Co-issue, Correspondent, Broker Marketing Products; FHA and VA News; Note on Payroll Fraud; Compliance Tidbits
Let’s have a non-mortgage opening paragraph. Today is “Remember Pearl Harbor Day.” (If you like history, you gotta click on that link and see what is on there. Do a search.) The richest person in the world in the 1940s was Henry Ford, and when he died in 1947 his worth was about $200 billion in current dollars. (John D. Rockefeller became the first billionaire in 1916.) I mention these snapshots because one New Jersey industry vet wrote to me saying, “There are about 720 billionaires living in the USA, almost 1/4 of worldwide billionaires. The Administration is hiring 87,000 people to oversee the U.S. billionaires. That’s a 120-1 ratio. Ironically, after 40 years, the IRS never found Trump’s misreporting even though they audited him every year. Perhaps the IRS should not hire 87,000 but hire the top 720 CPA firms (paying them more than private practices) to examine the books of the 720 billionaires.” (Today's podcast is here and brought to you by SimpleNexus, an nCino company and award-winning developer of mobile-first technology for the modern mortgage lender, and today’s features an interview with SimpleNexus’ Jay Arneja, NotaryCam’s Brian Webster, and MISMO’s Jonathan Kearns on the role eClose plays in creating a future-ready mortgage industry.)
IMB Wanted
A national mortgage lender is looking to acquire an IMB. A leading privately-owned national mortgage lender is seeking to acquire a thriving IMB. With over 130 retail branches nationwide, this lender services $10.5 billion in loans. The company is licensed in all 50 states and retains nearly 100 percent of service rights on its mortgages to Fannie, Freddie, and Ginnie Mae. The lender supports every facet of marketing, including lead generation campaigns, social media, content creation, PR, events partner programs, and more. If you’re interested in learning more, you can fill in your confidential information here safely.
Lender and Broker Software and Services
OptiFunderSM has launched Wire Data Check, a new feature that adds a layer of protection against wire fraud. It continuously monitors for changes in instructions up to and including the funding process, automatically comparing wire Instructions to OptiFunder’s extensive data base and flagging anomalies. It’s part of the industry’s only Warehouse Management System which optimizes funding allocation decisions to significantly reduce expense and automates tasks for funding through loan sale. Find out why many of the top lenders have chosen OptiFunder. For details, to request a demo and free back test, or to meet at IMB23, visit Optifunder.com or follow OptiFunder on LinkedIn.
“Western Alliance Bank’s Specialized Mortgage Services group is excited to announce we’ll be attending MBA’s Independent Mortgage Bankers Conference on January 23-26 in San Diego. We look forward to seeing everyone there and discussing how we can provide your business access to a team of mortgage financing and treasury management professionals. We work closely with business partners to define needs and custom tailor debt and deposit solutions. Treasury management and liquidity solutions help Independent Mortgage Bankers find efficiencies in the current environment, and we have a core competency and a proven track record with escrow and operating accounts. Our clients receive best-in-class service with high-speed account opening and implementation from a dedicated service team. To learn how our treasury management solutions can add efficiencies to your cash flow cycle, please contact Jennifer Schachterle (720) 261-5774, Mark Short (469) 702-6212 or Chris Martin (480) 341-5483. Western Alliance Bank, Member FDIC.”
Even magical beings need help getting big jobs done, which is why the U.S. Postal Service is seeking volunteers to help answer children’s letters to Santa this holiday season. Mortgage brokers have the monumental task of finding the lender and loan with the best rates, terms and closing costs for their borrowers’ needs, but they can’t count on elves, volunteers or resources from a financial institution for help generating leads and nurturing customer and referral relationships. Fortunately, automated mortgage marketing tools can multiply brokers’ presence without bringing on extra hands. Add a little magic to your marketing plan with this comprehensive guide to mortgage broker marketing from the Surefire team at Black Knight.
