1.24.24 So Long NOLA; Deephaven's Tom Davis on Non-QM; Composition of Mortgage Apps

Thanks to today's podcast sponsor, LoanCare. LoanCare has successfully navigated 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™, supports 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.

Transcript

As attendees head home from the MBA’s IMB in New Orleans, plenty will be eating airplane chow. Maybe you should buy vittles on the ground instead. Given the breezy weather in New Orleans, leather jackets are out in force. Those in attendance are talking about several good things that happened in 2023, impacting mortgage rates and lenders. Inflation has come down, hourly wages outpaced inflation the last seven months of the year, we didn’t have a recession or a banking crisis that some “experts” expected. In fact, the S&P 500 was up 23 percent, and the economy grew a decent 2.6 percent. Credit costs and trigger leads are a big item; today’s L1 Mortgage Matters session at 2PM ET features John Fleming, of John Fleming Law and the Texas MBA, and a good update on the trigger lead situation. Basel III is a concern; as MBA President Bob Broeksmit points out, no bank has ever failed due to servicing requirements, and we should guard against non-sensical choices from Washington DC. (Today’s podcast can be found here and this week’s is brought to you LoanCare. LoanCare has successfully navigated clients and homeowners through market change for 40 years. The mortgage subservicer is known for delivering superior customer experience through personalization and convenience via its portfolio management tool, LoanCare Analytics™, supporting MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with Deephaven’s Tom Davis on the Non-QM space and what to expect from nontraditional financing markets in 2024.)

Lender and broker services, and software

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Spring is still a few weeks away, but it’s never too early to do some deep cleaning in your servicing operations. The Consumer Financial Protection Bureau is cracking down on “junk fees,” which means it’s time to do a thorough review of your servicing portfolio to help steer clear of non-compliance. Four of the servicing fees the CFPB has in its sights are late fees, unnecessary property inspection visits, PMI overcharges and COVID-related charges. When applied improperly, these types of fees pose a serious risk to servicers, from revenue consequences to retention impacts. Learn how you can safeguard against “junk fees” to protect your business and reputation in ICE’s blog post.

Strength, stability, and proven performance are essential in the mortgage space. Flagstar Bank has been checking all the boxes for 35 years, leading the way with more than $111 billion in assets, diverse product offerings, and consistently delivering excellent service. As the nation’s second largest warehouse lender with a team of a dozen dedicated relationship managers, you can count on Flagstar to handle your business with care. They warehouse most loan types, including conventional, non-QM, and construction, with a platform designed for quick and easy funding solutions for their 400 warehouse clients. Flagstar’s expertise also covers MSR, servicer advance, and EBO financing solutions, all of which they can tailor to meet your business needs. Their specialized mortgage banking team can even help streamline your operations and maximize the value of your cash balances. Flagstar is the ultimate one-stop-mortgage shop for lenders of all sizes. Contact Patti Robins or Jeff Neufeld today to learn firsthand why Flagstar should be your top choice.

Computershare Loan Services (CLS) has a long reputation for subservicing excellence with tightly managed processes, air-tight compliance, and an unmatched passion for helping clients succeed. In other words, they deliver unmatched performance and customer care that protect clients’ portfolios. Moody’s, S&P, and Fitch agree, consistently affirming and upgrading CLS’ servicing proficiency ratings. Learn how CLS improves loan performance for clients’ servicing portfolios.

Lending operations leaders who care about increasing revenue and decreasing costs: join your tribe in this live event. On January 30th at 1pm CT we have an electric panelist lineup made up of Industry leaders that are going to spill the beans on ten strategies they are focused on to increase sales and reduce costs with minimal investment in 2024. Some of these strategies are directly saving 50-80 percent per month on the larger costs that lenders face, and others allow them to close more loans, faster. Come and join Kevin Peraino, Chief Lending Officer at PRMG, Delfino Aguilar, Chief Production Officer - TPO, Kind Lending, David Lykken, Founder & Chief Transformation Officer at Transformational Mortgage Solutions, LLC (TMS), and Richard Grieser, VP of Marketing at TRUV as they share the revenue generating and cost saving must have strategies that you can put into practice today! RSVP now and we hope to see you there!

