4.27.23 Yield Curve Inversions; California MBA's Susan Milazzo on Advocacy Groups; U.S. Economic Growth

LoanCare has been successfully navigating clients and homeowners through market change for 40 years. The mortgage subservicer is known for delivering superior customer experience through personalization and convenience. Its award-winning portfolio management tool, LoanCare Analytics™, was built to support MSR investors with a focus on customer engagement, liquidity, and credit risk. LoanCare is part of Fidelity National Financial, a Fortune 500 company and leading provider of services to real estate and mortgage industries.

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Born in Ukraine, Golda Meir said, “Old age is like a plane flying through a storm. Once you are aboard there is nothing you can do about it." (Doubtful anyone called her Goldy.) Her time as the Prime Minister of Israel ended in 1974, and since that time oldsters in our biz have seen the yield curve invert ten times, give or take. Bond traders are no longer fully convinced that the Federal Reserve will do one more quarter-point interest-rate hike, given the nervousness about First Republic and fear of an economic downturn; recessions have tended to lag yield curve inversions by 6 to 18 months. (STRATMOR’s current blog is “The Yield Curve Is Inverted: Should Lenders Care?”) Politics are also on trader’s radar screens: A failure by Congress to raise the debt ceiling and prevent a default on US government debt would result in an "economic catastrophe" that will push interest rates higher for even longer, per Treasury Secretary Janet Yellen. "A default would raise the cost of borrowing into perpetuity…Future investments would become substantially more costly." I am sure they’ll figure out a way of kicking the can down the road. (Today’s podcast can be found here and is sponsored by LoanCare, a Fidelity National Financial (NYSE: FNF) division and award-winning developer of the most sophisticated mortgage servicing portfolio management tool, LoanCare Analytics, built to support MSR investors with a focus on customer engagement, liquidity, and credit risk. Listen to an interview with California MBA’s Susan Milazzo on the role of advocacy groups and IMB priorities for this legislative session.)

Jobs & transitions

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Brady Yeager has joined Movement Mortgage as its new National Sales Director to lead Movement’s rapidly growing sales team, focusing both on bringing new teammates to the organization and supporting the existing team. Yeager looks to build on Movement’s significant Q1 momentum and growing market share. A more than 20-year veteran of the finance and mortgage lending industries, Yeager brings to Movement an impressive recruiting & retention track record, deep servicing portfolio management experience and an unparalleled passion for serving others. Read the full release and learn more about Movement’s Impact Lending initiatives here.

Looking to take your career to the next level? Check out Embrace Home Loans, a well-capitalized, privately held national lender seeking loan officers across the country. Embrace offers a wide range of loan products, including FHA, Conventional, VA, USDA, Jumbo and renovation loans, so there’s a loan for almost every borrower. Also popular with Embrace loan officers and borrowers is its Approved to MoveTM Plus (ATM+) loan program, which helps customers compete with cash offers by allowing fully underwritten buyers to receive an unconditional loan commitment with a certificate of value for the property. The program lets buyers make an offer in any amount they choose, often not contingent on an appraisal. Embrace is also known for its award-winning Diversity, Equity, and Inclusion (DEI) initiatives. It all adds up to a great place for loan originators to work. Interested? Contact Jason Will.

“Humble, hungry, and smart… that is how we define the professionals at Thrive Mortgage! Attracting quality people who are ready to innovate, create, and execute on the most unique value propositions is key to our growth. Much has been reported lately about recent acquisitions, JVs, and large teams moving from one organization to another. Are you looking for the same, but not interested in corporate-style management? Want to create a flexible model of your own? Our forward-thinking has led to multiple new partnerships all across the industry, and we were recognized again as a “Top 5 Mortgage Company To Work For.” Our community is what makes us Thrive, and we believe our people are our greatest asset! If you are looking for a new opportunity, contact Randell Gillespie, EVP, National Sales. We are confident that our commitment to quality people, innovation, and competitive pricing strategies will continue to drive our growth and success in the industry.”

First Bank, a 112+ year, family-owned, banking institution announced the addition of Susan King, VP National Sales Warehouse Lending, to continue the growth of its Warehouse Lending division. “Susan is a lending professional with decades of consultive experience helping clients achieve their capital and liquidity needs with flexible terms”. (Susan will be attending the TMBA 107th Annual Convention in San Antonio next week.)

