9.26.24 Origination Forecasts; Silk Title's Marc Trachtenberg on Title Technology; Capital Markets Wrap

Thanks to Silk Title Co. Silk is for lenders who have centralized operations, are tech driven, process oriented, focused on the borrower experience, standardized in their approach, and most importantly… collaborative.

Transcript

We’re all following Hurricane Helene and its impact on lives and housing stock in the news. Will Rogers famously said, “All I know is what I read in the newspapers.” (He also said, “Politics has got so expensive that it takes lots of money to even get beat with.”) I could say, “All I know is what I read in predictions.” iEmergent, a forecasting and advisory services firm for the financial services, mortgage and real estate industries, announced a downward revision of its 2024–2026 U.S. Mortgage Origination Forecast. “Updated to reflect ongoing economic conditions, iEmergent now expects lower-than-anticipated growth for the next two years, particularly in the purchase mortgage market, while refinance volumes are projected to rise due to a gradual decline in mortgage interest rates.” Meanwhile, I received a short, harsh prediction from someone keeping their finger on the pulse of mergers and acquisitions: “Those lenders that do not have servicing portfolios and are running low on cash are going to race to the bottom on rates, lose more money, and be closing their doors if they don't sell.” (Today’s podcast is found here and this week’s is Sponsored by Silk Title Co. Silk is for lenders who have centralized operations, are tech driven, process oriented, focused on the borrower experience, standardized in their approach, and most importantly… collaborative. Listen to an interview with Silk Title’s Marc Trachtenberg on all things title, from how the process can be moved forward in the origination process, to the room for evolution, to what makes for a great title process, among other things.)

Lender and broker software, services, and loan programs

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As weather events continue to increase in frequency and intensity, many individuals and businesses are met with tremendous hardships due to these climate-related incidents. Federal regulators have also put an increased focus on understanding the implications climate is having on the mortgage market. As a result, lenders and servicers need to better understand climate impact and implement processes and solutions to help mitigate potential risks. Join ICE for an informative webinar on October 10 to learn how climate-related events are impacting home affordability, insurance costs and interest rates. As the regulatory focus on climate risk management grows and weather-related events further impact lenders’ loan portfolio, learn how ICE data and solutions can provide you with the actionable insights to help manage and mitigate potential risk.

Did you know in August, annual house price appreciation nationally slowed for the eighth consecutive month, inching closer to the pre-pandemic historical average? It's true! In case you missed it, First American Data & Analytics recently released its August Home Price Index (HPI) report where you can receive the most current insights into home price changes at the national, state, and metropolitan CBSA levels. In the report, First American Chief Economist Mark Fleming says, “Housing demand remains strained under the pressure of elevated mortgage rates and high prices, while for-sale inventory has increased compared to last year. Sluggish demand combined with increasing supply is a recipe for cooling home price appreciation." Download a full copy of the report to learn more valuable insights.

Fly fishing is a difficult sport to master, but for a skilled angler, there’s nothing more satisfying than matching the right combination of rod, leader, tippet, and fly to the right fish (just ask these world record holders). Independent mortgage bank Loanhouse is giving its retail loan officers a taste of that satisfaction by empowering them to match borrowers with just the right combination of product and investor using LoanPASS. Says Founder and CEO Nelson Haws, “We’re putting originators first by allowing them to pick the best investor in the market for any loan and earn the extra margin that most lenders pocket for themselves.” Read the case study to discover how LoanPASS’ rules-based loan decisioning and pricing engine helps Loanhouse maximize execution while reeling in business.

