Chrisman Commentary - Daily Mortgage News
Chrisman Commentary - Daily Mortgage News
5.15.24 Big Flagstar News; LoanCare's Kevin Cooke and Eric Seabrook on Servicing; Consumer Price Index
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.
Misconceptions and misunderstandings… Capital markets folks at the MBA conference next week should know that The Naked Cowboy in Times Square is not really naked. Soon after his presidency, Jimmy Carter (who’s been on hospice care for 15 months) gave a speech at a Japanese college and told a joke. To his surprise, the Japanese interpreter’s version was much shorter than the actual joke as he said it, and the entire audience burst out laughing. It turns out that the interpreter couldn’t translate the joke, and admitted to telling the audience, “President Carter told a funny story. Everyone must laugh.” One big misconception that seems to continue in lending is that home buyers still need to come up with a 20 percent down payment. A misconception in our biz is a focus on volume. It should be on units: underwriters and LOs do X units per day or month, not a dollar volume. The MBA expects $1.5 or $2 trillion this year, but the units are expected to be the lowest in decades. Wrapping up on misconceptions, out in California, Etienne Constable was told to build a 6-foot fence to hide the boat from view of his neighbors… But he got an image of the boat painted onto the fence. (Found here, this week’s podcasts are sponsored by LoanCare. 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. Hear an interview with Loan Care’s Kevin Cooke and Eric Seabrook on a variety of topics germane to servicing, from prominent players in the MSR market and implications of fewer Fed rate cuts, to HELOC and second lien servicing.)
Employment
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“’Golden handcuffs’ are causing quite a stir these days. And yes, being locked into a home loan when you’re ready to move on isn’t ideal. But what about being stuck working your butt off for someone else? That's another pair of handcuffs you’d probably like to kick to the curb, because you should be the one benefiting from your hard work. Not to worry. We’ve got the key to those shackles. A Motto Mortgage franchise is the easier way to own a brokerage and become your own boss. Our mortgage brokerage model allows you to find highly competitive rates for your borrowers while you create a business of your own. We provide professional marketing content, product mix, wholesale lender relationships, and compliance support. From. Day. One. So why grow someone else’s book of business when you can grow your own? Email us for all the details.”
Lender and broker software, products, and services
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Are you tired of soaring costs for income and employment verifications? Do you think there has to be a better way? There is a Better Way: Better product. Better experience. Less cost. Join Justin Venhousen, COO of Compass Mortgage and Richard Grieser, VP Marketing at Truv on May 23 at 1pm CT as Justin shares how his team faced mounting verification expenses and embarked on a quest for a cost-effective solution without compromising data quality. Discover how Truv empowered Compass Mortgage to slash verification costs by 60 percent, offering a modern, efficient approach to income and employment verification. Register now.
“Interested in swapping the file scrubbing for handshaking? Meet wemlo®, a processing company specializing in white-glove service for mortgage brokers and their borrowers. Here’s how it works. You collect borrower applications while wemlo processors hustle behind the scenes to prep files for closing. That way, you can spend more time on revenue-generating activities like chasing leads and supporting clients. Trust us, we’re in the business of keeping customers happy – just look at our 4.6-star* rating from borrowers. Ready to capture more market share and streamline your workload? Book your wemlo demo today.”
In a fast-changing industry, you can’t expect every partnership to last forever. But some do. When you find a great partner, the relationship can stand the test of time. MortgageFlex and Usherpa provide a very good example. The partners recently published a Press Release highlighting the benefits of their continuing partnership and why it’s great for each company’s clients. MortgageFlex offers the industry’s only cloud-native unified technology platform for both loan origination and servicing. When combined with Usherpa’s sophisticated, cloud-based CRM/Marketing automation system, the partnership is a perfect pairing that wins lenders more business. You can read the Press Release online today! Call John McCrea, SVP at 1-860-460-7418 to get a customized MortgageFlex demo.
For more than 35 years, AllRegs® by ICE Mortgage Technology® has been the industry’s single source of truth for mortgage compliance-related information across the whole loan lifecycle. Managed by a team of industry veterans and compliance experts, AllRegs continues to be the most comprehensive source for up-to-date agency and investor guidelines, state and federal regulatory content, policy guides and compliance best practices. Designed to help you confidently navigate today’s ever-evolving regulatory environment, AllRegs makes it easy to find the information you need and generate high-quality loans, all of which saves your business time and money. Click here to learn more about AllRegs.
