5.2.23 Jumbo Mortgage Originations; Wes Brown on Customer Service and Escrow Accounts; Origination Supply and Demand

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If you’re really happy when a scheduled conference or Zoom call is cancelled, does that mean you’re in the wrong line of work? (Asking for a friend.) The demand for Team or Zoom calls certainly skyrocketed during the pandemic, although as companies have moved back into the office to some extent, the demand for them has dropped. Supply and demand determine mortgage pricing, so there is little use in a lender originating loans if there is no demand by investors or portfolios for those loans. Most jumbo loans are originated in states near the Atlantic and Pacific Oceans. Many originators in those states are wondering where their jumbo pricing will come from, as not only is Wells Fargo Correspondent gone but now First Republic, the 4th largest jumbo mortgage lender, has just exited the market. On the investor call, Jamie Dimon noted that First Republic’s core business of “making very large cheap mortgages will not happen going forward.” Other banks have also reduced their appetite for on-balance sheet jumbo mortgages. An increase in mortgage rates from bank lenders should be a positive for non-bank lenders that use the securitization market for financing. (Today’s podcast can be found here and is this week’s is sponsored by Blend. Want to power a better lending journey from application to close? Find out how their digital end-to-end mortgage experience can help you reach your business goals. Listen to an interview with Wes Brown on customer service: adjusting escrow payments and items he wishes his LO would have briefed him on before closing.)

Employment, promotions, and transitions

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Network Funding, LP announced that it has promoted a 25-year industry veteran, Richard Jefferson to Executive Vice President of Production, overseeing the mortgage lending company’s growing team of producers across the country and will identify and grow several small sales teams and individual producers across the nation. To continue to introduce more producers to the “best Network in mortgages,” he will focus on connecting with Loan Officers and confidentially fielding calls from interested candidates through Richard Jefferson or click here. Most recently at Network Funding, Jefferson has been instrumental in implementing the You+ Program for his sales staff which strives to develop individuals and teams to “be the best you that you can be” with the addition of Network Funding’s training and resources. Industry professionals can experience Jefferson’s expertise on the “Today in Mortgages” podcast, where he helps break down daily news in mortgage and real estate and gives coaching on how to address buyers and borrowers in today’s difficult housing market.

A Mortgage Boutique, a division of First Community Mortgage, is excited to announce the addition of DJ Ziggas as the new Vice President of Wholesale Sales. With over 25 years of experience in the mortgage industry, DJ brings a wealth of knowledge and expertise to the team. In addition, Michelle Richardson recently joined as an Account Executive covering the Southeast market. These new additions to the team are part of A Mortgage Boutique's commitment to growth and expanding its reach nationwide. A Mortgage Boutique is actively seeking talented Account Executives across the country to join the team. A Mortgage Boutique is dedicated to providing the highest level of service to clients and partners, and they believe that hiring top talent is essential to achieving that goal. If you're interested in joining a growing team with a passion for excellence, consider a career with A Mortgage Boutique, reach out to DJ Ziggas.

Earn more from your efforts. Working hard has probably never been a problem. Being fairly compensated for that effort might be another story. Without the limitations found in banks and retail lending, those who pursue a career in the wholesale mortgage industry realize just how lucrative going independent can be. In addition to having more options to offer clients, you determine how little or how much you work and, in turn, how much you take home. To learn more about unleashing your earning potential, contact our team at BeAMortgageBroker.com.

“At Pezian Search Group our goal is to make an impact with every Client and candidate that we interact with from coast to coast. Whether we’re discussing market conditions, hiring strategies, helping a client decipher what their exact need is, providing feedback to a candidate on their resume, or offering encouragement and opportunities to someone who is actively searching, our goal since 2010 has been to leave every candidate and Client better off than when we first interacted with them. That’s why we feature our ‘Celebrating Successes’ messaging on LinkedIn. We celebrate the fact that we helped impact someone's job search, and helped a client find someone that will take their team to the next level. Could you or your organization be our next success story? Reach out to us to learn how we can help your team and to confidentially share your resume.”

You can’t fix tomorrow's problems with yesterday's technology. The good news is Canopy Mortgage created tomorrow's technology. Canopy provides a better way where you gain ultimate control with its proprietary Loan Origination System, developed by industry experts for top producers. An independent study by the STRATMOR Group recently found that Canopy’s tech reduces the cost to fund a loan by up to 35 percent: Finally a better way! A better business model that is sustainably good for every party involved in the mortgage process. Reach out to Josh Neumarker at Canopy Mortgage for more information 888-696-9076.