Lender and broker products, services, and software

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Spring is finally starting to bring warmer temperatures, but the Empower® LOS has helped keep lenders’ pipelines warm all winter long. In the last year alone, more than 25 leading credit unions, banks and independent mortgage bankers turned to Empower, Black Knight’s advanced loan origination system, to automate their mortgage processes, implement exciting new innovations, capture new efficiencies, and reduce costs. Empower offers a complete digital ecosystem that seamlessly integrates with a natively embedded point-of-sale and loan officer workspace, the Optimal Blue℠ PPE, the Surefire℠ CRM, and more. Empower is a cutting-edge mortgage technology package that will transform the way you do business. Schedule a demo with Black Knight today and see why lenders trust Empower to help them win new leads and earn repeat business in a challenging market.

“We know that not all property data is equal, and it shouldn’t be viewed as a commodity. With data playing such a critical role in virtually every aspect of a mortgage (underwriting decisions, risk management, property, and asset valuation) it makes sense that you get your data from a trusted provider. That’s why we wanted to highlight First American Data & Analytics and its industry-leading and largest repository of recorded images. It’s true: more than 8 billion and growing! As a nationwide single-source solution, First American is proud to provide document images that are current, complete, and accessible so you can feel confident in your ability to know where and how to locate the documents you need. Sound good? Learn more and get a sample of the data.”

Get just the verification of employment data you need at closing with The Work Number®. Introducing Employment Select +™, a new addition to The Work Number suite of solutions, which enables a view into a borrower’s most recent 35 days of current and prior employment. Designed with mortgage lenders in mind, this solution seamlessly provides the verification information needed before closing. With access to 618 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 or payroll credentials, potentially exposing them and yourself to risk. Instant verifications from The Work Number 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. Learn how Equifax can help lenders close more loans for more borrowers. 

Fundamental changes to Fannie Mae QC: Are you prepared? Tune in for a 20-minute QC Now Webinar where ACES Quality Management’s EVP, Sharon Reichhardt discusses the changes Fannie Mae published to their Selling Guide on March 1st (effective September 1st) and how to easily implement the changes for organization-wide visibility and accountability. This on-demand webinar covers timing, selection, review types, and reporting for the prefunding QC review process as well as the PC review process, root cause analysis, gross defect percentages, and action plans. Watch now.

“Turn fixed costs into variable costs on a dime. When the market zigs, lenders need the flexibility to zag. Richey May Advisory brings the mortgage industry expertise and agility you need to convert fixed costs into variable costs. Our difference maker is your ability to outsource services to highly trained experts in a model that fits your needs. Whether that means loan-level accounting, advisory, business intelligence, compliance support, cyber services, internal audits, or underwriting automation, we have the tools, knowledge, and experience to deliver value and improve your financial performance unlike any competitor, anywhere. You’ll feel it almost immediately in your day-to-day operations. Even better, you’ll notice the difference in your bottom line. Reach out or visit our website to learn more about how we can help your operation pivot to a better place, no matter which direction the market goes.”

“Are you tired of spending valuable time searching for HOA documents? Time is money, and every minute spent hunting down these documents is a minute you could be using to focus on the things that make you money. But what if you could eliminate this time-consuming task altogether? Imagine never having to waste another minute talking to HOAs or manually updating your loan file with findings ever again. Well, now you can with Velma Connector and InspectHOA. Our powerful combined solution automates the entire HOA document finding process, making your life easier and more efficient. With Connector and InspectHOA, you can finally stop wasting your precious time on HOAs and focus on the things that really matter to you. Don't let HOAs slow you down. Get Connector and InspectHOA today and take back your time!”

Non-Agency, non-QM, reverse mortgage news

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Excelerate Capital announced the availability of its Non-QM program with improved pricing and flexible doc types; Elite Full/Alt Doc.

Big changes and big opportunities in Non-QM at Carrington Mortgage. In March, major changes were made to its Non-QM guidelines and getting great feedback from partners.

AAA Lendings offers a flexible solution to cash out seasoning requirement, without affecting your first loan. HELOC and Closed-End Second programs are available at AAA Lendings.

