TPO, HELOC Workflow, Processing, PPE, API Tools; CFPB Fines Carrington $5.25mm
Few base their company or family’s savings on the inherent risk in a prediction. But… On a big scale, and we’ve been hearing forecasts of a recession for a year now, JPMorgan Chase’s economists opine that the economy will slip into a mild recession in 2023 as a result of the Federal Reserve's monetary tightening. Of course, recessions usually mean lower rates (one of the topics in today’s Rich and Rob show with MGIC). "We also expect slowing aggregate demand eventually leading to labor market weakness that builds on itself, and we anticipate that we could lose over a million jobs by the middle of '24." Smaller mortgage banks may not be able to wait it out. STRATMOR’s M&A practice is “en fuego” with large and small deals. Mortgage servicing rights continue to hit the open market in varying sizes and shapes. Informally chatting with a couple servicing specialists indicates that the smaller pools are mostly from sellers that thought the market would turn around and are giving in to higher rates whereas the bigger pools of servicing are due to more aggressive agency putbacks. Lenders must have cash to buy back loans if their defense doesn’t work, and the most valuable asset many companies have is their servicing portfolio. (Today’s podcast is available here and this week’s is sponsored by MCT Investor Services, which helps investors scale their seller base, automate the bid process, source whole loan and flow co-issue production, automate AOTs, and analyze performance all in a cost-effective manner.)
Broker and Lender Services and Software
Open banking is gaining traction across the industry and there are three good reasons for this. First, it ensures a better borrower experience by dramatically simplifying the end-to-end process. Everything required to underwrite and approve loans is seamlessly connected via APIs in the cloud, ensuring borrowers aren’t shuttled from one system to another in service to a checklist. Second, open banking makes it significantly easier to cross-sell other products. APIs make it easy to connect to other core banking platforms which facilitates the sharing of marketing information with internal sales departments. Third, the wealth of information open banking provides can be used for better marketing. This is important to acquire new low-cost leads and reduce fallout. Fiserv’s Mortgage Director enables open banking via its robust API ecosystem. If you want to improve your borrowers experience, cross-sell more effectively and gain better access to data, email to learn more.
To stay afloat when tides shift is one thing, but to transcend the current is crucial during challenging times. Choosing a modern and proven PPE solution enables lenders to outperform their peers in an economic upturn and a market downturn. Lender Price's scalable PPE helps lenders identify the lowest possible rates and best loan programs in the market. Time-tested and experienced, Lender Price proudly holds a demonstrated track record of successfully executing mid to large-scale implementations for various types of lenders in the mortgage industry. Having gone through numerous implementation scenarios, Lender Price uniquely positions itself to offer solutions, advice, and recommendations that meet the needs of banks, IMBs, credit unions, and large-scale enterprise lenders. Lender Price is "Democratizing pricing for all.” From large banks to mortgage brokers and everyone in between, we are committed to listening to our lenders of all sizes and being the technology leader in pricing and capital market solutions. To learn more about Lender Price's innovative solutions, www.lenderprice.com.
What’s the secret to staying afloat during a downturn? Or keeping up during increased demand? “Virtual in-house processing” services with wemlo® are designed to help your mortgage business thrive in fluctuating market conditions. With wemlo’s “virtual in-house processing”, you get all the benefits that come with having an in-house processor but none of the managerial headache or long-term financial responsibilities that come with. As a scalable alternative, wemlo removes the headache of hiring an in-house processor or (even more daunting) doing the processing yourself. “Virtual in-house processing” can alleviate stress when business ramps up, but it can also give you time to capture new business during slower seasons. Available in 46 states plus Washington D.C., wemlo’s processing team is trained to work with dozens of loan products and lenders. Schedule your 1:1 call to learn more about our third-party loan processing services.
If your financial institution wants to succeed in a compressing market, you need to focus on two things: driving more value from your agent–originator relationships and developing a crystal-clear understanding of your customers’ short-term needs and long-term goals. It’s not enough to simply pull together data from across your tech stack. You need a tool that can analyze and monitor your data, identify opportunities for targeted engagement, and provide your teams with the context they need to have more impactful interactions. In our latest webinar, Total Expert’s Chief Lending Officer, Dan Catinella, sat down with Prosperity Home Mortgage LLC’s Brand Ambassador, Jelaire Grillo, to discuss how Total Expert Customer Intelligence can get more loans into the hands of your loan officers and drive deal flow by surfacing borrower intent. Watch the webinar on-demand.
