Insurance Products; Trends in Servicing Sales; State's $0 Down Payment Offer

“Skin in the game” is a key component for lower delinquency and foreclosure rates, as borrowers have come up with required down payments. Mortgage investors like that kind of thing. But news broke that Massachusetts has now launched a “No-Money-Down Mortgage Program.” Things are different this time than fifteen years ago, right? Right? Speaking of remembering the past, UBS has settled with New York for $230 million over 15 securitizations from 2006 to 2007. Apparently, the bank sometimes ignored the advice of its own diligence vendors in packaging and selling loans that didn't conform to its underwriting guidelines.

Servicing

Servicing values can fluctuate daily based on interest rates, state foreclosure timeframes, product, maturity, risk, etc. Smaller lenders had hoped to retain servicing, creating an annuity cash flow, and a balance sheet advantage, as a hedge against production dropping as rates rose. This has happened, but many companies have found they need to sell large blocks or flow deals to raise capital. Let’s sum up some recent deals to see what the important factors are for buyers and sellers.

For anyone curious about the value of servicing, this commentary had a piece which included a primer on the value of servicing worth a glance.

Phoenix Capital, Inc. (PCI) offered up a $1.25B Fannie Mae and Freddie Mac bulk servicing rights package from “a well-capitalized, experienced MSR Seller” in January. “65% FNMA A/A, 33% FHLMC Gold, 2% FHLMC ARC, 87% Fixed 30, 13% Fixed 15, 0 DQs; 0 FCs; 0 BKs, 3.680% (F30) Note Rate; 3.208% (F15) Note Rate, 0.250% wAvg Net Service Fee, Avg Bal $290K, 18% FL, 17% TX, 16% CA (by Loan ct.), wAvg FICO 759; wAvg LTV 72%, wAvg Age 20 months, 89% Single Family Properties, 93% Owner Occupied Properties, 47% Rate/Term Refinances, 100% Retail Originations, <1% HARP originations.

On the flow side, earlier this month Phoenix Capital, Inc. sent out bid requests for $40 - $60 million per month Fannie Mae and Freddie Mac flow servicing rights “from a well-capitalized seller.” (For information on the bid activity or Phoenix can be addressed to Steve Fleming.) “86% Fixed 30, 14% Fixed 15, <1% ARM, Avg Bal $225K – $243K, 60% Purchase Originations, 17% Retail Originations, 81% Correspondent, 2% Wholesale, 93% Single Family/PUD Properties, 95% Owner Occupied Properties, 33% FL, 28% CA, 8% TX (by UPB), wAvg FICO 734, wAvg LTV 80, 0 HARP refinance loans.”

IMA $6.197B FNMA/FHLMC MSR Offering: 24,739 loans, $250k avg loan size, 4.255 WAC, 754 WaFICO, 75.5% WaLTV, .2513% Servicing Fee, 85% Owner, 10% Investment, 59% SFR, 23% PUD, 13% Condo, 56% Purchase, 25% R/T, with top states: CA (31%), FL (8%), NY (7%) and CO (5%).

IMAC #104661 Got Puerto Rico Auto Loans? $93M, 3,824 loans (1691 new, 2133 used), $31,112 average loan amount, $28, 743 average balance, 3.66% WaNR, 803 WaFICO, 29.16 WaDTI, and an 97.25% WaLTV.

IMAC #104657 $41M Hybrid 7/1 ARMs….90 loans, 4.71 WAC, 57% Orig CLTV, 749 WaFICO, 36.43% WaDTI, 76% Owner, with a top state of CA (99%).

IMAC #104659 $22.3M Jumbo Fixed….27 loans, 4.11%, 72.23% Orig CLTV, 772 WaFICO, 32.11% WaDTI, 83% Owner, with top states: CA (32%) and IL (36%)

IMAC #104646 $50M Jumbo Hybrids & 30 YR Fixed….64 loans (30 30-yr fixed, 5 7/1, and 29 10/1), 3.95% WAC, 73.92% WaLTV, 347 WA Remaining Term, 754 WaFICO, 32.16% WaDTI, 83% Owner, with 100% being FL originations.

