Profitability and Commission Products; HELOCs, Servicing, Digital...Geocoding Bid Tapes!

Why is the housing market sluggish despite a solid U.S. economy, solid demographics, and pent-up demand? Those don’t matter if prices are out of reach relative to incomes, and housing appreciation has outpaced income growth for a long time. And lending standards have remained more rigorous than they were during the last housing boom, so it has been harder for people to stretch to buy a home. (Veteran lenders will tell you, however, that not everyone deserves to own a home.) The inability of people to buy homes they can’t really afford is great news in terms of avoiding another crisis or even a bubble, but not so great for the near-term outlook for housing.

Lender Services and Products

Is your correspondent lending business prepared to grow in 2019? To find out, check out this new and trending industry blog from TMS. Don’t risk your business by not being ready for the next year! As a top 15 correspondent lender with more than 20 years of experience, TMS taps into the expertise of its leaders to give a fresh take on what you need to know to increase your margins now and through all of next year. Learn about industry trends, the latest news around the election, and how to grow your business in TMS’s CAREspondent Connection.

“Tired of fighting your software only to end up behind a stack of spreadsheets? After spending over a year trying to configure its generic commission management system to meet its mortgage industry-specific needs, BBMC Mortgage (which will soon join forces with Synergy One Lending/Mutual of Omaha Mortgage) had to cut its losses. Producing over $2B annually, BBMC needed a technology partner that understood the difference between a first and second lien and a system that could automatically handle tiered commission plans based on custom business rules. That’s why BBMC turned to LBA Ware’s CompenSafe™, the first mortgage industry-specific automated compensation calculation platform. According to Stephen Bennett, BBMC’s senior vice president and regional director, implementing CompenSafe has cut payroll processing time by 95% and all but eliminated payroll errors. Download the free case study to learn how CompenSafe helped BBMC take the spreadsheets out of payroll and automate a tiered commission program.”

Evolve Mortgage Services offers a seamless way to reduce costs and increase profitability without worrying about LO Comp or lengthy technology integrations. For 25+ years Evolve has offered a truly variable cost model that helps you scale your business during periods of growth, and greatly minimizes losses during slow periods. We provide cohesive solutions across the entire loan lifecycle that interoperate or work independently. From Safe Act underwriting, to closing and loan delivery for originators and acquisition due diligence for investors, we adapt our solutions to fit your business. Plus, if you already deliver to one of our many large aggregator clients, we can offer additional cost-saving opportunities and benefits. Our unique structure allows us to deliver off-shore cost structures using on-shore resources. Whether you are a retail, wholesale, or correspondent lender, Evolve can help you manage your business and improve your margins in this increasingly challenging environment. Click here to learn more.

What’s New Out There?

It’s always good for lenders and vendors to have a sample of who’s doing what out there. In no particular order…

Think there’s no new companies or innovation in loan servicing? I hinted at that recently in Kansas, and the head of capital markets with whom I was speaking countered with, “Have you heard of Scratch?” I hadn’t.

HELOCs are a hot topic what with millions of borrowers happy with their 3.5% 30-year fixed-rate mortgages. Prosper, a leading peer-to-peer lending firm, is launching a new digital HELOC product in January 2019 that will deliver loan estimates in 1 to 2 seconds and a soft pull on credit. “Applying for and obtaining a HELOC has historically been a difficult and lengthy process, leaving many consumers frustrated with an approval process that can take days to weeks. According to a recent TransUnion study, as home values rise, more and more people will be looking at a HELOC as a potential option for accessing credit. The study reported that an estimated 10 million consumers will take out HELOCs between 2018 and 2022, which would be more than double the number originated from 2012-2016.” (Write to Shelby Sabat if you have questions.)

