5.18.23 National Debt; Stavvy’s Kosta Ligris on Remote Online Notarization; Housing Data

Thanks to today's sponsor, Richey May. Richey May is a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades. Among many awards, Richey May has been named a Top 100 Firm twice and is known in the market for their education and contributions to the mortgage industry. They don’t just hire from the mortgage industry; they have the experts who build it.  To experience how Richey May can help you transform your mortgage business, visit richeymay.com.

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This Commentary has made a name for itself in covering breaking, shocking news that other, lesser outlets are too timid to even mention. “One day I hope to be wealthy enough not to do a double take every time I see abandoned furniture on the side of the road.” “Wealth” is an interesting concept, and while lenders carefully watch their locks, funding volumes, and margins, and what they’re worth (STRATMOR’s current blog is titled, “Doing Business with the Agencies: The Golden Ticket?”), individuals are doing the same thing. Loan officers from coast to coast tell me the same thing: With inflation continuing to outpace consumers' wage increases, their levels of debt are rising. According to the Federal Reserve Bank of New York, total U.S. household debt (mortgages, credit cards, car loans, and student debt) rose to $17.05T, with balances standing $2.9T higher than at the end of 2019 (before the pandemic recession). Fortunately, as an industry we did a great jobs financing and refinancing millions of borrowers into great rates (click on “Outstanding Mortgages” in the header then page down). (Today’s podcast can be found here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades, helping transform the mortgage business. Interview with Stavvy’s Kosta Ligris on Remote Online Notarization (RON) and industry adoption of digital trends.)

Employment

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“Are you a loan officer or mortgage banker frustrated with the constraints of retail lending? Tired of competing against lower rates, fees and closing costs? Then now’s the time to take control of your pipeline and career by making the switch to wholesale lending as an independent mortgage broker. Whether you’re looking to open your own brokerage or join a team as a loan officer, you can get up and running without missing a beat with support from the team at BeAMortgageBroker.com. You have nothing to lose and only clients, greater flexibility, and compensation to gain.”

Lender and broker products, software, and services

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Maintaining a 5-star reputation as a lender can feel like Mission Impossible in today’s digital marketplace. Still, it’s a mission that lenders must choose to accept if they want to come out on top. Online consumer reviews have the potential to make or break a financial institution. Fortunately, there are proven-effective strategies that mortgage professionals can employ to enhance efficiency, productivity, and overall customer satisfaction. In a free webinar on Thursday, May 25 at 2 PM ET, Tony Blodgett of New American Funding, Scott Harris of Experience.com and TrustEngine’s Dave Savage will help you crack the code to consistently beating the majority of lenders and winning long-term customer loyalty. Register and break into the 5-star lenders club!

Are your loan officers collecting credit card numbers over the phone for your upfront fees?  Not efficient. Not compliant. Not good. Check out the slickest way to collect upfront fees and interim servicing payments here.

Mortgage leaders: Are your loan teams tired of an inefficient homeowner's insurance process? Matic, a digital insurance platform for mortgage enterprises, can help solve this problem. Our technology integrates with your existing systems — so your teams won’t have to chase down insurance documentation and can close loans faster. Plus, borrowers aren’t limited to one insurance option and can quickly find the best rates from our network of 40+ top-rated carriers. Learn how mortgage enterprises can gain efficiency (and add a new source of revenue!) by booking a demo.

AFR Wholesale is excited to present a live webinar series with special guests in the industry! Our lineup is one that you will not want to miss. With topics like Home Possible, HomeOne, HomeReady, Renovation, and Manufactured Housing – Why Wait? The series will highlight affordable financing solutions that provide homeownership opportunities to more families. If your clients are on the fence about purchasing a home, these programs and features are built to make the journey to homeownership easier. Give your clients a foot in the door – right now. Attendees will have the chance to ask industry experts questions directly on how to interpret program guidelines and gain valuable insight on how to use various programs as solutions for your borrowers. Why Wait? Register today!*Registrants must attend to gain subject matter. Contact AFR by going here, email us or call 1-800-375-6071.

If you’re a non-QM, Residential Transition (fix-and-flip), DSCR, multifamily or SFR investor in commercial loans then you know how important a nimble servicing partner is to your success. Planet's commercial servicing division provides investors like you with the flexibility required to profit from today’s commercial lending opportunities. Industry veterans lead the division, serving institutional investors, private equity firms, commercial originators, and government agencies. Expert asset managers, specialized technology, and advisory services optimize portfolio performance. Planet’s specialized commercial servicing platform automates payment processing, collateral tracking, reporting, and escrows. And if defaults occur, our renowned default team immediately applies special servicing strategies to limit losses and maximize recovery. Reach out today to get the most from your investments by getting specialized service from Planet. Contact Jim DePalma or Gigi Woods to learn more or (585) 512-1030.

“As a trusted advisor, Newrez Correspondent is the partner you want in your corner. We have a long-standing history of consistency, quality and integrity, as proven by our solid track record with the agencies and the stellar performance of our servicing portfolio. As a top tier aggregator, we have seen a thing or two and our correspondents benefit from this experience as we are able to proactively help prevent, and in some cases-react to trends that our Underwriting management team sees right now. If you are currently a Newrez Correspondent Lender, we thank you for the partnership, your commitment to quality and urge you to contact us for more details on the current trends. If you are not a customer, contact us today to learn more about the benefits available to you. #ALLIN with Newrez.”

Retail news

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Typically, this Commentary posts news from correspondent investors and those in the wholesale channel about changes in policies, procedures, and programs. But retail companies are doing some interesting things. Here are two quick examples.