MIAC #401147 2nd Lien Flow Arrangement…seller seeks a flow takeout of approximately $20mm a month for 6+% 2nd liens, fixed rate mortgages.  The Seller is a Non-Bank originator that is exclusively a 2nd lien originator. The current guides are up to 90 LTV and down to a 660 FICO, all full doc. Current Guides: Fixed rate, 5, 10, 15, 20-year terms, 680 FICO, up to 90 CLTV, 660-679, 85 CLTV, 36/43% Max ratios, min $2,000 Disposable Income, 0x24 Required, 6 mo. ownership required.

MountainView $75mm GNMA/FNMA/FHLMC MSR Offering…Quality features of this portfolio include: 97 percent fixed rate and 100 percent 1st lien product, WaFICO of 715 and WaLTV of 86 percent, Weighted average interest rate of 3.81 percent (3.86 percent on the 30yr fixed rate product), Top states: Utah (62.4 percent), California (20.7 percent) and Florida (10.4 percent)

Average loan size of $235,033

MountainView $420mm FHLMC/FNMA Servicing Offering…Quality features of this portfolio include: 100 percent fixed rate 1st lien product, WaFICO of 714, WaLTV of 97 percent, Weighted average interest rate of 4.51 percent (4.57 percent on the 30yr fixed rate product), low delinquencies, Top states: New York (48.6 percent), California (18.3 percent), Florida (10.7 percent), and New Jersey (10.3 percent). Average loan size of $238,619.

Fiserv Inc. formed a joint venture with private equity firm Warburg Pincus. This joining will include all automotive loan origination and servicing products and related operations of Fiserv, as well as its LoanServ mortgage and consumer loan servicing platform. (So, while not home mortgage related, it indicates a trend.) Fiserv will retain its Secure Lending product for e-contracting and its UniFi mortgage origination solution. The new venture is also expected to create value for current and future Fiserv clients by partnering closely with Fiserv for seamless delivery of account processing, integrated billing and payments and LoanComplete solutions, and through Warburg Pincus' demonstrated expertise and track record in growing financial technology businesses of scale. The business will continue to be led by Bret Leech, currently President of Fiserv Lending Solutions.

Capital Markets

Things were a little choppy in stocks and bonds Wednesday with post-FOMC (Federal Open Market Committee meeting) volatility. As expected, the March FOMC Statement called for the fed funds target rate range to be increased 25 basis points to 1.50%-1.75% while the accompanying “dot plot” showed that policymakers were leaning towards two more rate hikes by year end. The Committee now expects a total of six hikes by the end of 2019.

In Chairman Powell’s first press conference, he offered a generally upbeat picture of the economy, but did indicate that possible ramifications from a trade war were of concern to the committee. Chairman Powell indicated that the Fed would continue to gradually increase rates as the economy grows and inflation approaches the 2.0% Fed target. Changes to the FOMC statement were minor as well, and those expecting a more hawkish tone may have been disappointed. But it was unlikely that Chairman Powell would drastically alter the Fed’s path in his first official meeting.

In other news, existing home sales increased 3.0% month-over-month in February to a seasonally adjusted annual rate of 5.54 from an unrevised 5.38 million in January, beating expectations. Importantly, notable supply constraints continue to act as a drag on overall sales. High-priced limited inventory is crimping affordability, particularly for first-time buyers. A rising rate environment will only add to the strain on buyers.

The latest decision from the Bank of England kicked off today’s calendar. They kept the overnight rate and the asset purchase target unchanged at 0.50% and £435bn, respectively. (The BOE is expected to raise the rate in two months’ time.) In the U.S. we’ve already had weekly jobless claims (229k – the strong labor market continues). Coming up are the January FHFA House Price Index, expected to increase, the preliminary March manufacturing and service PMIs, February leading indicators, the KC Fed manufacturing index, and the New York Fed weekly MBS reinvestment purchases for the week. In a flattening of the yield curve, rates, somewhat surprisingly, are lower than last night’s close: the 10-year is yielding 2.84% and agency MBS prices are better by .125.

