Chrisman Commentary - Daily Mortgage News

4.19.23 Trigger Leads; Candor's Sara Knochel and Ed Kourany on Tech Advencements; MBS Portfolio Sales

April 19, 2023
4.19.23 Trigger Leads; Candor's Sara Knochel and Ed Kourany on Tech Advencements; MBS Portfolio Sales
Chrisman Commentary - Daily Mortgage News
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Chrisman Commentary - Daily Mortgage News
4.19.23 Trigger Leads; Candor's Sara Knochel and Ed Kourany on Tech Advencements; MBS Portfolio Sales
Apr 19, 2023

Candor’s patented automated underwriting decision engine, CogniTech™, is a state-of-the-art, 100% machine platform that can handle infinite loan scenarios.  The portability allows clients to plug in the technology wherever an underwrite happens during the loan lifecycle, from point of sale to servicing. Clients can instantly scale to match loan volumes, improve quality to mitigate repurchase risk, & boost liquidity. Candor Can Do

Show Notes Transcript

Candor’s patented automated underwriting decision engine, CogniTech™, is a state-of-the-art, 100% machine platform that can handle infinite loan scenarios.  The portability allows clients to plug in the technology wherever an underwrite happens during the loan lifecycle, from point of sale to servicing. Clients can instantly scale to match loan volumes, improve quality to mitigate repurchase risk, & boost liquidity. Candor Can Do

“Yesterday I asked my kindergartener what she did in school, and she replied ‘nothing,’ then later I went on Instagram and her teacher had posted a picture of her holding an alligator.” To keep your child safe from harm, or increase their boredom, next week, April 27th, is “Bring your child to work day.” I am not quite sure how that works with the hybrid office/work from home situation that many are doing now. “Come with me into the living room; I’ve arranged your desk on the coffee table.”? Lenders and vendors have been able to reduce office leases and overhead, but working from home has certainly impacted the feeling of “corporate culture,” and some would argue makes it easier for competitors to hire key personnel away. Meanwhile, NAMB “applauds” Congressional lawmakers for advancing H.R.2656, legislation designed to end the use of trigger leads, and if passed and signed by the President would protect consumers by ending the practice of mortgage application data being sold to parties not associated with the mortgage transaction. (Today’s podcast can be found here and is sponsored by Candor. Candor’s patented automated underwriting decision engine, CogniTech™, is a state-of-the-art, 100 percent machine platform that can handle infinite loan scenarios. Today’s has an interview with Candor’s Sara Knochel and Ed Kourany on assurity prediction models, and the melding of man and machine.)



In today’s world, everything moves quickly. That’s why Evergreen Home LoansTM combines its signature customer service with an exclusive technology platform that offers mobility and convenience. Adding to its technology stack, EHL Pre-Check improves file quality allowing for fast answers. The tool is designed to review loan file data, including credit reports and appraisals, and provide an automated needs list, all within 60 seconds followed by an underwriting decision in 24-hours! “The overall goal is to save time and improve file quality, resulting in cleaner loan approvals, consistent conditions, and reduced time in processing and underwriting with fewer file touches,” said Crystal Adair, VP of loan fulfillment. “This gives homebuyers an advantage in today’s market and allows loan officers the capacity to close even more loans.” Is your company investing in you? Evergreen does and loan officers interested in taking their business to the next level should visit its Careers page.

Lender and broker services, products, & software


Exclusive report: Maxwell 2023 Hispanic American Borrower Survey reveals that 96 percent opt for a national or local lender over online-based options. To help lenders better serve this demographic, Maxwell conducted a study of Spanish-speaking borrowers, surveying over 1,100 Hispanic American home buyers who completed the mortgage process in the past few months. The findings are eye-opening: For instance, a whopping 96 percent opted for a national or local lender rather than an online-based option. Want to learn how to become the go-to lender for this rapidly growing borrower segment? Click here to download your free copy of Maxwell’s 2023 Hispanic American Borrower Report.

Are you tired of having to adjust head count every time the market changes? The Mortgage Automation Suite, brought to you by Richey May and Zoral, can help. With scalable automated solutions that improve accuracy while reducing repurchases and costs, your business will be well-equipped for any market cycle. Leveraging this powerful automation will allow your team to close loans more easily, helping to retain your best staff. Plus, it adds the extra layer of stability needed during difficult times; something we could all use a bit more of these days! Find out how the Mortgage Automation Suite from Richey May & Zoral can help you today. Email us.”