The MBA Secondary Conference is just around the corner. Be sure to book time with the key players at Flagstar Bank if you’re headed to the Big Apple. Right now, you can secure private meetings with key senior leadership members in Mortgage Finance, Third-Party Originations, Secondary Marketing, Mortgage Subservicing, Specialized Mortgage Banking Solutions, and more. Don't miss your chance to get the scoop on what's ahead for this $113-billion-asset bank, from new products, including the upcoming DSCR, to product enhancements, tech rollouts, and warehouse lending opportunities. Connect with your RM or AE to reserve a time today. If you're not a partner yet, sign up at flagstar.com/why.
Verus Mortgage Capital’s closed end second lien mortgage program is an effective way to capitalize on the record amount of available home equity that continues to grow across the country. Market data from Intercontinental Exchange cites roughly 48 million people have access to tappable equity, which averages $206,000 per homeowner, up from $185,000 at the same time last year. A closed end second lien is an effective alternative to a cash-out refinance because it helps homeowners tap into their equity while keeping their low interest-rate first liens intact. Verus provides this and other non-agency solutions to lenders for borrowers who need more flexibility – such as self-employed, property investors, foreign nationals, etc. To learn more, meet with Verus at the MBA Secondary & Capital Markets Conference May 19-22 in New York or contact Jeff Schaefer, EVP – National Sales (202-534-1821).
Changes in liquidity have the industry spooked
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Warehouse banks supply liquidity to independent mortgage banks in the form of cash. This cash is borrowed by IMBs to fund loans, and when the loans are sold in the secondary markets the warehouse bank is paid off. Depository banks and credit unions can also borrow money instead of using deposits to fund loans. So, when there is big news in this relationship, whether a bank enters the business channel or exits it, it attracts the industry’s attention.
“Flagstar announced the sale of $5 billion of mortgage warehouse loans to J.P. Morgan’s Securitized Products Group in their Investment Bank. “The sale of these loans is accretive to both capital and liquidity and allows us to continue down the path of building a well-diversified, high performing regional bank. Flagstar remains committed to mortgage and continuing to provide a best-in-class service to its origination, servicing and MSR lending customers and partners.
“It was important that we partnered with an acquirer who has the expertise and acumen you deserve, with a shared commitment to excellence in service. With a talented team, strong brand power and a reputation for a high caliber of service, we are confident J.P. Morgan is the right partner and you will experience the same level of service you have come to expect.
“It’s business as usual during the transition, and your service will remain uninterrupted until the transaction closes in approximately 60 days. Flagstar and J.P. Morgan are committed to facilitating a smooth transition, and you will be notified soon with details on the transition and what to expect. Again, you will experience no immediate changes to your loans or how you transact with us. Furthermore, we will be scheduling a joint call with you, Flagstar, and J.P. Morgan over the next few days to further explain the transition and answer any questions you may have.”
You can bet every warehouse management group and capital markets crew using Flagstar are now busy figuring out alternatives. And other warehouse banks like First Horizon, GBC, Customer’s Bank, and several others are either licking their chops and/or closely watching what Chase does with the unit.
Floods, hurricanes, tornadoes, fires, earthquakes…
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The United States is prone to these and more, like volcanoes. FEMA is the official source of disaster declarations and when FEMA publishes them, lender and investor policies and procedures are triggered. From hurricanes to forest fires, the environmental impacts of climate change are becoming more pressing with each passing year as the severity increases. 90 percent of natural disasters involve some degree of flooding. Flood damage has cost Americans over $50 billion throughout the last decade.
Of course, the major Agencies post disaster assistance for their borrowers, although it is questionable whether the average borrower even knows what type of loan theirs is, or where their loan was sold. Fannie, Freddie, FHA, and the VA all have something.
What’s going on out there? Nebraska Tornadoes DR-4778-NE. Ohio Tornadoes DR-4777-OH. Oklahoma DR-4776-OK.
On 5/3/2024, with DR-4778, FEMA declared federal disaster aid with individual assistance has been made available to Nebraska counties Douglas and Washington, affected by severe storms, straight-line winds, and tornadoes from 4/25/2024 to 4/27/2024. See AmeriHome Disaster Announcement 20240504-CL for inspection requirements.
On 5/2/2024, with DR-4777, FEMA declared federal disaster aid with individual assistance has been made available to eleven counties affected by tornadoes on 3/14/2024. See AmeriHome Disaster Announcement 20240503-CL for inspection requirements.