With volume expected to make soft gains this year, exceptional LOs are key to bringing in every possible dollar. The MBA forecasts over 5 million mortgages in 2024, and all-star LOs have the right expertise, the right experience, and the right mindset to capture that opportunity. So, how can lenders attract and keep these MVPs? Discover the secret in Floify's free eBook Drafting a Dream Team. Derived from a survey of 150 top producers, the eBook uncovers what makes them stay, the technology they prefer and the benefits they value most. Download the free eBook now to recruit and retain an elite team.

Your online loan application is your front door. Is yours very welcoming? Did you just take the free one that the builder threw in? Is your entryway imposing such that visitors leave before ringing the doorbell? Take some pride in your castle and check out LiteSpeed by LenderLogix. 

2024 will be another challenging year for servicers in terms of new regulations and changing expectations from investors: Will you be ready? For 30 years, Clayton’s Servicing Oversight solutions have helped residential and commercial servicers reduce risk and ensure that their processes meet quality, compliance and reporting standards, as well as comply with regulatory, rating agency and investor requirements. One of the new headwinds that servicers will face in 2024 is the dramatic increase in real estate tax and insurance costs, which will create anxiety for borrowers and operational and financial challenges for servicers. Click here to read the MortgagePoint article by Samantha Shanaberger, Clayton VP of Business Development - Servicing Oversight, about why call centers will be ground zero in this effort. Email Samantha to learn more about Clayton Servicing Oversight.

Production Managers are you starting 2024 off with the question: “How can I get all my originators working more like my top producers?” Then, you’re looking for the holy grail: habit duplication. Usherpa has been researching habits of highly successful loan officers for nearly 30 years, helping literally thousands of LOs increase production using habit duplication… through every conceivable market condition! How? Using data analytics (and lengthy history in the industry), Usherpa identified the most powerful habits of successful producers. Leveraging those trends coupled with Usherpa’s technology and commitment to customized training, you can ensure your team is primed to operate like the big hitters. Make your life a little bit easier and give your LOs the tools to duplicate top producers’ habits, learn how here. While you’re at it download the Usherpa eGuide “3 Habits of Top Producing Loan Officers (You Can Duplicate).”

Company product and program news

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New Story Lending, LLC is proud to announce that it received designation as an approved Seller by The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac. Approval and onboarding were achieved quickly, substantiating both New Story Lending LLC’s and Freddie Mac’s commitment to enhancing affordable housing opportunities. “We are excited to partner with Freddie Mac to expand our affordable lending solutions. As a minority and veteran-owned business, we are aligned with their mission to close the homeownership gap and support the communities from which we come,” says Juan Rodas and Shane Miller, Co-CEO’s of New Story Lending. Despite being a startup organization, this approval is a testament to the team's extensive experience in the industry and their successful establishment of a solid foundation of business practice, stability and continued growth. New Story Lending’s decision to begin as a Mortgage Banker is atypical and speaks to the innovative leadership vision and strong mission focus for the organization.

“As we step into a fresh chapter, most industry experts are forecasting a rate decrease in 2024. This heralds a massive opportunity for our clients at American Financial Resources, Inc. (AFR), to tap into lower interest rates through programs like the VA IRRRL and both the FHA and USDA Streamline. These programs are designed to offer smoother, more cost-effective loans for borrowers, making refinancing easier than ever. At AFR, we're thrilled to roll out our new SwiftStreamline Refinance. This innovative process is set to revolutionize refinancing by slashing turn times, trimming costs, and dialing down the aggravation. It's a fantastic opportunity for both borrowers and originators to fine-tune their financial strategies. Think reduced paperwork, lower interest rates, and a streamlined refinancing process. Reach out to us for this great opportunity! Visit www.afrwholesale.com, contact sales@afrwholesale.com, or call 1-800- 375-6071 or partner with AFR today!”

