Hedging, Non-QM, Credit Verification, Digital Tools; Conventional/Conforming news; Fair Lending Interview

You should know that caffeine increases the power of aspirin and other painkillers, which is why it is found in some medicines. You should also know the “50-50-90 rule”, which definitely applies to me: Anytime you have a 50-50 chance of getting something right, there's a 90 percent probability you'll get it wrong. Cute sayings aside, one thing you don’t want to be wrong on is Fair Lending, and every lender, and their employees, should know the rules and regulations surrounding it, and know that its enforcement is a priority of the Consumer Finance Protection Bureau and is often mentioned in its Supervisory Highlights. In today’s “Mortgage Matters” presented by Lenders One (at 2PM ET, 11AM PT) attorney Brian Levy addresses Fair Lending, as well as the NAR verdict and other “hot” legal and compliance topics. Today’s podcast can be found here, and this week is sponsored by nCino makers of the nCino Mortgage Suite. With three products tailored to the needs of the modern mortgage lender, nCino Mortgage, nCino Incentive Compensation, and nCino Mortgage Analytics unite the people, systems, and stages of the mortgage process. Hear an interview with Argyle’s John Hardesty on recent integrations with Fannie Mae and ICE.

Lender and Broker Software, Products, and Services

The Loan Vision team is excited to attend the MBA’s Accounting and Financial Management Conference! Stop by table 2 in the Exhibit Hall to learn how companies that run Loan Vision show a 25 percent reduction in OPEX/time to close, a 20 percent reduction in overall accounting headcount, complete LOS to G/L automation, and improved reporting and visibility that allow for better business decisions. Be sure book time with Carl Wooloff here to get an early introduction to our newest product, that focuses on allowing our customers to be more profitable with less volume; LV-PAM, a modeling tool that provides actionable intelligence with consolidated loan data. Loan Vision’s innovation continues to provide you the “insights you need in the software you trust.”

There’s no denying that 2023 was a tough year for loan officers. See which challenges affected originators the most in the latest Loan Originators Survey Report from MGIC and Loan Officer Hub. Over 1,000 originators shared their insights on marketing, social media, referral relationships, business planning and more. Download the report to get valuable insights you can use in your own planning for 2024!

Maximize your return on every loan with better secondary pricing and industry-leading technology. To achieve profitable mortgage lending, you need solutions built for your bottom line. Maxwell’s tech-enabled platform enhances each step of the process, from point of sale to the secondary market. You’ll gain competitive secondary market pricing on a wide array of products, including non-QM and jumbo, and full-service fulfillment support on both wholesale and mini-correspondent offerings. Maxwell Capital customers leveraging Maxwell Point of Sale close 36 percent more loans than top competitors, increasing and accelerating closes, while built-in business intelligence tracks and benchmarks performance. Schedule a call with our team to learn more about Maxwell Capital and Maxwell Point of Sale to ensure profitability on every mortgage origination.

Are your mortgage lending operations built on a solid foundation? Inefficient processes, a non-digital experience and inadequate compliance can all present deep cracks in your mortgage lending foundation that can affect the overall borrower experience and create significant risk. With Wolters Kluwer’s portfolio of mortgage solutions, lenders can provide their borrowers with a fully digital experience while simultaneously simplifying and enhancing their processes. With the one of the most extensive portfolios of mortgage offerings in the market, Wolters Kluwer is there with a solution built for your needs to help you build a rock-solid, compliant, and efficient foundation. Learn more.

“Informative Research is excited to announce a strategic integration with Gateless, a visionary mortgage technology company. Lenders face the challenge of collecting, verifying, and evaluating a significant amount of data, all while striving to speed up loan approvals and reduce costs. Our new integration with Gateless’ flagship product, SmartUnderwrite®, addresses these challenges head-on with the instant delivery of credit and verification data directly into Smart Underwrite®, enabling its real-time automation and artificial intelligence to process critical underwriting functions, such as credit and income evaluation. This not only accelerates loan approvals but also drastically reduces the risk of human error. This integration is a win-win for both lenders and borrowers. Lenders can expect greater efficiency, reduced operational costs, and an edge in a competitive market. Borrowers benefit from faster loan approvals and a more streamlined application process, resulting in a smoother, more convenient experience. To learn more about our integration with Gateless and how it can benefit your lending operations, please contact us.”

