7.24.24 Existing Homes; Better's Chad Smith on LO Comp; Advanced Indicators

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

In Utah every year, July 24th commemorates “Pie and Beer Day,” the day in 1847 when the first group of pioneers reached the Salt Lake valley and their leader Brigham Young declared, “This is the right place.” Did I say “pie and beer” day? I meant Pioneer” Day. Sorry. 700 miles on Highway 80 to the west, housing issues continue. Do you think it’s easy, if you’re rich, to buy up the land and build a city? Nope, as billionaires are finding out in California: “Even spending hundreds of millions of dollars isn’t enough to build a city without giving the locals time to get used to the idea or see an environmental impact report.” Hey, if you don’t have the wealth to create a city, or have a private jet that goes overseas but have 60 grand burning a hole in your pocket and like to travel, next year you can jump on a Pan Am flight (yes, you read that right), and do the “Tracing the Transatlantic” itinerary: from JFK it stops in Bermuda, Lisbon, Marseille, London and Foynes, Ireland… All places that have significance to Pan Am and were on the airline’s old routes. (Today’s podcast is found here and this week’s is sponsored by LoanCare, known for delivering superior customer experience as a mortgage subservicer through personalization and convenience, and supporting MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with Better’s Chad Smith on LO comp, tech trends for originators, and borrower preferences.)

Lender and broker software, products, and services

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Yesterday, Optimal Blue announced the launch of three AI capabilities and an ongoing strategy focused on using AI to address real-world challenges for mortgage lenders. In a press release, the company detailed the new AI assistants, which are available in its CompassEdge hedging and loan trading platform. These capabilities (a Profitability Assistant designed for chief financial officers, a Projections Assistant designed for capital markets leaders, and a Trade Assistant designed for leaders of a lender’s trading desk) all help lenders reduce manual processes associated with profitability attribution, calculating projections, and optimizing trade selection. In alignment with the company’s mission to help lenders maximize profitability on every loan, the AI assistants are available to CompassEdge users for no additional fee. Read more in the press release.

Asking for credit card info over the phone is awkward, but calling the borrower back to ask for it again because you wrote the number down wrong is even worse. With Fee Chaser by LenderLogix, you'll never have to do that again. Borrower gets a text with a link to pay the fees you're collecting upfront. They click the link, pay on their device, and everyone gets a receipt upon completion. Schedule a demo to check it out. 

Sagent’s EVP of Servicing shares the Top 4 planning questions for servicers before 2025. Navigating the future of mortgage operations is a challenge even for seasoned leaders. With the economy resembling pre-pandemic stability, we must ask: Are servicers ready for the next hardship cycle? It’s without question that the pandemic taught us the importance of swift adaptability, especially when it comes to technology and choosing the right partner. For more on this topic, check Sagent’s EVP, Servicing Perry Hilzendeger’s recent piece with HousingWire where he expands on the strategy of effective communication and flexible systems that help servicers support homeowners through any economic shift. Click the link here and then reach out to the team with questions.

“Citi Correspondent Lending’s commitment to supporting underserved communities and diverse markets remains a priority. You may already be familiar with our very successful proprietary HomeRun program that was introduced last year. Soon we’ll be launching a new program that further expands options for low- to moderate-income borrowers purchasing or refinancing primary residences within select markets. This program offers features that include closing cost assistance and pricing premiums for qualified borrowers. We’re incredibly excited to discuss how this program can help make the path to homeownership more affordable for your borrowers. To learn more, reach out to your Citi Account Executive  or complete our Prospective Correspondent Questionnaire.”

Have you been using expensive third-party tools for sales automation or paying your CRM extra money? Usherpa just changed all that with Pipelines: exciting new functionality that offers built-in, best-practice marketing and lead generation workflows that can easily be customized. Usherpa users get Pipelines at no extra cost and can build as many as they want. “The nation’s top LOs consistently outperform their peers because they have a better sales process. Now, every LO can have a winning process and win more business,” said Usherpa CEO Chris Harrington. Corporate stakeholders can create Pipelines with call scripting and push to their LOs. Usherpa delivers the daily tasks to loan officers via in-platform dashboard, email, and mobile app, and provides detailed reporting on each LO's usage for management purposes. Schedule a demo with Usherpa to see this groundbreaking new tech.

