Correspondent, Wholesale, Document Automation Tools; FHA, USDA Changes; Mark Calabria Interview
Demographics matter. Although I am sending today’s Commentary out from a Dunkin’ near Columbus, Ohio, yesterday I found myself visiting a supposedly haunted hotel in Chattanooga, possibly the last “weather kiosk” in the world in Knoxville, a tourist attraction near Lexington built like an ark, and in a tavern, for lack of a better term, in Kentucky, and a fellow at the bar struck up a conversation with me. He explained that his family had moved from Wisconsin to Florida, found it intolerable, and was now thinking about living near Lexington. Per Prashant Gopal of Bloomberg, lots of investors snapped up land in Kissimmee, Florida, the suburb of Orlando, with the goal of making an easy buck renting them out to tourists trying to visit Disney. The suburb has over 30,000 short-term rentals, more than any other city in America, so lots of supply and not as much demand. The solution? Hire Home Theme Orlando, which will renovate the houses at a starting price of $150,000 a pop to make them “themed.” The ”theme” of this week in Mar Largo has been proposed appointments, and eventual changes in Washington DC. And today is another episode of The Big Picture at 3PM ET (click here to register). Today’s show has Mark Calabria (he was the Director of the Federal Housing Finance Agency – FHFA – and chief economist for VP Pence) discussing the possible future of Freddie & Fannie. (Today’s podcast can be found here. This week’s is sponsored by Floify. Floify is an easy-to-configure point-of-sale platform that allows each branch or loan officer to customize its look and feel to meet the needs of their lending team, homebuyers, and market. Today’s features an interview with CMG Financial’s AJ George on the strategy of mergers and acquisitions from an executive’s perspective.)
Lender and Broker Software, Services, and Products
Heading to the IMN MSR Forum in New York next week? Looking for insights on home equity and alternative products’ servicing, recapture, prepayment trends and distressed MSRs? Mark your calendars for Thursday’s session on “Seconds, RTLs, Home Equity & Other in Vogue or Alternative Products, Their Servicing & MSRs.” You’ll hear directly from Covius Chief Business Officer Pete Pannes, who will moderate the panel, and executives from Onity, BSI Financial Services, Dovenmuehle Mortgage, Cornerstone Servicing and Home. LLC as they discuss these and other key servicing and secondary market issues. Want to discuss your strategy for this market? Reach out to set up a meeting during the conference.
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Correspondent and Wholesale Product News
“The New AFR: Here to Support Your Loans, From Conventional to Complex! We’re thrilled to announce enhanced support for our On Demand Processing (ODP) feature, exclusively for Renovation and One-Time Construction (OTC) loans. Acting as your dedicated liaison, we cover all third-party communications, simplifying the complex steps and ensuring seamless connections at every stage. This dedicated service allows us to work closely with you to tailor our approach, delivering a seamless experience for each client and transaction. From flexible processing options to expert guidance, the New AFR is here to ensure custom support every step of the way. Consider us an extension of your team, here to support the most complex transactions! Let’s connect! Reach out at sales@afrwholesale.com, call 1-800-375-6071, or visit www.afrwholesale.com. We can’t wait to hear from you! (NMLS 2826)”
“Newrez Correspondent thanks our customers and industry partners for spending time with us at the MBA Conference in Denver. It was very exciting discussing the strides made in 2024 and how we can grow together in 2025. For those who aren’t signed up with Newrez Correspondent, it’s time to align with one of the Top Industry Correspondent Lenders, according to Scotsman Guide® 2024 rankings, to help you achieve your financial goals next year. We’re excited that we now allow “soft pull” credit reports on non-credit qualifying FHA Streamlines and VA IRRRL loans, and soon, the FHA 203(h) Mortgage Insurance for Disaster Victims to help those in need. Also released is the USDA and HUD Section 184 Indian Home Loan Guarantee funding for the next fiscal year, and in the near future, an upgrade to our FTHB escrow waiver process. Again, if you aren’t aligned with Newrez Correspondent, #TheTimeisNow”
We’re in the home stretch of 2024 and AmeriHome Correspondent is still running full steam ahead! Join AmeriHome next week for its quarterly webinar alongside Freddie Mac Single-Family. Don’t miss “Navigating Today's Appraisal Challenges” on Wednesday, November 20 at 10am PST. Join for a discussion moderated by AmeriHome’s Managing Director of Correspondent Sales, Steve Kolker, as he speaks with Freddie Mac Single-Family’s Chief Appraiser and Director of Property Valuation, Scott Reuter, their Senior Director of Property Valuation, Danny Wiley, and AmeriHome’s EVP of National Credit operations, Rekha Siddani. Be a part of the conversation and Q&A session as they discuss current appraisal challenges, policy changes, and best practices! Click here to register. In other news, if you are a bank looking to meet your annual CRA requirements, AmeriHome can help, email them today! For more details on what AmeriHome can do for you, click here!
