3.13.25 Lending Lawsuits; TRAiNED's Jonathan Freed on AI Adoption; PPI Follows CPI

Welcome to The Chrisman Commentary, your go-to daily mortgage news podcast, where industry insights meet expert analysis. Hosted by Robbie Chrisman, this podcast delivers the latest updates on mortgage rates, capital markets, and the forces shaping the housing finance landscape. Whether you're a seasoned professional or just looking to stay informed, you'll get clear, concise breakdowns of market trends and economic shifts that impact the mortgage world.

In today’s episode, we look at lending lawsuits for residential and commercial lending. Plus, Robbie sits down with TRAiNED's Jonathan Freed to talk about what problems AI can solve in mortgage lending and how successful lenders are embracing it. And after yesterday's CPI report, he closes by going through today's PPI inflation figures.

This week’s podcast is sponsored by TransUnion. TransUnion offers thousands of B2B solutions designed to address the unique needs of mortgage lenders, especially for their identity-focused, data-driven mortgage insights and solutions. 

Transcript

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Teddy Roosevelt thought that lawyers are trained to serve clients and not justice. An interesting discussion topic. Residential lending certainly has its share of legal proceedings and suits, but commercial lending does as well. For example, Wells Fargo is suing JPMorgan over a troubled $481 million commercial real estate loan made in 2019 to “recover losses for investors on the loan allegedly based on fraudulently inflated net operating income by 25 percent. According to the complaint in Manhattan federal court, JPMorgan went ahead with the loan, knowing it would eventually be sold in pieces to unwitting investors. The borrower defaulted in 2022 and still owes more than $285 million, while investors have lost tens of millions of dollars, Wells Fargo said. Wells Fargo wants New York-based JPMorgan to repurchase the loan, less amounts the trust received from sales of underlying properties, or else pay damages for breach of contract. In the residential world, the talk of repurchase requests by Freddie and Fannie has died down, but it is still a possibility and the cost of handling and defending against those requests, or dealing with repurchases, is certainly added to the cost of business for lenders. (Today’s podcast can be found here and this week’s is sponsored by TransUnion. TransUnion offers thousands of B2B solutions designed to address the unique needs of mortgage lenders, especially for their identity-focused, data-driven mortgage insights and solutions. Hear an interview with TRAiNED’s Jonathan Freed on what problems AI can solve in mortgage lending and how successful lenders are embracing it.)

Lender and broker products, software, & services

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ICE is helping to automate one of the longest-standing pain points in the mortgage life cycle. ICE Mortgage Technology has enhanced the MSP loan servicing system to integrate with its Encompass LOS, so organizations can board newly originated loans into servicing quickly and accurately. New automations and quality control measures mean no more waiting for batch transfers or spending hours on painstaking manual post-boarding reviews. Read a recent National Mortgage News article featuring Sandra Madigan, EVP of Servicing Technology Product Innovation, as she shares how ICE Mortgage Technology’s innovations are streamlining the loan boarding process.

This message will not self-destruct, but your deals might if pre-approvals are too slow. QuickQual gives borrowers and agents instant access to generate their own letters while staying within lender-set limits. No waiting, no last-minute calls, just pre-approvals that keep up with the market. Meet with the LenderLogix team to see how it works.

“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. Contact Richey May today to get started on the solution that fits your business.”

As home equity lenders strive to keep origination expenses down, automated valuation models (AVMs) are growing in popularity, according to Corporate Settlement Solutions’ 2024 Home Equity Valuation Analysis. The new report reviews the valuation products that CSS lenders used for home equity originations in 2024. In 2024, lenders used AVMs on 34% of their home equity loans, up from 25% in 2023. “Give continued tight market conditions, home equity lending is a bright spot for many lenders with expectations that it will only increase over the next several years,” said CSS CEO Ashley Jelinek. Click here to learn more about CSS’ full suite of home equity valuation products. 

Rates are dropping: Which of your clients are poised for a home equity loan? You likely have a lot of clients with tappable equity in their homes right now, but can you easily identify them? CoreLogic’s Precision Marketing solution lets you quickly see which clients have tappable equity. With our equity position indicator, you receive insights to get you in front of your clients before they go to another lender with their home equity application. If you’re ready to grow your pipeline and increase profitability, all with your existing book of business, CoreLogic is ready to help!

