QC/Fraud, LO AI, MSR Financing, GNMA Programs; Disaster Updates and Guides - The CFPB is There for Us
It was a rough weekend. My cat Myrtle, resting comfortably at the top of the food chain, was visibly miffed at me not nominating her (again) for the vaulted “40 under 40” award. I reminded her that she is way over that in cat years, but my explanation fell on her one deaf ear and her one good ear despite me telling her how much line-caught salmon we could buy with the nomination fee. (Hey, don’t get me wrong. I know some of those folks who were nominated or selected, and the industry is better off because of them!) If lenders would like a little good news, they should know that, despite the low interest rates we saw a few years ago, people are still moving, and that’s a source of business. Around 8.6 percent of Americans moved last year, slightly more than the previous year, but still below pre-pandemic levels. Accordingly, WalletHub released its report on 2023’s Best States to Live in. Chalk it up to complete East Coast bias, but Massachusetts, New Jersey, New Hampshire, and New York took the top four spots. Really? (Today’s podcast can be found here and this week’s is sponsored by LoanCare, a Fidelity National Financial (NYSE: FNF) division and award-winning developer of the most sophisticated mortgage servicing portfolio management tool, LoanCare Analytics, built to support MSR investors with a focus on customer engagement, liquidity, and credit risk. Hear an interview with Flagstar’s Jason Lee on how capital markets departments balance volume and margin.)
Lender and Broker Products, Programs, and Services
Mortgage servicers of all sizes trust their portfolios to MSP®, Black Knight’s loan servicing system. In fact, Fahe (Federation of Appalachian Housing Enterprises), a nonprofit that serves the people and communities of Appalachia, recently signed a contract for MSP. In Black Knight’s recent announcement, Fahe states that top-tier technology will help it realize its mission and better serve its communities. Wondering if the MSP loan servicing system is the right fit for your servicing business? Learn why it’s the one loan servicing system for every mortgage servicer.
NEW: Maxwell’s Mini-Guide to Surviving Today's Big Housing Market Reset, ft. advice from Maxwell Co-founder & CEO John Paasonen, Rob Chrisman himself, theLender EVP Chris Ledwidge, and more. Is your lending business prepared for a market reset? To thrive, lenders need a fresh game plan driven by home buyer trends, creative lead generation, and insightful data. Maxwell put this guide together to help you refresh your thinking for the market ahead. In it, you’ll learn ways to rebuild your pipeline, the borrower segments that are still rising in the housing market, and how to better leverage data to make confident business decisions. Lenders: The next five years likely won’t be anything like the last five. Now is the time to rethink your business. Click here to download your free copy of Maxwell’s Mini-Guide to Surviving Today's Big Housing Market Reset.
Profitable Mortgage Companies are focused on the long-term value of the customer relationship. Essex Mortgage’s partners enjoy greater customer retention, GNMA pass-thru pricing, no overlays, no LLPA’s, NO EPOs and NO EPDs, as well as Tax Deferred asset growth and a long-term cash flow stream without having to be a GNMA issuer themselves. Please contact us to discuss how the Essex GNMA Excess MSR program can help retain and enhance your customer relationship, broaden guidelines, and expand into new markets. Please contact Kimberly Schenck.
“Your business can benefit from powerful national banking resources that incorporate personalized, one-on-one relationships with industry experts. Western Alliance Bank delivers stable, trusted treasury management and fraud protection services from cash management to financing to account security. These tools can help you keep operations running smoothly, conveniently manage custodial and payroll accounts, and originate streamlined online wire transfers. Our Specialized Mortgage Services team tailors mortgage finance products to your needs, including warehouse lending, MSR financing, note financing and corporate credit card services that offer speed to approval and certainty of execution. Discover how competitive rates, efficient cash flow cycles and a streamlined banking relationship can help you achieve your goals. Contact Mark Short (469) 702-6212, Nick Richards (646) 708-1211, Nicole Avey (720) 633-4759, Elizabeth Mix (480) 329-2122, Jim Karr (626) 390-8534 or Chris Martin (480) 341-5483. Western Alliance Bank, Member FDIC.”
