Rushmore Exits Correspondent, Vendor Services, GNMA Risk-Based Capital; Jobless Claims

It really is the hope that kills you. That phrase, which was coined by English football fans and is probably more well known in America among Ted Lasso watchers, is now extending to the mortgage industry. After dozens of lawsuits and years of litigation in the case of Collins v. Yellen, Fannie Mae and Freddie Mac shareholders are about to get their first actual trial next month when Fairholme Funds v. Federal Housing Finance Agency and several related cases come before a jury in a U.S. District Court. Earlier this week, there were hopes that inflation would come in weaker than expected, meaning the Fed could eventually ease up on its quantitative tightening cycle. The CPI print rising 8.3 percent year-over-year in August forced markets to price in more rate hikes to already worrisome policy expectations which will further push up borrowing costs and push down prospects for avoiding a recession. Mortgage companies are hoping borrower demand returns toward normal levels. Borrowers are hoping rates come down, but is that possible without the Fed over tightening monetary policy and sending the economy into a recession? Yesterday was the last day of MBS purchases by the Federal Reserve for the foreseeable future as the central bank speeds up the pace at which it winds down its balance sheet, which stands at almost $9 trillion. The move is causing stress to bond market liquidity, as gaps between prices at which traders buy and sell widen and as prices swing wildly. Our business continues to change, the latest example being Rushmore exiting correspondent. How about some good news? Well, the world's oldest two-headed tortoise celebrated his 25th birthday. There was a party and presents! (Available here, this week’s podcast is sponsored by SimpleNexus an nCino company and award-winning developer of mobile-first technology for the modern mortgage lender. Todays has an interview with Optifunder CRO, Jon Rutila, on the importance of a Warehouse Management System.)

Vendor Services

Let this sink in for a moment: on average, 33% of declined loan applications are recoverable with down payment assistance (DPA). As your organization tightens its belt, consider, how much volume would you gain if you could convert one-third of your declined loans into closed loans? DPA programs are in high demand. Yet, despite that the average DPA program benefit is $17,000, that all 3,143 U.S. counties have at least one DPA program, and that more than 2,000 counties have 10 or more programs, many lenders don’t know much about them. Down Payment Resource’s suite of tools makes it easy for lenders to stand up, administer and match borrowers with the DPA programs they need to achieve their homeownership dreams. Want to learn how many of your organization’s declined loans could be recovered with DPA? Request a personalized Declined Loan Analysis from Down Payment Resource to learn the volume gains you’d enjoy by offering DPA.

NEW EBOOK: 5 Essential Functions of High-Performing Point-of-Sale Technology. Technology is a vital tool to stay competitive across market cycles. Still, there’s a risk in the search for the right provider: If lenders aren’t careful, they can fall prey to pricey subscriptions for complex services that their LOs never adopt and that integrate clumsily with their systems and processes. Mortgage solutions provider 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 point of sale should check, market considerations to guide your feature wish list, and real-life examples of how lenders have leveraged point-of-sale solutions for measurable impact. By the end of this read, you and your team will have a clear picture of the standard to set for a high-performing point-of-sale solution. Ready to go beyond marketing promises to choose technology that addresses today’s most pressing challenges? Click here to download 5 Essential Functions of High-Performing Point-of-Sale Technology.

Are you happy with your appraisals? Triserv has the ability to hand-select the best appraiser for each order, based on their distance to the property, the number of active orders in their pipeline, their average turn time, past performance, and more. Appraisers prioritize our orders because we pay them quickly and fairly, and don’t force them to pay to use our technology (as many other AMCs do). Read more in “Triserv’s Philosophy on Working with Appraisers.” We’re a 50-state AMC that has client-specific, dedicated teams on both coasts offering high-touch, personalized service, learn more.

Serena Williams retired earlier this month at the U.S. Open, reminding us in her farewell speech that there is no Serena without Venus. The sisters paired up over the years to win 22 doubles titles, including 14 grand slams and 3 Olympic gold medals. Axia Home Loans has also found a reliable partner and is on track to source more than $100 million in loan volume this year from Sales Boomerang + Mortgage Coach. By combining Sales Boomerang alerts with the Mortgage Coach Total Cost Analysis, Axia converts more applications into closed loans and creates clients for life. Looking to out-play your competition? Download the free case study or look for the SBMC team in Orlando this week at NAMMBA CONNECT.