Products

In a recent blog post Vendor Surf co-founder Scott Roller writes about how several dynamics have changed the way vendors are sourced. He details how he’s heard how vendor sourcing has evolved to increasingly rely on digital search and on committees of people who each have different skills and perspectives on vendor sourcing. He shares his thoughts on the future of vendor sourcing models such as how finding, researching and comparing potential service providers will become more of an online event and how RFPs will be issued and managed almost solely online. Scott also points out how innovative providers, no matter how small or large, will get their message out to their desired audiences. He is convinced the trend toward digital is not confined to borrower-facing touch-points.  It’s infiltrating all aspects of our business, vendor sourcing included. Read more at https://www.vendorsurf.com/blog/vendor-sourcing-has-changed-have-you

American Financial Network, Inc. (AFN) introduced AFN Protection+, an innovative product that protects a homebuyer’s down payment and includes +Plus SM down payment protection by ValueInsured SM. AFN President John Sherman stated, “The purpose of AFN Protection+ is to offer investment security and peace of mind as borrowers make one of the biggest purchases of their lives”. “AFN recognizes that borrowers need to protect their down payments and is addressing it by offering Protection+," said Joe Melendez, CEO of ValueInsured. Established in 2001, AFN is a licensed mortgage lender (NMLS #237341) in 47 states, is an approved Fannie Mae/Freddie Mac seller/servicer, and an approved Ginnie Mae issuer. And PVI Agency, LLC dba ValueInsured, is the only provider of down payment protection. ValueInsured’s +PlusSM down payment protection is backed by one of the largest re-insurance companies, with over $8 billion in capital.

Don't miss today's free orientation for the Momentifi sales, leadership and business coaching program. “Momentifi Coaching incorporates the six key ingredients that are crucial to create and maintain positive momentum in any business,” says Gibran Nicholas, CEO and founder of CMPS Institute and the Momentifi companies. The Momentifi strategic coaching retreats are all-inclusive, and they take place in 5-star, world-renowned resorts such as the Auberge du Soleil in Napa Valley, and the Esperanza resort in Cabo San Lucas, Mexico. Topics include: (1) how to use the latest StorySelling techniques to experience more influence when you sell and communicate, (2) how to win back more time and improve the profit margins on your time and energy, and (3) how to uncover hidden opportunities and market-proof your business. Gibran will also be reviewing payment plan options and discount opportunities if you bring along your spouse or +1. Click here for your free orientation.

Employment Opportunities

Expanding its program offering, Newfi Wholesale just launched a new proprietary loan product called Sequoia Portfolio Plus. With Sequoia, Newfi makes all credit decisions and exceptions in-house, delivering flexible qualification standards and fast approvals. The company supports loan scenarios and provides same-day exceptions through its team of product experts. Newfi’s goal is a return to make-sense lending, considering a borrower’s unique income and asset circumstances, even for loan amounts as high as $2 million. “We wanted to create a loan program that combines the best of jumbo and non-traditional lending options,” said Newfi CEO Steve Abreu. “With Sequoia Portfolio Plus, we are empowering brokers to serve more homeowners in a tight market.” To support this product expansion, Newfi is actively seeking Wholesale AEs in key markets – resumes should be sent to Steve.  Learn more about Sequoia Portfolio Plus here.

GSF Mortgage Corporation announces the acquisition of the Directed Retail Division of Fidelity Guarantee Mortgage Corporation (FGMC). GSF continues to expand its retail origination footprint and welcomes the experienced Loan Officers from FGMC into the GSF family. The acquisition comes with the existing pipeline of this division including experience origination of one-time close construction perm loans, a growing part of the GSF platform. Chad Jampedro, President commented, “The addition of the group will be immediately accretive to GSF and we are looking for a smooth transition to be completed ahead of the spring buying season.” If you are a group or individual interested in a direct conversation, contact Chad Jampedro directly about opportunities with GSF.