12.18.24 Change as a Constant; Marvin Chang on Product Management; Fed Decision Day

Thanks to today's podcast sponsor, Visio Lending. Visio is the nation's premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Visio is fast, simple, and dependable when it comes to financing rental properties. They believe time is money, and strive to be upfront and consistent about their qualifications. Using a simple DSCR rather than a complicated NOI calculation, there are no tax returns or personal financial statements, and their pricing is set, so you always know your rate. Learn more, including about Visio’s top-notch broker program, at https://www.visiolending.com/. 

Transcript

“When a woman says, ‘What?’ it’s not because she didn’t hear you. It’s because she’s giving you a chance to change what you said.” Things are always a changin’. Now the press is filled with another potential government shutdown looming. (My money is on “kick the can down the road.”) At the state level, how much should, or can, a state step in to address free market economics for renters and home buyers? Anyone interested in that question is watching Oregon’s state-level proposals addressing them. Is the government better at free market economics than the free market itself? With prospective first-time home buyers facing an affordability crisis, many families (and especially young people) have opted to rent for now. But for some, the dream of homeownership will not die easily. Deciding whether it's more financially sound to rent or buy depends on so many factors that it can be tough to do the math. (The NY Times created this handy financial calculator to do just that.) But as any appraiser knows, people don't make these decisions purely based on numbers. They're also considering schools, neighborhoods, commutes, outdoor space, and other lifestyle factors. (Today’s podcast can be found here and this week’s podcasts are sponsored by Visio Lending. Visio, which has a top-notch broker program, is the nation's premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Hear an interview with Duke University’s Marvin Chang on how mortgage lenders should be thinking about product management in 2025.)

Employment & transitions

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“Size. Culture. Support. These are the key ingredients in the secret sauce at Nations Lending. Our size gives you the freedom to expand your reach without competing against other branches in your local market. Our culture empowers you to have a voice in the decisions that impact your business. And our support is proactive, with tailored marketing, competitive pricing, and a network development designed to help you excel. Do you want to wait for business to get better, or do you want to get better at your business? To learn more about our exciting opportunities and the unique advantages of joining our team, reach out to our Divisional Managers. In the Western Division, contact Mike Towery at 541-951-3559 or Sondra Bialkowski at 480-201-8033. In the Eastern Division, contact Tim Dowling at 815-245-3052 or Andrew Carter at 937-818-3623. Discover how Nations Lending can help take your business to the next level.”

(As a reminder, anyone searching for employment can post their resume at no charge at www.lendernews.com, and potential employers can view all resumes for several months for only $75.)

Lender and broker software, services, and products

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NEW EBOOK: Tailored to Your Needs: How to Choose the Right Mortgage POS for Your Unique Business Challenges. Are you confident your POS will deliver in 2025? Now more than ever, lenders are opting for free technology that falls short or pricey subscriptions that their LOs never adopt and that integrate clumsily with their systems. What if there was a better option? Maxwell created its latest eBook to simplify your point-of-sale technology search. In this eBook, you’ll learn the 5 non-negotiable boxes your POS should check, market considerations to guide your feature wish list, and examples of how lenders have seen real results by finding the right POS. By the end of this read, you and your team will know exactly how to pursue POS technology to solve your unique business challenges. Click here to download Tailored to Your Needs: How to Choose the Right Mortgage POS for Your Unique Business Challenges. 

Looking forward to 2025, it’s vital to stormproof your business for any future market. One key factor? Don’t put a pause on growing Realtor relationships. With new Realtor commission structures, it’s more crucial than ever to emphasize your commitment to providing value. Usherpa equips you with the tools to stay ahead: automated marketing campaigns, co-brandable Local Housing videos with monthly stats for 100 major metros, business-building alerts, and lead-generating property flyers and websites. Maximize visibility and strengthen your referral network by utilizing Usherpa’s SmartCRM to maintain strong relationships as the market shifts, ensuring your success in any environment. Schedule a demo today!