In three months, Harry’s mother-in-law is moving in. He’s facing a cascade of realities: giving up his home office, forfeiting his garage storage and installing a ramp off the kitchen door. With interest rates stubbornly high and his kids about to start school, trading up to a larger house is a nonstarter. Luckily, Harry’s one of 48 million Americans sitting on tappable home equity. In 10 days, Harry remotely closes a home equity line of credit, calls a contractor, and pulls the trigger on an ADU for the backyard. Crisis averted, and all from his home office on his schedule. This scenario is a growing reality for many families with changing housing needs. If your home equity pipeline doesn’t support real-time decisioning that helps you close quickly, you’re missing out on borrowers like Harry who need a HELOC without the hoops. Learn how Covius’ Loanscape Home Equity Report can streamline your client’s experience and win market share. 

Join ICE for the August Mortgage Monitor webinar where you’ll gain critical insights into housing and mortgage market trends. During this informative webinar, ICE economic and product experts discuss borrower demand, housing affordability, interest rates, available equity and other factors that impact your lending strategies. The information is based on the most current analysis of ICE’s industry-leading U.S. mortgage, housing, and property data assets. It’s free for you to attend the webinar: Just sign up here. The webinar will be held Thursday, August 1, from 2 – 3 p.m. ET.

STRATMOR’s Consumer Direct Workshop

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STRATMOR Consumer Direct Workshop, live in Dallas! After a hiatus of several years, STRATMOR Group is bringing its popular Consumer Direct Workshop back to a live format this fall. The connections made between lender peers allow leaders to share ideas and develop strategies for the benefit of all as we navigate the downturn that won’t seem to end. Join STRATMOR Group experts and peer lenders in Dallas, TX, November 6 and 7, to learn how to better understand the needs of purchase borrowers, craft marketing messages that will appeal to them, tweak processes for purchases, and train LOs to close this business. The workshop will also focus on customer retention and household penetration for servicers and depositories.

The time to develop a strategy for attracting, nurturing, converting, and closing purchase business to hold or grow your market share is now. The cost to attend is just $2,500 for TWO Consumer Direct lending executives from your company. Learn more and reserve your seat today.

Disaster & catastrophe updates

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As homeowner’s insurance continues to be a huge burden for any owner, disasters continue throughout the year and throughout the nation. (STRATMOR has a blog is titled, “Catastrophe and Climate Risk Is Only Increasing”.)

FEMA has been busy. In the Midwest there’s Iowa Severe Storms, Flooding, Straight-line Winds, and Tornadoes DR-4796-IA. To the east is West Virginia DR-4787-WV. There’s Texas Hurricane Beryl DR-4798-TX. And New Mexico South Fork Fire and Salt Fire DR-4795-NM.

On 7/5/2024, with Amendment No. 1 to DR-4796, FEMA declared federal disaster aid with individual assistance to three additional Iowa counties; Buena Vista, Cherokee, and O’Brien affected by severe storms, flooding, straight-line winds, and tornadoes from 6/16/2024, and continuing. See AmeriHome Mortgage 20240702-CL Disaster Announcement for inspection requirements.

On 7/3/2024, with Amendment No. 1 to DR-4787, FEMA declared federal disaster aid with individual assistance to seven West Virginia counties affected by severe storms, flooding, landslides, and mudslides from 4/11/2024, to 4/12/2024. See AmeriHome Mortgage 20240701-CL Disaster Announcement for inspection requirements.

AmeriHome Mortgage has posted multiple Texas Hurricane Beryl Disaster Announcements detailing inspection requirements. On July 12, 2024, with Amendment No. 1 to DR-4798, FEMA declared that federal disaster aid with individual assistance has been made available to 15 counties in Texas to supplement recovery efforts in the areas affected by Hurricane Beryl from July 5, 2024, to July 9, 2024. See AmeriHome Mortgage 20240706-CL Disaster Announcement.

