Fulfillment, Benchmark, Servicing, Home Equity Tools; Disaster Updates; More Banks in Turmoil

Inflation? Yes, inflation! Yesterday I flew from San Francisco to Cody, Wyoming for the WMLA Conference, and indulged in a breakfast at SFO of a slice of banana bread and one of those yogurt/granola/berry cups, heavy on the plastic packaging. $14.30! Granted, airport chow is not the most cost-effective way to eat, but still… Jobs and housing drive our economy in the United States, and tomorrow we receive the monthly jobs data. What are they making out there? Serving up slices of banana bread, airport food service employees start at $14/hour. A UPS package-car driver starts at $21/hour, and a driver with four years on the job can make about $42/hour, with an average driver earning $95,000/year with benefits. Freddie Mac made more than that per hour in the first quarter, and its 10-Q showed a net income of $2.0 billion, a decrease of 47% year-over-year, primarily driven by lower net revenues and a credit reserve build in the current period compared to a credit reserve release in the prior year period, and net revenues of $4.8 billion, a decrease of 17% year-over-year, as higher net interest income was offset by a decline in noninterest income. (Today’s podcast can be found here and is this week’s is sponsored by Blend. Want to power a better lending journey from application to close? Find out how their digital end-to-end mortgage experience can help you reach your business goals. Listen to a discussion between Robbie and me about how secondary marketing works.)

Lender and Broker Software, Services, and Products

With tappable equity nearly 60% above pre-pandemic levels, the demand for home equity (HE) loans and lines of credit is expected to increase during 2023. Given the growing interest in these products, it’s crucial that lenders find ways to reduce HE origination costs and deliver faster turn times to meet consumer expectations. View Black Knight’s complimentary webinar, Driving Efficiencies in Home Equity Originations, for an update on the HE market, including current opportunities and risks, as well as how to drive valuation workflow efficiencies amid growing product demand. Don’t miss this important and timely webinar: view it here.

“Does your subservicer oversight review simply meet the minimum compliance requirements, or does it provide you with valuable insights to identify risks and allow you to see how well your subservicer is complying with new regulations and agency requirements? Richey May’s subservicer oversight reviews enable you to play a more active role in the monitoring of the servicing of your loans and take proactive action to drive true value and reduce risk for your business. And if you’re not sure whether you should continue to retain servicing in this market, we can work with you to develop a long-term strategy and active monitoring process. By leveraging the team of mortgage industry experts at Richey May, you will gain valuable insights that help your organization reduce risk and increase profitability. Learn more about our subservicer oversight reviews and servicing strategy deep dives.”

“Digital Federal Credit Union extended its fintech partnership with Sagent! This week, Sagent announced its 5-year extension with longtime partner and customer Digital Federal Credit Union (DCU). DCU will continue to power their mortgage servicing with Sagent’s nimble, highly configurable system-of-record, LoanServ. We’re proud to play such a big role in DCU’s high-tech, high-touch member experience, and keep them in sync with real-time customer expectations and regulatory requirements. We take this role very seriously and are thrilled to keep growing with DCU: cheers to 5 more years! Read the full release here.”

When it comes to capital markets, the profit center of your company, you need the best – which is what MCT works each day to provide. Dave Gilbert, COO at Chicago Financial Services, stated, “I’m always looking for efficiency. One thing with MCT and their software is if I’m selling $100 million in loans or $5 million in loans it takes about the same amount of time. It’s not a complex system, it’s easy to understand, easy to process, and easy to maximize your profit.” View new client video testimonials to discover how MCT is helping clients achieve their goals. MCT will also review Strategies to Improve Profitability in the Current Market in its upcoming webinar on June 1st at 10am PT. In this webinar, MCT’s Phil Rasori and Paul Yarbrough will provide key hedging, trading, best execution, and MSR recommendations, as well as how to improve profitability and efficiency.

You know what your numbers looked like in March. But do you know what your competition did? And how do you compare? Find out right now with MMI’s monthly Mortgage Industry Benchmarks newsletter, which lets lenders and LOs compare their recent performance to their peers via production-based tiers. After small production increases in February, LOs in every tier saw significant pipeline growth in March. Leading the way are LOs in MMI’s Unicorn Tier ($100M+ production/year) with 47% month-over-month growth in production, and an average $9.8M in closed loan volume in March. Want to see what else Unicorn LOs did in March or how you stack up against other LOs in your tier? Sign up for MMI’s monthly newsletter for to find out and for more insights like these!

Currently in our industry, making the right technology decisions is more important than ever. We ask ourselves critical questions such as: Is there a rapid, tangible ROI? Will it disrupt our internal process? Do I have enough volume to support this decision? Will there be a decrease in quality? We are honored to offer a solution to these and so many other important questions. CandorPLUS is a Lean Six Sigma Man + Machine solution spanning the entire loan fulfillment process. CandorPLUS supports all loan types assisting underwriting and processing staff by delivering a complete decision-ready/action-ready file. This technology driven service delivers quality, speed, productivity improvements, capacity, and cost arbitrage, allowing lenders to instantly scale and deliver concierge-level satisfaction to borrowers. Click here to learn more.

Climate and Natural Impact

The U.S. is prone to tornadoes, earthquakes, flooding, hurricanes, storms, volcanoes, and fires. FEMA is the official source of disaster declarations. And when FEMA publishes them, lender and investor policies and procedures are triggered. From hurricanes to forest fires, the environmental impacts of climate change are becoming more pressing with each passing year. 90 percent of natural disasters involve some degree of flooding. Flood damage has cost Americans over $50 billion throughout the last decade.

