Co-issue, eNote, Correspondent, Cust. Experience Tools; CFPB News; FHFA Delays DTI Shift; Bank News and MBS Prices
Have to buy something for someone in your life who has everything? If they’re a basketball fan, how about food smoked with the same type of wood used by NCAA basketball courts? News can be thrown at our biz has no rhyme or reason. Yesterday was one of those days, including the FHFA’s temporary hold on DTI pricing, detailed below. If you’d like some thoughts on the housing market after Silicon Valley Bank’s collapse, here you go, care of MCT. Along those lines, this Friday, “The Rundown” features Keith Little, President of Centennial Bank (Arkansas) discussing the bank failures from a banker’s perspective. Were regulators, auditors, and examiners doing their jobs? Speaking of regulators, my cat Myrtle, who is not a big fan of the CFPB, no doubt took note of yesterday’s announcement that the Consumer Financial Protection Bureau has launched an inquiry into companies that track and collect information on people’s personal lives. Some would wonder, isn’t that every government agency? And how ‘bout this: Is CNBC “recommending” lenders now? Who will read the warning at the top? “Select independently determines what we cover and recommend. We earn a commission from affiliate partners on many offers and links. Read more about Select on CNBC and on NBC News, and click here to read our full advertiser disclosure.” (Today’s podcast can be found here and this week is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology, and other services in the mortgage industry and in banking. Today’s has an interview with Richey May’s Michael Nouguier on the latest in mortgage cybersecurity.)
Lender and Broker Services, Products, and Software
To understand someone, you need to walk a mile in their shoes. The same rule applies if you want to enhance the customer experience (CX) in your servicing organization. CX is shaped by the outcomes of all the interactions that take place around products, technologies, and communication channels, including email, service reps, sales, websites and more. A lesser-known driver of CX, however, is how the employee experience affects customer outcomes. To shed light on this often-overlooked concept, Black Knight published a blog focused on how you can improve CX by first mapping the employee journey. By breaking the process down into four straightforward steps, servicers can better understand the needs of both internal and external stakeholders, so they can ultimately enhance CX and uncover new revenue opportunities. Read the blog.
Darren Harrison found himself in a bind last May when his pilot suddenly slumped over the controls, unconscious. There was nobody else on board the plane, so it was up to the 38-year-old father-to-be to save himself. Despite never having flown a day in his life, Harrison calmly nailed a three-point landing at Palm Beach International airport with guidance from air traffic control. I love this story, because it epitomizes two things MLOs need to survive in today’s market: do-or-die resolve and flawless communication. To learn how to bring every deal in for a landing with the right approach and a closed loop of two-way communication, join Cross Country Mortgage SVP Jeremy Forcier, along with TrustEngine Chief Innovation Officer Dave Savage, and Jungo CEO Michael Gulitz, next Wednesday, March 22 at 1PM ET.
Planet Home Lending’s Correspondent division is built on an unwavering commitment to Correspondent lending and the belief that strong partnerships are the cornerstone of success. Our continually refined product lineup ensures you have the right products to build volume in any market cycle. Go beyond government and conventional loans and move into profitable niche products, like renovation, manufactured homes, and buydowns. Talk to Regional Sales Manager Gary Strohwig (262-224-4435) at the IMA Spring Conference in Coralville, IA, April 3-4, Regional Sales Manager Joe Griffin (859-806-3323) and Correspondent Renovation Account Executive Margie Walsh (732-673-6228) will also be at the Great River MBA Conference in Memphis, TN, April 4-6. Reach out and put Planet to work for you.
As the 2nd largest correspondent investor in the nation, AmeriHome Correspondent remains unwavering in its commitment to deliver consistent and competitive pricing, world class customer service, and a relationship focused mindset. As a wholly owned subsidiary of Western Alliance Bank, it is important to note that the bank’s uniquely flexible, diversified business model positions them as a premier commercial bank with superior asset quality across economic cycles. The synergies between these two best in class industry participants (full suite of loan products, warehouse lines and treasury management services) make AmeriHome-Western Alliance a “must have” relationship. Make sure to connect with an AmeriHome rep at an upcoming conferences: the MCT Exchange (Mar 23-25), the Great River Conference in Memphis (Apr 4-6), the TMBA in San Antonio (Apr 28-May 2), and the NE Regional Conference of MBAs in Atlantic City (May 1-4), just to name a few!
eNotes have been taking a backseat on the priority list for many lenders as the mortgage industry slows. However, the ability to adapt and offer convenience to busy borrowers can open new avenues for lenders struggling to close in a highly competitive marketplace. Kevin Wilzbach, Director of Product Management at Wolters Kluwer, recently shared insights into the impact of the slowing market on eNote adoption. He examined the growing importance of home equity lines of business, and the importance of adaptive technology that can support all styles of closing while remaining compliant with shifting industry regulations. Gain more insight from the full article today.
