Reg. X, POS, Soft-Pull, VOE Products; Conventional Conforming Changes; Housing Supply Hits

Tis the time of year when pumpkins have magically appeared in bins outside supermarkets and on porches. Which state grows the most? It’s hard to beat Illinois with its 18,000 acres of pumpkins. 2,100 miles away, in California (with roughly 900,000 acres of grapes), what happens when a family with a vineyard tries to do a tiny bit to help the housing/shelter market? In California, it isn’t pretty: Decent people, not criminals… They should have painted it camouflage. In addition to the terrible personal toll, wide swaths of housing are wiped out by fire (Maui) and now Helene, impacting supply and demand. Whether it is trends in residences, income, or credit analysis, things change. Do the Agency guidelines fit the current trends in income? Arguably not. (Capital markets staffs certainly can’t hedge GSE changes to gfees.) What about non-owner DSCR loans, are you concerned about that credit risk? You can’t hedge that either. Time will tell. For supply, new listings came in recently 8% ahead of a year ago, sending total active inventory 33% higher versus last year, while the median listing price was 1% lower, all encouraging signs for buyers. (Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a Warranty, eliminating repurchase worries. Hear an interview with Nectar’s Derrick Barker on the long-term implications of builders not meeting market demand for homes.)

Lender and Broker Software, Services, and Loan Programs

Compass Mortgage Finds a Better Way to Save 60-80% on Verifications. “In our first year with Truv we saved 60-80% on verifications. Cost savings are both obvious and significant from day one.” - Justin Venhousen. See Truv in action.

MCT reported a 3.17% rise in mortgage lock volume in September compared to the previous month. While purchase lock volume has slowed during August and September from expected seasonality after the summer buying season, refinance activity has steadily increased. This uptick in refinancing has offset the usual seasonal decline in overall lock volume. Andrew Rhodes, Senior Director and Head of Trading at MCT, explained “This data signals a potential shift in strategy for loan officers, who are increasingly targeting borrowers looking to refinance.” However, a more significant rise in refinance activity depends on mortgage rates dropping beyond market expectations. MCT’s monthly Lock Volume Indices Report provides a snapshot of rate lock activity in the residential mortgage industry, categorized by lock type: purchase, rate/term refinance, and cash-out refinance across a variety of lenders. Download the full report to see changes in lock activity over the last year.

Today’s mortgage landscape is competitive, and mortgage lenders want to avoid spending money, time and resources on prospects who might eventually switch to another lender. Similarly, potential borrowers want the flexibility to shop for mortgages without impacting their credit. TransUnion is improving the mortgage underwriting process with TruVisionTM Trended Early Access Soft Check. This soft inquiry report, which pulls industry-leading TransUnion trended credit data, enables mortgage lenders to begin underwriting earlier, reducing unnecessary, upfront verifications and processing costs while helping protect pipelines. Best of all, lenders can reassure potential borrowers they can shop around without fearing their credit scores might be negatively impacted. Now that’s what we call a win-win! Learn more here.

Maybe it’s the lack of support, maybe it’s the price increases, or maybe it’s Maybelline, but a lot of lenders aren’t feeling the love from their POS vendors. If you’re a lender that cares about providing great service, you better demand the same from your tech partners. If this message resonates with you, it’s time to check out LiteSpeed by LenderLogix.

Lenders and servicers know one of the few constants in the mortgage industry is change, and more change may be coming to loss mitigation. The Consumer Financial Protection Bureau has published a proposal to revamp the current loss mitigation rules. Read this recent MBA Newslink article featuring Vicki Vidal, Senior Regulatory Counsel at ICE Mortgage Technology, as she explores the amendments to various sections of Regulation X and discusses the effects it will have on servicing operations if it’s finalized.

Agency and Conventional/Conforming Updates

On September 22, the Governor of California signed AB 3100 into law which will change the requirements for conventional home mortgage loans in the state. The legislation will require any conventional home mortgage loan originated on or after January 1, 2027, secured by an owner-occupied residential property with up to four dwelling units, to include provisions allowing any existing borrowers to purchase another borrower’s property interest.