Heading to IMN’s MSR Forum tomorrow? The Clayton team will be there ready to discuss how our 30 years of experience can help combat industry challenges and capitalize on the opportunities in today’s market. Clayton is the leading provider of due diligence, servicing oversight and compliance solutions with the scale and expertise to handle any size residential or commercial engagement, ensuring assets and processes meet quality, compliance and reporting standards and comply with regulatory, rating agency and investor requirements. We help get your deals done and done right. Clayton Servicing Oversight’s VP of Business Development, Sam Shanaberger, will be part of the Using a Sub-Servicer vs. Self-Servicing: Examining Strengths & Weaknesses of Both Approaches panel on Thursday, November 9th at 11:30 a.m. Be sure to attend the panel to learn more about the need for measurement in the sub-servicer selection and management process. Contact Sam Shanaberger or Tom Coffey to schedule a meeting during the forum.

TPO Products for Brokers and Correspondents

Verus Mortgage Capital recognizes that in this highly competitive and complex environment, originators are faced with many challenges… And 2024 is expected to offer more of the same. If you’re looking to thrive, not just survive, consider adding non-agency programs to your suite of financing options. With non-agency options, you can meet the needs of borrowers who require more flexibility: people with nontraditional income, those investing in properties, foreign nationals, or borrowers seeking an interest-only payment option. As the leading investor in non-agency mortgages, Verus has the extensive experience and the financial resources necessary to help originators succeed in the current market. Learn why selecting an investor partner like Verus, one that is 100 percent dedicated to non-agency and offers common sense underwriting, is so important. Contact Jeff Schaefer, EVP – Correspondent Sales, or call 202-534-1821.

Get ready to boost your year-end performance with Arc Home’s 50 Basis Point (BPS) Price Improvement Special, applicable to qualifying Non-QM and Non-Agency products. This offer is open to all TPO channels but is available for an extremely limited time, contingent on lock activity. From DSCR to Alt Income options and beyond, this substantial price improvement can be the advantage you need to close out the year on a high note. Don't miss out, click here or contact your Arc Home AE to learn more.

Conventional Conforming Updates

We still have a couple weeks before Thanksgiving, the traditional time for the FHFA/Freddie Mac/Fannie Mae consortium to release the official loan limits for the following year. But there are plenty of other changes to track.

Fannie Mae's selling guide has some changes which will take effect later this month. First, to expand access to credit and provide support for affordable rental housing, the maximum allowable LTV, CLTV, and HCLTV ratios for two- to four-unit, principal residence, purchase, and limited cash-out transactions will be updated to 95 percent. This change will not apply to high-balance mortgage loans and loans that are manually underwritten. These changes will be implemented during the DU update occurring the weekend of November 18th.

Recall that Fannie’s DU will no longer consider number of borrowers as a factor in the risk assessment. This change comes after a review and evaluation of the risk factors evaluated by DU and aligns DU's risk assessment with the Enterprise Regulatory Capital Framework, which does not include the number of borrowers as a factor in determining capital allocation. Fannie Mae anticipates that this change may result in a slight increase in loan casefiles receiving an Approve/Eligible recommendation. This change will only apply to DU Version 11.1 loan casefiles created on or after Nov. 20, 2023.

Fannie Mae Announcement SEL-2023-10 - November Selling Guide has been updated to prohibit an employment offer or contract for future employment from a family member or interested party to a transaction, updates general lender requirements regarding lender staffing, training, and policies and procedures to maintain seller/servicer eligibility, clarifies the policy to acknowledge an unauthorized transfer of ownership or change in occupancy status, and updates the Special Lender Approval Form (Form 1000A) to make it easier for lenders to apply to sell or acquire servicing for HomeStyle® Renovation Mortgages.

Auto-generation of claims in Property 360™ will be retired for loan modifications completed/closed on or after Nov. 1, 2023. View Fannie Mae’s post for details.

Freddie Mac Guide Bulletin 2023-22 announces updates pertaining to new written income analysis content examples, employed income history, earnings types and income calculation specificity updates, timeshare-related obligations, and updates to its list of unacceptable appraisal practices.

Argyle is now an authorized report supplier for income and employment verification for the Desktop Underwriter® (DU®) validation service. Contact the vendor directly to begin the onboarding process. See all Fannie Mae verification report vendors.

Pennymac is aligning with the updates announced in Fannie Mae SEL 2023-08 and SEL 2023-09. View Pennymac Announcement 23-73 for details.

