TPO, Market Analysis, VOE, Real Estate Search Tools; GSE and USDA News
“I named my dog ‘5 Miles’ so I can tell people I walk 5 Miles every day.” This morning, I head to Yosemite National Park for some camping, hiking, and biking. National parks receive 325 million visits a year, about 4 million of which are Yosemite’s compared to top U.S. sites like the Blue Ridge Parkway and the Golden Gate National Recreation Area, both with over 15 million. While we’re on comparisons and moving around the nation, is the South rising again? Recently built housing units make up the largest share of homes in Austin, Nashville, and San Antonio, all roughly around 5 percent. It's much better than the 1.95 percent across the nation’s 50 largest metros' 75.89 million housing units built over the past two years. Conversely, new homes make up the smallest share of the housing supply in three Northeast metros: Hartford, Buffalo, and Providence. (Found here, this week’s podcasts are saponsored by Essex Mortgage. Essex specializes in providing exceptional mortgage subservicing solutions tailored to meet your specific needs. Looking to capitalize on your excess servicing strip? Check out Essex’s servicing offerings today! Interview with Caruso Home’s Christy Beck and Crib Equity’s Skye Laudari on affordability challenges and solutions from both a builder and product perspective.)
Lender and Broker Products, Software, and Services
Waterfalls form their own microclimates; all that mist coming off the cascading water produces the perfect environment for lush plant growth (and sometimes even wine production, as seen in the Niagara Escarpment). With the right verification waterfall, lenders can create the perfect ecosystem for success, too. That’s why, instead of relying on a single verification of income and employment (VOIE) provider, lenders are increasingly building a cascade of solutions. Read this article for an explanation of how putting consumer-permissioned VOIE data at the top of the waterfall helps lenders nearly double their verification success rate while saving an average of 80% on total verification costs.
NEW EBOOK: How to win borrowers by pairing human-led support with leading technology. Nearly 70 percent of millennial and Gen Z buyers report having “some,” “very little,” or “no” knowledge about the mortgage process. The good news? Buyer illiteracy creates a massive opportunity for lenders prepared to step up. Created in partnership with ACUMA, Maxwell’s newest eBook will teach you how to provide expertise and resources to home buyers early and often, creating a lasting bond that translates into long-term business. Learn how to select technology that wows buyers, ways to balance human-led support with a borrower experience, and more. Click here to download Finding Balance: How to Pair Mortgage Technology with Human Support to Drive Homeownership in Your Community.
When generating non-QM loans, traditional marketing efforts simply don’t cut it anymore. A 3 percent click-through rate on your email campaigns might be the norm, but it won’t provide your salespeople with the conversations they need. Privy offers something different, something better. A branded real estate search and investing platform. Privy lets lenders automate borrower acquisition and retention. You become present at every step of a borrower’s transaction, from when they are just browsing to when they are ready to close. You are just a button click away. Provide your existing borrowers with the technology to close more investment deals while you close more loans. Contact Brad Bieber (803-730-5032) to learn more about Privy’s Enterprise Solutions.
“Truv offers income and employment verification through Fannie Mae's DU validation service. We're thrilled to announce that Truv is now an authorized report supplier for mortgage lenders using Fannie Mae's Desktop Underwriter® (DU®) validation service. With Truv, lenders can lower costs by up to 80%, reduce risk of fraud and buybacks by leveraging real-time data directly from the source, and accelerate growth by increasing pull-through rates and closing loans faster. Contact our team for a demo today to start saving. Learn more.”
Don’t miss ICE’s upcoming Mortgage Monitor webinar where you’ll gain critical insights into housing and mortgage market trends. During this informative webinar, ICE economic and product experts discuss borrower demand, housing affordability, interest rates, available equity and other factors that impact your lending strategies. The information is based on the most current analysis of ICE’s industry-leading U.S. mortgage, housing, and property data assets. It’s free for you to attend the webinar: just sign up here. The next webinar is tomorrow, Thursday, May 2, from 2 – 3 p.m. ET.
Correspondent and Wholesale Products
“Are you seeking to broaden your product offerings? Look no further! Lakeview Correspondent invites you to secure a spot on our calendar for a meeting at the upcoming New York MBA Secondary Conference next month. We are thrilled about the opportunity to connect with industry leaders, including professionals of your caliber. Whether you’re interested in discussing the latest innovative products or exploring collaboration with a trusted liquidity partner, we’re here to engage in meaningful conversations. Don’t miss out on this chance to explore synergies and chart a course toward mutual success. Request a meeting today.