On 4/15/2023, with DR-4704, FEMA declared federal disaster aid with individual assistance has been made available to counties affected by severe storms, straight-line winds, and tornadoes from 3/31/2023, to 4/1/2023. See AmeriHome Mortgage Announcement 20230407-CL for inspection requirements.

Natural disasters are a reality of life and these days we seem to be experiencing more of them. Whether you ascribe this to a growing global population, increased development, or just the natural variability of our ecosystem, check out ACUMA Policy Insights recent post: Add CFRAC to Your Acronymic Alphabet Soup.

Florida’s hurricane season doesn’t commence until August, but that doesn’t mean there aren’t other issues. FEMA granted individual assistance to one Florida county, Broward, to supplement state and local recovery efforts in the areas affected by severe storms, tornadoes, and flooding from April 12, 2023, to April 14, 2023 with DR-4709.

Oklahoma is prone to tornadoes. On April 24, 2023, with DR-4706, FEMA declared that federal disaster aid with individual assistance has been made available to two Oklahoma counties, McClain and Pottawatomie to supplement state and local recovery efforts in the areas affected by severe storms, straight-line winds, and tornadoes from April 19, 2023, to April 20, 2023.

And the Hoopa Valley Tribe welcomed the news that President Biden approved a major disaster declaration for the Hoopa Valley Tribe. FEMA announced that federal disaster assistance has been made available to the Hoopa Valley Tribe to supplement tribal recovery efforts in the areas affected by the severe winter storms and mudslides Feb.14 to March 5, 2023. Public Assistance federal funding is available to the tribal government and certain private nonprofit organizations on a cost-sharing basis for emergency work and the repair or replacement of facilities damaged by the severe winter storms and mudslides in the Hoopa Valley Tribal Nation. Federal funding is also available on a cost-sharing basis for hazard mitigation measures.

Capital Markets

The Fed news was expected, but attention today is elsewhere. In banking news, First Horizon is now in the news, along with PacWest, both trying to bolster confidence with investors. PacWest, whose stock dropped 50 percent, is looking at selling its securities, but many smell blood in the water despite the bank reporting that deposit outflows are not out of the normal. Meanwhile, Congress continues to jawbone about the debt ceiling, allowing spending that has already been approved.

But the Federal Reserve did what almost everyone said it would do, announcing a 25 basis points raise in its 10th consecutive interest-rate hike yesterday, bringing rates above 5 percent for the first time since 2007. Fed officials suggested it could be the final move in the most aggressive tightening campaign since the 1980s, as language indicating that "some additional policy firming may be appropriate" was removed. The Fed’s language was similar to what’s been used before to signal the end of a tightening cycle, while still (theoretically) retaining a tightening bias.

As always, data dependent: Fed Chairman Powell pushed back on suggestions that a pause is imminent during his press conference, saying that inflation is still running hot and a data-dependent approach will be used to determine if additional tightening is needed. If this is indeed the peak of the Fed’s tightening cycle, mortgage rates should drift down over the course of the year as the U.S. economy slows and as financial market volatility settles down and the banks finish selling MBS.

Ahead of tomorrow’s payrolls report and after yesterday’s strong ADP employment figures, it was reported this morning by global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc. that U.S.-based employers announced 66,995 cuts in April, a 176 percent increase from the 24,286 cuts announced in April 2022. It fell 25 percent from the 89,703 cuts announced in March, and marks the lowest month of job cuts so far this year.

We’ve also received weekly jobless claims (242k, up from 230k, about as expected), the March trade deficit (-$64 billion, down dramatically) and preliminary Q1 productivity (-2.7 percent) and unit labor costs (+6.3 percent, a contributor to inflation). Ahead of the open, Norges Bank announced its latest monetary policy decision with the ECB expected to deliver a 25 basis points hawkish hike followed by President Lagarde’s press conference. We begin the day with Agency MBS prices roughly unchanged from Wednesday’s close and the 10-year yielding 3.38 after closing yesterday at 3.40 percent; the 2-year down to 3.86.

Employment, Promotions, and Transitions

“Planet Home Lending hires exceptional MLOs and then arms them with innovative products. Interest rate concerns are reduced with our lender-paid 1-0 buydown, 1st Year Flex, our Home 2 Refi with no lender and appraisal fees, and HELOAN products for borrowers with low-rate firsts. Homebuyers build dream homes with a self-funded One Time Close construction-to-permanent mortgage. Ready to close more loans? Reach out to Planet’s VP Talent Acquisition Peter Briggs (435-709-6278). Because when you’re here, you’re home.”

In the Northwest and California, Banner Bank is searching for Mortgage Loan Officers looking to create lasting Realtor and builder relationships at a bank focused on the market today. Banner has opportunities for lenders looking for local decision making with FHA, VA, USDA, state bond and true Portfolio lending opportunities along with servicing retained Fannie and Freddie loans to assist in client retention. Additional highlighted products cover CRA lending with private label no payment down payment assistance to help assist all borrowers with the right opportunity. Banner is the right fit for an established team, or the individual looking to grow their business and take the next step in their career. Please send resumes to Aaron Miller.

Sovereign Lending Group continues to expand at its new Consumer Direct office at Fashion Island in Newport Beach, CA. While other companies are trying to figure out marketing, they have a steady flow of live transfers and smooth loan operations. Originators are expected to work in the office. No experience is needed: Sovereign will train and help you become licensed. Get rid of the market blues and call Matthew Cataño to understand how SLG can help: (949) 736-9148.