In a market that has contracted from record highs, lenders need more leads and increase closing rates. Join the National Mortgage Professional webinar How to Use Credit as A Strategic Tool to Attract More Leads, Make Better Offers and Close More Loans on Thursday, October 6 at 2 pm ET / 11 am PT. We’ll tap into CreditXpert’s inquiry data and analysis to demonstrate how to leverage applicant credit as a strategic tool with EVERY applicant regardless of where they are on the credit spectrum. In this webinar, Mike Darne, VP of Marketing, CreditXpert will discuss credit strategies and how it can be used to gain a better understanding of how mortgage inquiry volume has shifted. Darne will show you how to identify opportunities and build credit-based strategies that will help you better target key market segments. You’ll learn how to leverage applicant credit potential to attract more leads and close more loans.

The Urban Institute projects that Latinos will account for 70% of homeownership growth over the next 20 years. That’s a huge opportunity to expand your reach and grow your business – if you know how to tap into the Hispanic market. Don’t miss out! MGIC can help you develop your cultural competency and reach Hispanic first-time homebuyers with Spanish-language materials and more. Check out MGIC’s Hispanic marketing resources today!

Exploring non-delegated options? Current non-delegated correspondent seeking new fulfillment options to drive efficiencies and lower costs? In the upcoming National Mortgage Professional webinar How to win with non-delegated correspondent - Key insights on the model and fulfillment solutions, regardless of your existing model, you’ll learn everything you need to know about the opportunities and risks of non-delegated including a special review of the critical fulfillment solutions that are required for your success. On Thursday, September 29 at 2 pm ET / 11 am PT, Don Chiesa, SVP of Rocket Pro TPO’s Correspondent lending platform, and Tyler Flora, CEO of SunnyHill Financial, a non-delegated correspondent lender, will help you understand the benefits of becoming a non-delegated correspondent (and how to mitigate any risks). They’ll share critical fulfillment solutions required for your success that will allow you to redeploy your investments. You’ll walk away with the steps needed to set up MERS, warehouse lines, and more.

Doug Duncan, Chief Economist of Fannie Mae notes that for the first time in over 5 years cost-cutting and talent management are lenders’ top priorities right now. Join Teraverde’s Jim Deitch and MCT’s Tom Farmer for a webinar on September 22nd at 10am PT entitled The Power of Effective Cost Management in a Rapidly Contracting Market… How to Win. The webinar will review three innovative strategies for cost control and to simultaneously manage talent productivity. Topics during the webinar will also include MBA 2Q2022 market highlights, a breakdown of costs to originate a loan, and a review of the “profit driven” approach. Register for the webinar and join MCT’s newsletter to be notified of future webinars.

It seems like everyone is rediscovering Home Equity Lines of Credit (HELOCs). Banks and credit unions are aggressively marketing HELOCs again, and investors are developing new secondary market options for these assets. Clayton has long been a leader in due diligence, HELOCs and other second lien loans. To date, Clayton has reviewed more than $1 billion in HELOCs, and we’re actively working with leading investors to support new securitization programs. We can tailor the scope of our reviews to clients’ needs: Compliance Only Reviews, Credit Only Reviews, Data Validation and/or the full scope of Credit, Compliance and Valuation Diligence for Securitization and Whole Loan evaluations. To learn more about Clayton’s HELOC Due Diligence offering, contact National Sales Director Pete Thomas or VP-Business Development Tom Coffey.

Government Lending Updates

Bob Broeksmit, CMB, President and CEO of the Mortgage Bankers Association (MBA), issued the following statement on the passage of H.R. 7735, Improving Access to the VA Home Loan Benefit Act of 2022, by the U.S. House of Representatives: “MBA is grateful to the House for passing with bipartisan support this commonsense bill to make VA home loan financing more accessible and affordable to our nation’s servicemembers, veterans, and their families by accelerating the updating of the Department of Veterans Affairs’ (VA) rules and program guidelines that govern home appraisals. The bill will encourage important reforms to the agency’s requirements regarding when an appraisal is necessary, how appraisals are conducted, and who is eligible to conduct an appraisal. This legislation is an important first step towards broad modernization of VA appraisal processes and could make veterans’ home purchase offers more viable in today’s competitive housing market. MBA now urges the Senate to pass a companion measure, S. 4208, as swiftly as possible to ensure active and retired servicemembers throughout the country have access to more affordable, sustainable homeownership opportunities.”

