1.3.25 What 2025 Has in Store; A&D Mortgage's Victor Kuznetsov on Non QM; Lackluster Construction Spending

Thank you to The BIG Point of Sale, which offers a highly configurable, easy to install point of sale solution. Their simplified consumer workflows and web-based portals allow for consumers and loan originators to collaborate with the back-office team to keep everyone informed throughout the loan process.

Transcript

Even the calendar knows 2025 starts with W-T-F. We didn’t hit our stride watching Tiger King until a few months into 2020, but still, the new year reminds us that the pandemic was five years ago. Five years in the rear-view mirror! What lies ahead for 2025, besides a 4th color on our stoplights? (And you wonder where your tax dollars go.) As the world’s population adjusts to writing “2025” instead of “2024” on letters, checks, and other documents, what’s going with lenders and vendors? MCT has begun trading loans on the MCT marketplace between buyers and sellers who are leveraging the FICO 10 T score. People in our biz are keeping an eye on the CFPB’s mortgage market activities. Staffs are talking about closing costs, and any inkling that the White House may somehow lower housing costs (although it doesn’t control interest rates, insurance costs, or property taxes). Stay tuned! (Today’s podcast can be found here and this week’s is sponsored by The BIG Point of Sale, which offers a highly configurable, easy to install point of sale solution. Its simplified consumer workflows and web-based portals allow for consumers and loan originators to collaborate with the back-office team to keep everyone informed throughout the loan process. Hear an interview with A&D Mortgage’s Victor Kuznetsov on the non-QM securitization space, from trends to investor demand.)

Companies sought

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“Ready to take your mortgage company to the next level? Evergreen Home Loans® is seeking acquisition opportunities with companies that value their Loan Officers and want to grow with a trusted industry leader. At Evergreen, we provide innovative products, a robust construction lending department, and an internal marketing agency to support your team’s success. With a fortress balance sheet and the resources to ensure long-term growth, we’ll take care of your Loan Officers and empower them to thrive. Let’s discuss how partnering with Evergreen can elevate your business. Contact Evergreen’s CEO and Founder, Don Burton (206.300.9965) today.”

(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.)

Correspondent and wholesale non-Agency products

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“Coming off an extraordinary 2024, Carrington Mortgage Services, LLC. is excited for 2025. To that end, we are ringing in the new year with a Wholesale Non-QM special! Borrowers will receive a lender credit for up to $1,000 at closing toward the cost of a single appraisal on a Non-QM loan. Starting Monday, January 6, 2025, this special applies to Non-QM loans only submitted in the month of January. We understand the challenges in the housing market today, and just want to make it a little easier for both you and your borrowers. Speak to your account executive or reach out to us today. Carrington is looking forward to a successful 2025. Let’s work together to grow in the new year!”

“Happy New Year from eRESI! As the year begins, we want to express our gratitude for your continued partnership and extend warm wishes to you and your loved ones. We're excited to kick off 2025 with fresh Non-QM opportunities and are hitting the ground running in January! eRESI's Lisa Schreiber will join panelists at the IMN 2nd Annual Residential Lenders Forum on DSCR & RTL in Aventura, FL. Also, meet with Amer Ahmed, Kris Willoughby, and Lisa Schreiber at the IMB25 Conference in Austin, TX, to explore our latest Non-QM growth strategies. We're excited to continue our journey together in 2025 and remain committed to delivering the exceptional service you have come to expect from us. For more information, please get in touch with your eRESI Representative or email sales@eresimortgage.com. Here’s to a joyful holiday season and a prosperous new year ahead.”

A&D Mortgage, a leading innovator in mortgage solutions, announced a powerful new addition to its Artificial Intelligence in Mortgage (AIM) Partner Portal: the Self-Disclosure feature, designed for seasoned brokers working with Conventional, Jumbo, Government and Non-QM loans. Responding to direct broker feedback, this update enables confident, experienced brokers to streamline the creation and management of disclosure packages, saving both time and resources. 