“Are you servicing your own mortgage loans? You’ll have an additional revenue stream, a closer relationship with your borrowers with more opportunities to satisfy them and win referral business. But what about the software? MortgageFlex has you covered with its SQL-based, cloud-hosted, multi-lingual servicing portal. It’s a modern, nimble, cost-effective solution that is easy to install, easy to use and gives you complete access to your data, something some servicers have struggled with on legacy software. As the business continues to shift and new loans are harder to find, more originators are finding that it makes good sense to keep their borrowers closer by servicing their own loans. If you’re selling off your servicing rights or sending them to a sub-servicer, it might be time to visit with John McCrea at MortgageFlex. Find out how easy it is to get started by visiting us.”

“Mortgage Banker CFOs: If you could cut 10 percent from one of the largest items on your P&L, would you? It’s possible with OptiFunder’s optimized decisioning for warehouse funding. Our Warehouse Management System (WMS) utilizes advanced AI/ML technology and optimization science to help you make better, more informed decisions to achieve your strategic objectives, whether that’s minimizing interest expense, maximizing ROE, or achieving certain funding allocation targets. Plus, you can gain real-time business analytics and automate funding, wire data checks, shipping, and Purchase Advice tasks. To receive case studies showing how we’re on track to deliver our clients six and seven-figure savings, email us or meet with Jon Rutila at the upcoming MBA Secondary Conference in NYC.”

Expand your pipeline this Spring with LoanStream’s CalHFA My Home Assistance Program, DPA up to 3.5 percent of the Purchase Price on both FHA & Conventional. Plus, Spring is in the air with Government (up to 35 BPS off) and Non-QM Full Doc, Alt Doc and DSCR (up to 50 BPS off) Specials through April 30th! Restrictions apply so contact your Account Executive for details.

#ICYMI: Sagent Standouts! The incredible team we’ve built (and continue to grow) at Sagent is key to our homeowner-first modernization vision to fundamentally change the dynamics of America’s housing ecosystem to deliver positive homeowner outcomes. Sagent Standouts is our ongoing employee spotlight series highlighting the team members who reliably support our customer success team and are making positive impacts every day, helping clients pull out wins, even during these tough market cycles. Did you miss any of our #SagentStandout blogs? Check out our most recent standouts (with more to come) to learn more about each of our reliable team members and their impact on the industry, as well as a few fun facts about each person. For example: who’s a former food-fight survivor; who won 2 Division A trophies in the Dallas Cricket League; which one is a bona fide trivia buff; and who loves all things Louisiana including crawfish and Cajun food? Click to check out our Standouts!

Customer experience: muy importante


As a mortgage servicer, your customers are your top priority. But are you doing everything possible to assist them when they face periods of financial hardship? Black Knight’s blog post, “Streamline Early Engagement With Struggling Homeowners,” discusses ways you can use technology to stay connected with customers and help them stay in their homes. This informative piece highlights the benefits of using automated tools to create efficiencies, how high-functioning default software can engage customers and more. Using digital servicing technology integrated with discreet collection tools, servicers can now open the channels of communication to demonstrate that they’re an ally to the homeowner and ready to assist them through hard times. Read the blog post to learn how you can begin enhancing the customer experience when they need you most.

“I'm not concerned with the noise because I'm playing the long game." Attribute to Warren Buffett, or was it Jay-Z? Both business moguls built impressive wealth by taking the patience-and-persistence route, a.k.a., playing the long game. In a day and age where every TikTok video is touting side hustles and “get rich quick” schemes, it’s tough for lenders and loan officers alike to make slow moves and trust the process. But that’s what it means to play, and win, the long game. In his April Customer Experience Tip, STRATMOR Group’s Customer Experience Director Mike Seminari suggests three moves originators can make now to set up long-game success, ultimately building a future impervious to mortgage rate cycles. Check out the April Customer Experience Tip, “Strategic Moves for Long-Game Mortgage Success.”

Initial strike against trigger leads


Just like anyone can sue anyone at any time, any politician can introduce legislation at any time. How far it goes is anyone’s guess, including being signed by the President. H.R. 2656 has been introduced which would amend the Fair Credit Reporting Act to prohibit the creation and sale of trigger leads, and for other purposes. “This legislation would end the dangerous practice of trigger leads which hurts consumers and damages the overall mortgage marketplace.” H.R.2656 was introduced by Representative Richie Torres of New York this week.