Revvin, the leading low-code/no-code digital lending platform, has released a set of HELOC-specific workflows that make it easier for lenders to attract Home Equity Line of Credit (HELOC) applicants and gather the required information for delivery to the lender’s LOS. The pre-built workflows can be deployed in a day or two and, like all Revvin workflows, can be customized to the lender’s specific requirements. “In the current market, homeowners can no longer afford to take equity out of their homes by refinancing, so demand for HELOCs is ramping up,” said CEO Valentin Saportas. “After several lenders approached us for pre-built HELOC workflows, we created the offering we’re rolling out to all lenders today. Revvin has always offered lenders the capability to create their own custom workflows, but speed is of the essence too.” Ready to rev up your HELOCs? Visit here to learn more or contact us.
TPO Products
“Are you a broker looking to expand your reach with top-notch product offerings? Look no further than Newrez Wholesale. With Newrez’s newly launched SmartSeries temporary buydown loans, you’ll have a full suite of products at your fingertips to offer your clients. Our Smart Series consists of uniquely developed Non-QM solutions that ensure that homebuyers with unique financing needs have access to mortgage solutions that meet their specific needs. We are now offering 3/2/1, 2/1, and 1/0 buydowns on our SmartEdge and SmartSelf products. You won’t want to miss out on this opportunity! Check out our recent webinar on Smart Series Temporary Buydowns. Watch now or contact BrigadeSupport@newrez.com to get approved with us today if you aren’t already.”
During this season of gratitude and giving, U.S. Bank is excited to support music education via a guitar donation to Bradley Academy, An Arts Integrated School in Murfreesboro, Tennessee. We thank our clients and partners for playing a part in this effort by helping to build 10 guitars during the MBA Annual in Nashville and joining us in bringing the gift of music to students and classrooms. Through partnership, we can achieve great things together. With today’s complex and evolving market conditions U.S. Bank remains a trusted advisor in Correspondent and Housing Finance Agency lending. We’ll help you navigate the current mortgage lending landscape and offer solutions to grow your business and support your borrowers. At U.S. Bank we believe in the power of partnership. Contact us to learn more about the benefits of partnering with U.S. Bank.
The CFPB Acts
The CFPB is roughly ten years old and has gone through a few cycles of “shooting first and asking questions later” versus embracing industry input on best practices that help consumers and lenders alike.
This grabbed the industry’s attention yesterday. “The Consumer Financial Protection Bureau (CFPB) is taking action against Carrington Mortgage Services for deceptive acts or practices under the Consumer Financial Protection Act in connection with mortgage forbearances. The CFPB found that Carrington failed to implement many protections, provided to borrowers with federally backed mortgage loans who were experiencing financial hardship, during the COVID-19 public health emergency.
“The CFPB found that Carrington misled certain homeowners who had sought a forbearance under the CARES Act (which, among other things, provides forbearances of up to 180 days upon request and credit reporting protections) into paying improper late fees, deceived consumers about forbearance and repayment options, and inaccurately reported the forbearance status of borrowers to the big three credit reporting companies: Equifax, Experian, and TransUnion. The CFPB is ordering Carrington to repay any late fees not already refunded, repair its faulty business practices, and pay a $5.25 million penalty that will be deposited into the CFPB’s victims relief fund.
“Carrington Mortgage unlawfully withheld legally mandated pandemic protections, wrongly imposed fees, and reported false information to credit reporting companies,” said CFPB Director Rohit Chopra. “Homeowners were misled and denied key protections at a time when they were in most need of help.”
Carrington Mortgage Services is a non-bank mortgage servicer headquartered in Anaheim, California. Carrington operates in all 50 states and services a large number of federally backed mortgage loans, which are made or guaranteed by federal agencies or government-sponsored entities (GSEs). As of September 2020, Carrington serviced nearly half a million federally backed mortgage loans: more than 65% were Federal Housing Administration loans, nearly 20% were U.S. Department of Agriculture loans, slightly more than 10% were Veterans Benefits Administration loans, and about 5% were loans backed by GSEs.