On 4/30/2024, with DR-4776, FEMA declared federal disaster aid with individual assistance has been made available to three Oklahoma counties, Hughes, Love and Murray affected by severe storms, straight-line winds, tornadoes, and flooding from 4/25/2024, and continuing. See the attached announcement for inspection requirements. See AmeriHome Disaster Announcement 20240501-CL for inspection requirements.
PHH Mortgage posted information on FEMA declared disaster declaration to Oklahoma counties. Reference Oklahoma DR-4776: New Disaster Announcement for all disaster declared counties, requirements, procedures, and conditions.
Oklahoma FEMA declared disaster DR-4776-OK. 4776-DR-OK Amendment 001 Carter County. 4776-DR-OK Amendment 002 Okmulgee County. 4776-DR-OK Amendment 003 Osage County. 4776-DR-OK Amendment 004 Pontotoc County.
On 4/30/2024, with Amendment No. 1 to DR-4776, FEMA declared federal disaster aid with individual assistance to Oklahoma county, Carter, affected by severe storms, straight-line winds, tornadoes, and flooding from 4/25/2024, and continuing. See AmeriHome Mortgage 20240505-CL Disaster Announcement for inspection requirements.
On 5/7/2024, with Amendment No. 2 to DR-4776, FEMA declared federal disaster aid with individual assistance to Okmulgee County. See AmeriHome Mortgage 20240506-CL Disaster Announcement for inspection requirements.
On 5/9/2024, with Amendments No. 3 and No. 4, Osage and Pontotoc County to DR-4776, FEMA declared federal disaster aid with individual assistance to additional counties and provided an Incident Period End Date from 4/25/2024 to 5/9/2024. See AmeriHome Mortgage 20240507-CL Disaster Announcement for inspection requirements.
Capital Markets: Inflation & Fed continue to drive rates
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“Where were you guys when I was with my last company?” Word is out that MAXEX is the premium source for liquidity for a multitude of products including Agency-eligible second home and investment properties, DSCR, bank statement, jumbo loans and more. One contract gets you access to multiple premium investors ready to trade on a flow, bulk, and forward basis–whatever best fits your business. Learn more about MAXEX in person next week at the MBA Secondary show in Times Square or schedule a 30-minute consult with our team right now.
Inflation at the wholesale level, also known as the Producer Price Index, came in higher than expected for April yesterday, rising 0.5 percent month-over-month and 2.2 percent year-over-year, but March was revised lower. Most of the increase in the index was attributable to gains in wages.
The report produced an immediate sell-off, but then a bounce higher as it was digested. On the heels of that release, we heard prepared remarks from Fed Chair Powell, who repeated that he does not expect a rate hike to be the next policy move, saying that the April PPI reading was "quite mixed." He added that the economy is performing well, calling consumer spending and business investment strong, and said that the labor market is coming back into better balance, but that there was a lack of further progress on inflation in Q1. So everyone should settle down, right?
Following yesterday’s PPI report, today brought the all-important consumer inflation data in the form of CPI, as well as retail sales both for April. However, the economic calendar kicked off with Mortgage applications from MBA increasing 0.5 percent from one week earlier. Activity was expected to be little changed with the 10-year yield closing the week nearly unchanged at 4.50 percent and the 30-year mortgage rate from Bankrate unchanged at 7.38 percent.
CPI increased +.3 percent month-over-month and +3.4 percent year-over-year versus 0.4 percent and 3.5 percent previously. Analyst consensus suggested that both headline and core annualized inflation cooled versus the reading in March. Retail sales for April were unchanged versus expectations of increasing 0.3 percent. Other releases today include Empire Manufacturing for May grim, Business inventories in March, the NAHB Housing Market Index for May, March TIC data from the Treasury, and remarks from a trio of Fed speakers. Soon after the consumer inflation numbers, Agency MBS prices are better by .125-.250 and the 10-year is yielding 4.36 after closing yesterday at 4.45 percent.
Best of Marcus Lam (part 3 of 5)
No one reads the rules for Monopoly until an argument breaks out.
Life is too short to properly eject USB devices.
The unspoken rule for using any calculator is to hit the clear button 3-5 times before starting a new equation.
Making eye contact with an in-store kiosk salesperson is like accidentally tapping a pop-up ad.
People still play the lottery even though most of us can’t get the USB in the first time correctly and those odds are 50/50.
With every passing hour, you are one hour closer to your next pizza.