AVM, Audit, Compliance, Referral Network Tools; Conventional Conforming Changes

Do you know anyone in a “Situationship?” You know, a romantic or sexual relationship that is not considered to be formal or established? People in many varying degrees of relationships buy homes together, and using multiple incomes has become arguably more important in recent years. The math is not hard. The “average” person has a student loan, or a car loan, or credit card debt, or all three. Throw in interest rates around 7 percent, homeowner’s insurance of possibly thousands of dollars, utilities, property taxes, utilities, maintenance, mortgage insurance… you get the picture. Home affordability has deteriorated for several months in a row due to all of those reasons, not the least of which is mortgage rates, sidelining many prospective buyers from entering the housing market. Even the Fed noted it in its Beige Book, saying that “tight credit standards and high interest rates continued to constrain lending growth. Housing demand rose modestly, and single-family construction increased, though there were reports of rising rates impacting sales activity.” (Today’s podcast is found here and this week’s is sponsored by Bundle, the attorney-prepared legal documents company that is dedicated to the real estate, mortgage, and title industries. Fuel your operations and execution of documents from deeds to subordinations to assignments, and everything you need for any order, in one bundled price; receive 20 percent off using the code “Chrisman” at checkout. Hear an interview with Bundle’s Courtney and Frank Dec on attorney prepared documents germane to the mortgage industry.)

Software, Products, and Services for Lenders and Brokers

Winning Agent Business: The lender’s guide to building a strong referral network, updated for 2024! The new rules mandated by the NAR settlement go into effect August 17th. That means agents are more incentivized than ever to show their clients value—and they’re actively looking to partner with top-tier lenders in their market. Want to take advantage and grow your referral business? Maxwell just updated its Winning Agent Business eBook with new tips straight from agents to help you better network to create a strong funnel of referral leads. Download your free copy to learn qualities agents value in their lending partners, networking dos and don'ts, ways to become a go-to lender, and more.

“As summer approaches, we’re reminded of the fascinating phenomenon of cicadas emerging after years underground. Just like these insects, compliance challenges can sometimes seem to surface unexpectedly. But unlike the cicadas, you don’t have to face these challenges alone. Take it from Valerie Silva, SVP Compliance Officer and Associate Counsel at Amerant Mortgage, “I see the difference in what MQMR provides; the quality of their team and talent has made my compliance life better.” At MQMR, we’re here to help you navigate the complexities of audit, risk, and compliance. Whether it's dealing with Fair Lending, understanding reconsideration of value, or controlling costs through vendor management, MQMR’s solutions will elevate your business. Just as cicadas rely on their internal systems to thrive, lenders rely on MQMR’s comprehensive compliance management solutions to stay ahead. Don’t let compliance bug you: Take advantage of MQMR’s team of experts. Contact us to learn more.”

On June 20, federal regulators published new quality control standards for automated valuation models (AVMs). The standards focus especially on safeguarding the credibility and integrity of AVMs to support fair lending practices and non-discrimination in real estate property valuations. Now is the time for you to prepare. Attend a complimentary webinar hosted by ICE for an insightful panel discussion with leading valuation experts. The webinar, “New quality standards for AVMs - are you ready?,” will take place Tuesday, July 16, from 2 – 3 p.m. ET. Save your seat today.

Conventional Conforming News

Freddie Mac published the company’s annual Sustainability Report, which provides details about the company’s 2023 sustainability strategy, activities, and performance. The report also includes the company’s Sustainability Accounting Standards Board (SASB) Index and Metrics for the years 2021-2023, as well as a Taskforce on Climate-Related Financial Disclosures (TCFD) Index.

Fannie Mae updated LL-2023-05, Advance Notice of Changes to Master Servicing Processes and Systems, to reflect that changes to reporting deadlines for summary loan payments are effective with the September 2024 loan reporting cycle.

If you missed them, Fannie Mae sent out its Desktop Underwriter Validation Service Release Notes.

Strong quality control (QC) can help your organization manage risk and improve loan quality. Learn how Fannie Mae views the importance of managing risk and insights to help you achieve a best-in-class QC program. View Fannie Mae’s Beyond the Guide page.

Don’t forget that the FHFA, overseer of Freddie Mac and Fannie Mae, conditionally approved a limited pilot program for Freddie Mac to begin purchasing certain single-family closed-end second mortgages. This decision came after implementing a new approval process for products from F&F, which became effective in April 2023. The pilot will determine if the new mortgage product “advances Freddie Mac's statutory purposes and benefits borrowers, particularly in rural and underserved communities.”