Equator, a leading provider of residential loan default software and marketing solutions for many of the country’s top servicers, real estate agents and vendors, announced the launch of a mortgage servicing blockchain solution. Through an agreement with Factom, Inc., the Factom® Harmony blockchain-as-a-service (BaaS) platform is integrated into the Equator® PRO software-as-a-service (SaaS) solution. The addition of Factom’s Harmony provides Equator customers the opportunity to incorporate the recordation of data, documents and key audit events onto Factom’s blockchain solution. Factom’s Harmony provides options for individual loans to be tracked as individual chains of data on the blockchain. This design allows Equator PRO customers the option to embed blockchain preservation into their various workflows, allowing for an immutable and encrypted blockchain audit record to be built for each loan and each workflow step.

Digital home loan closings? Redfin has partnered with Notarize: Online closings are now available to customers of Title Forward, Redfin's title and settlement company, and Redfin Mortgage, Redfin's lending arm.

Mortgage fintech LoanSnap launched VA Smart Loans, which will provide personalized options to current and former service members applying for a home loan.

Citadel Servicing Corp. debuted its new product for five to 35-unit properties and mixed-use containing a livable unit with a bed. The Outside Dodd-Frank Plus Program builds on the company’s highly successful Outside Dodd-Frank Program to offer loans on properties up to 35 units. Loan amounts are up to $3 million with a max LTV of 75%. “Basically, if it has a bed or living residence attached to it, we can fund it”, said CSC’s founder and CEO Daniel Perl. Kyle Gunderlock, President & Chief Operating Officer, stated, “We saw the need in the market and created a program that would build on our popular ODF product.” For the first time, CSC will offer products to business entities and trusts. A Personal Guarantee is required as the major addition to the normal and usual due diligence items.

You can qualify your self-employed and 1099 borrowers with 12 Months of Bank Statements. Contact inquiry@citadelservicing.com for more information.

Pacific Bay Lending Group has a new product: Pacbay Portfolio VOE (PBPV) starting at only 4.65%. Contact Jennie Ensunsa (323-346-7474) for details.

LoanStream Mortgage has an all new Credit Grade on NanQ Product Line: LoanStream "Select". Questions? Contact LoanStream at Inquiries@lswholesale.com

The Lending Answer’s SIVA Elite is now available to both W2 and Self-Employed Borrowers. An incredible product for individuals who have too many write-offs on their tax returns to qualify for a Full-Doc Mortgage or just haven’t had long enough seasoning at their current employment. Contact The Lending Answer for details.

A bank statement loan is the perfect solution for the self-employed who do not have the tax documents proving their ability to repay. Contact Angel Oak Mortgage Solutions for non-QM alternatives: info@angeloakms.com

PennyMac posted an announcement: Release of Non-Delegated VA.

Have you been searching for NIVA loan options? Check out the ACC Mortgage product matrix and contact Kelly Brown for details.

DocMagic Inc. announced that QRL Financial Services, a nationwide provider of residential mortgage lending services for community banks and credit unions, has leveraged its eVault technology to purchase eNotes. The deal will make QRL one of the first investors outside of the GSEs to begin purchasing eNotes. Because QRL is using DocMagic’s SmartDocs, all documents retain a tamper evident seal to ensure data and document integrity. “Offering a truly paperless solution is the future. Consumers will expect and demand a closing experience that is more timely, convenient and informative," says Alex Rivera, managing director at QRL Financial Services. "QRL’s ability to purchase and service eNotes will allow the credit unions and community banks that we service to stay ahead of the technology curve as they compete with the larger institutions in the race to improve the mortgage experience.”

Capital Markets

90% of all secondary market transactions expose borrower addresses to non-buying bidders. This dissemination of address data is a growing data security concern, especially for parties concerned with EPO performance and servicing pre-payment speeds. MCT is moving to improve this process by replacing addresses with geocode data during whole loan bidding, an industry first. "The only investor that should eventually see the property address is the winner of the loan,” stated Phil Rasori, COO. “Our solution to this security concern is a proprietary geocoding process specific to our BAM platform that enables investors to price LMI-CRA incentives without the address.”