PRMG Product Update 23-22 includes information on Choice Stretched Prime and Non-Prime for properties in the state of Georgia, clarification on homebuyer education requirements for CA CalHFA Programs and CA CalHFA Dream for All Conventional- funds are no longer available, loans must have been locked as of 4/7/2023.

Champions Funding is one of the few non-bank lenders who are also Community Development Financial Institutions (CDFIs) in the nation. Backed by the U.S. Department of the Treasury, CDFIs help spark economic growth in areas with historically limited-to-no access to funding, helping people who are traditionally locked out of financial systems and are typically considered low-income, among other attributes. Champions Fundings’ flagship Ally loan program is a great example of what a CDFI product can do for your borrowers, relying less on credit scores than a traditional agency loan.

A non-QM pricing engine that enables lenders to provide all agency products and non-agency loans through a single #PPE, Lender Price’s FLEX increases product selection available to loan originators. With its flexible UI, FLEX gives non-QM lenders the ability to build a custom pricing engine using a simple drag & drop feature. No coding needed.

If you’re in Michigan, Northern Michigan has a Reverse Mortgage Luncheon on May 4.

Guaranteed Rate, added fuel to its reverse mortgage program, a type of loan product for homeowners nearing retirement age that allows them to tap into the equity they've built up in their homes. Others use a reverse purchase money mortgage to right-size and buy their dream home in retirement. This new initiative gives more systems of support to loan officers as well as a new training program to certify loan officers in this type of product. Reverse mortgages are growing-balance loans so the loan balance increases, not decreases, over time, with the understanding that the mortgage will one day be paid off, usually by selling the home once the last surviving homeowner sells or leaves the home for good.

Capital markets: GDP shows the consumer doing fine

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Do you think next week will be the last Fed rate increase? Recent comments from Fed officials run the gamut from hawkish to dovish and tightening credit conditions in the wake of recent bank failures contrast with surprisingly resilient economic indicators. What will it mean for the mortgage industry if this is the final rate hike? Register for the first Agile Trader Talk webinar as Tawab Abawi explores these questions with industry veterans Chris Maloney of BOK Financial and Ian Lyngen of BMO Capital Markets. Agile is working to create a better MBS market through digital platforms and industry analysis; register for the End of QT? Mortgage Markets & the Fed Webinar and subscribe to the Agile newsletter to stay in touch with future coverage.

In bond market news, some good quarterly earnings reports from Wall Street helped calm markets yesterday. We learned that total durable goods orders were up a robust 3.2 percent month-over-month in March, well above consensus 0.7 percent expectations. Excluding transportation, durable goods orders rose a more modest 0.3 percent and non-defense capital goods orders excluding aircraft, a proxy for business spending, declined 0.4 percent.

Economic data of late has clearly shown that growth slowed in the spring after a solid first two months of the year. Housing starts, retail sales, sales of cars and existing homes, and manufacturing output all were lower in March. GDP growth slowed from the fourth quarter of 2022 into the first quarter of 2023 and will likely downshift further over the rest of the year. Similarly, the labor market kicked off the year strongly, but has since cooled. Job growth averaged 345k per month in the first quarter and the unemployment rate held near a half-century low, but job openings fell by over a million in January and February, and continued jobless claims are now at the highest level since late 2021. Wage growth has slowed, too, though it is still higher than its pre-pandemic average.

The first look at Q1 Gross Domestic Product (1.1 percent, worse than expected; personal consumption was +3.7 percent so the U.S. consumer is doing just fine) along with weekly jobless claims (230k, down from 245k, indicating a strong labor market) led off today’s calendar. GDP was expected to increase 2.0 percent versus 2.6 percent previously. Later this morning brings Pending home sales for March, KC Fed manufacturing, a Treasury auction of $35 billion 7-year notes, and Freddie Mac’s latest Primary Mortgage Markets Survey. We begin the day with Agency MBS prices roughly .125 worse, the 10-year yielding 3.48 after closing yesterday at 3.43 percent, and the 2-year at 4.02.

(Thank you to Don C. for this one.)

An MIT linguistics professor was lecturing his class the other day.

"In English," he said, "A double negative forms a positive. However, in some languages, such as Russian, a double negative remains a negative. But there isn't a single language, not one, in which a double positive can express a negative."

A voice from the back of the room said, "Yeah, right."