Read the enforcement link above for full details. The announcement includes wrongly charged late fees, deceiving certain borrowers, providing false information about pandemic protections, botching homeowners’ credit reports, inaccurately furnishing reports on the delinquency of certain homeowners in forbearance, and failing to promptly notify the big three credit reporting companies about the errors.
“The order requires Carrington to provide redress to consumers (Carrington must conduct an audit to ensure any improperly charged late fees have been refunded to consumers, and if not, to refund them), repair its faulty business practices (Carrington must assess customer service staffing and provide training relating to applicable CARES Act and agency and GSE guidelines and establish policies and procedures to prevent the issues from recurring, and pay $5.25 million in fines (Carrington must pay a $5.25 million penalty to the CFPB, which will be deposited into the CFPB’s victims relief fund.
Capital Markets
Unfortunately for borrowers and LOs waiting to lock, rates shot up yesterday thanks to Fed President Bullard supporting continued rate raises. He gave a speech which suggested that a "sufficiently restrictive" fed funds rate would need to be somewhere between 5 percent and 7 percent and noted further risks to the economy. Some traders joked that based on the current situation the fed funds rate should already be at least 5 percent. The stock and bond rally of the past week had been driven by hopes that the Fed is set to pivot toward looser monetary policy, but this speech and other remarks from earlier this week have poured some cold water on that sentiment.
We also learned yesterday in the housing starts and building permits report that the average loan size fell to $400,616, representing declining interest in higher-priced homes and lower home price growth in general. The increases in mortgage rates this year means some potential homebuyers can no longer afford to buy the house they ordered a year ago. This leads people to lose their deposits, even if the builder ends up selling the property to a different borrower at a higher price. Separately, this week’s Freddie Mac Primary Mortgage Market Survey (which no longer publishes fees/points or hybrid ARM rates) saw fixed mortgage rates tumble along with Treasuries yields. For the week ending November 17, the 30- and 15-year fixed rates plunged 47-basis points and 40-basis points, respectively, to 6.61 percent and 5.98 percent.
Today’s data is on the lighter side with just existing home sales and leading indicators, neither released at the “important” 5:30 AM PT/8:30 AM ET time slot. One Fed speaker is scheduled, Boston Fed President Collins. We begin the day with Agency MBS prices little changed from Thursday evening and the 10-year yielding 3.79 after closing yesterday at 3.78 percent.
Jobs and Transitions
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Hallmark Home Mortgage accelerates strategic expansion by adding experienced team of residential mortgage bankers! Hallmark Home Mortgage, a Fort Wayne, Indiana-based independent residential mortgage lender, has completed the acquisition of a well-established team of mortgage bankers. The move will expand its residential lending services to include Colorado, Georgia, Kansas, Louisiana, Missouri, South Carolina, and Texas, representing a strategic milestone for the organization.
“I am pleased to welcome this talented team of more than 60 mortgage professionals,” said Deborah Sturges, CEO and Founder at Hallmark Home Mortgage. “Hallmark is now positioned to become one of the nation's top 100 residential mortgage lenders. This increased production will create new employment opportunities at the corporate headquarters in Fort Wayne.” “This is a tremendous opportunity,” noted Hallmark Home Mortgage EVP/Division Manager Mark Etchison. “The team brings a strong lending and scalable presence in their current markets and shares the same passion as Hallmark for delivering a superior customer experience.”
Marc Wadman will continue to direct the newly acquired team as SVP/Regional Manager. “Hallmark is known for its continued strong leadership and team support within the mortgage industry,” Wadman added. “It became evident after discussions with the Hallmark executive leadership team that this was the ideal fit for our associates and clients.”
With rising inflation and mortgage rates climbing, workforce capacity has had to be adjusted for many mortgage lenders. Hallmark, however, continues to successfully execute against its strategic growth plan by focusing on its Realtors®, referral partners and past clients. To learn more about Hallmark Home Mortgage please visit Hallmark. If you’re looking to take your origination career to the next level visit contact Deborah Sturges, Mark Etchison or Marc Wadman.
Cenlar FSB, loan subservicer and federally chartered wholesale bank, announced that Nayda McKain has been promoted to VP, Human Resources Business Partner and will lead a team of HR professionals and work closely with executive leadership to advise on human capital functions and continue to deliver on Cenlar’s business strategy.