Chrisman Commentary - Daily Mortgage News

5.19.23 Mortgage Rate Buydowns; Built Technologies' Riley Thomas on Commercial Real Estate; U.S. Debt Ceiling Theater

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.

For me, yesterday involved a trip from Connecticut to Northern California, with talk of a lack of inventory, relatively high mortgage rates, and loan level price adjustments still echoing in my head from the CMBA conference. There isn’t much one can do about rates or homes for sale, but one can always let the FHFA know what you think about pricing. Meanwhile, lenders are doing what they can to help borrowers. Credit unions, for example, are being creative. Last year, per Zillow, about 45 percent of mortgage borrowers around the nation used points to buy down the mortgage rate. LOs are watching demographic trends. America was once extremely mobile, with people often moving between states for work. From 1986 to 1997, 29 percent of job seekers relocated for a new position, a figure that fell to 17.8 percent over the period from 1998 to 2007 and seemed to crater out during the pandemic at just 4.1 percent in 2021. In the first quarter of 2023 just 1.6 percent of people relocated to take a new job, likely due to tight labor market, remote work, and people having more choice to take their pick of work without moving. (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 Built Technology’s Riley Thomas where he takes us through a comprehensive overview of the commercial real estate space.) Employment_________________________________________________ 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___________________________________________________ I like to stay on top of the trends in mortgage and real estate, but here’s a trend I found surprising: disposable cameras are making a comeback because Gen Z is using them to snapshot their lives. For a snapshot that can’t be caught on film, MMI is bringing lender performance into focus with its new Lender Snapshot Videos. With MMI’s Lender Snapshot Videos, lenders gain a new perspective of their performance and shed some light on unique insights they might otherwise overlook. See the full picture with stats such as your company’s national rank, how your LOs compare to the national average and what percent of their business your top real estate partners have sent your way. Take a second right now to instantly develop your customized MMI Lender Snapshot Video: no dark room required!American Savings Bank extends Sagent partnership for seven years! Sagent is thrilled to announce the expansion of our partnership with American Savings Bank (ASB) for another 7 years. ASB will continue powering its community-first mortgage servicing vision with our nimble, highly configurable system-of-record, LoanServ. ASB uses it to automate complex, high-volume tasks, enabling their team members to focus on customer service. Sagent takes this crucial role in ASB’s high-tech, high-touch banking model very seriously, and it’s been a critical partner as we build our next-gen core, default, and consumer servicing platforms. We can’t wait to keep building this future with, and for, them and their customers. Cheers to 7 more years! Read the full Sagent/ASB partnership details here.” “Want to ensure greater loan quality and enhance profitability throughout the mortgage process? Xactus’ QC ReviewX is a multi-dimensional loan data and document review platform that lets you review one loan file, or thousands, to identify potential underwriting errors or variances. It utilizes innovative technology that leverages automated data extraction and image indexing through optical document and character recognition. It also allows for digital presentation and storage of loan files. QCReviewX quickly locates data and correlates documentation so you can research errors or variances found during the audit process. And Xactus is further advancing the modern mortgage with its 50+ person QC team that performs an average of 30,000 loan quality file reviews annually across Pre-Closing, Post-Closing, Adverse Action, Pre-Funding, TRID, and Reverification specific audits. To learn more about how Xactus is innovating to serve and serving to innovate with QCReviewX, email us.” “You’re Stronger with Cenlar Subservicing! The U.S. housing market has been anything but predictable in the last few years. Cenlar is prepared for the volatility of this environment and is committed to helping you succeed. As both a bank and a subservicer, Cenlar is uniquely positioned to assist you as the mortgage landscape shifts. We can offer you the benefit of economies of scale, create customized mortgage servicing solutions, provide an outstanding homeowner experience, and manage regulatory compliance so that you can always focus your efforts on growing your business and staying competitive in the marketplace. Let’s discuss how Cenlar can meet the mortgage servicing needs of your organization. Call 1-888-SUBSERV (782-7378) or visit us. We want to be your trusted partner, each and every day.” For independent mortgage banks coping with shrinking production volumes and rising costs per loan, outsourcing accounting is an elegant solution to what’s become a very common challenge. Whether you have no accounting expertise in-house or you have a new team with no mortgage experience, you can tap the Richey May Client