Fifth Third Correspondent Lending posted Communiqué 2024-33-11.6.24. This edition has the following topics: Freddie Mac Products: Coastal Barrier Resource Systems, All Conforming and VA Products: Individual Tax Identification Number, All Conforming Products: Builder Forward Commitments, and Refreshed MISMO 3.4 XML File Prior to Submission.
Pennymac Announcement 24-118, provides information on update Conventional LLPAs and the SRP Grid values effective for all Best-Efforts Commitments taken on or after Wednesday, November 6, 2024.
PHH Correspondent Lending will now have the ability to rescore loans scored on Freddie Mac’s Loan Product Advisor. Go to the PHH Mortgage company library to view the information in the announcement.
FHA, Ginnie, USDA, and VA Changes
On 11/06/2024, USDA Rural Development sent Updates to Handbook-1-3550 Bulletin. With the posting of PN 628 dated November 6, 2024, changes were made to Handbook-1-3550, Chapters 1, 3, 4, 6-8, 10, 12, 13 and Appendices 3 and 5. Review the PN carefully for details.
FHA published Mortgagee Letter (ML) 2024-20, Adoption of Federal Flood Risk Management Standard (FFRMS) for Minimum Property Standards (MPS) in Special Flood Hazard Areas (SFHA). This ML updates FHA’s Minimum Property Standards (MPS) for all newly built single-family residential structures – except for manufactured homes – being financed through the FHA Single Family program. With this ML, FHA is implementing the provisions of the final rule, Floodplain Management and Protection of Wetlands; Minimum Property Standards for Flood Hazard Exposure; Building to the Federal Flood Risk Management Standard, published on April 23, 2024.This final rule revised HUD’s regulations governing floodplain management and the protection of wetlands to implement the FFRMS in accordance with Executive Order 13690, Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input dated January 30, 2015.
In an All Participants Memorandum (APM) 24-12, Ginnie Mae announced that issuers who have a track record of managing their interest rate exposure through Mortgage Servicing Rights (MSRs) hedging and who meet prescribed eligibility requirements may qualify for Risk-Based Capital Ratio (RBCR) requirement relief. To determine if it will grant risk-based capital relief, Ginnie Mae will review information submitted quarterly on the issuer’s Mortgage Banking Financial Reporting Form and calculate an MSR value adjustment, the percentage by which the issuer’s MSR values will be reduced for the purposes of calculating RBCR.
In All Participants Memorandum 24-12, Ginnie Mae announced that issuers who have a track record of managing their interest rate exposure through Mortgage Servicing Rights (MSRs) hedging and who meet prescribed eligibility requirements may qualify for Risk-Based Capital Ratio (RBCR) requirement relief. To determine if it will grant risk-based capital relief, Ginnie Mae will review information submitted quarterly on the issuer’s Mortgage Banking Financial Reporting Form and calculate an MSR value adjustment, the percentage by which the issuer’s MSR values will be reduced for the purposes of calculating RBCR. Details are available in the Ginnie Mae Press Release.
Capital Markets
What are Mortgage Servicing Rights (MSRs), and how do these essential assets allow businesses to pivot based on market conditions? In MCT’s whitepaper, Mortgage Servicing Rights 101, explore how MSRs offer revenue stability, cross-hedging opportunities, and strategic flexibility for lenders in an evolving market. This comprehensive guide covers the advantages and challenges of MSR ownership, including regulatory considerations, valuation methods, and key value drivers. Whether you're new to MSRs or looking to refine your strategies to achieve predictability through a consistent and granular approach to MSR pricing, this whitepaper equips you with the insights needed to maximize profitability in MSR management. Download the whitepaper or subscribe to MCT's newsletter for educational content on secondary marketing.