“At Optimal Blue, we want to express our sincere gratitude to our clients and partners across the industry. We take pride in innovating and delivering products that directly address the real-world challenges faced by mortgage lenders. This year, we launched generative AI capabilities designed for secondary-market-specific use cases, helping lenders maximize profitability on every loan transaction. Our mission continues in 2025. Join us in February for our inaugural user conference, the Optimal Blue Summit. Our packed agenda caters to everyone in the mortgage industry, from originations to trading. This must-attend event will also showcase a collection of new product innovations to help you get ahead in 2025. Don’t miss out – grab your discounted ticket before December 20 with code AHEAD25 at Summit.OptimalBlue.com. On behalf of the entire Optimal Blue team, we wish you a happy holiday season. We look forward to the year ahead as your trusted partner.”

Your nCino Mortgage POS just got a new SUPERCHARGED integration! Truv now offers seamless income, employment, AND asset verifications embedded directly within nCino’s Mortgage POS. Borrowers can complete verifications within the loan application (no external links or extra steps) creating a faster, friction-free experience. Lenders gain real-time access to accurate data from payroll providers and over 13,000 bank connections, streamlining workflows and boosting efficiency. Activate Truv’s embedded solution today for a simplified, seamless mortgage process! Learn more and see it in action!

Many homeowners don’t know how much housing wealth they have, but ICE is helping to bridge the knowledge gap with just a tap. ICE is combining its customer-engagement app with its property valuation tool to inform homeowners how much equity they have, and to encourage them to explore equity lending opportunities with their servicer. The newly announced integration between ICE Servicing Digital and the ICE Validate property valuation tool will 1) provide homeowners a current estimate of how much tappable equity they have in their home and 2) give them the ability to proactively complete a self-guided valuation of their property… without having to start a formal application. What’s more, this all happens in the same banking app they use to manage their mortgage, making it quick and easy for them to explore the value of their home. Read more from ICE here.

Wholesale, correspondent, and pricing news

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LoanStream wants you to Boost Your Volume and Close Out the Year with a Full Pipeline with their Holiday Specials! Up to 60 BPS Price Improvements (when combined with select specials on qualifying loans). 25 BPS Price Improvement on Government (FHA/VA), Non-QM and Closed End Seconds. Plus, Select Price Improvements: 35 BPS on Government Loans FICO 680+ and Loan Amount $250K+ (Excludes DPA). Specials are valid for loans locked 12/1/2024 through 12/31/2024. Offers subject to change at any time, terms and conditions apply. Restrictions apply so contact your AE to learn more.

Rocket ProSM TPO continues its impactful December Presence campaign, helping its partners finish the year strong with several exciting updates. These include new 15- and 30-year terms for its Home Equity Loan product and the extension of the popular 24 Takeoff program through December 29, featuring a 24-bps credit on conventional, VA and FHA purchases and refis, plus an extra 20 bps credit on eligible VA and FHA loans. The Fast 15 Guarantee also promises eligible loans will be clear to close in 15 days or the client will receive $2,500. Correspondent partners also benefit from a waived $999 acquisition fee. Additionally, from December 16 to 31, for every 100 Home Equity Loan applications that close by January 15, Rocket will donate $2,500 to Rebuilding Together. If you’re interested in learning about these offerings and more, contact Rocket Pro TPO.

Lender & investor FHA and reverse news keeps coming

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Government programs consistently account for 20 percent of overall applications. So, it’s good to know who’s doing what out there.

JMAC's new Down Payment Assistance program provides an FHA first with a 3.5% or 5.0% DPA that can go toward the down payment and/or closing costs: no income limits, borrower does not need to be a First-Time Home Buyer, lower credit scores and no MAX DTI with AUS approval, manual underwriting requires a FICO score of 660, with max. DTI 45%, conforming or High-Balance allowed, one set of FHA Guidelines with minimal overlays, priced to require less cash to close, fund never runs out, available in every state JMAC is licensed, and solid alternative to bond/state agencies.

LoanStream Wholesale posted FHA’s recent announcement regarding FHA’s recent announcement if an increase in the maximum mortgage limits for FHA-insured loans. These updates are effective for case numbers assigned on or after January 1, 2025.