“The Floify team is heading to Las Vegas for our first ACUMA Annual Conference next week and we’ll bring a lot to share and show our credit union partners on how the right point of sale (POS) platform (Floify Lender Edition) can rock your world. But don’t just take our word for it. Jeffrey VanderVorste, senior mortgage originator at Westerly Community Credit Union (WCCU) in Rhode Island, has been using Floify since 2022 and notes, ‘Floify has transformed the mortgage experience for our members. I love the platform, and I’m one of its biggest supporters here at the credit union. It's definitely made my job easier and improved how our customers view and interact with us.’ That’s a pretty rock-solid review (thanks, Jeff, we’re big fans of your work, too!). Say hello to Jason Mapes at ACUMA or download the WCCU case study to see what Floify can do for you.”

Wondering if MQMR can handle both your AML Audit and AML Risk Assessment? Here's the difference: AML risk assessments identify and evaluate your risks and should be handled internally. You know your company’s products, services, and risks best. Use resources such as the CSBS’ Assessment and the Multi-State Mortgage Examination Manual to help guide your evaluation. On the other hand, an AML audit requires an independent and qualified compliance inspector, making sure you’re following the rules. That's where MQMR steps in, we specialize in independent audits! Keeping these roles separate ensures objectivity and credibility; it's not best practice for us to "check our own work.” So, while we’re always here to help, we'll leave the risk assessment to you but provide guidance and recommendations for improvements as part of the audit. If it's been 12-18 months or more since your last AML Audit, give MQMR a call!

Turns out, regardless of the rate, people still want to buy houses. It can be quite confusing if you're not a mortgage pro. "What would my monthly payment and cash to close look like if I wanted to get an FHA loan versus a conventional? How about if I put $15,000 more down? Surely my payment will change significantly. Hey Loan Officer, I'm going to an open house and want to have a letter in hand but I need it in these amounts..." With QuickQual by LenderLogix, these questions are answered right on your borrower's phone, and we're not talking a Google search. Set the parameters, fire it off to your borrower, and watch them comfortably shop for the home of their dreams.

Elevate your accounting function today! As an independent mortgage bank, your focus should be on growth, not accounting headaches. 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 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 about outsourced accounting as a mortgage bank.

Broker and correspondent products

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One of the priorities at Newrez Correspondent is to share product and process improvements that demonstrate our valued partnership with you. Whether it be newly originated loans from our correspondent customers, or through MSR acquisition in bulk, AOT, co-issue or direct acquisition, our servicing portfolio grew by 28% Q2 over Q1, ranking Newrez #2 as a non-bank servicer. In addition, we sub-service for many lenders/investors and would like to discuss this opportunity if you are considering a change in your servicing strategy. Next up is expanding our product line to include Freddie Mac® GreenCHOICE Mortgages® as well as piloting the Ginnie Mae® PIIT Co-Issue option. Learn more by contacting your Regional Sales Manager today. Lastly, thank you for trusting in Newrez Correspondent, and don’t forget to schedule a meeting with us at the National MBA Conference in Denver, October 27-30.

Boost your bottom line with Planet, your one-stop shop for end-to-end solutions. Meet with us at MBA Annual, Oct 27-30 in Denver, to discover how we can drive year-round correspondent growth and profitability in all market cycles. From niche products like renovation, manufactured home lending, and USDA, to co-issue for consistent MSR pricing and fast funding, we offer full-service flexibility. Whether you need best effort, mandatory AOT, delegated, or non-delegated delivery, we’ve got you covered. As the fastest-growing non-prime sub-servicer, we provide unmatched, best-in-class sub-servicing and asset management. Start your path to performance with Planet. Contact your Regional Sales Manager or book a meeting at MBA Annual. Put Planet to work for you.

Morsels from the government loan program world

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FHA, VA, and USDA program consistently account for 20-30 percent of lender’s applications. VA servicing values have dropped dramatically, but FHA loans still continue to be very profitable for most lenders. What’s happening out there?