Ready to mend your relationship with your loan origination system? Join the TRUE team on September 20th and hear directly from TruStone and V.I.P Mortgage on how they’re applying AI technology to solve the challenges related to their LOS platforms. The roundtable discussion will unpack the frustrations related to most of today’s more popular LOS platforms, the crucial importance of well-organized borrower data, and how applying AI at specific points in the document journey can dramatically change the way LOS platforms perform. Sign up today.
Capacity is heading to The Mortgage Collaborative's “Music in My Ears Conference” in Nashville, TN, next week! CEO David Karandish will speak on Monday, September 11th, at 3:15 p.m. about our latest offerings: generative AI-powered Guideline Search and tailored AI Assessments. Get game-changing, personalized insights on successfully implementing AI and automation in your business! Be sure to stop by our session in Nashville or book one-on-one time with our team here. The mortgage industry desperately needs a platform that securely integrates with lenders’ key systems, providing loan officers with instant, actionable answers about borrower opportunities, loan statuses, guidelines, and more. Capacity reduces the time LOs spend logging into a sea of endless systems to find information. If this sounds familiar, why not find out how Capacity can save your team time and frustration? See how it works.
“TENA Companies, Inc. is your strategic mortgage Quality Control partner in the fight against fraud. Develop your strategy against evolving mortgage market fraud with help from our proficient and highly trained auditors. Fraud involving income and employment schemes, as well as occupancy-related deception, continue to impact risk levels for all lenders. As highlighted in Fannie Mae’s July 2023 Quality Insider: Reviewing your fraud controls in QC, a robust Quality Control plan is an integral component for identifying patterns that can be indicative of fraud. These insights enable lenders to proactively implement processes for fraud prevention. Safeguard your operations, ensure risk mitigation, and strengthen your Quality Control by partnering with TENA. Contact us today!”
Disaster News and Updates
Last year, U.S. disaster damage totaled $171.5B. Destructive weather and climate events, or bad forestation or building practices, factor into the mix of hurricanes, wildfires, tornados, and drought. Few are forecasting them to decrease or affect a smaller geographic range. Is your lending operation ready? What are you telling your borrowers about insurance? Major insurers say they will cut out damage caused by hurricanes, wind, and hail, not to mention along coastlines and in wildfire prone areas, suggesting that companies will just insure for liability and fire. So if that is the case, will insurance rates fall? Of course not. But where does all of this leave the mortgage servicers?
When disasters strike, lenders often postpone loan closings, impacting origination revenue and impairing the ability to fund new loans. Loans that have already been funded may be difficult to sell, further limiting liquidity. Black Knight has a piece worth skimming, or more, about how you can reduce your financial exposure, decrease costs, and better serve borrowers by preparing before, during and after a disaster. Download a complimentary ebook: Climate-Change and Weather-Related Disasters: How to Manage Mortgage Risk.
Nearly every part of the United States faces natural disasters, whether they be earthquakes, hurricanes, tornadoes, forest fires, drought, or volcanoes. A declaration by FEMA triggers lender and servicer policies and procedures.
Mortgage Quality Management & Research (MQMR) sent out Fannie Mae Disaster Relief – FAQ. Check out more equally insightful FAQs. (To learn more about Mortgage Quality Management & Research, download MQMR’s white paper.)
Recently we’ve had Florida Hurricane Idalia FEMA-4734-DR, Illinois Severe Storms and Flooding DR-4728-IL, Mississippi DR-4727, and Vermont DR-4720: Update to End Date of Occurrence.
Florida, Georgia, and the Carolinas were hit by Hurricane Idalia, causing damage from storm surge, flooding, and high winds. Recovering from a catastrophic event like this one can feel overwhelming. It’s not always easy to know where to turn for help and what steps to take. The CFPB put together a guide to handling finances that you can share with the people you serve, to help them manage the money decisions they face. View CFPB’s disasters and emergencies guide providing resources to help recovery, including how to tackle housing issues, protect finances, deal with property damage, manage bills, and ask financial companies for help.