The Federal Housing Finance Agency (FHFA) released an interactive tool for tracking data on multifamily mortgages that enables users to review details about loans and properties at both the state and national levels. The tool, known as a data visualization dashboard, provides a more accessible way to view and understand data on multifamily mortgages. It is derived from the Public Use Database (PUDB) of mortgage acquisitions by Fannie Mae and Freddie Mac (the Enterprises). FHFA releases the PUDB for Enterprise mortgages annually to meet FHFA’s requirement under 12 U.S.C. 4543 and 4546(d) to publicly disclose data about the Enterprises’ mortgage acquisitions. The database can be found at: https://www.fhfa.gov/pudbdata.

Federal Housing Finance Agency (FHFA) issued an Advisory Bulletin to the Federal Home Loan Bank (FHLBank) System that communicates guidance regarding the FHLBanks’ practices of providing their members with access to advances in a safe and sound manner.

FHFA released its first quarter 2024 Foreclosure Prevention and Refinance Report. The report shows that Fannie Mae and Freddie Mac (the Enterprises) completed 52,154 foreclosure prevention actions during the quarter, raising the total number of homeowners who have been helped to 6,957,884 since the start of conservatorships in September 2008.

FHFA published its 2024 second quarter data for the Uniform Appraisal Dataset (UAD) Aggregate Statistics and introduced new condominium data as part of the UAD Aggregate Statistics. This is the first publicly available data drawn from condominium appraisal records and complements the existing data for single-family homes.

After considering issues that commenters had raised about FHFA’s original proposed rule issued in July 2023, FHFA announced that it has revised the Agency’s proposal to amend the Suspended Counterparty Program (SCP). This includes distinguishing between misconduct that poses material risk to the safety and soundness of the regulated entities from behavior with de minimis impact.

Fannie Mae’s Uniform Appraisal Dataset (UAD) and Forms Redesign team has updated existing documentation to align documents, make minor changes, and provide further clarification. A detailed Revision History is provided in each document. In addition, two additional Uniform Residential Appraisal Report (URAR) sample scenarios have been created.

Fannie Mae’s standardized subordinate documents have been published for the District of Columbia, Indiana, Kentucky, Louisiana, Michigan, Oregon, and Texas. View these documents and learn how we are working to expand access to down payment assistance.

Discover how Fannie Mae is modernizing property valuation with the Uniform Property Dataset (UPD), a standardized approach that enhances quality and consistency in the mortgage process.

The September Appraiser Quality Monitoring (AQM) list is posted to Fannie Mae Connect.

Fannie Mae launched a new online education course that outlines the benefits of HomeStyle® mortgages and helps simplify the process. “HomeStyle Mortgages Unlocked,” details the steps to originate, sell, and service HomeStyle Renovation and HomeStyle Energy. Course takers can test their knowledge, gain tips, and learn how to become an approved HomeStyle Renovation Lender.

In the October Loan Product Advisor® (LPASM) Release, Freddie Mac introduces LPA ChoiceSM, enhanced feedback messages to deliver unprecedented information to help you identify opportunities, make faster and informed decisions and go from Caution to Accept. View the October release to show how you can get ready to take advantage of LPA Choice and our other enhancements.

On September 29, Freddie Mac is integrating additional Condo Project Advisor Project Assessment Request (PAR) statuses for condo projects directly into LPA to give you earlier insight into why a particular condo project status has been assigned. Read the September 2024 Release Notes for more information.

The latest Fannie Mae Quality Insider explains defect trends we are seeing and offers valuable insights to understand these issues. Read the article for suggested best practices to help manage risk and improve loan quality.

Freddie Mac published a Uniform Loan Delivery Dataset (ULDD) job aid to help prepare you for the alignment with the redesigned Uniform Appraisal Dataset (UAD 3.6).