Accounting and Advisory Services (CAAS) team for the support you need. This team is stacked with mortgage industry experts who can tailor your solution to meet your most pressing needs in a volatile time, with no training needed. Need help transitioning to loan level accounting? Need a fully outsourced function? You got it! Need industry training for your controller? We can do that. In this article, Richey May’s expert Kim Dittmer answers all your most frequently asked questions around outsourced accounting as a mortgage bank. “Many lenders struggle with outdated, disconnected, and inefficient mortgage technology, which bogs down their operations and leaves borrowers frustrated. Cloudvirga's Horizon platform revolutionizes the mortgage lifecycle, enhancing efficiency and user experience for all stakeholders. Developed by mortgage professionals and technology innovators, Horizon streamlines the origination process, closing loans faster and at reduced costs. Our cloud-based, scalable Horizon Retail POS and Wholesale platforms simplify borrower interactions and provide loan officers and brokers with powerful tools to serve clients effectively. Offer borrowers an intuitive experience to apply, compare rates, and communicate with lenders while staying updated in real-time. Experience reduced touch time between loan officers and borrowers while generating underwriter-ready loan files in less than 30 minutes. Discover the future of mortgage lending—schedule a demo with Cloudvirga today.” Wholesaler products & news_________________________________________________ “Brokers are our universe! In celebration of Customer Appreciation Day, Orion Lending will be waiving underwriting fees on all loans uploaded to STAR Portal on Monday, May 22nd, Tuesday, May 23rd, and Wednesday, May 24th! To all the brokers who have trusted Orion Lending for the past 9 years, thank you! Not approved with Orion? We have a lot to offer, check out our great loan programs, very competitive pricing, and awesome STAR Portal! Click here to get approved today, so you can start submitting on May 22nd! You’re Not Just Another Broker. We’re Not Just Another Lender.” Rocket Pro TPO has a big announcement coming! Sign up for a special edition of IGNITE Live on Monday, May 22, at 11AM ET. Executive Vice President, Mike Fawaz is sharing important news that will impact every broker in a big way. This IGNITE Live is one you don't want to miss. Sign up here. Unfamiliar with Rocket Pro TPO? They’re all in on the success of the broker community. Rocket Pro TPO commits dedicated teams to their Partners called Crews. It’s an operations model like no other. This team of underwriters, closers and purchase title coordinators works on every loan from the broker. Compared to other lenders who pull from a pool of hundreds of operations workers, Crews Partners get high-touch, personalized support. Another winning opportunity? Credit pulls are available in the Rocket Pro TPO portal at no charge to Partners. This translates to thousands of dollars in Partner savings month-over-month. Partner with Rocket Pro TPO today to learn about these and other exclusive benefits! PRMG is an approved participating Lender with the State of Utah-UHC, offering an FHA loan with a second mortgage down payment assistance program. In an ongoing effort to help its Wholesale TPO partners, PRMG has developed a Utah Housing DPA Calculator tool. This is aimed at determining the starting rate and fees when disclosing to the borrower. Rocket Mortgage posted a new edition of Rocket Fuel which includes a look at April’s inflation numbers and how inflation interacts with key housing metrics. And the company is offering a new product: Home Equity Loan And 3-2-1 Temporary Buydown. An easy choice for clients seeking to consolidate debt or make home improvements. use the HEL vs. Cash-Out Calculator to compare blended rates on scenarios. STRATMOR on the wholesaler/broker relationship_________________________________________________ Lenders, if you’re in the Wholesale space, your rate sheet may be feeding short-term sales, but your relationships with mortgage broker partners will ultimately determine your long-term success. According to STRATMOR Group’s Customer Experience Director Mike Seminari, “These relationships are crucial for two reasons. First, the line between where the broker ends and the lender begins is often blurred for borrowers, so good or bad, the broker reflects on the lender. And second, brokers have options for where to send their loans, and being the preferred lender for a broker can soften the effects of rate fluctuations or aggressive competitors in a tight market.” In his May Customer Experience Tip, Seminari offers three strategies to strengthen the lender-broker relationship and create stronger, synergistic partnerships that drive more revenue. Check out Seminari’s new Customer Experience Tip, “Drive More Revenue by Rethinking Your Mortgage Broker Relationships” on the STRATMOR Group website. MBA profitability report now available_________________________________________________ The first quarter of 2023 was not good for most lenders. “A net production loss of 68 basis points in the first quarter of the year is an improvement over the record 99-basis-point loss reported in the fourth quarter of 2022. Conditions continue to be challenging for the industry... One silver