ICE Mortgage Technology® announces ICE Experience 2023 speaker line up! ICE just announced the speaker line up for its industry user conference, ICE Experience 2023. General Session speakers include Pro Football Hall of Famer and NFL Analyst, Steve Young, HGTV TV personality & Real Estate Broker, Egypt Sherrod, MBA President, Bob Broeksmit, the Founder and Inventor of Ring, Jamie Siminoff, and Investor and Former Chairwoman of Etsy, Caterina Fake. Other speakers listed include renowned industry leaders. For more details on the customer-only, ICE Experience, visit the website.
Lakeview Loan Servicing, LLC (Lakeview), Master Servicer for Florida Housing Finance Corporation (FHFC) Homebuyer Loan Programs, would like to announce a program enhancement. Now, Florida based wholesale brokers can originate FHFC loans through an approved FHFC Lender. This includes the Hometown Heroes program, which still has plenty of funds available. We are also pleased to announce that FHFC is now accepting applications for new lenders. Contact your Lakeview VP or Director of Business Development for more details or call 855-253-8439.
As an originator, pesky metrics like the compare ratio might not be at the top of your priority list. Between handling time-consuming workloads and managing customer relationships, you’ve already got a lot on your plate. But, as TMS Correspondent’s latest blog points out, if left unchecked, a bad compare ratio can get you into a lot of trouble. A compare ratio puts your DQ rate against the industry average; when you get above the 150% range, you jeopardize your origination authority. That’s why it’s so important to sell your loans to a correspondent investor with a favorable compare rate. In its latest blog, TMS goes over the ins and outs of the compare rate, and what to look for in a strong correspondent partner.
LoanStream Mortgage is running two great Holiday Specials for a limited time: 35 bps Off Price Improvement on FHA loans and Non-QM Specials that can be combined for up to 50 BPS that includes Non-QM FICO/LTV Special and DSCR Special. Specials are here for a limited time so contact your AE for full details. Not approved yet? Get in the game.
FHA, VA, and USDA Updates
Even though assumable loans haven’t been around in forty years, there is a subset of mortgages are readily assumable. Namely, those insured or guaranteed by the Federal Housing Administration, the Department of Veterans Affairs and the Department of Agriculture's Rural Housing Service. Together, FHA, VA and USDA loans accounted for around 18% of mortgage origination volume in the second quarter of 2022, according to data gathered by the Urban Institute.
FHA published Mortgagee Letter 2022-20, 2023 Nationwide Forward Mortgage Limits, which provides the maximum mortgage limits for FHA-insured Title II forward mortgages. These new loan limits are effective for case numbers assigned on or after January 1, 2023, through December 31, 2023. Mortgagee Letter includes table listing the CY 2023 FHA loan limit thresholds for low-cost and high-cost areas.
FHA granted two temporary partial waivers to its Home Equity Conversion Mortgage (HECM) loss mitigation policies. Both waivers continue the same flexibilities outlined in prior waivers dated June 16, 2022, that expire on December 31, 2022. View FHA INFO 2022-98 for specifics.
USDA Rural Development announced, in its 11/28/2022 bulletin, Interest Rate Increase for SFH Direct Programs.
Don’t miss out on Carrington Correspondent’s December pricing specials. Receive up to a 75 BPS price improvement on select FHA and VA loans, loans must lock in December.
Legal and Compliance Snippets
Compliance, using legal issues as a backdrop, are their own discipline within residential lending. Let’s take a look at some recent thoughts on various topics.