On Thursday, May 15th, 2025, at 10:30 AM PST, Garris Horn LLP’s Senior Litigation Partner, James Brody, in collaboration with The Mortgage Collaborative (“TMC”) will present a webinar, titled: “Annual Regulatory Roundup: Invaluable Tips for Maintaining Compliance in 2025 & Beyond.” Click here to register; registration is free. In this co-sponsored Regulatory Roundup webinar, Mr. Brody will leverage his decades of experience as a financial services litigator and compliance attorney to ensure your organizations remain compliant during a time of upheaval all across the mortgage banking industry.  Specifically, Mr. Brody will address compliance topics involving LO Comp, RESPA, Cyber, TILA, UDAP, M&A, MSAs, and more. For any registration related questions, please contact Mr. Brody (415-246-3995). Also, if you’ll be attending TMC’s conference in Dallas, stop by and speak with Mr. Brody, who will be a featured speaker on many of the same issues that will be covered during the webinar.

Correspondent and wholesale product news

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“In honor of Women’s History Month, U.S. Bank Correspondent Lending is offering a special webinar: ‘Women and Wealth – Understanding & Serving the Female Homebuyer.’ Recent data from the National Association of Realtors shares single women now own more homes than single men, and this session will provide valuable perspectives and strategies to better support this growing market segment. Register today to learn more. And if you’re heading to Great River MBA (April 1-3 in Memphis, TN) or Texas Mortgage Bankers Annual Convention (April 27-29 in Arlington), connect with a U.S. Bank account executive. U.S. Bank Correspondent and HFA Lending is vested in helping lenders grow by continued investment in our business and in yours and by offering solutions to support you and your borrowers.”

“In today’s housing market, the right products open the door to more loan opportunities. Planet Correspondent provides a full suite of renovation loans (FHA 203(k), VA, HomeStyle®, and CHOICERenovation®) your borrowers can use to purchase or refinance and modernize aging homes. Learn how in Planet’s exclusive Guide to Renovation Lending then connect with Planet VP National Renovation Lending Jim Bopp to put these strategies into action (518-348-6426). Want even more ways to boost business? Join Regional Sales Manager Stuart Blend at the Colorado Mortgage Lenders Association’s Luncheon March 27 to explore profitable, niche lending strategies. Book your meeting with Stuart Blend (469-939-9055). At Planet, we make growth easy with competitive pricing, seamless execution, and expert support every step of the way. The market won’t wait… Partner with Planet today and turn possibilities into production!”

As markets fluctuate with uncertainty, AmeriHome maintains its reliability and continues to add new products and services to deliver consistent value to its clients and partners. AmeriHome just began the rollout of its non-QM suite of products including DSCR, Expanded with Bank Statements, and Asset Qualifier! AmeriHome will be releasing additional non-QM products and features such as the AUS Jumbo Express in Q2. It is also wrapping up the pilot phase of eNote capabilities, so make sure to discuss your readiness with your sales rep. AmeriHome’s sales team will be at the MCT Exchange later this month in San Diego and the Great River Conference in Memphis April 1-3… Connect with them to learn more about what they can do for you. Check here for a more detailed breakdown of where AmeriHome will be throughout 2025, email them to schedule a meeting, and follow AmeriHome Correspondent on LinkedIn to stay in-the-know!

Edition 2025-1-3.7.25 of Fifth Third Correspondent Lending Communiqué includes the following topics:  All Agency Products: ACE+ PDR and Value Acceptance + Property Data Expansion, All Agency Products: Hybrid Appraisals, Fifth Third Correspondent Lending Portal Transition.

Pennymac is restructuring its Best Effort Rate Sheet, view Announcement 25-22 for information.

AmeriHome Mortgage General Announcement 20250209-CL summarizes previously published changes made during February, additional changes made with this announcement, and recent Agency and regulatory news.

Technology in the capital markets

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MCT recently announced the release of Atlas, an AI advisor and high-quality educational resource for MCT’s mortgage lender clients. With this launch, MCT continues its tradition of innovation in secondary marketing technology, offering clients instant access to expert knowledge and paving the way for future AI-driven workflows that will save clients time and improve their financial performance. “We’re proud to be the first mortgage capital markets platform to put AI in the hands of every client,” said Phil Rasori, COO of MCT and architect of Atlas. “AI has the potential to improve performance and act as a force multiplier for capital markets professionals, but only if it is deployed responsibly and transparently with careful protections for client data ownership and privacy.” Learn more about the data security and privacy standards built into Atlas or watch MCT’s webinar, AI Blueprint for the Future of Mortgage Capital Markets Technology.

“Today, Product and Pricing Engines (PPEs) like Optimal Blue, Polly, and Lender Price have revolutionized the pricing process. Instead of manually inputting rates, secondary teams push a few buttons, and rates are instantly updated across multiple channels. Investors no longer have to send individual rate sheets to 100+ banks; they simply ensure accurate delivery to a PPE platform.” (To read more, click here on The Chrisman Commentary’s Thought Leadership piece.)