Government-backed product news

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Conventional conforming (Freddie & Fannie) continues to garner the lion’s share of the business, but FHA, VA, and USDA products can’t be ignored. In terms of last week’s applications, the FHA share of total applications was 14 percent, VA was 13.7 percent, and the USDA share of total applications was .4 percent.

The Single Family Housing Guaranteed Loan Program (SFHGLP) announced revisions to technical Handbook-1-3555, Chapter 4, Lender Responsibilities; and Chapter 11, Ratio Analysis. These changes became effective upon the recent issuance of a Procedure Notice (PN).  

Recent Ginnie Mae Press Release announced its mortgage-backed securities (MBS) portfolio outstanding grew to $2.52 trillion in December, including $28.7 billion of total MBS issuance, leading to $13 billion of net growth. December’s new MBS issuance supports the financing of nearly 95,000 households, including more than 47,000 first-time homebuyers. Approximately 76.3 percent of the December MBS issuance reflects new mortgages that support home purchases because refinance activity remained low due to higher interest rates.

USDA Rural Development SFHG Program posted Advance Notice Bulletin: GUS Changes and Revisions to HB-1-3555, Chapter 8. SFHGLP will be implementing a change in the Guaranteed Underwriting System (GUS) to remove required data entry in the Immigration/Naturalization Check Information section of the Additional Data screen for non-U.S. Citizen applicants. The anticipated implementation date for these changes is April 1, 2024.

Ginnie Mae Press Release announced that it is exploring development of a new securitization product as part of its efforts to enhance and expand its existing Home Equity Conversion Mortgage (HECM) mortgage-backed securities (HMBS) program. This new product will not change the requirements for the existing HMBS program, where HECM loans with balances at or above 98 percent MCA are required to be bought out of HMBS.

On January 5, 2024, USDA published PN 602 announcing revisions to Handbook-1-3555, Chapter 4 – Lender Responsibilities, and Chapter 11 – Ratio Analysis. See AmeriHome Product Announcement 20240105-CL for details.

Capital markets: refis are about 1/3 of apps

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By many measures, the U.S. economy is strong right now. Unemployment is near its lowest point in decades, inflation has slowed down, and wages have grown faster than prices since last year. Consumer spending finished the year on a strong note as retail sales increased by more than expected 0.6 percent in December. It was the sixth straight month where sales outpaced expectations, a sign of consumer resilience despite the transition towards more credit card spending. The same can’t be said about the world’s second largest economy, China, which is reportedly set for $280 million in imminent stimulus to support its equity markets.

In the United States, lower interest rates have led to an increase in builder confidence and single-family building permits as we approach spring selling season. Mortgage rates may need to improve further to motivate more would-be sellers to list their homes. We learned last week that existing home sales fell to an annualized rate of 4.09 million units in December, the lowest rate since 1995 and well below the 2019 rate of 5.34 million units. The median existing-home sale price rose 4.4 percent from December 2022 to $382,600 as supply remained tight at 3.2 months’ worth.

Mortgage applications from MBA kicked off today’s economic calendar. Despite mortgage rates increasing over the reporting period, mortgage applications increased 3.7 percent from one week earlier, including an adjustment to account for the MLK holiday. The refinance share of mortgage activity decreased to 32.7 percent of total applications from 37.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.3 percent of total applications.

Later today brings S&P Global PMI January flashes, Treasury auctions headlined by $28 billion 2-year FRNs, and the latest monetary policy decision from the Bank of Canada. We begin the day with Agency MBS prices better by about .125, the 10-year yielding 4.10 after closing yesterday at 4.14 percent, and the 2-year yield at 4.32 percent.

Instead of the usual humor, here is a three slide description of how a teacher cleverly instructed students on finding happiness using balloons! (Click on the arrow in the slide.)

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. STRATMOR’s current blog is titled, “Adjusting Loan Officer Compensation to Improve Profitability.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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