NAMB quickly got behind it, publicizing its support, as did lenders whose clients are subject to being contacted “out of the blue” by competitors. Not so much credit bureaus and lenders who buy those leads.

“Trigger leads” are the bane of many lenders who spend their time and money finding borrowers. Trigger leads occur when a consumer applies for a mortgage, either a purchase or refinance transaction, and the inquiry to credit by a mortgage company is a trigger that notifies the credit bureau that the consumer is interested in applying for financing. This "trigger lead" is then sold by the credit bureau to data brokers including competing mortgage companies without the consumer's knowledge or approval. Consumers may then be contacted by these competing companies who have purchased the "trigger leads" which creates confusion for the borrower and may prompt them to send personal information they may not have otherwise intended to share.

H.R. 2656, would ensure that no consumer reporting agency may furnish a consumer report in connection with a credit transaction that is not initiated by a consumer, if the report is being procured based in whole or in part on the presence of an inquiry made in connection with a residential mortgage loan (as defined under section 103 of the Truth in Lending Act (15 U.S.C. 1602). We’ll see where it goes.

Capital markets: case study in supply and demand and pricing


Mortgage pricing is a matter of supply and demand. Blackrock has begun selling mortgage-backed security (MBS) pool sales from the Silicon Valley Bank and Signature bank portfolios. Unlike TBA (“to be announced” pools), existing pools of mortgages have CUSIP (Committee on Uniform Securities Identification Procedures) numbers and pool sizes and most of the pools are in the lower coupons (UMBS 2.0/2.5, filled with 3 or 3.50 percent loans). Those coupons ended up trading more than a half-point lower in the TBA market to end Monday after the plan was announced.

Although it is expected, increasing the supply of MBS hitting the market won’t help the price, especially with banks pulling back from buying a lot of mortgages, and keep mortgage rates high on a relative basis until it is digested by whatever buyers are out there. Not only has the Federal Reserve stopped buying MBS, but there is noise about it selling a portion of its holdings.

Lately I’ve been asked about a major disconnect between servicing valuations and bids. Servicing never seems to sell for what it is “on the books” at, leading to company valuations based on MSR values. There is also Wells Fargo’s sale of mortgage servicing rights (MSRs) impacting pricing. Ira Selwin noted, regarding the price action, especially in the lower coupons, “Part of supply (too many small pools), part is risk (too many weak counterparties making indemnifications worthless), and part of it is fewer buyers of MBS. This is going to be bumpy and might impact how much rates drop over the next several months even with Fed pause.

As the FDIC, via BlackRock, conducted the first sales of Agency MBS from the failed bank portfolios of SVB and Signature Bank (there is another planned tomorrow), we saw that the yield curve can only become so inverted before hitting resistance. After traders priced in potential 2023 rate cuts on the back of a potential banking crisis, 2-year U.S. Treasury yields are 60 basis points higher since then. Those yields would have to move lower ASAP for 10-year yields to have any more room to come down. That’s not good news for banks and not good news for a price reversal in mortgages. Hawkish rhetoric from St. Louis Fed President Bullard yesterday further priced out easings by year-end, which was unhelpful for the situation.

As the commentary mentioned yesterday, we received the Housing Starts/Building Permits report for March which showed a decrease in both categories… But the decrease in starts was smaller than expected. Housing starts fell 0.8 percent month-over-month and 17 percent year-over-year to a seasonally adjusted annual rate of 1.42 million. Building permits fell 8.8 percent month-over-month and 24.8 percent year-over-year to 1.41 million. Builders started construction on fewer single-family houses in March than a year before, which reflects the effects of higher mortgage rates. Demand for housing is proving to be more resilient than previously expected.

This morning we learned that last week’s mortgage applications decreased 8.8 percent from one week earlier. Last week’s increase in mortgage rates prompted a pullback in application activity, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The rest of today’s calendar is relatively light, with the Fed’s Beige Book released in the afternoon, a Treasury auction of $12 billion reopened 20-year notes, and two Fed presidents speaking after the close: Chicago’s Goolsbee and New York’s Williams. We begin the day with Agency MBS prices worse .125-.250 and the 10-year yielding 3.61 after closing yesterday at 3.57 percent; the 2-year is up to 4.31.

What do you do if you are attacked by a group of clowns?

Go for the juggler...

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