Citi Correspondent Lending posted credit policy updates on Installment Debt, AIM LPA, and Accessory Dwelling Unit (ADU). In addition, Citi Correspondent Lending Bulletin 2023-10

Includes upcoming DU 11.1 Update – Support of LTV Updates Delayed and Open 30-Day Charge Clarification.

Citi Correspondent Lending is implementing changes to state geographic adjusters, effective with Best Effort locks completed on/after Friday, November 3, 2023. View Citi Correspondent Lending’s grid of the adjuster updates.

Citizens Correspondent National Bulletin 2023-18 includes information on Conventional Conforming Products ACE + PDR – LPA and USDA-RD Fiscal Year 2024 Product Updates and Reminders. See the bulletin for additional information and all lock, delivery, and purchase by dates, if required.

PRMG TPO Resource Center Updates 23-11 includes Training/Instructional Material, Condo and HOA Questionnaires, Future Income Checklist, VA LGY HUB User Registration, Added Onyx RSU Worksheet, Closing Non-QM Product Comparison Matrix, Credit Report Ordering Policy (Retail), and CalHFA Product Submission Checklist.

AmeriHome Correspondent 20231008-CL General Announcement summarizes previously published changes made during October, additional changes made with this announcement, and recent Agency and regulatory news.

Capital Markets

“Every lender wants to be more profitable, and at Optimal Blue, we’re in the business of making that possible, from pricing, to hedging, to trading, and beyond. Our latest white paper explores practical ways you can start boosting profitability in your hedging and trading processes. From aligning your front-end pricing to your actual execution marks, to incorporating hedge cost on the branch or loan officer level: Experts Steve Baselice and Mike Vough offer best practices that can set up your secondary operations for greater success. Learn more in Optimal Blue’s complimentary white paper: ‘10 Best Practices for Hedging and Trading.’”

Investors may have ramped up bets that global central bank tightening may be coming to an end, but Fed speakers have pushed back against that notion. Fed Governor Bowman held to her expectation of more hikes yesterday, while Minneapolis President Kashkari said it’s too soon to declare victory on inflation. Despite making progress on inflation in recent months, the Fed needs to see more data to see if further policy tightening is required. Accordingly, investor hopes of earlier than expected central bank rate cuts have diminished this week. One could argue that markets have experienced an outsized rally based upon investor hope, which will ultimately lead to continued elevated volatility.

The goal of the Fed moving forward is for unemployment to go up modestly, while inflation comes down markedly. The Consumer Price Index isn’t yet low enough for consumers to ignore and most prices have not fallen, only their rate of increase has. As a result, consumer credit increased by $9.0 billion in September, including a $3.1 billion increase in evolving credit. Consumers continue to spend but are eating into savings aided by tighter lending standards. Much like consumers, the Treasury needs money to operate, and this week is engaging in a series of auctions that offer $112 billion in new Treasury debt. The auctions will put last week's torrid rally to the test, though yesterday saw a strong $48 billion 3-year note sale, which precedes today's $40 billion 10-year note sale.

Today’s economic calendar kicked off with mortgage applications increasing 2.5 percent from one week earlier, according to data from MBA. The increase was expected after three straight weekly declines in application activity. However, refinance activity across every month remains at the slowest pace in this millennium. Later this morning brings wholesale inventories and sales for September, the aforementioned Treasury auction of $40 billion 10-year notes, and remarks from Fed Governor Cook, Fed Chair Powell, New York President Williams, Vice Chair Jefferson, and Fed Vice Chair of Supervision Barr. We begin the day with Agency MBS prices roughly unchanged from Tuesday night and the 10-year yielding 4.58 after rallying to close yesterday at 4.57 percent.

Jobs

“Homestead Funding takes a people-first approach in our company culture and the neighborhoods we serve. Even in the face of current industry challenges, we continue pushing forward and disrupting the mortgage space. Our collaborative and progress-driven attitude was what first drew Dave Stagnitti, CMB, to our executive team. In September, Dave became Homestead’s VP of Retail Sales, and he has wasted no time in formulating strategies for continued sales team growth and product portfolio diversification. Just this month, Linda Mallia, former President of Hunt Mortgage Corporation, also joined our team, with a plan to focus on expansion and growth throughout Western NY. At Homestead, we’re dedicated to bringing in industry leaders to help broaden our footprint and reach even more communities. Are you looking to join a team that propels you forward instead of standing still? If so, contact Michele Teague today at 518-368-1494!”