Automated Servicing, Verification, Pricing Engine Tools; Investor Portal Changes; Shared Appreciation Mortgages

Not only do most states “gain an hour” Sunday, but I have good news for all my readers. I am getting stronger with age. I can now lift $100 worth of groceries with one hand! Speaking of which, time flies and Thanksgiving will be here before you know it and with it, pumpkin pie. (Yes, I know that this is a mortgage commentary, but even pumpkins have their share of regulation and controversy.) Pumpkin is a variety of squash belonging to the “Cucurbitaceae”, or gourd family which also includes melons and cucumbers. Libby’s, for one, uses 100% Dickinson pumpkins in its Libby’s solid pack pumpkin, not squash. Although pumpkins and squash are very closely related, Libby’s denied that it ever used a “blend” of various squashes in its popular canned pumpkin. The FDA allows for sweet squash blends to be sold under the label of “pumpkin.” “But the ‘Libby’s Select’ strain of Dickinson is our own, developed over decades by our own agricultural people.” (Today’s podcast can be found here, and this week’s is sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Hear an interview with Insellerate’s Josh Friend on a new AI platform that helps mortgage companies identify, convert, and keep customers happy.)

Lender and Broker Software, Services, and Products

Optimal Blue continues its commitment to delivering high-impact solutions that tackle real-world challenges and help clients maximize profitability with three major product releases: the expansion of its AI assistant suite, Scenario Optimizer, and the free availability of Investor Pricing Insight. The Position Assistant in the CompassEdge hedging and trading platform empowers lenders with critical daily insights into changes in their risk exposure by automatically summarizing the top drivers impacting their hedged mortgage pipeline positions. The addition of Scenario Optimizer to the Optimal Blue PPE enables originators to quickly identify the most favorable loan scenarios, enhancing productivity while strengthening relationships with borrowers through fast, digital service and transparent pricing guidance. The Investor Pricing Insight data solution now offers new functionality allowing investors to benchmark their non-QM rate sheet pricing against other investors in real time, all at no additional cost to investor clients. Read more in the press release.

“Revolution Mortgage estimates that they can save up to $20,000 in cost on verifications with Truv over traditional verification methods. Significant reduction underscores Truv's commitment to providing cost-effective solutions for mortgage lenders. Femi Ayi, EVP of Operations at Revolution Mortgage noted, "We’ve dropped our verification cost per loan from 8 basis points to 3 basis points. That's all real cost, not factoring in time or touch savings.” Moreover, Truv is now a conditionally authorized report supplier for mortgage lenders using Fannie Mae's Desktop Underwriter (DU®) validation service. With Truv's support for D1C, lenders can lower costs by up to 80%, reduce the 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.”

Lender and Investor Updates

Often it is easy to group news, like conforming conventional, or government, or non-Agency. But sometimes changes and programs are all over the place, which brings us to today.

FHLBanks helped nearly 65,000 households through Key Affordable Housing and Community Development Programs. Findings from the Federal Housing Finance Agency Report highlighted significant growth in resources allocated by the Federal Home Loan Banks for programs aiding lower-income communities.

A&D Mortgage announced the latest enhancement to its innovative Automated Intelligence in Mortgage (AIM) Partner Portal. Brokers can now upload a borrower’s W-2 form directly into the system, allowing the AIM tool to automatically calculate the borrower’s monthly income and determine how much of a loan they could qualify for, whether it's for a Conventional, Non-QM Full Doc, or Government-backed loan. This streamlined feature is designed to simplify the income verification process and save brokers valuable time during loan application reviews.

This addition is part of A&D Mortgage's ongoing commitment to improving the broker experience through the development of user-friendly tools and processes.

The web address for the Citi Correspondent Lending Portal changed on October 27, 2024. Please make note of the new web address: https://citi-portal.sd.digitals.dmattercloud.com. Note: If the existing web address is used after the update completes, it will automatically redirect to the new web address for an interim period. Please share this update with all appropriate staff. A message reflecting this update is also posted on the current Portal login page.

Effective October 31, 2024, Sellers will be required to comply with the new appraisal reconsideration of value (ROV) requirements for lenders and appraisers as previously announced by the Agencies, Fannie Mae, Freddie Mac, and FHA. See AmeriHome Mortgage Product Announcement 20241032-CL for details.

Got a loan scenario or need an LTV estimate? Plaza offers a quick and easy way for your Account Executive to get you answers through the Rapid Reverse App, allowing you to focus on what matters most. By connecting with your Plaza Account Executive, you can swiftly obtain an LTV estimate based on Plaza’s margins, the age of the youngest spouse, purchase and down payment figures and more. While the app doesn’t replace Plaza’s Reverse PreQual service, it provides an immediate estimate to help determine if a PreQual might be helpful.

Provident Funding shared the release of an update to its compensation policy, partners are now allowed to have differing levels of compensation for their purchase and refinance transactions. One-time updates can be made to your compensation now and will be effective the next day. Please note, Lender Paid and Borrower Paid Compensation must remain the same for each loan purpose compensation level set.

Shared Appreciation Mortgages in Vogue

The U.S. home equity market is $32 trillion; homeowners come to Unison in the hope of leveraging their equity to obtain cash to renovate their homes, or consolidate high-interest debt.

