Fraud Prevention Report, HELOC, LO Awareness, DSCR Products Biden’s impact on Markets

No way, President Biden decided to drop out of the presidential race on National Ice Cream Day! The markets (take your pick… stock, bond, currency, whatever) don’t like uncertainty. Fixed-income markets, including those that involve mortgage-backed securities, generally sell off price-wise and go up rate-wise with uncertainty. With President Joe Biden announcing that he will not run for re-election in November, there is added uncertainty. Kamala Harris is not a shoo-in to be the nominee although, as of this writing, other Democrats are coming out saying they will not challenge her. And of course, the VP role is anyone’s guess. Financial analysts are scrambling to look at Harris’ history in terms of being anti-corporate, pro-regulation, and so on. None of this really helps borrowers anywhere, and, in fact, much of it increases the cost of residential lending. But while the GOP has been trying to blame the Biden administration for residual inflation, it’s Trump’s plans (another round of tax cuts Democrats say will go to the rich, across-the-board tariff hikes to trigger another China trade war, and curbs on immigration that Republicans blocked earlier this year) that economists are warning will wreak havoc on global trade and send inflation right back up again. That’s a lot of headline risk, regardless of who wins in November. We still have over three months until the actual election, and we can expect even less being done legislatively in Washington D.C. Meanwhile, all lenders and vendors are just trying to do their jobs and help their borrowers. (Today’s podcast is found here and is sponsored by LoanCare, known for delivering superior customer experience as a mortgage subservicer through personalization and convenience, supporting MSR investors with a focus on customer engagement, liquidity, and credit risk. Today's episode features an interview with InterLinc Mortgage’s Erin Dee on the roles and responsibilities of a Chief Operating Officer at a mortgage company.)

Services and Software for Brokers and Lenders

Mortgage customers are telling you their frustrations, and servicers can use that feedback to deliver the mortgage experience customers are asking for. Last year, the CFPB received nearly 28,000 complaints from mortgage customers citing trouble making payments, concerns with loss mitigation issues, refinancing and more. In a new blog, ICE explores where in the loan life cycle customers were frustrated the most and how you can use this data to build a servicing operation that meets and exceeds your customers’ needs.

Human minds wander for many reasons, with lack of stimulation leading the list. Our brains just don't respond well to repetitive tasks, and soon we’re thinking about our weekend plans or picking up groceries on the way home. Enter AIVA, the well-disciplined and fully trained office assistant who’s never tired, never bored, and is willing to work 24/7 to help you be more profitable. AIVA (pronounced “Ava”) Virtual Assistants from Dark Matter Technologies use the latest cognitive and AI technology and draw from Dark Matter’s many years in automating mortgage processes to provide lenders with a digital workforce capable of relieving your staff from mundane stare-and-compare tasks, working at speeds and accuracy levels that far surpass human abilities, so your staff can focus on exceptions, problem-solving and building relationships. Learn more about AIVA today.

You can't manage what you can't measure, and in today's highly competitive market, knowing where you stand relative to your competition is a must-have data. So, want to see these numbers in black & white? With a free lender comparison data request from MMI you’ll get a custom report that shows how you stack up head-to-head with a key competitor across various production KPIs. The report includes your nationwide and peer rankings, 14-month production volume, market share and transaction growth, transaction and loan type breakdowns, and the top 5 states and counties based on market share. Dive into this critical intel to see where you’re ahead and where you need to make some gains. Submit your lender comparison data request now to benchmark yourself against a top competitor.

Podcast: Big Market Headlines Every Lender Should Consider Going into 2H24. Going into the second half of the year, there’s plenty to pay attention to in market news: From possible rate cuts to the new FCC rule on mortgage leads, changes on the horizon could drive new opportunities (and new challenges) for lenders. Here to weigh in is Maxwell’s Clear to Close crew. In this episode, Alan, Anthony, and Bryan discuss the foremost topics lenders should understand in the latter part of 2024, along with actions lenders can take to get ahead of market changes. Click here to listen to Big Market Headlines Every Lender Should Consider Going into 2H24.

FundingShield, the market leader in wire & title fraud prevention, released its Q2-2024 report showing nearly half (47%) of transactions had deficiencies. During Q2-2024, a record high 45% of transactions had CPL issues and 8.8% had wire/bank account related risks. Disparate systems and processes between the title and lending communities as well as cyber related risk from bad actors drive these high figures. An increase in title-related claims has been noticed as well as execution errors by closing agents meaning a thorough review process is needed by lenders at the transaction level. ‘With heightened cyber threats and cyberattacks leaking private information, bad actors have more data to leverage to exploit gaps in controls in the mortgage and real estate market. Lenders have been busy deploying FundingShield’s solutions to drive automation and cost savings while protecting lenders as they engage with closing agents,’ shared Ike Suri CEO. Contact Sales@fundingshield.com for demos and free trials, Meet us at the California-MBA’s Western Secondary, Palos Verdes CA 8/19-8/21.”

