing tools with a new web-based platform that finally allows the servicer to change its own rules and do things differently. Built by people with actual industry experience, this is Disruption Redefined. No more conforming to an outdated process. MortgageFlex software allows the servicer to (finally!) make their own rules and run their business their way. What could be more disrupting or empowering than that? See it in booth #805 at MBA Servicing or contact John. Disruption Redefined: Giving Every Servicer the Power to Disrupt Outdated Processes and Succeed.

Want to get your reps or LOs in front of top-tier referral sources this spring? Check out the The StorySeller Virtual Summit on April 19-20. The event is hosted by Gibran Nicholas, who will interviewing several big-name speakers about how to grow business and build your personal brand using StorySelling. Your company’s branding would show up whenever someone logs into the virtual event using your link. This gives you the ability to put on a world-class event without tying up any of your internal resources. If you’re an industry vendor, this is a great way to get in front of top LO’s. If you’re a mortgage company, this is a great way to get your LO’s in front of top referral partners as the spring homebuying season kicks off. Email Gibran directly if you want to learn more.

Discuss a Quicker Path to Closing with The Work Number® at ICE Experience 2023. There’s no need to gamble when it comes to verifications of income and employment. If you’re attending ICE Experience 2023 in Vegas, February 27 - March 1, stop by the Equifax booth #300 to learn why The Work Number is the gold standard in helping determine loan affordability. Automated income and employment verification solutions help lenders reduce risk and avoid longer and more cumbersome mortgage loan origination processes. Equifax verification experts look forward to connecting with you one-on-one to discuss why our GSE and FCRA-compliant instant mortgage solutions work better for lenders—and borrowers, too. With access to 604 million records, The Work Number database INSTANTLY returns records, updated each pay cycle, provided directly by employers—so there’s no need to collect an applicant’s private banking credentials, potentially exposing them and yourself to risk. Discover how The Work Number can help speed your business and your customers through the mortgage loan process.

“Regardless of rates and markets, there are loans to be had in your databases. In Q3 and Q4 of 2022, Usherpa used SmartScore alerts, based on machine learning and Ushpera’s proprietary algorithms, to mine corporate clients' databases for loan opportunities. Working with corporate marketing teams at participating companies, we delivered targeted emails to these opportunities. Finally, Usherpa delivered every contact who had opened the campaign (over a 48 percent open rate across all companies) to the LO’s dashboard - creating a hyper-targeted hot call list. It's an understatement to call the program a success. And as of 2/17/23, 1,262 loans have been originated across our participating 11 corporate clients for 398.7 million in volume. This is what a true partnership between Usherpa and our clients can accomplish. Market proof your business by targeting leads within your current database and download our free eGuide 3 Habits of Top Producing LOs.”

Non-Agency, DSCR, and non-QM soundbites

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With volume and refinance business down significantly, loan originators are showing some interest in non-QMs. Non-QM borrowers are strong and not subprime. And the non-QM lenders that were able to weather financial difficulties in 2022 are looking to increase business. Demand for investment-property mortgages is increasing, especially for underwriting based on debt service coverage ratios.

Kind Lending is taking It to the next level with the introduction of Spark Nitro non-QM product. Engineered for self-employed borrowers utilizing ONLY a 12-month analysis of personal or business bank statements. Kind Lending’s streamlined process and best priced product, Spark Nitro initiates more flexibility for the self-employed borrower who does not qualify using traditional income calculation methods. Increase your business with offer expansion of reliable & efficient Non-QM loans through Kind Lending's Spark TPO program.

Angel Oak Mortgage Solutions is allowing non-warrantable and short term rentals with Investor Cash Flow program and other program enhancements.

Carrington Correspondent offers the highest LTV in the industry on DSCR loans. How high? Up to 85 percent. With that kind of leverage, investors will be enjoying their positive cash flow and appreciation in no time.

Effective February 8th, A&D Mortgage is improving the eligibility on all its Non-QM programs to make the dream of homeownership a reality for all types of borrowers. By decreasing FICOs and increasing loan amounts, more borrowers will be able to purchase their perfect house more easily. Plus, non-QM products are back so even those with lower credit scores have access to more affordable mortgage options. With less than one week from Valentine’s Day, what's not to love?

Verus Mortgage Capital (VMC), a correspondent investor specializing in residential non-QM and investor rental programs, was the top Non-QM issuer in 2022, maintaining its dominant position in the non-agency sector. “The company financed 10 deals totaling more than $5.2 billion, one of which was the first deal rated by Moody’s, Fitch, and S&P. Verus was the largest issuer of non-QM deals in 2022. Since its inception, Verus has financed approximately $19.2 billion across 42 rated securitization transactions, cementing its position as the largest non-QM issuer since 2017. The Washington, D.C.-based company, with operations located in Minneapolis, has purchased more than $22 billion in expanded, non-agency loans since its inception. In addition, through its affiliates, VMC has completed 42 rated securitizations.

Loan Stream Mortgage has a new Non-QM 1-Year Self-Employed Program. Highlights up to 80 percent LTV purchase, Purchase, Refinance and Cash Out available. View program details, Loan Stream Mortgage.

Hometown Equity Mortgage allows Non-Warrantable condos on NONI and NonQM Products. Up to 20 percent delinquency on HOA, Minimum budget 5 percent minimum HOA Reserves, Investor Concentration Up to 60 percent (may be higher), Litigation may be acceptable case-by case, Single entity ownership up to 25 percent.

Capital markets: mortgage rates back to November levels

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“Don’t fight the Fed.” More investors seem to be accepting that the Federal Reserve means what it says about rate hikes, namely that there will be more for a while. Stocks and bonds both sold off yesterday as a result. On the data front, we learned that existing home sales decreased 0.7 percent in January to a seasonally adjusted annual rate of 4.00 million, worse than expected. This marks the twelfth consecutive month of contracting sales and total sales in January were down 36.9 percent from a year ago due to high mortgage rates and economic uncertainty.

It was just a couple weeks ago that many market participants were content with the economic data they thought was showing a gradual slowing of overall activity even though inflation wasn’t easing quite as fast as desired. In general, the aggressive tightening of monetary policy was having the intended effects and there was debate as to whether a “soft-landing” was possible. Then last weekend happened.

As many know, economic data rarely moves in a straight line. Consumer inflation posted its largest monthly increase since October while the year-over-year rate was marginally lower. Prices continue to climb at a rate that’s well above the Fed’s target and the resilient jobs market means that upwards price pressure will likely persist. Shoppers using income rather than savings will influence expectations of a pullback in spending later in the year. January’s data has shifted market expectations for monetary policy. Instead of pausing in March, the expected pause is currently following June’s FOMC meeting where the peak Fed Funds rate is expected to reach 5.50 percent, implying three more 25 basis points rate hikes.

Kicking off today’s economic calendar, we learned that mortgage applications decreased 13.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. Mortgage rates increased across all loan types last week, with the 30-year fixed rate jumping 23 basis points to 6.62 percent, the highest rate since November 2022. Later this morning brings Redbook same store sales, a Treasury auction of $43 billion 5-year notes, remarks from New York Fed President Williams, and the minutes from the January 31/February 1 FOMC meeting. We begin the day with Agency MBS prices better by .125, the 2-year at 4.67, and the 10-year yielding 3.93 after closing yesterday at 3.96 percent.

Q: My child will not eat fish. What can I replace it with?

A: A cat. Cats love fish.