Click n’ Close has expanded its unique Shared Appreciation Mortgage (SAM) program, which provides homebuyers with the ability to access affordable loans while sharing in the long-term appreciation of their property. This shared equity structure is at the heart of the product’s innovation, offering a win-win scenario for both borrowers and lenders in today's challenging housing market. Unlike traditional mortgages, the SAM program offers homebuyers the chance to benefit from the long-term value growth of their home in exchange for sharing a portion of that appreciation with Click n’ Close. This approach opens up homeownership to buyers who may otherwise be priced out due to limited housing supply.

Unison Mortgage Corporation, a Unison company, announced the launch of its Equity Sharing Home Loan in Florida and Oregon, which enables homeowners to receive cash today at below-market rates. Unison also recently announced that global investment firm Carlyle (NASDAQ: CG) has agreed to purchase up to $300 million of equity sharing home loans from Unison. “The innovative Unison Equity Sharing Home Loan combines the benefits of home loans and home equity sharing agreements into a unique mortgage solution that allows homeowners to convert part of their home equity into cash with low monthly payments.”

“Unison Equity Sharing Home Loan is an interest-only loan, part of the cost is offset by sharing a portion of the home's future appreciation, as well as partially deferred interest. Homeowners who make improvements-beyond that of regular maintenance-are eligible, after 3 years, to request a credit for the added value, which reduces what is due for the shared appreciation interest. Borrowers can repay the loan early without penalty, which includes paying back the original loan amount, any deferred interest, and the agreed-upon share of appreciation. Homeowners with higher FICO scores may receive more favorable loan terms. Homeowners with a FICO score of 680 and above, a maximum combined loan to value ratio of 70%, and a debt-to-income ratio not exceeding 40% are eligible.” More information can be found at www.unison.com/florida and www.unison.com/oregon.

Capital Markets

We received a lot of data yesterday, including the core PCE Price Index, which held steady at 2.7 percent year-over-year for the third consecutive month, alongside a positive jobless claims report and a slight easing in the Employment Cost Index for Q3, which rose a less than expected 0.8 percent. Overall inflation in the U.S. has dropped to 2.1 percent, the lowest since early 2021, and slightly above the Federal Reserve’s 2 percent target. The persistent core inflation may temper expectations for aggressive rate cuts. Indications are for a likely 25-basis point reduction in the Fed Funds rate at the meeting next week.

Yes, the Fed is in no rush to cut rates. And why would it be? The economy showed strong growth in Q3, with consumer spending rising by 3.7 percent, the highest since early 2023, driven by increases in various sectors, including autos and household goods. The inflation-adjusted GDP grew at an annualized rate of 2.8 percent, following a 3 percent rise in the previous quarter, fueling speculation that a "soft landing" may have already been achieved.

Of course, lenders care what rates are doing, and the numbers showed that mortgage rates jumped again in the latest Freddie Mac Primary Mortgage Market Survey. For the week ending October 31, the 30- and 15-year mortgage rates rose another 18-basis points and 28-basis points, respectively, to 6.72 percent and 5.99 percent, the highest since early August. Those rates are 64-basis points and 84-basis points higher than the September lows. Compared to a year ago, however, those rates are both 104-basis points lower. (Actual daily rates are already much higher as seen here: Today's Mortgage Rates - Daily Index)

The first Friday of November means the October payrolls report. Nonfarm payrolls were +12k, much lower than the +100k expected but with some back-month revisions. The unemployment rate was 4.1 percent, as expected. Hourly earnings were +.4, a shade stronger than expected. The reported numbers likely reflect temporary job losses due to recent hurricanes. Later today brings the final October S&P Global manufacturing PMI, ISM manufacturing PMI for October, and September construction spending. After Halloween, and after the jobs data, Agency MBS prices are roughly unchanged from Thursday, the 2-year is yielding 4.19, and the 10-year is yielding 4.30 after closing yesterday at 4.28 percent, up 48-basis points over the course of October.

Employment

“At Evergreen Home Loans™, we're on the move and actively looking for motivated, qualified Loan Officers and Branch Managers to join us as we expand into new markets in 2025. Evergreen offers a unique, people-first culture where our team members benefit from direct access to engaged executive leadership, a suite of innovative loan products, and new programs designed to meet today’s evolving market needs. Our commitment to cutting-edge technology empowers you to serve clients with efficiency and excellence, while our full-service marketing team provides customized support to help you reach and exceed your goals. At Evergreen, we’re dedicated to fostering professional growth and providing resources to help you stand out. If you’re ready to make an impact with a company that prioritizes your success, visit our careers webpage!”

“Loan Officers! What Would It Take to Truly Thrive? You’ve built a career in a competitive industry, but are you thriving or just surviving? At radius, we believe that success is more than numbers… It’s about creating impact. What if your next step brought deeper fulfillment and better results? Let’s discuss how radius can make that happen. For confidential inquiries, contact Carla Herrera (781-742-6500).”

(As a reminder, anyone searching for employment can post their resume at no charge at www.lendernews.com, and potential employers can view all resumes for several months for only $75.)