Chrisman Commentary - Daily Mortgage News
Chrisman Commentary - Daily Mortgage News
7.15.24 CFPB v. Townstone; PHH's Taylor Adams on Correspondent Lending; Price Index Fallout
Want to ensure your borrowers have a competitive edge and consistently win deals? It’s easy when you work with Calque to offer a better ‘buy before you sell’ solution. Calque provides a binding backup offer on a borrower’s departing residence, which empowers lenders to provide a bridge-like experience with easier qualification and less risk. You’ll make your job easy by offering non-contingent financing, eliminating the departing home from DTI, and reassuring borrowers with a Calque backup offer. Oh, and it costs less than other ‘buy before you sell’ solutions. Visit www.calqueinc.com/lender to set up a demo.
Yes, I know that this is a mortgage commentary, but some things are way above that. (Warning: tissues may be required; what’s happened legislatively since?) Dr. Ruth, who was sent to a Swiss orphanage by her parents were killed during the holocaust, died, as has fitness guru Richard Simmons, actresses Shelley Duvall, and Shannen Doherty. None of this has anything to do with mortgages, other than we as lenders are constantly involved in the fabric of our client’s lives. It seems like, at least over the past couple of years, time has flown by. It’s been four years since we were all watching called “The Tiger King.” The pandemic is ancient history in terms of mortgage rates. Four years since the last summer Olympics were scheduled. World Financial Group announced that Olympic and X Games gold-medalist snowboarder Shaun White will headline the company's Convention of Champions this week. Don’t confuse Shaun with Sage Kotsenburg and his Totally Dope Refi Mortgage…a classic short clip. (Today’s podcast is found here and is sponsored by Calque. Calque provides a binding backup offer on a borrower’s departing residence, which empowers lenders to provide a bridge-like experience with easier qualification and less risk. Today's episode features an interview with PHH Correspondent Lending’s Taylor Adams on the current state of correspondent lending.
Employment and transitions
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“Join ICE and embark on an exciting career in mortgage technology! We’re redefining the industry with innovative solutions that enhance every step of the end-to-end mortgage lifecycle. Our open network integrates groundbreaking technologies, connecting origination and servicing seamlessly. ICE’s dynamic and collaborative environment is perfect for those eager to advance our cutting-edge origination and servicing tools, evolve our product and pricing engine (PPE), enhance our consumer engagement suite and help deliver best-in-class closing solutions. Whether you're new to the field or a seasoned expert, we have opportunities to shape the future of mortgage technology and the industry itself. Explore our job openings and help us transform the industry at ICE!”
Top loan officer Alexandra San Martino joins Service First Mortgage to revolutionize her business! Top Loan Officer Alexandra San Martino has joined Service First Mortgage, and with Service First’s unmatched support and innovative technology San Martino plans to achieve exponential growth while providing exceptional service to her clients and referral partners. “Joining Service First Mortgage is a strategic move that aligns perfectly with my goals of business growth and team expansion,” said San Martino. “Service First’s exceptional support and innovative loan products will undoubtedly enable me to achieve remarkable growth in my business.” San Martino’s transition highlights Service First Mortgage’s commitment to excellence and innovation, offering loan officers top-tier resources, unparalleled support, and a collaborative atmosphere that fosters success and innovation.
Lender and broker software, services, and products
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Home insurance pricing and availability continue to challenge homebuyers and existing homeowners in 2024. Matic, a digital insurance platform built for the mortgage industry, helps your borrowers find the best price and policy options by offering quick access to a network of 40+ A-rated insurance carriers directly within the loan closing or servicing experience. Seamlessly integrating into your existing processes, Matic saves time and reduces administrative burdens for processors, automating tasks like insurance document delivery. Our platform also enhances the borrower experience and opens up a new revenue stream for your business, with each policy generating additional income. Learn how mortgage enterprises can deliver automated, personalized insurance offers to your borrowers by booking a demo today.