MQMR came out with a new compliance hot topic: common risks an audit department/external auditor should be aware of to identify payroll schemes and related fraud. There are four categories of red flags: Employee information anomalies. An employee’s Social Security number (SSN) is not listed, or multiple employees have the same SSN; an employee doesn’t have any deductions-for taxes or benefits-coming out of the paycheck; or there are multiple address changes within a year or so. Payroll-register anomalies for direct deposits. The same bank account number is used for multiple employees, potentially indicating a ghost employee’s paycheck is being deposited into the same account another employee uses. Multiple bank accounts for one employee’s paycheck could potentially indicate that a ghost employee’s paycheck is being split between co-conspirators. Payroll-check anomalies. Multiple checks are issued to an employee within one pay period, or an image of the payroll check shows it was endorsed by someone with a name different from the payee’s. Bonus or pay-increase anomalies. An employee receives a bonus at a time different from the company’s typical bonus distribution, or an employee receives multiple pay increases within one year.” Companies should compare payroll files against the master employee file for inconsistencies and duplicate checks. Reconcile the number of paychecks generated per cycle to the number of active employees within the Company for every pay cycle. If the number of payees is greater than the number of employees, then the Payroll Department should investigate further. Have controls in place to ensure that no more than one paycheck is generated for each employee each pay period, and to ensure that bonus checks are only generated at company-authorized intervals.
Can an ex-spouse cancel a mortgage loan? Jonathan Foxx, Ph.D., MBA, recently wrote about a comment in TILA about an exemption to the “Right to Cancel.” For any credit transaction in which a security interest is or will be retained or acquired in a consumer’s principal dwelling, the Truth-in-Lending Act (TILA) gives each consumer residing in the dwelling whose ownership interest is or will be subject to the security interest the right to rescind the transaction (otherwise known as the “Right to Cancel”). This right does not apply to transactions expressly exempted and for instances where the consumer has appropriately waived rescission. One exemption to the Right to Cancel applies to “residential mortgage transactions.” The term “residential mortgage transaction” is not limited to a first lien or equivalent security interest. The term includes junior security interest transactions when created or retained in the consumer’s principal dwelling to finance the acquisition or initial construction of that dwelling. Read on for more.
Lenders Compliance Group's Jonathan Foxx, Ph.D., MBA, recently wrote on prohibited acts and practices are involved in Regulation Z. Violations are more than a UDAAP issue, as there are also violations of Regulation Z based on prohibited acts and practices. Regulation Z, the implementing regulation of the Truth-in-Lending Act (TILA), imposes restrictions on the advertising of closed-end consumer credit plans. Specifically, Regulation Z prohibits the following seven acts or practices in advertisements for credit secured by a dwelling: misleading advertising of “fixed” rates and payments, misleading comparisons in advertisements, misrepresentations about government endorsement, misleading use of the current lender’s name, misleading claims of debt elimination, misleading use of the term “ ‘counselor," and misleading foreign language advertisements.
Capital Markets
MCT’s award-winning Investor Services technology opens the door for residential mortgage investors to help 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. Watch this short video to learn how MCT’s Investor Services division pairs industry leading expertise with products such as BAM Marketplace, allowing buyers to bid regardless of approval status and sellers to receive automated live pricing from every buyer on the platform. Additionally, join MCT for an upcoming webinar today at 10am PT when MCT’s Phil Rasori and Justin Grant, and Mr. Cooper’s Chis King introduce BAMCO, discuss the new BAMCO co-issue executions via agency integrations, and show you how co-issue loan sale transactions are now integrated into MCT’s whole loan trading platform, making the process of selling co-issue more convenient and transparent. Register for the webinar.
Turning to rates, we had a little rally in the bond markets yesterday due to poor risk sentiment after the recent bevy of better-than-expected economic news raised fears that this would cause the Fed to hold rates higher for longer. We also had a hawkish rate hike by the RBA and Statement that the board expected to hike rates further. But we are in the blackout period before the Fed’s meeting next week, which occurs around the same time as the next economic release of note (CPI), and it is pretty quiet, news-wise, out there.
Today sees another light calendar that began with mortgage applications from MBA. Applications decreased 1.9 percent from one week earlier, though last week’s results include an adjustment for the observance of the Thanksgiving holiday. We’ve also received final Q3 productivity and unit labor costs (). Later today brings October consumer credit. Without much to stimulate action, we begin the day with Agency MBS prices worse .125 and the 10-year yielding 3.54 after closing yesterday at 3.51 percent.