There are limits. FHFA's approval includes a $2.5 billion cap on purchases, a maximum duration of 18 months, a maximum loan amount of $78,277, (in alignment with the CFPB’s Qualified Mortgage criteria), a 24-month “seasoning period” for the first mortgage, and a restriction to primary residences only. In a year and a half the FHFA will evaluate its success and effectiveness. Any proposed expansion or conversion of the pilot into a regular program will require a new round of public comments and FHFA approval, based on the pilot's initial outcomes.

Fannie Mae announced Diane Lye was appointed to its board of directors. “Lye brings years of technology and financial services expertise to the board as it helps Fannie Mae fulfill its mission to facilitate equitable and sustainable access to homeownership and quality affordable rental housing across America.”

Pennymac Correspondent Announcement 24-65 discusses its alignment with Fannie Mae clarifications to their guidelines for trust income and section 8 payments.

Pennymac will update Conventional and Government LLPAs effective for all Best Efforts Commitments taken on or after Monday, July 1st as described in Pennymac Announcement 24-64.

AmeriHome Mortgage General Announcement 20240624-CL summarizes previously published changes made during the month of June and additional changes made with the announcement.

Newrez Bulletin 2024-041 contains the following information: most recent agency announcements: effective immediately for all loans in the pipeline, unless otherwise noted. Clarifications and/or corrections to the Newrez Guides effective June 27, 2024. The memo also includes a summary of previously announced guidelines now incorporated into the Newrez Underwriting Guide. Updates to the Product Summaries and/or Overlay Matrix.

Capital Markets

Last week, markets received another inflation update showing continued moderation in price growth. Core Personal Consumption Expenditures increased 0.1 percent in May and year-over-year inflation rose at a 2.6 percent pace. Over the last three months, inflation for core services (excluding primary shelter) rose at a 3.2 percent annualized pace, which is below the year-over-year pace of 3.4 percent, so we are seeing some slight improvement: The report was right on the mark with numbers supporting a soft landing and moderating inflation, which will keep alive the market's hope for a Fed rate cut before the November election. It comes as wide-ranging economic data illustrates a downshift in U.S. growth over the first half of the year tied to the Fed’s higher-for-longer policy.

Other economic data released last week was mixed. Core capital goods orders fell 0.6 percent in May and was 0.2 percent below its level one year ago. Shipments were down 0.3 percent for the month. The final revision to Q1 GDP saw personal consumption revised lower to 1.5 percent growth versus an initially reported gain of 2.5 percent. New home sales dropped 11.3 percent in May and stood at an annualized pace of 619k units. Pending home sales were 6.6 percent below last year’s level and May marked the 30th consecutive month of negative growth on an annualized basis.

This holiday week sees markets closed on Thursday for the Independence Day holiday with an early closing on Wednesday for bonds. The economic calendar will be dominated by data on the labor market, which will be welcome data points to decipher if America’s recently white-hot employment picture has indeed cooled to about where it was on the eve of the pandemic. The latest Job Openings and Labor Turnover Survey is scheduled for Tuesday, followed by ADP's reading on private sector employment on Wednesday and Challenger job cuts, leading into Friday's nonfarm payrolls report for June. Economists expect payroll gains to slow from 272k in May to 200k last month, and the unemployment rate to stay level at 4.0 percent. Agency MBS prepayments will be released after Friday’s close and into the evening.

On the docket today we have S&P Global manufacturing PMI for June, the Institute of Supply Management Manufacturing Purchasing Manager’s Index for June, construction spending for May, and a couple of short-duration Treasury auctions that will settle on Friday, July 5, due to the holiday. We begin the week with Agency MBS prices worse from Friday’s close .125-.250, the 10-year yielding 4.41 after closing last week at 4.34 percent, and the 2-year at 4.76.

Jobs

NRL Mortgage has opened two Senior Vice President of Sales regional roles. These key leadership roles are responsible for driving NRL's sales strategy, fostering a culture of excellence, and delivering predictable results. Key Responsibilities: Lead and manage the day-to-day sales operations across all assigned branch locations. Recruit, mentor, and develop a high-performing sales team. Identify new business opportunities and partnerships to expand market presence. Foster a culture of compliance and lifelong relationships with customers and partners. Drive innovation in sales processes and technologies to enhance efficiency. Qualifications: Minimum of 15 years in mortgage operations, 7 years in leadership, Group volume minimum: 180-240M annually, proven track record driving significant sales growth and exceeding production goals. Knowledge of mortgage lending processes, regulations, and compliance. Strong leadership, interpersonal, and communication skills: Southeast Regional Role and Northwest Regional Role.

FHA has a job opening for a financial auditor, job announcement number 24-HUD-1589-P. Duties include studying pertinent laws, legislative history, regulations, contracts, and management controls. Examine and test financial records and management controls. Prepare and present reports to the management level having the authority and responsibility to act on the audit findings.

(Remember: employers can view posted resumes for several months for a nominal charge and job seekers can post their resumes for free on www.lendernews.com.)