Sagent executive talks servicing tech ROI circa 2024, including AI! A unified platform with cloud-native architecture is the foundation for leveraging AI, specifically LLMs, in mortgage servicing. The promise of AI in servicing depends on single-source, real-time data across the entire performing and nonperforming lifecycle. Sagent’s Sales and Business Development Lead, David Doyle, recently unpacked this conversation with MortgagePoint, sharing relevant industry intel including their strategy to help servicers deliver an exceptional homeowner experience while driving a substantial reduction in cost per loan. Check out the full article here and then reach out to the Sagent team with your questions.
“A&D Mortgage announces the launch of the ADvantage Partner Loyalty Program, transforming the mortgage broker industry with unparalleled benefits and rewards. Key benefits include earning points for funded loans, personalized support, and exclusive networking opportunities. Approved partners can redeem points for appraisal credits, lock extensions, underwriting fee waivers, and more. Preferred partners will retain their status and benefits seamlessly. For more information, visit ADvantage Partner Loyalty Program or contact ADvantage@admortgage.com. You can also find out more at our introductory webinar Tuesday, July 16 at 1 PM EST. To register, click here.”
“Stand out with a top-ranked mortgage point of sale customized for your business. In today’s competitive mortgage marketplace, customizing workflows and borrower experience is crucial to differentiation. With the industry-first configurability of Maxwell Point of Sale, lenders can define workflows for any mortgage product, while configuring triggers and business rules to align the borrower experience to operational processes. Maxwell Point of Sale also features more than 60 third-party integrations, allowing lending teams to seamlessly connect with other vital pieces of their workflow, from credit and verifications to pricing and disclosures. It’s no wonder that Maxwell Point of Sale is the top ranked mortgage point of sale on Capterra with 4.8/5 stars. Want to learn more? Let us know and we’ll show you what Maxwell can do for you and your borrowers.”
California: Announcing homebuyer assistance up to $350,000 per household to help low- and moderate-income residents (homebuyers and renters) impacted by wildfires in California in 2018 and 2020. The NEW ReCoverCA Homebuyer Assistance Program, is now available from Golden State Finance Authority (GSFA), featuring down payment and closing cost assistance up to $350,000 in the form of a deferred second mortgage with a zero percent note rate, fully forgiven after 5 years of ownership and occupancy. Counties eligible for 2018 funds are: Butte, Lake, Los Angeles, and Shasta. Counties eligible for 2020 funds are: Butte, Fresno, Los Angeles, Napa, Santa Cruz, Shasta, Siskiyou, and Solano. Properties eligible for financing through the Program must be located outside of High or Very High Fire Hazard Severity Zones. Join us for a Lender Training on the ReCoverCA Homebuyer Assistance Program and start helping families recover and re-establish long-term housing. For more info visit www.gsfahome.org.
Rejection is humiliating. Whether in relationships, prospects, or applying for college, it is a lingering feeling that haunts you. It stays with you as you work towards achieving your goals. In many cases, it is the reason many become successful, to reconcile the feeling of desertion. Getting your loans rejected should feel similar. Mortgage Lenders experience a 50 percent reduction in rejected loans after implementing AI Underwriter™. If you are tired of rejection, click here to schedule a demo.
CFPB fair lending court victory
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On July 11, a U.S. Court of Appeals for the Seventh Circuit reversed a district court’s decision and ruled that the Consumer Financial Protection Bureau has broad authority to discourage discrimination to combat redlining, delivering a major victory to the bureau in a contentious case, CFPB v. Townstone Financial. The court validated the CFPB’s claims that the Chicago-based nonbank mortgage company and its owner violated ECOA by engaging in discriminatory marketing.
For some background, CFPB initiated a redlining enforcement action against the company in 2020, alleging defendants discouraged African Americans from applying for mortgage loans from the company and redlined African American neighborhoods in Chicago. Last year, the U.S. District Court for the Northern District of Illinois dismissed the CFPB’s action. On appeal, the CFPB argued that its interpretation of ECOA is supported by the historical context of Regulation B and has not been contested by Congress.
The court stated that Regulation B's rule against deterring prospective applicants aligns with both the text and the intent of the ECOA, reasoning that it “cannot constrain artificially the ECOA to a single provision” and rather, must review it as a whole.