lining from the first quarter is that production revenues improved by 40 basis points." The MBA's Quarterly Mortgage Bankers Performance Report is now available for purchase and “contains meaningful performance measures and benchmarks on IMB originations and servicing. Each report contains aggregate data on more than 300 IMBs and includes metrics such as loan origination fees, broker/correspondent fee income, warehousing income and expense, secondary marketing income, servicing release premiums, and repurchase reserve provision, sales and fulfillment personnel expense, benefits, O&E, production technology expense, and corporate allocation, average number of loans closed per month per sales, fulfillment, and production support FTEs, etc. Capital markets: still driven by the Fed and debt ceiling talk_________________________________________________ Ginnie Mae’s mortgage-backed securities (MBS) portfolio outstanding, consisting mostly of FHA and VA loans, grew to $2.39 trillion in April, including $33 billion of total MBS issuance, leading to $16 billion of net growth. Issuance for this month was higher than March’s $28 billion, and significantly higher than February’s $24 billion. April’s new MBS issuance supports the financing of more than 112k households, including more than 50.7k first-time homebuyers. Approximately 72 percent of the April MBS issuance reflects new mortgages that support home purchases, as refinance activity remained low due to higher mortgage rates. For the 2023 calendar year to date, Ginnie Mae supported the pooling and securitization of more than 177k first-time homebuyer loans. The April issuance includes $32 billion of Ginnie Mae II MBS and $1 billion of Ginnie Mae I MBS, including approximately $1.2 billion in loans for multifamily housing. Of the 11 Fed speakers this week, Dallas Fed President Logan yesterday went the furthest beyond the “higher for longer, and no rate cuts in 2023” message that the Fed has been pushing, saying that inflation is still too high to consider pausing rate hikes. Inflation did slow for the 10th straight month last month, but prices have still risen about 5 percent over the past year. As a result of those remarks, rates rose for the fifth consecutive day yesterday and fed funds futures are now handicapping nearly a 40 percent chance of another 25-basis point hike at the next Fed meeting on June 13-14. The one category of inflation that remains too high and will likely keep the overall inflation above the Fed’s target throughout 2023 is labor-intensive services, which will cause the Fed to struggle to cut rates in 2023 without some type of drastic deterioration in that sector. We learned yesterday that existing home sales fell 3.4 percent month-over-month in April to a seasonally adjusted annual rate of 4.28 million, according to NAR. On a year-over-year basis, sales were down 23.2 percent. Median home prices fell 1.7 percent compared to a year ago, but around half of the country is experiencing price gains, as multiple-offer situations have returned in the spring buying season. The inventory of existing homes for sale remains tight, which is due in part to the strength of the labor market (and ability to work remotely) and the rise in mortgage rates that is deterring existing homeowners' interest in moving. One quick note on the debt ceiling since it has been making headline news. While more signs point to the U.S. economy slowing and the Federal Reserve making progress in its inflation fight, Washington could (it’s unlikely, but still) soon destroy all that while shaking the global economy in unprecedented fashion. Few investors doubt that America will make good on its debts but even a “technical” default that delays interest and principal payments would roil the $24 trillion Treasury market, the bedrock of the global financial system. The fallout from a default could lead to a deep recession, a spike in unemployment and borrowing rates, a blow to national security, and other grim ripple effects. There was allegedly good progress this week after President Biden met with Republican leaders. With U.S. government cash set to run out by June 1, Treasury Secretary Yellen has repeated that the only good outcome is for Congress to raise the country’s $31.4 trillion borrowing limit, though she hasn’t said what measures she would take if that doesn’t happen. Without any economic data of note on today’s schedule, Friday is all about Fedspeak, including Chair Powell taking the stage. New York President Williams and Fed Governor Bowman will also make an appearance. We begin the day with Agency MBS prices slightly worse than Thursday night and the 10-year yielding 3.66 after closing yesterday at 3.65 percent. It should be noted that yield curve inversion (the 2-year is up to 4.27) is the biggest resistance for rate sheets to drop lower, especially with fed funds futures repeatedly getting ahead of sticky inflation metrics.  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 5 of 5.) Crosswalks are high-traffic areas. If you’re waiting to cross the Avenue, get out of the way of people who are crossing the Street. Make a path! Watch out for people on bikes. Don't just step off the curb. They will hit you. Not joking. Dogs and humans alike use the sidewalks, streets, and planters as bathrooms. Keep that in mind when you get home. Clean your shoes!”