With the P&L Only Program (Profit & Loss) from Jet Mortgage, the business P&L is used to determine income. No bank statements are required. The perfect program for S/E borrowers who can't go Full Doc or do a traditional Bank Statement Program.

Exclusive to LoanStream Mortgage Brokers, DSCR 5-8 Unit Residential Program is designed for your Investor Clients. Program highlights include 75% LTV, Purchase, Rate and Term and Cash-Out, Occupancy: Investment, $2 million max loan amount, Min FICO 680, 15 -YR Fixed, 30 -YR Fixed, Minimum DSCR ≥ 1.00.

PHH began offering its new Bronze Non-Agency products, adding 3 new products to its Delegated and Non-Delegated Non-Agency offerings. The expansion allows the continued use of PHH’s Gold & Silver Products, while offering additional options and flexibility with the new Bronze Products. View the PHH Mortgage Correspondent Lending Announcement for details.

Per Announcement 24-126, Pennymac added new ‘Jumbo Other Price Adjustments’ LLPA grid to the ‘Jumbo LLPAs’ tab. Updates to Jumbo LLPAs was posted in Announcement 24-127. 

JMAC Lending offers two exceptional Non-QM programs for your borrowers to qualify on the cash-flow of the property; no tax records, personal income or paystubs are required. The products are great for borrowers who do not have sufficient funds to meet the reserve requirements with agency guidelines or meet the minimum FICO score of 720 for borrowers with ownership of 7 or more properties. Plus, experienced investor borrowers do not need to own a primary residence.

Is January 9th a day off for lenders, or not?

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No, probably not, although Martin Luther King Day (Monday, January 20th) isn’t that far away. President Biden has proclaimed January 9, 2025, a federal holiday for the state funeral of former President Jimmy Carter. So don’t go to the post office or call looking for your Social Security check: Federal government agencies and departments will be closed that day. 

Lenders are focused on helping clients in a compliant manner. In an informal “Rob Chrisman poll” no one has the entire day off, but is it a “business day?” But is a federal holiday proclaimed by executive order a “legal public holiday” for purposes of certain disclosure timing requirements of Regulation Z? As a reminder, under the Truth in Lending Act (TILA) Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure Rule (TRID), the creditor is responsible for ensuring that it delivers or places in the mail the loan estimate (LE) no later than the third business day after receiving the consumer’s application. Further, a creditor must ensure that the consumer receives the closing disclosure (CD) at least three business days before consummation of the transaction. In addition, for certain refinancings, Regulation Z permits the consumer to rescind (cancel) the transaction within three business days after consummation.

The MBA reminds us that, “For purposes of providing the LE, a business day is a day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions. However, the term ‘business day’ is defined differently for other purposes, such as counting days to ensure the consumer receives the CD on time and the consumer’s exercise of the right to rescind the transaction. For these purposes, ‘business day’ means all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. § 6103(a): New Year’s Day, the Birthday of Martin Luther King, Jr., Washington’s Birthday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.

The MBA continues. “Because the Carter state funeral on January 9, 2025, is not a ‘legal public holiday’ within the meaning of 5 U.S.C. § 6103(a), it is a business day for counting days to ensure the consumer receives the CD on time and for the consumer’s exercise of the right to rescind the transaction. Further, January 9, 2025, is also a business day for purposes of providing the LE as long as the creditor’s offices are open to the public for carrying out substantially all of its business functions.”

A few lenders/investors have put forth policies, as has SIFMA for the bond market.

“AmeriHome offices will be open, and all operations will be available during regular business hours on that day, except as noted below… Treasury Desk Loan Purchase Schedule:

The Federal Reserve will be open on Thursday the 9th, and loan purchase funding wires will be issued as scheduled. Commitment and Trade Desk Schedule: AmeriHome will follow SIFMA recommendations for early secondary market closure on Thursday, January 9, and will be open regular hours on Friday, January 10.” The AmeriHome Commitment and Trade Desk schedule for those days changed slightly; talk to your rep.

