Credit and Verification, Warehouse, AI Processing Tools; Basel III Update; Rates Higher for Longer?
Wanna know the new buzz acronym? Residential Transition Loans (RTL): financing for properties in transition, including fix-and-flip, bridge, and rehab deals. Catch the wave… people always need to borrow money! Now, if only income guidelines by the Agencies matched how incomes have changed. Change is constant: “Rob, if you think inflation is bad, home insurance price increases in many parts of the nation are worse. When is the government going to address that?” I don’t know the answer to that: the government certainly is involved in lending, but not much so with insurance companies. Interestingly, insurance companies’ use of data analytics is way above that of the mortgage industry’s, although servicers and others are certainly catching up on risk-based pricing. (Today’s podcast can be found here and this week’s ‘casts are sponsored by TransUnion. Discover how data-driven mortgage intelligence is helping lenders identify in-market borrowers, strengthen portfolio performance, personalize outreach, retain customers, and drive smarter growth in an increasingly competitive housing market. Today’s has an interview with Insellerate’s Josh Friend on increasing loan officer and sales manager efficiency.)
Lender and Broker Products, Software, and Services
“Why are you paying onboarding fees to stay in a servicing relationship you don't love? Don't let onboarding and de-boarding fees keep you in a bad servicing relationship. At MSF Servicing, we believe partnerships should start with alignment, not invoices. That's why our onboarding fees are structured to the specific engagement. For initial transfers, we partner with you and help negotiate the de-boarding fees. We invest in the relationship first because we're confident about what we deliver next. Of course, we do so much more than collect payments. Our platform also supports full loan origination capabilities (FHA, VA, USDA, and conventional) paired with a disciplined retention strategy designed to maximize lifetime borrower value while reducing runoff, managing outcomes, anticipating risks, controlling narratives, and optimizing performance at every stage. Finally, our private-label and co-branding options allow your brand to stay front-and-center while our systems run seamlessly in the background. For more information, contact Rick Smith or call 860-989-9006.
Mortgage lenders know they need automation and AI, but most are doing it wrong. JazzX can help. Most mortgage automation and AI tools today focus on individual tasks, not the full loan process. Basic tools may eliminate small inefficiencies, but they rarely lower cost per loan or accelerate credit decisions at scale. JazzX AI delivers true end-to-end intelligent automation with digital assistants that work alongside your existing LOS, streamlining operations across the loan lifecycle to lower costs, accelerate decisions, and improve quality without adding headcount. Want to learn more? Book a demo with the JazzX team.
“Ready to take the next step in your lending journey? FirstFunding helps mortgage professionals evolve from broker-to-banker, and now from banker-to-TPO, with innovative warehouse lending solutions built for speed, capital efficiency, and security. For years, FirstFunding has been a trusted partner for broker-to-banker transitions, helping lenders move into delegated correspondent and non-delegated correspondent channels with confidence. We provide the tools, strategic support, and reliable access to capital needed to compete, scale, and gain greater control over the lending process. Today, we’re also helping bankers expand into the TPO and wholesale space, creating new opportunities for growth and long-term success. With real-time transaction processing, integrated risk management, and strategic partnerships, FirstFunding delivers more than warehouse lending… We help deliver a smarter way to grow. Whether you’re entering correspondent lending or expanding your wholesale channel, FirstFunding gives you the foundation to move faster, operate efficiently, and fund with confidence. Learn more.”
The Chrisman Marketplace is a centralized hub for vendors and service providers across the mortgage industry to be viewed by lenders in a very cost-effective manner. We’re adding new providers daily, so check back often to see what’s new. To reserve your place or learn more, contact us at info@chrismancommentary.com.
Credit and Verification Services
Earlier this week Equifax’s Joel Rickman explained the current credit situation: Why Your Mortgage Credit Score Looks Different, Mortgage Underwriting Is About To Use A Lot More Data, VantageScore Adoption Is Accelerating Fast, and Washington Is Pushing Mortgage To Cut Costs.
The mortgage credit ecosystem is entering a new phase, one where score choice is becoming operational, not theoretical. As competition increases, lenders are being asked to evaluate how modern credit models, richer data and pricing dynamics intersect with risk management and compliance. TransUnion® is helping lenders navigate this shift by modernizing mortgage credit reporting and analytics to support more confident, forward-looking decisions across the loan lifecycle. To explore how credit score competition can drive both insight and cost efficiency, without compromising safety and soundness, read TransUnion’s blog.
Look at your current pipeline. Pull up a mortgage file and count how many vendors touch it before it closes: Credit, Income, Employment, Flood, Fraud, Tax transcripts, Social Security
verification, Background screening and more. For a lot of operations, that's five or six different relationships, five or six logins, five or six places where a delay or a missed response stalls the file. Advantage Partners Solutions brings the full verification stack into one partnership. APS streamlines your process from application through closing, gaining clarity and reducing team handoffs. The result? Your pipeline moves better with fewer interruptions. Bring structure to your process and simplify execution across every file today. Let’s map your workflow and show how a single partnership can replace multiple vendors and simplify your process. Connect with APS today to get started.