Most, if not all, government loans end up in Ginnie Mae’s mortgage-backed securities (MBS) portfolio which grew to $2.63 trillion in August, including $41.2 billion of total MBS issuance, resulting in $13.7 billion of net growth. For the 2024 calendar year to date, Ginnie Mae has supported the pooling and securitization of more than 429,000 first-time homebuyer loans. Visit Ginnie Mae Disclosure for more information on monthly MBS issuance, Unpaid Principal Balance (UPB), real estate mortgage investment conduit (REMIC) monthly issuance, and global market analysis.

The Federal Housing Administration (FHA) posted a draft Mortgagee Letter (ML), Adoption of Federal Flood Risk Management Standard (FFRMS) for Minimum Property Standards (MPS) in Special Flood Hazard Areas (SFHA), on the Single Family Housing Drafting Table for public review and feedback. Interested stakeholders are encouraged to thoroughly review the draft ML and provide feedback through October 7, 2024.

Earlier this year, in FHA INFO 2024-20, FHA announced the Department of Housing and Urban Development’s (HUD) Office of Environment and Energy’s (OEE) publication of the final rule, Floodplain Management and Protection of Wetlands; Minimum Property Standards for Flood Hazard Exposure; Building to the Federal Flood Risk Management Standard. This final rule revises HUD’s regulations governing floodplain management and the protection of wetlands to implement the FFRMS in accordance with Executive Order 13690, “Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input,” dated January 30, 2015. 

“This draft ML proposes updated guidance for implementing the provisions of the final rule by amending Minimum Property Standards (MPS) for all newly built single-family residential structures, with the exception of manufactured homes, being financed through the FHA Single Family program. The draft ML proposes guidance to implement within FHA’s Minimum Property Standards a requirement that the lowest floor in newly constructed dwellings located within the 1-percent-annual-chance (100-year) floodplain be built at least two feet above the base flood elevation. This elevation standard would be applicable to FHA-insured mortgages on homes that are new construction with building permit application submission, or their equivalent dated on and after January 1, 2025.”

“HUD estimates that elevating new construction dwellings in flood-prone areas to meet the FFRMS could lead to homeowner savings of $56.4 million to $324.3 million over the expected 40-year economic life of the properties. These savings will result from lower flood insurance premiums, reduced property damage, avoidance of relocation, avoidance of temporary housing expenses, and avoidance of lost income due to flooding.

For more information on the FFRMS, access HUD’s FFRMS Final Rule Webinar Series, and read FHA INFO 2024-20, FFRMS FAQs and the final rule in its entirety.  

USDA Rural Development posted Fiscal Year 2025 Conditional Commitment Notice Bulletin. Review the Single-Family Housing Guaranteed Loan Program (SFHGLP) Conditional Commitment process. FY 2025 will begin October 1, 2024, and end at the close of business September 30, 2025.

Are you with a company that does a lot of VA loans? Compared to FHA loans, VA loan pricing has “taken it on the chin” lately, but the program is still popular. If you have a client using the VA-guaranteed home loan benefit, there have been some recent changes that have affected Veterans using the VA-guaranteed home loan. Here are some details to show you how these new changes may impact a borrower. 

Over one million borrowers with FHA-insured mortgages have utilized partial claims to bring their mortgage current and avoid foreclosure. Partial claims become due and payable when the FHA-insured mortgage is sold, refinanced, or otherwise terminated. FHA posted a draft Mortgagee Letter (ML), Partial Claim Document Recording and Payoff Statements, on FHA’s Office of Single-Family Housing Drafting Table for public review and feedback. This draft ML proposes to establish a new procedure requiring mortgagees to obtain partial claim payoff statements from HUD’s SMART Integrated Portal (SIP) and provide it when they receive a payoff request on an existing FHA-insured mortgage.

A coalition of housing trade associations (like the American Bankers Association, Housing Policy Council, and National Mortgage Servicing Association) oppose the Federal Housing Administration’s (FHA) latest mortgage servicing Mortgagee Letter, Modernization of Engagement with Borrowers in Default. Together, the trades expressed concern that FHA’s proposed changes to the borrower engagement process would increase complexity and level of difficulty to execute FHA’s new guidance, and thereby increase the associated cost and risk for program participants.