Citi Correspondent Lending Bulletin #2024-09 contents include numerous credit policy updates on Agency & Non-Agency Loans such as Rent Related Credits, Unacceptable Collateral & Unique Properties, Rental Income and Interested Party Contributions. Additional updates on 2024 MFI Limits - Citibank Assessment Areas & SPCP.

UWM announced that it will honor the expected 2025 conforming loan limits for conventional and VA loans locked starting today, September 18: $803,500 one-unit conventional and VA loans (increased from $766,550). Updated conforming loan limits are also available on conventional loans for 2–4-unit properties

Pennymac Correspondent announced, in Pennymac Announcement 24-96, that they’re raising Conventional loan limits to $795,000 for all commitment types, effective 09/17/2024.

A&D Mortgage announced that new, increased loan limits for conventional mortgages went into effect on September 23, 2024. These updated limits are designed to help homebuyers and investors access greater financing options, enhancing their ability to compete in today’s housing market. Lower 48 states: 1 unit, $802,650, 2 units, $1,027,750. Alaska & Hawaii: 1 unit $1,203,975, 2 units, $1,541.625. (Talk to A&D for 3 and 4 units.)

Increased Conforming Loan Limits are available now with LoanStream Wholesale, effective with loan applications dated on or after 9/17/2024.

Available immediately but required and effective for note dates on or after November 1, 2024, Fannie Mae and Freddie Mac have published state-specific multistate 30-day average SOFR ARM instruments that have incorporated all state-specific required authorized changes and a state-specific tagline. Pennymac is aligning with this change effective with note dates on or after November 1, 2024, information is available in Pennymac Announcement 24-97.

National MI announced a temporary increase to the AUS conforming loan amounts. At this time, there is no change to National MI’s TrueGuide® AUS Conforming High Balance Loans Eligibility Matrix requirements. For complete details on rates and guidelines, visit nationalmi.com.

On June 5, 2024, Fannie Mae and Freddie Mac announced that builder standby/builder forward commitment fees are not subject to Interested Party Contribution (IPC) limits because they are not attributable to the specific loan transaction. These changes went into effect with loan applications dated on and after September 4, 2024. Pennymac aligned with these changes, see Pennymac Announcement 24-102.

Pennymac Announcement 24-104 states it will update Conventional LLPAs effective for all Best-Efforts Commitments taken on or after Monday, September 30, 2024, as follows: update values for the ‘2nd Home Additional’ LLPA on the ‘LLPAs by Product Feature for All Eligible Loans’ LLPA Grid.

Capital Markets

Bond yields rose for the fourth consecutive day yesterday as the market pondered the impact of ongoing geopolitical fears, the aftermath of a major hurricane in the Southeast, and a dockworker strike along the East Coast. Economic data on the day was light: ahead of tomorrow’s payrolls data, the ADP Employment Change report pointed to the addition of 143k nonfarm payrolls in September, beating 120k expectations, while the August increase was revised up by 4k to 103k. The weekly MBA Mortgage Index fell 1.3 percent to follow last week's 11.0 percent increase. The Refinance Index was down 3.0 percent while the Purchase Index rose 0.7 percent.

Today’s economic calendar kicked off with Job cuts from Challenger, Gray & Christmas for September. U.S.-based employers announced 72,821 cuts in September, a 4% decrease from the 75,891 cuts announced one month prior. It is up 53% from the 47,457 cuts announced in the same month in 2023. We’ve also received weekly jobless claims (225k, about as expected). Later today brings final September S&P Global services PMI, ISM services PMI for September, factory orders for August, Treasury releasing the details of the mini-Refunding consisting of $58 billion 3-year notes, $39 billion 10-year notes and $22 billion reopened 30-year bonds, Freddie Mac’s Primary Mortgage Market Survey, and remarks from a couple of Fed speakers. We begin the day with Agency MBS prices roughly unchanged from Wednesday’s close, the 2-year yielding 3.66, and the 10-year yielding 3.81 after closing yesterday at 3.79 percent.