Less back-and-forth. More first-time-right verifications. Truework replaces manual verification waterfalls with a single automated platform, so underwriters, LOs, and ops can cut down the document chasing, conflicting numbers, and last-minute corrections. Lenders see up to 50 percent cost savings on verifications, with faster turn times, higher accuracy, and stronger R&W relief. Trusted by top lenders in the U.S., Truework gives your team verification results they can rely on. Learn more.
Less Data, More Risk? A Data-Driven Look at the Future of Mortgage Credit Standards. A new mortgage industry study by AD&Co paints a concerning picture if the current tri-merge standard were to be replaced with a bi-merge or single credit report standard. The findings point to potentially costly impacts on borrowers and mortgage lenders, including less accurate loan pricing and increased borrower credit risk, which could, ultimately, drive higher mortgage rates for everyone.
Continued News from New York City and Basel III
We’ll be dealing with the issues that were discussed at this week’s MBA Secondary conference. Today’s Last Word at 1PM ET breaks down market signals, agency developments, and where the industry succeeded or failed. The discussion focuses on separating real insight from reaction as the market evolves. Panelists will be fresh from the MBA Secondary.
Mortgage prices are a result of supply and demand, more specifically the demand by MBS, institutional, and portfolio investors, and banks & credit unions. Critics say, “a town in Switzerland shouldn’t impact the U.S. mortgage market,” but it does, especially when it comes to servicing rights and weighing their risk.
Regarding Basel, our MBA writes, “The current rule raised the risk weight on MSRs from 100 to 250 percent, with no empirical justification. As a result, banks looked at the capital cost and started walking away from mortgage servicing. The new proposal recognizes that 250 percent might not be the appropriate risk weight, and requests input from stakeholders on what the appropriate number should be. MBA will be recommending that the risk weight for MSRs return to 100 percent. That should increase bank MSA activity and MSA values. To put this in perspective, a 25-basis point increase in servicing value is a 25-basis point reduction in closing costs, or $1,000 in savings on a $400,000 loan.
“We’re also striving to improve the treatment of warehouse lending. Under the current system, warehouse lines carried a 100 percent risk weight, but that defies logic. If an IMB fails to repay, a bank gets the whole loan, but at only a 50 percent risk weight. The risk weights shouldn’t improve when a counterparty fails! The risk weightings should be fully aligned. The current policy makes it more difficult for banks to participate in the lending and servicing business. We need a policy that fully recognizes and respects the role that banks play in providing vital liquidity to IMBs, who make the bulk of affordable loans to American families.
“We’re strongly calling on agencies to change the capital requirements for banks that have loans on portfolio that have private mortgage insurance. They’re obviously not as risky, and the rules should reflect that. Bottom line, there several places in Basel III that still need fine-tuning.”
Capital Markets
Markets experienced a sharp reversal Thursday when reports surfaced that Pakistan may have helped broker a potential ceasefire framework between the U.S. and Iran, easing fears of further escalation. Oil prices quickly fell back below $100 per barrel, which helped calm inflation expectations, stabilize bond markets, and lift equities.
Longer-dated Treasuries, recovered to finish stronger on the day, while mortgage-backed securities (MBS) also rebounded after early weakness, allowing some lenders to modestly improve mortgage pricing. Despite the relief rally, investors remain cautious over (and about) elevated energy prices, persistent inflation pressures, sovereign debt issuance and demand, and structurally higher interest rates.
Stepping back slightly, expectations have been scaled back for near-term rate cuts as investors increasingly accept a “higher-for-longer” policy environment that could extend well into 2027. Long-term Treasury yields have risen to levels not seen since 2007 without sparking a major equity selloff, suggesting a gradual repricing to a world of permanently higher capital costs. I have also heard growing concerns that yields approaching key psychological levels could eventually trigger broader risk-asset repricing. And rising gas prices are beginning to pressure consumers, with recent spending data showing household budgets increasingly strained outside of fuel purchases. All in all, bond markets are entering the summer with low conviction, thin liquidity, and heightened sensitivity to policy shifts and headline-driven volatility.
It’s a light economic calendar to end the week, with Final May Michigan Consumer Sentiment (it won’t move rates) being the sole release of note. Markets will also receive remarks from Fed Governor Waller. We begin the Friday before a three-day weekend with Agency MBS prices better than Thursday’s close by .125-.250, the 2-year yielding 4.08, and the 10-year yielding 4.55 after closing yesterday at 4.59 percent.
My Dad (U.S. Navy, 1942-1962) was always quick to remind me that Memorial Day doesn’t honor servicemen and servicewomen, or veterans. It is a federal holiday in the United States for remembering the people who died while serving in this country’s armed forces. Don’t let any politicians tell you otherwise. The number totals about 1.1 million, almost half of which were in the Civil War, fighting against one another. First recognized in 1868, it was set on the last Monday in May starting in 1971. Give those who gave the ultimate sacrifice for our nation more than a passing thought, not only Monday but throughout the year!