CFPB: Expanding and Solidifying its Reach
“The Consumer Financial Protection Bureau (CFPB) has launched an inquiry into companies that track and collect information on people’s personal lives.” (Wait… isn’t that the CFPB?) “In issuing this new Request for Information, the CFPB wants to understand the full scope and breadth of data brokers and their business practices, their impact on the daily lives of consumers, and whether they are all playing by the same rules. This request is a chance for the public to share feedback about companies that play a significant role in people’s lives and in the economy. This feedback will shed light on the current state of an industry that largely operates out of public view, and inform the CFPB’s future work to ensure that these companies comply with federal law… The request for information will be published in the Federal Register, and the public will have until June 13, 2023 to submit their comments.”
The CFPB released the 2023 HMDA Transactional and Institutional Coverage Charts. These charts update the closed-end threshold pursuant to the United States District Court for the District of Columbia September 23, 2022, order in NCRC et al. v. CFPB.
The CFPB and the Department of Justice filed a joint statement of interest in a lawsuit alleging an appraiser and a lender violated federal law by lowering the valuation of a home because the owners were Black and by denying a mortgage refinancing application based on that low appraisal.
FHFA, Freddie, and Fannie Updates
The Federal Housing Finance Agency (FHFA) has taken a number of steps since January 2022 to update Fannie Mae and Freddie Mac’s (the Enterprises) single-family guarantee fee pricing framework with a special focus on upfront fees. In January 2023, FHFA announced redesigned and recalibrated grids for upfront fees in addition to a new upfront fee for certain borrowers with a debt-to-income (DTI) ratio above 40 percent. These updated pricing grids include the upfront fee eliminations announced in October 2022 to increase pricing support for purchase borrowers limited by income or by wealth.
Since the January 2023 announcement, FHFA has received feedback from mortgage industry stakeholders about the operational challenges of implementing the DTI ratio-based fee. FHFA has decided to delay the effective date of the DTI ratio-based fee by three months to August 1, 2023, to ensure a level playing field for all lenders to have sufficient time to deploy the fee. In addition, lenders will not be subject to post-purchase price adjustments related to this DTI ratio-based fee for loans acquired by the Enterprises between August 1, 2023, and December 31, 2023. This temporary price adjustment exception will not alter any other quality control review decisions by the Enterprises. During this time, FHFA and the Enterprises will continue to engage with industry stakeholders to address operational concerns.
The MBA’s Bob Broeksmit was quick to react. “While we appreciate the delay, we are disappointed that FHFA’s statement did not recognize the need to consider alternatives to using a debt-to-income pricing adjustment. From the beginning, MBA has emphasized to FHFA that DTI-based loan level price adjustments simply are not workable for lenders and borrowers alike. DTI can fluctuate throughout the mortgage application and underwriting process, and FHFA’s new fees will inevitably lead to borrowers’ costs changing between application and closing, requiring multiple redisclosures that will increase compliance costs and confuse borrowers.
“We will use the extra time offered by the change in the effective date to continue working with FHFA to explore alternatives that will not pose undue hardships on borrowers and lenders.”
But That Isn’t All…
As a reminder, at the direction of the Federal Housing Finance Agency, the Supplemental Consumer Information Form (SCIF Freddie Mac/Fannie Mae Form 1103) will be a required document in the loan file for new conventional loans sold to the GSEs with application dates on or after March 1, 2023. Any data provided on the SCIF must also be included in the Loan Product Advisor® (LPA℠) submission file. All versions of the LPA specifications can collect the preferred language.
Freddie Mac has more Loan Selling Advisor® enhancements, a few updates are available now and several more are coming soon. Find out what’s new and coming soon.
Fannie Mae revised the Texas Home Equity security instrument (Form 3044.1) and added a new authorized change to its instructions. Read the summary of updates.