Lender and broker software, services, and products

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When borrowers choose your organization to finance their new home, they trust you with one of the biggest investments of their lives. It’s no surprise that today’s borrowers expect a high level of service both before and after closing. Fortunately, there are many opportunities to enhance the borrower’s experience once loans transition into servicing. Evaluating your technology is a great place to start, just take it from AMOCO Federal Credit Union. Eddie Bonilla, executive vice president of lending at AMOCO, recently discussed why they chose MSP®, Black Knight’s loan servicing system, in an article featured in Credit Union Insight. Read the article to learn how AMOCO uses MSP to enhance the borrower experience, improve retention and more.

“STG Mortgage is now live on Loan Sifter, making it easier for broker partners to access our aggressive price points. ‘As a full-service lender located in Anaheim, CA and licensed in 33 states, we take pride in offering a wide range of products, including competitively priced Conventional, Gov't, Non-QM, ITIN, FHA-DPA and Jumbo,’ says CEO, Nectar Kalajian. ‘With our cutting-edge technology and the vast experience of our Executive team, we're committed to providing top-tier service,’ says President, Omar Cantillo. Don't miss out on this opportunity to work with one of the fastest-growing Wholesale Lenders in the industry! To get started, simply fill out our Fast Track Form and gain access to our system within hours upon approval, allowing you to price and submit files same day. For more information, please reach out to Todd Carte, our National Sales Director. Let us help you take your business to the next level!”

“Times are tough. Every penny counts. Would you like to save $6000 to $15,000? Blue Water offers real-time MSR and whole-loan valuations for free. Use our system alongside your current valuation provider and let it prove itself. Try before you buy…. but there is no ‘buy,’ its free to use! The levels provided are delivered in real-time, on-demand, at your fingertips via our proprietary, cloud-based SaaS product called BlueRate™. BlueRate™ generates a fair-value suitable for financial reporting purposes, as well as true mark-to-market tradeable/actionable levels. It provides the answer to two important questions: What is my asset “worth”? and where would it trade today? Did we mention…. It’s FREE! Connect with a Blue Water Sales Rep today.”

“Citi Correspondent Lending continues to focus on further expanding support of underserved communities and diverse markets. Very soon, we will be introducing the first of a series of planned Community Lending initiatives: a portfolio Community Lending product with no mortgage insurance requirement that allows up to 97 percent LTV and as little as 1 percent borrower down payment contribution. We are excited to discuss the opportunity this new product can create from an affordability perspective, as well as the complete offering of products and services the Citi Correspondent channel can provide, at the Secondary and Capital Markets conference later this month. Please reach out to your Citi Account Executive or our National Client Services Team to schedule time to discuss how we can help your business thrive in 2023.”

Industry Report: The Continuously Improving ROI of Trusted Data. AI-powered data automation is being adopted by more mortgage lenders. How should these organizations measure the effectiveness and ROI of their technology investments? By measuring real life business outcomes and impacts. The aim of this paper is to provide you with questions and expert insights that will help you to evaluate the need, effects, and timing of automation investments, equipping you to compete in an industry undergoing digital disruption. Download now to get expert insights from highly experienced analysts in the fields of ROI, data automation, and AI.

A zoo in England is seeking applicants "comfortable wearing a bird costume" to deter seagulls from the facility’s dining areas. Lunch-napping birds are certainly a nuisance, but today’s lenders are tasked with safeguarding something much more valuable than french fries: their books of business. With TrustEngine loan loss reports, lenders have an eagle-eye view of every competitor that has stolen a borrower from your database and what sort of deal they did. The reports also offer comprehensive insight into how much incoming opportunity a lender should expect and how much business they’re losing without TrustEngine’s borrower intelligence alerts based on the previous 12 months' volume. Stop letting past and potential customers fly the coop! Ask TrustEngine for a FREE loan loss report today.

Freddie and Fannie, FHFA news continues

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Fannie Mae announced its results this morning for the first quarter of 2023. $3.8 billion of net income for the first quarter 2023, with net worth reaching $64.0 billion as of March 31, 2023. Net income increased $2.3 billion in the first quarter of 2023 compared with the fourth quarter of 2022, primarily driven by a $3.2 billion decrease in provision for credit losses. $78 billion in liquidity provided to the mortgage market in the first quarter of 2023. Acquired approximately 170,000 single-family purchase loans, of which more than 45 percent were for first-time homebuyers, and approximately 45,000 single-family refinance loans during the first quarter of 2023.