Applying this standard, the court held that ECOA prohibits “not only outright discrimination against applicants for credit, but also the discouragement of prospective applicants for credit.” In remanding the case, the 7th Circuit left it to the district court to determine whether the defendants’ alleged conduct was prohibited discouragement under ECOA, in addition to whether defendants’ argument that their allegedly unlawful conduct is protected by the First Amendment’s guarantee of free speech.
Attorney Brian Levy had this to say about CFPB’s victory: “Townstone is a critical case to follow for fair lending jurisprudence. If the 7th Circuit had agreed with the lower court that “prospective” applicants were not covered by ECOA, CFPB’s redlining theories would have been dramatically curtailed (leaving that mostly to the Justice Department). Yet, while many in the industry may have hoped that a Townstone victory would effectively prevent the CFPB from being able to pursue redlining claims, most people would agree that there is something wrong and discriminatory for a lender to be able hang a sign on the door that says something like “Irish need not apply”. I suspect the three-judge panel at the 7th Circuit were discomforted by the idea that Congress, in enacting ECOA, would not have permitted the CFPB to prevent that kind of blatant example of discouraging prospective loan applicants as opposed to merely protecting those who already had applied.
Discomfort also is caused by CFPB’s expansive position in redlining cases that pretty much everyone is a prospective applicant under ECOA and the failure to encourage applications is discouraging applications. But, that expansive interpretation of who is a prospective applicant for Townstone, as well as CFPB’s dubious definition of “discourage” haven’t ever been tested in court. Those issues have been sent back to the trial court (along with first amendment speech issues). Rather than starting over at the lower court, Townstone and its attorneys may still decide to appeal this 7th Circuit decision to the Supreme Court on whether ECOA encompasses prospective applicants at all. Stay tuned.”
Capital markets: takeaways from recent inflation reports
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Last week, those hoping for imminent Fed rate cuts finally got the headline CPI they were waiting for when it was revealed that consumer prices fell in June by 0.1 percent. Excluding food and energy, prices rose by a mere 0.1 percent. Over the last three months, inflation has increased at an annualized pace of 2.1 percent. June’s report finally saw an easing in shelter inflation along with falling prices in discretionary spending.
U.S. consumers are feeling the fatigue of higher prices and beginning to reign in debt-fueled spending. The University of Michigan’s Consumer Sentiment report fell to an eight-month low as respondents were less optimistic of both current conditions and future expectations. The silver lining is that inflation expectations dipped slightly. Should a slowdown in spending gain momentum, focus will shift towards labor market impacts and a potential economic downturn.
Inflation at the wholesale level rose 0.2 percent month-over-month and 2.6 percent year-over-year, above expectations while May’s figures saw an upward revision. The year-over-year rate for PPI and core PPI accelerated for the fifth month out of the last six with rising prices of services outweighing falling prices of goods in June. The jump was almost exclusively related to retailer margins. The bond market didn't react much to the PPI number, with fed funds futures still nearly certain there will be a rate cut in September.
This week’s calendar includes more Treasury supply, besides bills, with $13 billion reopened 20-year bonds and $19 billion new 10-TIPS on Wednesday and Thursday, respectively. There is also some first-tier data including retail sales, Fed surveys, business inventories and housing-related reports. At least one Fed speaker is scheduled for each day before going into their blackout the following week. The latest Beige Book will also be released on Wednesday ahead of the July 31 announcement. Outside of the Fed, the ECB will be out with their latest monetary policy decision where they are expected to hold rates steady following the 25bp cut at the prior meeting.
Bank earnings continue with Goldman Sachs reporting today, and Bank of America and Morgan Stanley tomorrow along with several super regional banks. Regarding MBS, Class B 48-hours is on Tuesday and Class C on Thursday.
Today’s economic calendar is light and includes Empire manufacturing for July, and remarks from Fed Chair Powell and San Francisco Fed President Daly. We begin the day with Agency MBS prices slightly worse from Friday's close and the 10-year yielding 4.24 after closing last week at 4.19 percent.
(Warning, PG. No complaints please)
Two old ladies were sitting on a park bench when a man in a trench coat came up and flashed them.
One old lady immediately had a stroke.
The other one couldn’t quite reach.
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