Freddie Mac and Fannie Mae offer translated Uniform Instruments to help lenders and others in the residential mortgage industry better serve multilingual and non-English speaking borrowers in becoming homeowners. In connection with the updated 2021 Uniform Instruments, we recently published Spanish translations of our Uniform Instruments available on Freddie Mac Mortgage Resource Documents webpage. These documents are for reference only and are not to be executed.
Capital Markets
Mortgage Capital Trading announced that BSI Financial Services (BSI) has become the latest investor to join BAMCO, MCT's new marketplace platform for co-issue loan sales. BAMCO is a new set of executions within BAM Marketplace, the industry’s largest loan exchange which serves MCT’s mortgage lender clients. BAMCO brings co-issue transactions directly into MCT’s whole loan trading platform and improves price transparency by connecting unapproved sellers to live executions from potential buyers. BAMCO supports live, flow-based, loan-level MSR pricing, expanding execution options for sellers while creating new client acquisition opportunities for buyers. Those seeking more information should contact MCT.
In the bond markets, the U.S. Treasury market has experienced extreme volatility following the collapse of Signature/Silicon Valley/Silvergate Banks, and investors are concerned the disruption may persist. Experts expect thinner markets and more volatile price moves until it becomes clear how many banks are affected by the failure. How about the impact on securities backed by mortgages?
Agency MBS prices have nearly disconnected from Treasuries. The yield on the 2-year Treasury security has seen its largest rate move in 35 years, we’ve seen a large spike in implied volatility, and a large “risk-off” move led by the financial sector certainly argues for more risk premium in spreads. But as one trader put it, “Rather than viewing this as a buying opportunity, it seems most market participants now expect further widening from here, seemingly for a couple main reasons. 1) The SVB and Signature asset portfolios are likely to come out and be a significant weight on the market, and 2) the fallout from these events solidifies the fact that banks will never buy Agency MBS again (and possibly sell).
“In general, Quantitative Easing went on for too long, and forced banks to reach for yield “out the curve” (like 10-year or 30-year instruments) at the worst possible price at the worst possible time, immediately followed by a violent reversal of monetary policy. Depository banks have already decreased their demand for MBS… will it continue? And if it does, who will be the natural buyer for MBS, jumbo, and non-Agency securities?”
Rate hike expectations swung wildly again yesterday, with the fed funds futures market showing the implied likelihood of a hike next Wednesday is now close to a toss-up and there is more than a 50+ percent implied likelihood of a June cut. The Producer Price Index for Final Demand declined 0.1 percent month-over-month in February when it was expected to increase 0.3 percent. Excluding food and energy, the index for final demand was flat month-over-month. This will likely be seen by the Fed as a positive inflation report, as it also featured month-over-month declines in pipeline measures that include the index for both unprocessed and processed goods for intermediate demand. We also learned that total retail sales for February declined 0.4 percent month-over-month as there were declines in most retail sales categories following large gains in January.
Today’s calendar already has the complete set of data out for release. Import prices (), jobless claims (192k, still low, 1.684 million continuing), Philadelphia Fed manufacturing, and housing starts/permits (+9.8 and +13.8 percent, respectively: surprising!). Later today brings a rate hike decision from the European Central Bank, where a 25 basis points hike is expected, before a Treasury auction of 20-year bonds and 10-year TIPS. We begin the day with the 2-year back up to 3.96 percent, Agency MBS prices .125 better, and the 10-year yielding 3.44 after closing yesterday at 3.49 percent.
Employment
“GHMC’s latest product, FHA Manufactured Home Loans, is here! GHMC is now accepting double-wide and triple-wide single unit dwellings. Eligible applicants must meet a 640 minimum FICO score and may qualify with LTVs up to 97.75 percent and DTI up to 50 percent with AUS approval. Restrictions may apply. Please contact your AE for more information. GHMC has some new and exciting Jumbo products in the pipeline: three new products are hitting the marketplace soon, bringing you updated pricing and more advanced features than ever before. We’ve enhanced our GConnect portal to include three mortgage insurance options on the price a loan page and an estimated closing date now populating on the closing disclosure page. And GRewards are in full swing allowing brokers to earn and redeem points. Don’t miss out on the opportunity to take advantage of exciting perks such as a VIP quick pass to expedite a loan or catered lunch for your team when you lock in a loan with GHMC! We kick off the peak home buying and selling season as spring approaches. Give your borrower the peace of mind to lock in a rate while searching for the perfect property to call home with our TBD Program. To learn more, please visit us.”