As recently noted in the Commentary, United Wholesale Mortgage (UWM) announced it removed Loan Level Pricing Adjustments (LLPAs) on FHA, VA, and USDA loans for borrowers with a FICO score of 600 and above. Available now until March 31, 2025, this initiative aims to improve pricing by up to 150bps for borrowers who are typically impacted by the highest LLPAs and provides brokers with a competitive edge. With the removal of these adjustments, borrowers may increase their buying power, find it easier to purchase a property or lower their interest rate to secure a larger or more desirable home.

And UWM announced its “60bps for 60 Days” program, providing independent mortgage brokers with a significant 60 basis point pricing advantage on loans. Effective immediately, all UWM broker partners can apply this 60bps incentive to any conventional or government loan for borrowers with a FICO score of 720 or higher. This program is designed to help independent mortgage brokers remain competitive in the current market landscape. This announcement follows UWM’s recent move to eliminate Loan-Level Pricing Adjustments (LLPAs) on FHA, VA, and USDA loans for borrowers with a FICO score of 600 and above.

Make reverse mortgages a bigger part of your business with Ready Reverse™ from Plaza Home Mortgage®. This streamlined process keeps you connected through the whole origination journey and is specialized for Reverse Mortgages. Here’s why you’ll love Ready Reverse: No set-up fees, Speedy pre-quals and closings, Webinars and videos to guide you through the process of this unique loan program, Managed title and closing services to ensure conditions and demands are met, Experienced guidance from our reverse mortgage pros who specialize in introducing reverse mortgages to traditional originators and Support for compliant counseling, application, redisclosure and closing packages so you can focus on the most important thing, your borrowers.

Capital markets: are we heading for an ARM market?

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It’s Fed decision day today, where a 25-basis points rate cut is a near-certainty. We learned yesterday that U.S. retail sales increased more than expected in November, bolstered by a surge in car purchases and online shopping as the holiday-purchase season kicked off. That is yet another data point aiding the narrative that the Fed should pause or slow the pace of rate cuts in 2025 (there is currently a 16 percent probability of another 25-basis points cut at the January FOMC meeting).

Investors are anticipating an additional 75-basis points in Fed rate reductions by the end of 2025, with the 2/10-year Treasury curve projected to steepen to a positive 40 basis points by midyear, driven by movement at the short end of the yield curve. This environment suggests shorter-duration mortgage products may again deliver the best relative performance, as they did in 2021 and 2022, with the Fannie Mae 15-year leading year-to-date performance. A steeper yield curve could also widen 30-year mortgage spreads, prompting investors to favor 10-, 15-, and 20-year securities as safer options.

How far rates (including mortgage rates) can fall depends not only on inflation but also on the “neutral rate” of interest, the level at which monetary policy neither stimulates nor restrains the economy. While the neutral rate was long thought to be low, the COVID-19 pandemic upended that assumption, sparking a fierce debate among policymakers and market participants. Estimates of the neutral rate vary widely, from as low as 2.4 percent to as high as 4.5 percent, creating divergent views on whether the Fed’s three-month-old easing cycle is in its early stages or nearing its end. Even within the Fed, estimates for the long-run rate (a proxy for the neutral rate) range from 2.375 percent to 3.75 percent, which is the widest disparity since the Fed began publishing these figures more than a decade ago. Investors will closely watch whether the median estimate rises and what the range of opinions among policymakers does.

Today’s economic calendar began with mortgage applications decreasing 0.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. We’ve also received the Q3 current account deficit, as well as housing starts and building permits for November (1.289 million and 1.50 million, respectively, and slightly higher than expected). And yes, this afternoon brings the latest FOMC decision, with the Statement, and updated Summary of Economic Projections (SEP) due for release at 2:00pm ET, followed by Chair Powell’s press conference. Eyes will be glued on the dot plot for the number of cuts projected for next year, after there was a total of 100-basis points of 2025 easing in the September forecasts. We begin Wednesday with Agency MBS prices roughly unchanged from Tuesday’s close, the 2-year yielding 4.25, and the 10-year yielding 4.42 after closing yesterday at 4.38 percent.

How about a little fun holiday from the USAF band? (Thanks to Robert K. for this one – definitely entertaining.)

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 STRATMOR blog is “A Lender’s Personal Touch Can Help After a Disaster.” 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.)