Sales, Investor, Construction Products; Servicing Study; Citi's Penalty

Why do us capital markets folks seem to speak a different language? To better understand what secondary marketing folks deal with every day, here’s a piece titled,“Best Execution in Mortgage Secondary Markets” for anyone wanting to know what’s involved after a loan funds. (The information hasn’t changed much, if at all.) Yes, numbers are critical in the mortgage process, as is fair lending. For anyone paying attention to new contributors in lending, they should read this about ZestFinance, a company using Artificial Intelligence (AI) in an attempt to remove discrimination through its ZAML Fair software.

Lender Products and Services

Are you ready to increase your mortgage production? Give Cindy 90 days to show you how! Sign up for your FREE 20-minute coaching call with Mortgage Coach Cindy Ertman, one of the industry's Top 100 Mortgage Loan Originators in the U.S. for over a decade. She will help you learn in 90 days what has taken other LO’s years to accomplish on their own. You’ll learn to work smarter, not harder, using Cindy’s proven Connection to Conversion Lead Strategy System to help you convert more leads in record time. LIMITED TIME OFFER! Get your FREE 10 Easy Steps to Secure Your Listing Agents guide and a $200 DISCOUNT by using discount code 90DAY200 at checkout.

In a recent Altisource® survey to over 200 mortgage professionals, nearly 30% of respondents identified construction loans as the largest growth opportunity in the market. “Lenders utilizing Altisource’s® revolutionary new Construction Title Pro® solution powered by Granite Risk Management™ and Premium Title™, have achieved significant risk reduction and unparalleled cost savings, averaging 30%. To capitalize on this impending growth, it is imperative for lenders to launch and manage a construction program that mitigates potentially catastrophic losses.” Connect with Justin Vedder today to realize the benefits of attracting and retaining loan officers through a profitable program that outsources your complete construction management process.

ARMCO’s Q3 2018 Mortgage QC Industry Trends Report shows that defect trends reflect repercussions of downsizing and lower origination volume. “In an effort to win market share, investors often become more aggressive by expanding eligibility guidelines, while originators try to make up for declining volume by submitting loans of lower than usual quality”, explained Phil McCall, president and COO of ARMCO. Q3 2018 Trends Report Summary: Critical defect rate reached 1.89%, its second highest level since the TRID rule went into effect; critical defects attributed to Loan Package Documentation spiked nearly 23% over the previous quarter; the number of defects attributed to the Income/Employment category dropped almost in half; FHA loans accounted for a disproportionate number of critical defects, comprising 28.20% of originated loans in the benchmark, but accounting for 49.55% of loans with critical defects.

Simplify your underwriting process with Loan Product Advisor® asset and income modeler (AIM). Through the expertise of third-party service providers, AIM automates the manual processes of assessing borrower assets and income. AIM reduces the burden of traditional documentation, speeds up the loan origination process and helps you close loans faster. Freddie Mac is working hard to bring you solutions that create efficiencies for your business and improve the borrower experience - giving you a competitive edge. These capabilities are available now. Gain greater efficiency in your underwriting processes with AIM - get The Freddie EdgeSM.

Floify now integrates with focusIT’s hosted Calyx PointCentral LOS! With this powerful new integration, lenders of all shapes and sizes can seamlessly combine the industry’s leading mortgage automation platform with this popular LOS – a convenience formerly available to only enterprise lenders. By implementing an existing focusIT API connection, loan originators who are using Floify’s point-of-sale functionality can create new loan files in PointCentral, sync 1003 data to a PointCentral loan file, push uploaded documents from Floify to PointCentral, and more. This is just one more way Floify is helping lenders reduce cycle times, fight margin compression, and stay competitive in our digital mortgage world. To see Floify’s new Calyx PointCentral LOS integration in action, request a live demo.

Deephaven’s Investor Advantage product provides investors with a combination of flexible qualification methods that will make you as a loan originator the go-to destination for real estate investors. Deephaven springs forward with significant rate improvements on our Investor Advantage, and it is truly remarkable! Check out our current Rate Sheets/Matrices by contacting brokerinfo@deephavenmortgage.com (Wholesale) or sales@deephavenmortgage.com (Correspondent).

Did you know Pre-Qualification Plus, Credit Plus’ soft credit pulls are less expensive than a traditional tri-merge report, won’t impact the consumer’s score and will not activate trigger leads? If you’re experiencing high fall out rates due to low credit scores, consider pre-qualifying your applicants with Pre-Qualification Plus. It’s just one solution included in CloseCAPTURE – a suite of products designed to help lenders be more productive and profitable. CloseCAPTURE also includes Lending Hand – a service for applicants with credit scores that are near qualifying. With Lending Hand, you’ll receive a low cost, expert evaluation of each credit file so you can share helpful insights with your applicant and a planned set of actions for the highest probability of a successful rescore. With homebuying season upon us, now it the perfect time to take the #CloseCAPTURE challenge. Contact Credit Plus or watch this video for more information.

