More and More eClosings; Credit Score Trends: 850 FICO a Goal?

I’ve only been in this business since the mid-80s, and as a capital markets person always find it amusing when an owner says, “If it wasn’t for TBA pair off costs, we would REALLY be making money!” For the antithesis of making money, on this date 10 years ago news broke that First Magnus...well... didn't make money. (And just look at those Fed Fund rates!)

Vendor updates

Here's the latest from The Mortgage Collaborative, which holds its summer "eclipse" conference in Nashville next week. "The Mortgage Collaborative, the nation's only independent mortgage cooperative, announced a new partnership with national compliance solutions provider, Strategic Compliance Partners. The new relationship with Strategic Compliance Partners adds another best-in-class mortgage compliance company to their preferred partner network. The Mortgage Collaborative network is more than 110 lenders strong, with an aggregate annual origination volume of over $190 billion.

The Mortgage Collaborative also announced a new pilot with a focus on affordable lending support and education for select lenders that are members of TMC's network, using educational resources and materials provided by Fannie Mae. "The new Affordable Lending Outreach Pilot Program was developed to promote the cooperative's lender members' initiatives to expand lending to low-income to moderate-income borrowers, rural and manufactured housing communities. It will help participating lender members expand educational events with nonprofit organizations, enhance partnerships with community groups to promote affordable lending options, train targeted populations and assist with the cost of homeownership counseling for consumers."

First Choice Loan Services Inc., a Berkshire Bank Company, announces the launch of a new customer relationship management (CRM) tool powered by the Certified Mortgage Planning Specialist (CMPS) Platform. "Aimed to equip the loan originators of First Choice Loan Services with the leading mortgage industry tools, CMPS Platform is designed to improve productivity and increase business. This is accomplished by providing increased efficiencies in prospecting, communications, pipeline management, and marketing."

To make online closings available to borrowers across the country, UWM partnered with Arlington, VA-based Notarize, the nation's first digital platform for legally notarizing documents online.

Notarize, the first digital platform to legally notarize documents online, announced Notarize for Mortgage, the first platform to enable an entirely online mortgage closing process. With the launch, Notarize has successfully completed the first-ever online mortgage closing in partnership with lender United Wholesale Mortgage (UWM) and Stewart Title. Verified by Fannie Mae and Freddie Mac, the Notarize for Mortgage platform digitizes the entire closing process with technology to securely coordinate lenders, title companies and borrowers online. Dwell time is reduced from 17 days to one, effectively eliminates the 280 pages typically required to close a mortgage, and reduces the average cost for a lender to issue a mortgage, which has risen from $2,291 in 2008 to nearly $8,887 today.

Lender Greater Nevada Mortgage and mortgage technology provider Pavaso have teamed up in Nevada to complete the first residential hybrid "eClosings" in state history. "These otherwise traditional home closings were made historic by Greater Nevada's use of the Pavaso Digital Close platform, through which the typically hefty package of documents was digitally delivered to the buyers three days before closing. This allowed the homebuyers to review each document online, to understand them, and ask questions prior to closing.  At the closing table, they digitally signed all documents, with exception of a few documents that are required by state law to be 'wet' signed. Each wet-signed document was automatically barcoded when printed from Pavaso's system so that, upon the physical signing of the required documents, the forms could be digitally scanned and imported back into the system."

Docutech and Veritax have expanded their integrated services to enable lenders to easily obtain the tax transcripts needed to enroll in Fannie Mae's DU validation service. Once enrolled in DU, lenders can receive Fannie Mae's Day 1 Certainty. Veri-Tax is authorized to provide 4506-T tax transcripts through the Fannie Mae DU validation service. "By expanding the integration between Veri-Tax and Docutech, lenders that use Docutech's ConformX platform can easily satisfy Fannie Mae's requirements by placing and retrieving tax transcript orders seamlessly within ConformX, where borrower information is already stored, while shortening the loan process by days."

Spiegel Accountancy Corp., a professional accounting firm that serves the mortgage industry and small businesses nationwide, has formed a professional alliance with 5X Solutions, a mortgage research, data analytics technology company. It is the only accounting firm to have an alliance with the mortgage business intelligence company.

Trends in credit scores

Average credit scores have eclipsed their October 2006 peak, hitting 700 this year. iServe's Brent Nyitray opined, "US consumer debt levels are at all-time highs; however, debt service is at a low." Debt service is one's mortgage, car, installment, and credit card debt as a percentage of income.

It seems that 1.4% of U.S. consumers have a FICO credit score that is a perfect 850. The number is hugely consequential when it comes to securing credit, and many aspire to that top figure and will use all the idiosyncrasies of the algorithm to get there. Indeed, the percentage of Americans with 800+ credit scores is steadily rising.

Underwriters are keeping an eye on Artificial Intelligence (AI) issuing credit decisions. Does it work, or does it merely create the illusion of good credit decisions?

There is the Alt-Prime Program from Excelerate Capital. Its features include: NO MI 661 Fico minimum, Up to 50% DTI, CONDOs Up to 85% LTV-Full Doc and Refi C/O up to 85% LTV-Full Doc.

Remember that Fannie Mae announced its new policy addressing debt-to-income ratios. Now, the new debt ratio guideline tops out at 50, up from 45. As a quick refresher probably not needed by anyone reading this, a debt-to-income ratio, or debt ratio, compares monthly credit obligations with gross monthly income from the individuals on the mortgage application. This is quite a change and something that shouldn't be ignored

NYCB Mortgage Banking's seller guide has been updated with changes effective August 14th, 2017. DTI Enhancements 12.0 Liabilities and Debt-to-Income Ratios referencing alimony/child support/separate maintenance. The policy update allows more flexibility on the treatment of alimony paid by the borrower. An additional update now allows for timeshares to be treated as installment loans rather than mortgage debt, even if they are identified as mortgage debt on the credit report (or other documentation). Also included in the updates, Conforming Std ARM Expansion to 95% LTV/CLTV/HCLTV plus other enhancements.