Non-Agency news, but first a conventional conforming warning

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Yesterday’s Commentary noted, “As announced in Freddie Mac Bulletin 2025-01, Freddie Mac previously updated Loan Product Advisor (LPA) to assess rent payment history in the credit assessment (an asset report identifying rent payments is required). LPA has been enhanced to allow approved Freddie Mac Sellers to indicate in the submission when a borrower’s rent payment history has or can be documented utilizing borrower provided documentation.

Important: Correspondent clients wishing to take advantage of this enhancement must obtain written approval directly from Freddie Mac. Pennymac’s approval does not apply to correspondent clients.”

In prompted Megan Kritsky, Product Manager at Lenderworks, to write, “On the PennyMac announcement, I think it’s important to note that the enhancement is only eligible for approved Freddie Mac sellers. Correspondent clients wishing to take advantage of this enhancement must obtain written approval directly from Freddie Mac. Pennymac’s approval does not apply to correspondent clients. All correspondent lenders that wish to take advantage of this enhancement must contact their Freddie Mac rep and receive written Freddie approval.” Thank you, Megan!

The Latin phrase “carpe diem” literally means, “pluck the day” although common usage has it as “seize the day.” Investors specializing in non-QM products, such as bank statement programs or certain investor loans, are watching their business increase as no LO wants to say “no” to a potential borrower.

Verus Mortgage Capital (VMC), a correspondent investor specializing in residential non-QM and investor rental programs, “reaffirmed its position as a leading issuer of non-agency mortgage-backed securities last year. VMC specializes in expanded credit/non-QM and investor rental loan programs and financed 12 deals totaling more than $6.5 billion. Since its inception, VMC has financed approximately $31.4 billion through 65 rated securitization transactions, further cementing its position as the predominant non-QM issuer since 2017, with roughly 80 percent penetration into the largest fixed income investors globally. In addition to this market leading presence and scale, the platform has also continued to grow, increasing the investor base by 10 percent in 2024.”

LoanStream Mortgage Wholesale is offering a no pre-payment penalty (PPP) option with its Business Purpose DSCR Investor Loan. Borrowers have complete financial freedom to pay off their loans early without incurring extra fees. This creates an exciting opportunity for your clients to manage debt more efficiently, reduce their burden, and maintain greater control over their financial future.

Citi Correspondent Lending updated its non-Agency loan level price adjusters (LLPAS) and CRA premiums effective with Best Efforts locks completed on/after Friday, March 7, 2025.

AmeriHome announced the launch of its new non-QM loan products. Effective with 20250204-CL Product Announcement, Non-QM Expanded and Non-QM DSCR products are available, providing additional options for Non-Agency loans.

Capital markets: more backward-looking inflation numbers

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As most of you already know, the Consumer Price Index (CPI) came in slightly softer than expected, with both the headline and core indices advancing 0.2 percent in February. Annual core CPI inflation slowed to a three-and-a-half year low of 3.1 percent, indicating inflation continues to recede gradually, but in a sticky manner. However, the upward pressure on goods prices is intensifying with tariffs, meaning a further reduction in inflation this year is going to be hard to come by. Shelter costs, which rose 0.3 percent month-over-month and 4.2 percent year-over-year, accounted for half of the overall increase. Shelter costs remain at about half of the 8.2 percent peak in 2023, though higher than the pre-pandemic average of 3.4 percent.

February producer prices (unchanged for the month, lower than expected, +3.2 percent year over year, about as expected) and weekly jobless claims (220k, a shade lower than expected) led off today’s economic calendar. PPI was expected to increase 0.3 percent month-over-month and 3.5 percent year-over-year versus 0.4 percent and 3.5 percent previously. Later today, the Census Bureau will release the Quarterly Services Survey, Treasury will announce next week’s auction sizes for reopened 20-year bonds and 10-year TIPS before auctioning $22 billion reopened 30-year bonds, and Freddie Mac’s Primary Mortgage Market Survey is due out. We begin Thursday with Agency MBS prices roughly unchanged from Wednesday’s close, the 2-year yielding 3.98, and the 10-year yielding 4.32 after closing yesterday at 4.32 percent despite the uncertain direction of the U.S. government shutdown.

Paddy is with his wife at the beach at Trawmore when all of a sudden, a gorgeous, young, well-endowed woman sporting very revealing swimwear walks up to Paddy and greets him, as if they knew each other.

When she leaves, Paddy’s wife Bridget glares at him and asks, "Who the hell was that?"

Slightly nervous, Paddy replies, "Just a woman I met professionally."

Bridget then asks, "Whose profession, yours or hers?"

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. This month’s piece is titled, “Natural Disasters and Economic Resilience.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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