“AFR Wholesale®, in collaboration with Enact, is thrilled to announce an exciting event: ‘Are You Smarter than an Underwriter,’ featuring special guest Mary Kay Scully. This engaging session is scheduled for May 16th at 2 pm EDT and promises to be both informative and entertaining. Register Today! Participants will have the opportunity to test their knowledge and gain insights into Fannie Mae and Freddie Mac guidelines from industry experts. Don't miss out on this unique chance to engage with key players in the industry and enhance your understanding of underwriting practices. Register now to secure your spot and join us for an insightful and interactive session. Contact us at sales@afrwholesale.com, 1-800-375-6071, or visit www.afrwholesale.com.”
Mortgage Action Alliance: Strength in Numbers
This week, the Mortgage Bankers Association (MBA) kicked off its annual Mortgage Action Alliance (MAA) Action Week campaign dedicated to boosting membership and increasing engagement in the legislative process. MAA is the MBA’s FREE grassroots advocacy network for real estate finance professionals- 75,000+ total members and growing. This year, MBA is gratified to have 90 organizations (including MBA and 20 state associations) participating. MAA is a powerful tool to speak directly to policymakers at the federal, state, and local level when important legislation is being considered. Having regular contact with your lawmakers and their staff through MAA Calls to Action is critical to ensure your elected officials understand how policy issues affect you, your customers, and the communities you serve. Get involved today! Don’t forget to register for the MAA Quarterly Webinar on Thursday, May 2, from 2:00-3:00 pm ET.
Government Agency News
Freddie Mac (OTCQB: FMCC) today reported its First Quarter 2024 financial results and filed its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission: Net Revenues of $5.8 billion, Net Income of $2.8 billion, and Comprehensive Income of $2.7 billion.
The Federal Housing Finance Agency (FHFA) released its Fair Lending, Fair Housing, and Equitable Housing Finance Plans Final Rule, together with Fannie Mae and Freddie Mac’s (the Enterprises) Equitable Housing Finance Plan updates for 2024 and Performance Reports for 2023.
Remember that the FHFA only regulates Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Many believe that this will only indirectly impact lenders but have taken note that the FHFA is saying it can regulate UDAP (unfair and deceptive acts and practices as part of this fair lending rule). It is way above my pay grade to say if the FHFA has the authority to regulate UDAP, but the key point for lenders may be this provision: “FHFA does not expect the final rule will impact primary market lenders, as they are already subject to UDAP compliance requirements from the other Federal financial regulators, including the Consumer Financial Protection Bureau, and the Federal Trade Commission. This final rule does not apply to primary market lenders and FHFA’s enforcement and supervision would be limited to its own regulated entities.”
FHA revised planned updates to its Home Equity Conversion Mortgage for Purchase Program and published Federal Register Notice (Docket 6382-N-02) and supporting Mortgagee Letter (ML) 2024-06, The FR Notice and ML are effective for all HECM case numbers assigned on or after April 29, 2024. All other changes previously announced in the October 24, 2023, FR Notice and October 31, 2023, Handbook 4000.1 update, remain unchanged.
The Department of Housing and Urban Development’s (HUD) Office of Environment and Energy (OEE) and the U.S. Department of Agriculture (USDA) published a Notice of Final Determination, [Docket No. FR-6271-N-03] in the Federal Register. This final determination fulfills a statutory requirement under the Energy Independence and Security Act of 2007 (EISA) that requires HUD and USDA to jointly adopt the most recently published energy efficiency standards for single family and multifamily homes, subject to an energy efficiency determination by the U.S. Department of Energy (DOE) and a cost-benefit housing “affordability and availability” test by HUD. Compliance dates for this final determination vary according to program type and will follow the implementation schedule described in Section VI of the notice.
The Department of Housing and Urban Development’s (HUD) Office of Environment and Energy (OEE) published the final rule, [Docket No. FR-6272-F-02] in the Federal Register revising HUD’s regulations governing floodplain management and the protection of wetlands to implement the Federal Flood Risk Management Standard (FFRMS) in accordance with the Executive Order 13690. For specific compliance dates, refer to the final rule.
With the posting of Procedure Notice (PN) 611 dated April 19, 2024, changes were made to Handbook-1-3550, Appendix 10, Single Family Housing Field Guidance on Disaster Declarations, to lower the maximum Section 504 grant assistance in Presidentially declared disaster areas from ten percent of the national average area loan limit to $15,000. As noted in the PN, this action follows a reduction in available funding. For general disaster guidance and resources, view Rural Development Disaster Assistance.