Fannie Mae priced a $604 million Multifamily DUS REMIC under its Fannie Mae Guaranteed Multifamily Structures (Fannie Mae GeMS) program on September 8, 2022. FNA 2022-M13 marks the seventh Fannie Mae GeMS issuance of 2022. “The new issue market was crowded last week following the summer holidays, so we were pleased that investors were able to focus on the M13 deal with its discount, 10-year call-protected, fixed-rate collateral,” said Dan Dresser, Senior Vice President, Multifamily Capital Markets and Pricing, Fannie Mae. “The spreads on the DUS MBS, which serves as the collateral backing the GeMS transaction, remained strong relative to other asset classes during this volatile year, and investors appreciate the ability for the market to create larger, well-diversified pools of the DUS MBS through the GeMS resecuritization process.” or additional information, please refer to the Fannie Mae GeMS REMIC Term Sheet (FNA 2022-M13) available on the Fannie Mae GeMS Archive page.

Freddie Mac announced the pricing of its second Seasoned Credit Risk Transfer Trust (SCRT) offering of 2022, a securitization of approximately $536 million including both guaranteed senior and non-guaranteed subordinate securities backed by a pool of seasoned re-performing loans (RPLs). The SCRT program is a fundamental part of Freddie Mac's seasoned loan offerings which reduce less liquid assets in its mortgage-related investments portfolio and shed credit and market risk via economically reasonable transactions. Freddie Mac Seasoned Credit Risk Transfer Trust, Series 2022-2 includes approximately $492 million in guaranteed senior certificates and $45 million in non-guaranteed mezzanine and subordinate certificates. The mezzanine certificates will be rated. The transaction is expected to settle on September 14, 2022. To date, Freddie Mac has sold over $9.7 billion of Non-Performing Loans (NPLs) and securitized more than $76 billion of RPLs consisting of over $30 billion of fully guaranteed PCs, $34 billion of SCRT senior/sub securities, and $12 billion of Seasoned Loans Structured Transaction (SLST) securities. Additional information about the company's seasoned loan offerings can be found at: http://www.freddiemac.com/seasonedloanofferings/.

Capital Markets

There was less volatility in the bond markets yesterday than what we have experienced recently, with PPI data coming in as expected, a welcome respite for capital markets folk. Inflation worldwide has been driven by supply chain bottlenecks in the aftermath of the COVID pandemic and Russia’s invasion of Ukraine, which has caused food and energy prices to surge. We learned yesterday that inflation at the wholesale level fell 0.1 percent month-over-month, but rose 8.7 percent year-over-year. The decline was driven primarily by a big decrease in energy prices. Encouragingly enough, the monthly core numbers (excluding food, energy, and trade services) are on a general downtrend over the past year. Will this influence the Fed's plans next week? Likely no.

The fed funds futures now see a 70 percent chance of a 75-basis point hike and a 30 percent chance of a 100-basis point hike at the Fed’s monetary policy meeting later this month, the fastest pace of monetary tightening since policy makers began using the benchmark fed funds rate as the principal policy tool in the early 1990s. Despite the broad market expectation for further 75-basis point hikes, the Fed will eventually likely pivot away from its hawkish trajectory in three stages as the disconnect between wealthy investors and institutions and the “real economy” widens. At some point in the future, the Fed will reduce the pace of rate hikes to 50-basis points, then adopt a neutral policy, before reversing course and becoming “accommodative” through cuts to rates or increasing the size of its book again.

The overwhelming amount of economic data being released today started with Initial Jobless Claims, in at 213k, and August Import/Export Prices (-1.0 percent and -1.6 percent, respectively). Later this morning brings September Empire State Manufacturing, the September Philadelphia Fed Survey, August Industrial Production and Capacity Utilization, and July Business Inventories. We begin the day with Agency MBS prices down .250 and the 10-year yielding 3.44 percent after closing yesterday at 3.41 percent.