Third-Party Correspondent and Wholesale Programs

“Transform Your Lending Business with Hitch's Home Equity Platform. Unlock the potential of the booming HELOC market with Hitch's end-to-end white label solution. Our platform empowers traditional lenders to become home equity fintechs, offering unparalleled conversion rates and efficiency. Choose from three flexible partnership models: Affiliate: Earn $200-$350 per completed application, Broker Only: Receive 102% with full underwriting support or Correspondent: Earn 103.25% while maintaining control. Hitch delivers software and operational support for the following: Customized point-of-sale system, automated pre-underwriting, loan officer and processor portal and capital markets integration. Hitch provides the software and connects you with industry leaders for takeout: Top credit union HELOC buyer and leading investment bank that was a top home equity issuer in 2023. Experience industry-leading conversion rates and gain-on-sale margins. Join lenders like United Mortgage and Marlin Mortgage in revolutionizing home equity lending. Ready to elevate your lending game? Schedule a demo today with William Schoeffler via email or 707-328-9722.”

“Looking for flexible lending programs for your fast-paced investor clients seeking a quick closing with reduced documentation? Kind Non-QM has the perfect mortgage solution! Our DSCR options offer a minimum of 15% down, No Prepayment Penalty option, and true no ratio! Why choose Kind for non-QM? Our programs offer unique solutions with flexible terms to help a wider range of borrowers who fall outside conventional lending criteria. We understand that every client is unique and with the dedicated support of our seasoned mortgage professionals and streamlined broker technology, we ensure a smooth and simple process making getting to the closing table easy. Don't delay creating opportunities for your business! Connect with your Kind AE and start on the path towards success with Kind's non-QM product line! If you're not yet a partner with Kind, visit here.”

Chrisman Commentary Video Programs

Have you heard about (read: registered for) some of our expanded media offerings? Chrisman Commentary is pleased to bring you a variety of video shows hosted on Zoom throughout the week. Take your pick: We have a show focused on technology and innovation (Now Next Later Mondays at 1pm ET, presented by BILT Rewards), origination (Mortgage Pros Tuesdays at 2pm ET), big-name interviews (Mortgage Matters Wednesdays at 2pm ET, presented by Lenders One), headline news (The Big Picture Thursday’s at 3pm ET), opinion (Last Word Fridays at 1pm ET), advisory services (Advisory Angle first Tuesday of the month at 2pm ET, presented by STRATMOR Group), capital markets (Capital Markets Wrap second Tuesday of the month at 3pm ET, presented by Polly), regulation and compliance (Regulation Central third Tuesday of the month at 3pm ET), and reaching the next generation of homeowners (Mortgages with Millennials last Tuesday of the month at 1pm ET, presented by The Mortgage Collaborative).

If you don’t see a presenting sponsor, please reach out to anixt@robchrisman.com to inquire about opportunities.

Capital Markets

Last week’s economic headlines generally exceeded market expectations, but a deeper dive into the data revealed weakness lurking underneath, and economic activity is likely to continue to lose momentum in the months ahead. June’s core retail sales displayed signs that consumer spending is losing momentum, despite growing 0.3 percent from May and 3.8 percent from one year ago. Initial jobless claims rose to 243k, continuing its trend higher, which indicates the pace of layoffs has risen. The once overheated labor market has cooled to pre-pandemic levels. And the rebalancing has been accompanied by moderation in consumer spending, as high prices and borrowing costs tamp demand and thus price pressures.

Housing starts rose 3.0 percent in June, though the gain was due to a rise in multi-family starts as single-family starts fell 2.2 percent. The NAHB Housing Market Index also declined for the third straight month, suggesting that builders are pulling back on new projects. Given recent inflation data and rising concerns about a softening economic outlook, the markets have renewed confidence that the Federal Reserve will have the certainty it needs to begin a rate cut cycle in September, with odds at 95 percent. Additionally, the market is fully expecting at least two rate cuts by the end of the year.

As the Fed’s preferred inflation gauge has eased to 2.6 percent, not far off its 2 percent target, there’s a lot of talk about the Federal Reserve’s Open Market Committee lowering the interest rates that the Fed sets in September. But lenders know that an interest rate cut might not translate into immediately lower mortgage rates. Ask your capital markets staff: The bond market is already pricing in rate cuts, so the simple act of the Fed cutting is not necessarily going to have a direct impact on mortgage rates. And while that coveted economic soft-landing is in sight, the Fed made clear it’s walking a tight rope: The central bank doesn’t want to see the labor market weaken substantially for the sake of continuing to reduce inflation.

With it looking increasingly likely the Fed will cut interest rates by the end of the year, chatter out there is that some house hunters believe mortgage rates will fall more and are waiting for that to happen before they buy. That’s possibly foolish, as now could be a great time to make offers before house prices increase and potential buyers lose some power. Additionally, there are more homes to choose from with many listings growing stale, giving buyers an opportunity to negotiate.

After last week ended with a widespread outage of essential computer systems after a faulty software update from cybersecurity provider CrowdStrike (see Saturday’s Commentary for more), this week includes month-end supply consisting of $183 billion in fixed coupon supply and first-tier data including flash PMIs from S&P Global, the first look at Q2 GDP, PCE and Michigan sentiment. Other data of interest includes regional Fed surveys, housing-related releases, and durable goods orders. No Fed speakers are currently scheduled with the Fed in its blackout period ahead of next week’s FOMC meeting. Regarding MBS, class D 48-hours is today. And speaking of today, the Chicago Fed National Activity Index for June is today’s sole data point (+0.05, trend-like growth). Despite the political uncertainty, we begin the week with Agency MBS prices roughly unchanged from Friday’s close and the 10-year yielding 4.22 after closing last week at 4.24 percent, the 2-year is at 4.52 percent.