As posted in AmeriHome Correspondent 20240902-CL Product Announcement, on 9/9/2024, USDA announced that funding will not be available for a short period of time at the beginning of FY 2025. During the funding lapse, Mortgage Loans with a Conditional Commitment reflecting “subject to the availability of commitment authority” will remain eligible for purchase by AmeriHome Correspondent.

Capital markets: yin & yang

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With the recent 50 basis point rate cut by the Federal Reserve, and expectations of additional rate cuts by end of year, there has never been a better time to review how these cuts affect mortgage rates. In MCT’s post, How Does the Federal Reserve Affect Mortgage Rates?, its experts review the function of the Federal Reserve and how the Fed impacts mortgage rates and mortgage-backed securities. The article also reviews how the Federal Reserve leverages short term interest rates, purchasing of assets, and liquidity to achieve their dual mandate of maximum employment and stable prices. MCT is focused on providing articles like this along with timely updates to help the capital markets community improve is industry knowledge and bottom line. Join MCT’s newsletter to ensure you receive timely articles and updates as they come out.

We have talked about the Fed ad nauseam in recent weeks (months? years? eternity?), but it is important to understanding the impact on the economy and mortgage rates. With the 50-basis points rate cut last week, investors are growing more confident that the Fed will be able to engineer a soft landing for the U.S. economy. So, individuals and companies will continue to spend, therefore strengthening the economy and pushing rates up. Make sense?

Ahead of some important economic releases today and tomorrow, this week has been dominated by Treasury supply, and yesterday's $70 billion 5-year note auction was received well, which was also the case with Tuesday's 2-year note offering. Internationally, China doubled down on stimulus measures cutting the interest rate charged on its one-year policy loans by a record 30-basis points, bolstering a sweeping program to revive confidence in the economy.

New Home Sales came in better than expected at 716k in August versus 700k expectations to register -4.7 percent month-over-month when the figure was expected to come in down 5.3 percent. That brings sales to a seasonally adjusted annual rate of 716k units from an upwardly revised 751,000 in July. On a year-over-year basis, new home sales were up 9.8 percent, aided by lower pricing and sliding mortgage rates. Notably, the South was the only region that saw a pickup in sales month-to-month. Lower mortgage rates should eventually provide a boost to new home sales

Today’s economic calendar kicked off with a bevy of releases, including durable goods orders (0 percent, stronger than expected), the final look at Q2 GDP (3.0 percent, as expected), and weekly jobless claims (218k, historically low but little changed). Later today brings pending home sales for August, Kansas City Fed manufacturing for September, Freddie Mac’s Primary Mortgage Market Survey, and several Treasury auctions that will be headlined by $44 billion of 7-year notes. Markets will also receive Fed remarks from New York President Williams, Vice Chair for Supervision Barr, Boston President Collins, Governor Kugler, Minneapolis President Kashkari, Governor Bowman, and Governor Cook. We begin the day with Agency MBS prices unchanged from Wednesday’s close, the 10-year yielding 3.78 after closing yesterday at 3.78 percent, and the 2-year at 3.56.

Two avid fishermen go on a fishing trip. They rent all the equipment: the reels, the rods, the wading suits, the rowboat, the car, and even a cabin in the woods. They spend a fortune.

The first day they go fishing, but they don't catch anything. The same thing happens on the second day, and on the third day. It goes on like this until finally, on the last day of their vacation, one of the men catches a fish.

As they're driving home, they're really depressed. One guy turns to the other and says, "Do you realize that this one lousy fish we caught cost us fifteen hundred dollars?"

The other guy says, "Wow! It's a good thing we didn't catch any more!"

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, “Lenders and Vendors Must Pay to Play.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2024 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman. The views and opinions in this newsletter are mine alone unless otherwise specifically stated herein.)