MCT is currently coordinating with all correspondent investors on implementing this upgraded process with a goal of completely replacing addresses by 2019. Learn more about the most efficient, secure, and profitable way to conduct loan sales by registering for an upcoming webinar on MCT’s Bid Auction Manager (BAM).

Western Asset Management which specializes in fixed income, has a new research report about the Freddie/Fannie Single Security. The good news is that Western is viewing the new security exactly as Fannie and Freddie had hoped – as a fungible security (meaning there’s no distinction between the two GSE issuers) with a Treasury backstop. Lisa Tibbitts with Legg Mason writes, “As we move closer to June 2019, when the UMBS will first be issued, it’s noteworthy that a large fixed income investor is on board and working with its clients to be sure they understand UMBS. This was a big unknown about three years ago when the GSEs began working toward a single security.”

Blue Water Financial Technologies announced it has developed an electronic co-issue pricing and trading platform, MSR-X. This cross investor and fully integrated web-based technology solution for co-issuing purposes allows lenders and investors to view portfolios and transactional data in real time. The platform brings greater efficiencies to the co-issue process and lowers costs for both investors and originators by reducing any manual input of pricing and increasing the immediacy of information. Buyers and sellers can access MSR-X via the web and view information in real-time. Originators can use the platform to reduce margin exposure, lower costs and streamline their secondary market operations. And the originators don’t pay to participate, rather, the investors do. In return, the investors obtain transactional data, they have better yield certainty through the purchase process and much of the administrative paperwork has been simplified. If you are an originator or investor who would like to access MSR-X, call 866.217.0246 or email inquiries@bluewater-fintech.com.

Turning to yesterday’s bond market, and therefore rates, the U.S.10-year halted this week’s downward trend Thursday, closing yesterday’s session unchanged at 3.12% as Treasuries across the curve ended the day on a mixed note. Across the Pacific, China presented a list of several concessions that officials would be willing to make in order to resolve the ongoing issues with the United States, though the list does not mention structural reforms that have been demanded by President Trump. Across the Atlantic, British Prime Minister Theresa May said she intends to push forward with her draft of the withdrawal bill despite the resignation of four ministers, including Brexit minister Dominic Raab. Despite some international doom and gloom, the week hasn’t been short on optimism, with optimistic comments from both Fed Chair Powell on the economy and U.S. Trade Rep Lighthizer on the next tariff tranche on Chinese imports potentially being put on hold.

Today sees a busy economic calendar which precedes a light U.S. calendar next week with markets celebrating the Thanksgiving holiday: October industrial production and capacity utilization at 9:15am ET, the KC Fed Manufacturing Index for November at 11AM ET, Chicago Fed President Evans in a moderated Q&A, and finally, at 4PM, the Treasury will release the September TIC data. Friday begins with rates little changed from Thursday’s close: the 10-year is yielding 3.09% and agency MBS prices are unchanged.

Jobs and Layoffs

Ethos Lending is looking for the best AEs. “In a rising and volatile rate environment, just one day’s market movement can mean the difference between winning or losing a borrower. Ethos Lending - the mortgage industry’s best kept secret - can help solve that problem. Our proprietary technology gives us the ability to significantly reduce the cost to manufacture a loan, which allows for Ethos to consistently offer a top-3 price in both agency and Non-QM. In addition, our lock to fund velocity is 50% faster than the industry and our world class operations provides industry leading customer service, including direct access to underwriters. While the rest of the industry is contracting, we are expanding. We are looking to add only best-in-class sales professionals and have select territories open across the country. If reading this excites you, please contact Bryson Bede.”

Wells Fargo notified 1,000 employees, including 900 mortgage lending professionals, that their jobs will soon be eliminated. It's the first major round of layoffs in a previously announced plan to cut the bank's workforce by as much as 10% over the next three years. The decreases in the company's mortgage division primarily reflect ongoing decreases in the number of customers in default and declines in application volume. In Des Moines, where its home lending division is based, “The Coach” will eliminate 400 jobs. (Those impacted can post their resumes for free online at www.LenderNews.com.)