Freddie Mac issued a reminder to homeowners and mortgage servicers of its relief options for those affected by Hurricane Idalia. Freddie Mac’s forbearance program provides homeowners mortgage relief for up to 12 months without incurring late fees or penalties. Freddie Mac's disaster relief options are available to homeowners who have been impacted by an eligible disaster. This includes anytime the homeowner’s property experiences an insurable loss, and also covers instances where their homes or places of employment are located in Presidentially Declared Major Disaster Areas where federal Individual-Assistance programs are made available to affected individuals and households. Foreclosure and other legal proceedings are also suspended while homeowners are on a forbearance plan. More information is available on My Home by Freddie Mac where owners can read about the steps they can take to help recover from a natural disaster, including frequently asked questions related to disaster and mortgage relief.
Fannie Mae reminded homeowners and renters impacted by natural disasters, including Hurricane Idalia, of available mortgage assistance and disaster relief options. Mortgage servicers are also reminded of options to assist homeowners under Fannie Mae’s guidelines.
Under Fannie Mae’s guidelines for single-family mortgages impacted by a natural disaster:
Homeowners and renters looking for disaster recovery resources may visit FannieMae.com to learn more about addressing immediate needs. Fannie Mae also offers help navigating the broader financial effects of a disaster to homeowners and renters through disaster recovery counseling at 855-HERE2HELP (855-437-3243).
PHH Correspondent posted information regarding Illinois DR-4728: New Disaster Declared, Mississippi DR-4727, and Vermont DR-4720. Go to the PHH company library to view the announcement and for all disaster declared counties, requirements, procedures, and conditions.
On 9/1/2023, with Amendment No. 1 to DR-4734, FEMA declared federal disaster aid with individual assistance has been made available to 6 additional Florida counties affected by Hurricane Idalia from 8/27/2023 and continuing. See the attached announcement for inspection requirements. AmeriHome Mortgage 20230901-CL Disaster Announcement.
Capital Markets
It’s looking more and more like a goldilocks scenario for the Federal Reserve. Last week was crammed with key economic data on the labor market and inflation which will probably be instrumental in shaping the decision of the Fed's monetary policy committee at its meeting later this month. Many of the indicators pointed towards cooling in the economy, strengthening hopes that it would be enough for the central bank to keep rates steady. Friday's nonfarm payrolls report showed an uptick in the unemployment rate. Market participants took heart from the data, which suggests that the highly resilient labor market is finally cracking and that the effects of the Fed's aggressive tightening campaign are showing up.
More specifically, we learned at the close of last week that U.S. unemployment rose to 3.8 percent in August, a significant increase from July’s rate of 3.5 percent and the highest percentage since February 2022, as the economy continued to lose momentum built up after pandemic lockdowns. Non-Farm Payrolls barely beat consensus (expected +170k, actual +187k) and previous prints were revised lower (June was cut from +209k to +105k). More people entered the workforce, increasing the size of the labor force by 736k, which will help bring supply and demand more into balance.
Keep in mind that increased hiring and slowing wage growth are key ingredients of the Fed’s fight against pandemic-era inflation, and the overall report was good news for the bond market, as it shows the Fed's tightening is gaining traction in the labor market. In theory, this will take some of the pressure off the Fed to keep hiking rates and give the central bank some confidence to let previously enacted hikes work their way through the economy. The next Fed meeting is only two weeks away.
Though we’ve already received the latest rate decision from Royal Bank of Australia this morning, where rates were held steady at 4.10 percent, today is light on economic data. After this commentary goes out, markets will receive August employment trends and July factory orders. Highlights from the remainder of the week include September’s Fed Beige Book tomorrow and July Wholesale Inventories on Friday. We begin the trading week with Agency MBS prices worse .125-.250 and the 10-year yielding 4.22 after closing last week at 4.17 percent on no real news.