In FHFA news, a 30-Day notice "National Survey of Mortgage Originations” information collection for OMB approval has been posted.

Freddie Mac announced enhanced access to Mortgage-Backed Securities (MBS) analytics data through its Clarity Data Intelligence® (Clarity) tool. “With Clarity, Freddie Mac MBS investors now have easy, efficient access to critical performance data through the same centralized hub our Credit Risk Transfer (CRT) investors have enjoyed for years,” said Mark Hanson, Senior Vice President for Securitization at Freddie Mac. “The ability to reach this information through a single sign-on should be a time saver for anyone with interests in both our CRT securities and MBS.” MBS investors can register for a Clarity account via the Clarity webpage. Clarity account holders have the option to choose between CRT or MBS portals.

Freddie Mac posted April Loan Selling Advisor® enhancements. Check out what’s new and coming soon.

Risk management requires robust and continuous oversight. Lenders can strengthen their risk management practices with Fannie Mae’s self-assessment tools even when business priorities shift. Hear risk leaders discuss the importance of risk management and how our tools can help lenders standardize their organization's risk management strategies. Fannie Mae is committed to partnering with lenders to support sustainability in the mortgage industry with effective risk management guidance. View the Seller/Servicer risk self-assessment page.

Fannie Mae updated In Case You Missed It resource, which provides an overview of policy changes, including Selling Guide updates, Servicing Guide updates, Lender Letters, and Desktop Underwriter®/Desktop Originator® release notes.

Capital markets: banking, supply and demand lessons

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Supply and demand for mortgages: Prior to 2008, there was a vibrant jumbo securitization market (as well as a market for non-traditional mortgage products). The jumbo securitization market contracted after the financial crisis, but demand for the product itself remained strong, and production shifted to bank balance sheets as bank lenders offered mortgage rates that were well below market-average mortgage rates required by the capital markets to generate adequate returns. Given the significant interest rate risk in holding 30-yr fixed rate mortgages, it would not be surprising if banks reduced their balance sheet exposure to this product. If that happens, it could send more jumbo loans into the securitization market and benefit jumbo lenders, such as Redwood Trust, that fund their production through the securitization market.

The biggest news to open the week came from the banking sector, where it was revealed that JPMorgan Chase won an auction for troubled First Republic Bank over the weekend in a U.S. government-led deal. JP Morgan will acquire the bank for $10.6 billion and also get loss coverage from the FDIC of 80 percent on all acquired loans. The underlying assumption of the deal was that First Republic's loans were marked at 87. While the news doesn’t come as a major surprise seeing as First Republic’s problems had been highly publicized and the bank had been seized by regulators, the deal makes the biggest U.S. bank (JPM) even bigger while minimizing further damage to the FDIC’s guarantee fund.

In terms of economic news, we learned last week that the U.S. GDP grew just over 1 percent on an annualized basis in the first quarter, coming in below market expectations for 2.0 percent growth. Despite the weak headline number, consumer spending rose by 3.7 percent as sales of goods rebounded 6.5 percent after a year of declines. Household expenditures rose by 2.3 percent, however residential investment continued its streak of declines. Inflation data within the GDP report continued to show persistently higher than desired at 4.0 percent annualized. Additionally, Friday’s annual personal consumption expenditures index registered a 4.2 percent annualized increase. This is still more than twice the Fed’s preferred level and has markets firmly expecting another 25-basis points rate increase following this week’s FOMC meeting. Markets will be looking for the committee to signal the end of the current tightening cycle and provide updated guidance although there will not be any updated economic projections released until their June meeting.

That latest banking turmoil to open the week has investors cautious ahead of today and tomorrow’s May FOMC meeting, with the Fed Funds rate decision looming tomorrow afternoon. Fed funds futures are predicting about an 80 percent chance of a 25-basis point hike. Besides the FOMC meeting, the other big piece of data this week will be the jobs report on Friday. Today’s calendar has the non-market moving Redbook same store sales and March factory orders. Overnight, the Royal Bank of Australia was out with its latest policy decision where rates were held steady. We begin the day with Agency MBS prices better by roughly .125 and the 10-year yielding 3.53 after closing yesterday at 3.57 percent; the 2-year is at 4.13.

Time flies. One minute you're young and fun. Next, you're turning down the car stereo to see better.

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2023 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)