We learned yesterday that U.S. inflation at the consumer level in October remained steady rather than decreasing further. The report showed both headline and core inflation figures meeting expectations, though the sticky figures could make it challenging for the Federal Reserve to achieve a "soft landing" for the economy. The core consumer price index (CPI), which excludes volatile food and energy costs, rose by 0.3 percent for the third consecutive month, the highest quarterly inflation rate since April.
One notable point is that shelter costs contributed over 65 percent to the 12-month increase in core CPI, meaning that outside of shelter, inflation pressures are somewhat milder, with the year-over-year increase in core CPI (excluding shelter) at just 1.3 percent. This suggests that while overall inflation appears high, it may not be as broadly inflationary as the headline figure would suggest.
In October, the U.S. budget deficit reached $257.4 billion, significantly higher than the $66.6 billion deficit a year earlier, primarily due to outlays exceeding receipts. Adjusted for calendar effects, the deficit came to $121 billion, reflecting a 22 percent increase from the previous year. This widening deficit at the start of the fiscal year was largely driven by increased spending on health, defense, and a rise in debt interest costs, though last year’s numbers were somewhat skewed by deferred tax revenue.
If implemented, President-elect Trump's policies, particularly his tax cuts and increases in defense spending, are projected to significantly raise the U.S. budget deficit over time. Estimates suggest that his proposals could increase the federal deficit by approximately $7.5 trillion over a decade under central projections, though the figure could be as high as $15.1 trillion, depending on economic factors and policy details. These projections factor in his intent to extend the 2017 Tax Cuts and Jobs Act, reduce some government expenditures, and potentially impose new tariffs.
Yes, Trump has also proposed the creation of a "Department of Government Efficiency" (DOGE), with Elon Musk and Vivek Ramaswamy appointed to lead it. This department would aim to address government waste and cut back on federal spending. Musk has advocated for cutting around $2 trillion from the budget, a large-scale goal that could target spending on major sectors such as transportation, healthcare, and Social Security. However, achieving these cuts would be challenging, as Congress would need to approve the proposed reductions, and such measures could face considerable political opposition.
Today’s economic calendar includes more inflation data, as well as jobless claims, and Fedspeak (including Chair Powell). Economic news that we have already received consists of jobless claims (217k) and October PPI (+.2, core +.3 percent, about as expected, +2.4 % Y-O-O). Prices charged at the producer level were expected to have risen modestly again. Later today brings Freddie Mac’s Primary Mortgage Market Survey, Treasury announcing next week’s 20-year bonds and reopened 10-year TIPS auctions, and several Fed appearances. We begin Thursday with Agency MBS prices little changed from Wednesday night, the 2-year at 4.28, and the 10-year yielding 4.45 after closing yesterday at 4.45 percent. The yield dipped as low as 4.36 percent in immediate reaction to the CPI report.
Employment
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In the Northwest and California, Banner Bank is searching for Mortgage Loan Officers looking for a diverse product group to create lasting client, Realtor and builder relationships. At Banner you have Portfolio lending, Construction to Perm financing, Fannie, Freddie, FHA, VA, and USDA along with equity products for HELOC, bridge financing and Lot Loans to serve your clients. Banner has opportunities for lenders looking for local decision looking to build or build onto their career with support for homebuyer education, CRA lending (state bond and Portfolio) as well as access to internal and external DPA to add value to your eligible clients and make more loans possible. Banner is the right fit for an established team, or the individual looking to grow their business and take the next step in their career. Please send resumes to Aaron Miller.
Out of South Carolina comes news that retail lender Movement Mortgage named industry vet Steve Smith has been named as President and Chief Financial Officer where he will oversee all sales, operations, finance, and corporate functions. (If the name sounds familiar, he has held executive positions at Stearns Lending, Caliber, Bank of America, and Countrywide.) He will report to Casey Crawford, Movement’s CEO.
From Cleveland, distributed retailer Cross Country Mortgage brought on Vandad Fartaj to its executive leadership team as Chief Investment Officer, William Chang as Chief Capital Markets Officer, and Tom Rettinger as Chief Portfolio Risk Officer. They will “lead CCM's capital markets and investment-related activities, which include the development and execution of investment strategies, secondary market activities, risk management, and hedging activities.” "CCM welcomes Vandy, Will and Tom during an exciting time for our company," said Ron Leonhardt, Founder and CEO, CCM.
(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.)