USDA Rural Development’s April 23rd Bulletin announces an interest rate increase for SFH Direct Programs.
Fannie Mae partnered with Freddie Mac to create standardized subordinate documents and nearly twenty state documents are now available, along with authorized changes. To learn more about these documents and efforts to expand access to down payment assistance, View Fannie Mae information on Down Payment and Closing Cost Assistance.
Consider a scenario where a homeowner, faced with disability and reduced income, is unable to reinstate their mortgage or resume payments. There is deferred maintenance and no equity in the home. While awaiting an assisted living placement, the borrower could afford local market rents. How should a servicer respond in this delicate situation? Review Fannie Mae’s solution webinar and download the presentation.
Capital Markets
The Federal Reserve will likely maintain higher interest rates for an extended period due to firmer-than-expected inflation in early 2024, despite market expectations of rate cuts this year. During the press conference today, Chair Jerome Powell is widely expected to emphasize the necessity of this approach to curb economic overheating, indicating potentially no rate cuts in the near future.
Ahead of today’s Federal Open Market Committee decision, which could alter rate cut expectations for the remainder of 2024, bond prices once again sank yesterday, pushing yields up. Between the statement and Fed Chair Powell’s press conference, analysts anticipate a hawkish message and the Fed signaling to the markets that it is comfortable keeping rates higher for longer, while stopping short of introducing the possibility of raising rates further. Pricing in fed funds futures markets now suggests only one 25 basis point cut for the year as the most likely scenario to play out, a large departure from the six+ cuts priced in at the start of the year. As discussed earlier this week, the Fed is close to tapering its balance sheet reduction by reducing the runoff of its Treasury securities, which shouldn’t impact mortgage-backed securities. The runoff for mortgage-backed securities continues at the organic pace of prepayments.
We learned yesterday that the FHFA Housing Price Index was up 1.2 percent month-over-month in February and 7.0 percent year-over-year after decreasing 0.1 percent in January. The S&P Case-Shiller Home Price Index was up 7.3 percent year-over-year in February after increasing 6.6 percent in January. Separately, consumer confidence slumped to the lowest level since mid-2022 as Americans’ outlook for the economy deteriorated. Confidence is slipping amid concern about the current labor market situation as well as future business conditions and whether income can keep up. And finally, a broad gauge of U.S. labor costs closely watched by the central bank accelerated in the first quarter. At 1.2 percent growth over the first quarter, the Employment Cost Index was a hefty upside surprise versus consensus expectations for a 1.0 percent gain. On a year-over-year basis, compensation costs are up 4.2 percent, unchanged from Q4 and the latest sign progress in lowering inflation stalled early this year.
Today’s economic calendar kicked off with mortgage applications decreasing 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. We’ve also received ADP Employment and the Quarterly Refunding announcement, where coupon sizes remain unchanged following Monday’s refunding estimate. Later today brings S&P Global Manufacturing PMIs, ISM Manufacturing for April, construction spending for March, JOLTS job openings, and the aforementioned latest FOMC decision followed by Chair Powell’s press conference. We begin the month of May with Agency MBS prices little changed from Tuesday’s close, the 10-year yielding 4.68 after closing yesterday at 4.69 percent, up 49 basis points over the course of April, and the 2-year at 5.03.
Employment
Sierra Pacific Mortgage (SPM) is expanding its Retail Channel nationwide by welcoming top mortgage originators and production teams who are seeking stability and revenue growth in their market. “LOs and their production teams want to have a seat at the table and not simply be absorbed by a larger organization,” says Rick Roque, SPM’s EVP of Retail Sales. “Large bureaucracies only add to your pricing, take away from your comp, or interfere with service levels required to be competitive. We are inviting all production teams to come leverage our products, technology, and build with Sierra. Here, you won’t simply be another branch or regional team.” Sierra Pacific Mortgage was founded in 1986 and remains one of the industry’s most successful privately held mortgage banking firms in the nation. For more information on how Sierra can take your career to the next level, contact Rick Roque.
Fairway Independent Mortgage is hosting a confidential Virtual Fairway Day tomorrow, May 2, at 2 PM CT. "Want to know what makes Fairway the best mortgage company to work for? Now’s your chance! Join us and learn everything you need to know about Fairway's products, platforms, training and coaching directly from Fairway CEO, Steve Jacobson, President of Retail Sales East, David Lazowski and other executives."