On July 13, 2024, FEMA declared two additional counties, Fort Bend and Nacagdoches, with Amendment No. 2  posted in AmeriHome Mortgage 20240707-CL Disaster Announcement.

AmeriHome Mortgage 20240703-CL Disaster Announcement references 5 additional Counties Granted IA on 7/8/2024, with Amendment No. 14 to DR-4781. FEMA declared federal disaster aid with individual assistance to 5 Additional Counties, Anderson, Panola, and Rusk Counties for Individual Assistance already designated for Public Assistance.

AmeriHome Mortgage 20240705-CL announces that on 7/11/2024, with Amendment No. 3 to DR-4795, FEMA declared federal disaster aid with individual assistance has been made available to New Mexico’s Rio Arriba and San Juan Counties affected by the South Fork Fire, Salt Fire, and flooding from 6/17/2024, and continuing.

On 7/9/2024, with Amendment No. 2 to DR-4796, FEMA declared federal disaster aid with individual assistance to Iowa’s Woodbury County affected by severe storms, flooding, straight-line winds, and tornadoes from 6/16/2024, and continuing. View AmeriHome Mortgage 20240704-CL Disaster Announcement for more information.

PHH Mortgage issued Disaster Alert Announcements for the State of Iowa and West Virginia.

Capital markets: yield curve inversion continues to lessen

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Let me give you a little rundown from yesterday. Bond prices rose for the first time in three days (meaning rates went down) after a $69 billion 2-year note sale from the U.S. Treasury met excellent demand ahead of today's $70 billion 5-year note auction. Separately, the Richmond Fed Manufacturing Index in July hit the lowest level since May 2020.

But the big release on the day was Existing Home Sales in June, which declined 5.4 percent month-over-month (to a seasonally adjusted annual rate of 3.89 million) versus an estimated 3.2 percent month-over-month decline and a 0.7 percent month-over-month decline previously. On the bright side, as far as affordability is concerned, months’ supply (1.32 million) increased to 4.1 from 3.7 at the current sales pace, the highest since May 2020. The median price climbed to $426.9k, a record high, from $417.2k. That marks the twelfth consecutive month of year-over-year price gains.

Unlike during the housing crisis, the current slowdown in activity hasn’t been accompanied by the dramatic drop in prices seen in the past. Accordingly, the issue with affordability isn't likely to go away anytime soon. Per BOK’s Chris Maloney, “Of the 293 months since the end of 1999, only three have seen the median price of an existing home exceed that of a new home. The only other two instances were seen in June 2021 and June 2005. Both times, the price of existing homes dropped by about 2 percent over the following six months, while that for new homes rose about 8 percent.”

Today’s economic calendar kicked off with mortgage applications decreasing 2.2 percent from one week earlier, according to data from the Mortgage Bankers Association. We’ve also received advanced indicators for June, none of which moved rates: the goods trade deficit, retail inventories, and wholesale inventories. Later today brings preliminary July S&P Global manufacturing and services PMIs, several Treasury auctions that will be headlined by $30 billion 2-year FRNs and $70 billion 5-year notes, and (despite the blackout, so don’t hold your breath) Dallas Fed President Logan and Fed Governor Bowman will give opening remarks at an event hosted by the Dallas Fed. Outside of the U.S., the Bank of Canada will be out with its latest monetary policy decision, where a 25 basis points cut to 4.5 percent is expected.

We begin the day with Agency MBS prices a shade better than Tuesday’s close, the 10-year yielding 4.23 after closing yesterday at 4.24 percent, and the 2-year is at 4.41.

(Thank you to Bruce S. for this one.)

I've sure gotten old!

I have outlived my feet and my teeth.

I've had two bypass surgeries, a hip replacement, new knees, fought prostate cancer and diabetes.

I'm half blind, can't hear anything quieter than a jet engine, take 40 different medications that

make me dizzy, winded, and subject to blackouts.

Have bouts with dementia.

Have poor circulation; hardly feel my hands and feet anymore.

Can't remember if I'm 85 or 92.

Have lost all my friends. But, thank God, I still have my driver's license.

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. The current blog is titled, “Catastrophe and Climate Risk Is Only Increasing”. The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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