Capital markets

Relations between the U.S. and North Korea have been moving markets. Interestingly, Tesla CEO Elon Musk says people should be more concerned about artificial intelligence (AI) than North Korea, saying it has "vastly more risk than North Korea." Musk pointed to the fact that AI has defeated some of the world's best video game players in a game that is much more complex than chess or Go. And don't forget that Facebook's AI created its own language between bots that had to be shut down.

Switching back to rates, U.S. Treasuries ended Tuesday on a lower note due to further easing of tensions with North Korea. An improvement in global risk appetite contributed to a lower start after it was reported that North Korea will not follow through on its threat to envelop Guam in fire...for now. A better-than-expected retail sales release also helped nudge rates up, given that this feeds directly into GDP estimates.

The 10-year yield touched a high of 2.28%, vs. Monday's 2.22% close - certainly still within the range we've been in all summer. Price-wise the 10-year worsened .375 while the 5-year T-note and agency MBS prices sold off .125-.250 depending on maturity, coupon, and type.

For news, this morning we've had the MBA's survey of retail applications for last week (+.1%). Coming up are July housing starts and permits, and at 2PM ET, 8AM in Hawai'i, is the Fed releasing the minutes from the July meeting: look for more confirmation of a September announcement regarding the commencement of tapering which is expected to start in October in addition to assessing odds of another rate hike this year with December heavily favored. We start Wednesday with the 10-year yielding 2.28% and agency MBS prices nearly unchanged versus last night.

Jobs and Announcements

"Choose a career you love and you will never have to work a day in your life.  This is the story behind our most recent addition to the Axia team, Deirdre Rogers - who will lead our corporate training efforts. Deirdre was most recently at Fannie Mae in numerous capacities, but most of you will remember her as the SVP - Head of National Correspondent Sales at Thornburg Mortgage. In her 40 years, she has done it all, seen it all and still loves it all. 'Those of us that do this for a living are blessed to make a difference in the lives of those that become homeowners in every sense of the word.' Welcome to Axia Home Loans, Deirdre!  What's your passion in mortgage? What's your purpose in life? We want to hear about it: contact Shelly Schwieso, SVP of Bus. Dev."

In retail job news, Capital Markets Cooperative, a Computershare Company, is looking for Mortgage Loan Originators with an NMLS license to join its growing team in the Jacksonville, FL Area! "We offer a competitive base salary plus commission. Contact us for an interview!" Click here and page down once for the complete job posting, or contact Gail Cunningham, Corporate Recruiter with any questions (720-563-8120).

For over 20 years, Freddie Mac has provided superior underwriting capabilities to lenders. "Now, we're leveraging the power of big data and advanced analytics to build game-changing solutions into Loan Product Advisor - our next-generation underwriting solution. Our goal is to drive efficiency in your loan manufacturing process, ultimately helping you cut costs and giving you rep and warranty relief sooner. For example, our automated collateral evaluation will speed up, simplify and save money in your appraisal process - you'll get your borrowers to closing faster, while receiving immediate certainty for collateral rep and warranty relief. Loan Product Advisor's automated asset and income validation will reduce paperwork helping to quickly confirm qualifications for borrowers. Finally, you can now expand homeownership opportunities through automated assessments for borrowers without credit scores. Plus, Loan Product Advisor is a simpler, more intuitive tool with easier navigation and data visualization, Ready to learn more? Visit our Loan Product Advisor web page."

Paul Clifford of Simplifile writes, "Simplifile continues to expand its e-recording network, which now allows settlement agents in more than 1,653 jurisdictions nationwide to electronically transmit deeds, mortgages, and other real estate documents for fast, secure, and efficient recording. Last week, we announced the addition of 17 new counties across the Midwest and Western United States. We also celebrated the achievement of Hawaii's first-ever Land Court e-recording. Just imagine having to manually record a mortgage when the only recording office is on another island!"

Congratulations to a good friend of this commentary and industry veteran, Allen Friedman, celebrating 8 years with iServe Residential Lending as its Western Regional Sales Manager. Co-CEO Ken Michael writes, "Allen's longevity and success over the years speaks volumes, but this type of stability is just as representative of iServe's attractiveness as an employer as it is Allen's accomplishments." Few better ways to measure a company, its management and team members, than the longevity of its employees. This commentary has enjoyed its relationship with Allen and iServe and looks forward to our association for many more years to come.

"Are you a compliance officer, MLO trainer, or origination manager interested in working with a start-up team of mortgage execs who are reshaping the industry? Neat Capital is a jumbo-focused mortgage originator that has developed proprietary technology that gives borrowers real-time feedback as they progress through their application. By underwriting borrowers in the application itself, applicants receive a smoother, more transparent process while originators spend substantially less time chasing documents. The result is a faster overall process, with an average clear-to-close time of 12 days. The team at Neat is expanding across the board and we are currently seeking a Compliance Offer and an Inside Sales Manager to be based out of HQ in Boulder, CO. Detailed descriptions - as well as other positions - are available here or resumes can be sent to careers@neatcapital.com."

Congrats to Sherry Valladares. LenderLive Network LLC announced that Sherry has joined the firm as its Northeast Correspondent Lending Regional Account Manager. She will work with current and prospective clients, including mortgage banks, community banks and credit unions participating in or considering the LenderLive correspondent program.