AmeriHome spread the word to clients of the General Business Day Rule: If a Creditor’s offices are open to the public, January 9, 2025, is included as a business day for meeting the (LE) disclosure delivery requirements of the General Business Day Rule. If a Creditor’s offices are not open to the public, January 9, 2025, is not included as a business day for this purpose.

“Specific Business Day Rule: Because January 9, 2025, is designated as a National Day of Mourning and not as a federal holiday, for all Creditors, it is counted as a rescission day, and counted for the (LE and CD) disclosure receipt requirements of the Specific Business Day Rule (including both the mail box rule and the required number of days prior to consummation).”

Over at Pennymac, for the most part the hours of operation will be business as usual but with an early closing. “…the hours of operation for Best Efforts (regular hours), Bulk and Bulk AOT Commitment Options (11AM PT). Please contact your Sales Representative with any questions.”

What about the bond market? “SIFMA joins the nation in expressing its condolences on the passing of former President Jimmy Carter… SIFMA recommends an early market close at 2:00 pm EST on January 9, 2025, for all fixed-income cash markets in recognition of the National Day of Mourning in honor of the 39th President of the United States. This is in keeping with SIFMA’s policy on unscheduled changes in trading hours.

Capital markets: the Fed doesn’t set mortgage rates

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The Federal Reserve has cut rates by 100 basis points since September 18. However, this reduction has not been reflected in mortgage rates, which have continued to rise. Since the Fed pivoted to a more accommodative stance, mortgage rates for conventional 30-year (+75 basis points), VA (+91 basis points), and FHA (+60 basis points) loans have all increased. In anticipation of further rate cuts, the conventional 30-year mortgage rate had dropped from a year-to-date high of 7.27 percent in April to 6.03 percent by mid-September, but as of January 2, U.S. mortgage rates have edged up closer to 7 percent, further squeezing homebuyers. The average rate on a 30-year mortgage rose to 6.91 percent this week, up from 6.85 percent the previous week, according to Freddie Mac. Meanwhile, the Mortgage Bankers Association reported a rise of 8 basis points, bringing the rate to 6.97 percent as of December 27, the highest in nearly six months.

We also learned yesterday that total construction spending (of which residential is a piece) remained largely unchanged, as a modest increase in residential expenditures offset a slight dip in nonresidential activity. The residential sector saw growth driven by higher spending on single-family homes and home improvements. This was largely due to homebuilders offering incentives to boost demand in an environment of low existing home supply.

Overall, construction spending has shown signs of slowing, as higher interest rates and tight credit conditions continue to dampen activity. On a month-to-month basis, total construction spending remained flat in November, following a revised 0.5 percent gain in October. Private construction rose by 0.1 percent, while public construction declined by 0.1 percent. Year-over-year, total construction spending was up by 3.0 percent, evidence of lack of significant momentum in construction spending, particularly in the nonresidential sector.

We have one last light day on the economic calendar before 2025 market action kicks off in earnest next week. Today’s sole economic release is Institute of Supply Management manufacturing PMI for December, due out later this morning. And Fedspeak resumes with Richmond Fed President Barkin speaking before the Maryland Bankers Association First Friday Economic Outlook Forum. We begin Friday with Agency MBS prices slightly better than Thursday’s close on no real news, the 2-year yielding 4.23, and the 10-year yielding 4.53 after closing yesterday at 4.58 percent.

1. You can't see your ears without a mirror.

2. You can't count your hair.

3. You can't breathe through your nose while your tongue is out.

4. You just tried No. 3.

6. When you did No. 3, you realized that it is possible, although it makes you look like a dog.

7. You're smiling right now, because you were fooled.

8. You skipped No. 5.

9. You just checked to see if there's a No.5.

10. Share this with your friends so you can mess with their heads too :-)

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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 2025 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.)