What does a Wells Fargo Bank account get you? “As a valued Wells Fargo customer, our dedicated team of home lenders is ready to help with your next home purchase or refinance. You could benefit from a full suite of jumbo mortgage options with competitive rates. Plus, special discounts and options may be available to you. The mailer goes on to list “asset-based discounts” on jumbo loans ($250,000-$499,999, relationship rate adjuster of .125 percent, .250 percent for $500-$749,999, and so on.) There are also “Cash purchase options.” “Purchase with cash up-front and then lock in a rate by applying for a mortgage with us. To take advantage of this feature apply within 90 days for a jumbo mortgage and six months for a conventional conforming mortgage.”

Guaranteed Rate Insurance LLC, “one of the fastest growing national insurance brokers, backed by the nation’s second-largest retail mortgage lender, Guaranteed Rate, now offers customers a convenient way to compare and purchase home, auto, life and other insurance policies from more than 50 top-rated carriers, all at once, with a single online application. The new digital insurance marketplace is embedded into Guaranteed Rate’s home financing application process, offering an additional way to get to the closing table faster. The Guaranteed Rate Insurance marketplace is available online at rate.com/insurance with agents readily available to help guide and advise coverage to customers throughout the process.”

Capital markets: banks out of the spotlight, for now

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MAXEX has expanded its non-QM offering by introducing the industry’s first multi-buyer alt doc flow liquidity program. Get competitive daily pricing from trusted investors of 12- and 24-month bank statement, P&L and 1099 loans. It’s a faster, more efficient way to tap into the rapidly growing market of quality borrowers that includes entrepreneurs, gig works and hybrid income employees. Get access to multiple buyers and non-agency programs with one contract. Learn more by visiting the company’s website or schedule time to meet with MAXEX at MBA Secondary or the IMN Non-QM and Non-Agency Forum.

When it comes to capital markets, the profit center of your company, you need the best, which is what MCT works each day to provide. Dave Gilbert, COO at Chicago Financial Services, stated, “I’m always looking for efficiency. One thing with MCT and their software is if I’m selling $100 million in loans or $5 million in loans it takes about the same amount of time. It’s not a complex system, it’s easy to understand, easy to process, and easy to maximize your profit.” View new client video testimonials to discover how MCT is helping clients achieve their goals. MCT will also review Strategies to Improve Profitability in the Current Market in their upcoming webinar on June 1st at 10am PT. In this webinar, MCT’s Phil Rasori and Paul Yarbrough will provide key hedging, trading, best execution, and MSR recommendations, as well as how to improve profitability and efficiency.

Turning to the economy, bank-owned lenders know that recent bank failures have put pressure on regulators to tighten capital and risk-management requirements. However, economists and analysts know that in this economic and credit climate, such measures could exacerbate issues already straining the system. Bringing down inflation is still Job 1 in the Fed’s mind. As if to head off any future discussion, JPMorgan Chase is unlikely to acquire other troubled banks after taking over First Republic Bank, CEO Jamie Dimon has told shareholders. Dimon has also said risks that prompted three bank failures this year could not have been prevented by regulators and has reiterated his faith in the soundness of the banking system.

For those watching rate sheets, the trend of lower prices due to large supply, and thus increasing rates, continued on Wednesday despite healthy account demand and take-down. The moves have been largely due to the largest outright MBS Bid Wanted in Competition (BWIC - a formal request for bids on a package of securities, submitted by an institutional investor to a number of securities dealers) on record, perhaps, and the fourth largest corporate bond issuance of all time. As far as economic releases of interest to the mortgage sector, the new residential construction report from the Census Bureau showed that single-family housing starts rose 1.6 percent in April to a seasonally adjusted annualized rate of 846k though March’s figure was revised downward by almost 30k units.

Housing starts rose 2.2 percent month-over-month in April to a 1.4-million-unit pace, including single-family starts up 1.6 percent month-over-month due to a strong 59.5 percent increase in the West. Before we get ahead of ourselves, single-family starts declined in all other regions and the headline figure is down 22 percent from a year ago, though home building does appear to be perking up a bit. Building Permits fell 1.5 percent month-over-month and 21 percent year-over-year to an annual rate of 1.416 million, though multifamily permits declining during the month suggests development is pulling back alongside cooling apartment market conditions. The weakness in permits was driven by a 9.7 percent decline in permits for five units or more.

The steady upward trend in permits since January is consistent with a tight inventory of existing homes pushing buyers toward the new home market. Additionally, public builders have been more optimistic than earlier in the year, and the NAHB Housing Market Index rose 5 points in May to return to a “neutral” outlook of 50 for the first time since July 2022.

Initial jobless claims (242k, less than expected; 1.799 million continuing claims) and Philadelphia Fed manufacturing (-10.4) kicked off today’s calendar. Later this morning brings existing home sales, expected at 4.28 million versus 4.44 million previously, before leading indications in April, a Treasury auction of $15 billion reopened 10-year TIPS, and a laundry list of Fed speakers. We begin the day with Agency MBS prices worse .125-.250 from Wednesday, the 10-year yielding 3.62 after closing yesterday at 3.58 percent, and the 2-year up to 4.21 after the continued strong employment data.

I, and an estimated couple thousand industry execs, head up Manhattan soon. Adam Quinones, Founder of dataQollab and former Head of Mortgages at Refinitiv, has some advice for anyone going to New York for the MBA’s National Secondary. (Part 4 of 5.) “NYC restaurants are graded on a letter scale. You’re looking for an “A” in the window. Anything else is caveat emptor. Don’t eat in Times Square. It’s gross. Midtown sidewalks are superhighways. You wouldn’t stop abruptly on the highway. Don’t do it on the sidewalks here. Locals will run into you on purpose and blame you for jamming the breaks at full speed in heavy traffic.”