Servicing Study

Servicers, are you doing everything you can to make sure your customers stick with you for their next loan? According to data from STRATMOR Group’s MortgageSAT Borrower Satisfaction Program, in 2018 a combined 28 percent of borrowers made their lender choice based on having an existing relationship with the company or the LO, or both. In many cases, the relationship existed because the borrowers dealt with the same people on their last loan. So, if nearly one in three borrowers is staying (or jumping ship) because of an existing relationship, then investing some extra care and attention in your servicing portfolio should pay high dividends, especially in a market that is 75 percent purchase business. MortgageSAT Director Mike Seminari offers three suggestions to bring customers back to you for their next loan in the new  March MortgageSAT Tip.

CFPB, Fair Lending, Compliance, and HMDA News

Citi’s $25 million fine grabbed Fair Lending headlines yesterday. Citigroup's main bank subsidiary was fined $25 million to settle allegations by the Office of the Comptroller of the Currency that the bank failed to offer home loan discounts to thousands of borrowers in violation of the Fair Housing Act. The OCC cited Citibank's inability to provide benefits through its Relationship Loan Pricing program to all who were eligible "adversely affected" borrowers "on the basis of their race, color, national origin, or sex.” The agency blamed a lack of training for loan officers.

The Office of the Comptroller of the Currency (OCC) released OCC Bulletin 2019-12 notifying national banks of the key Home Mortgage Disclosure Act (HMDA) data fields. These are the data fields that OCC examiners will be using to test and validate the accuracy of HMDA data collected in 2018.

The Consumer Financial Protection Bureau issued an Advance Notice of Proposed Rulemaking on residential Property Assessed Clean Energy (PACE) financing. The Economic Growth, Regulatory Relief and Consumer Protection Act (S.2155), signed into law last May, directed the Bureau to prescribe certain regulations for PACE financing.

The CFPB also released its “Supervisory Highlights” report for the winter of 2019. The residential lending biz was focused on mortgage servicing issues including charging mistakes, mortgage insurance cancellation denial errors, loss mitigation diligence failures, HECM foreclosure timeline concerns, and remittance refund failures.

Yes, in its Supervisory Highlights the CFPB highlighted problems with the servicing of reverse mortgages. Its recent examination brought to light the fact that some reverse mortgage servicers have issued misleading statements to the heirs of deceased reverse mortgage borrowers. (When a borrower dies, the servicer is required to contact the heirs to notify them of their right to repay the loan or place the property up for sale. Alternatively, the property moves into foreclosure. In this instance, the Department of Housing and Urban Development allows for up to two 90-day extensions to grant the heirs time to make a decision. But the CFPB found that “one or more” servicers sent insufficient information in this notice to the heirs.)

The Mortgage Bankers Association released a new white paper, The Roadmap to CFPB 2.0, detailing recommendations to ensure stability and consistent consumer protections in CFPB's practices and consumer financial laws. This white paper is a follow-up to MBA's 2017 CFPB 2.0: Advancing Consumer Protection (available here), which focused on how CFPB could better protect consumers by publishing clear, consistent regulations and bright-line guidance, rather than using enforcement actions to announce new, binding standards.

Recall that the CFPB recently proposed improvements to its “No-Action Letter” policy and proposed to create a new “Product Sandbox.” These new revisions intend to streamline the process of applying for a no-action letter, broaden the applicant pool and provide greater relief to successful applicants. Mayer Brown lawyers David Beam, Melanie Brody, Alex Lakatos and Joy Tsai recently published a Legal Update, which provides an in-depth overview of the proposed amendments for companies and trade associations to consider when submitting comment letters to the CFPB with any suggestions or problems with the proposals.

The FTC took aim at perceived inadequacies in compliance reports submitted pursuant to FTC consent orders and litigated judgments in its March 11, 2019 blog post.

Don’t forget that the CFPB finalized an amendment to the TILA/RESPA Integrated Disclosure (TRID) rule, which become effective last year. To address the amendment’s changes, the GSEs have identified updates to the UCD Delivery Specification that are necessary to support the changes in the TRID regulation. Those updates are being provided today in the GSEs UCD TRID Amendment Impact Memo. The corresponding updates to the UCD Delivery Specification was published in Q4.

Mayer Brown is hosting a 30-minute teleconference tomorrow, 11AM ET, which will provide a quarterly update on the CFPB and will go over new Director Kathy Kraninger’s first three months on the job. Mayer Brown partners Ori Lev, former CFPB deputy enforcement director, and Stephanie Robinson will cover updates on personnel developments beyond Kraninger’s confirmation, enforcement actions and litigation, regulatory developments and the state of play on the Hill. Contact Anny Kim for registration information (212.506.2546).

Capital Markets

Volatility continues to sink in U.S. fixed-income securities, which is fine for capital markets folks.

Yesterday was another snoozer ahead of today’s conclusion of the Fed’s latest policy meeting, any movement higher yesterday centered around reports U.S. trade officials are worried that Chinese trade negotiators will backpedal on some of their commitments from the latest round of trade talks. (The worry is that the U.S. will not lift punitive tariffs on imports from China.) In other international news, The Reserve Bank of Australia released its latest policy meeting minutes, noting significant uncertainties in the economic outlook. In Brexit news, British Prime Minister Theresa May will seek a 9-12-month Brexit extension from the EU after Speaker of the House of Commons John Bercow indicated that he will not allow a third vote on the same withdrawal bill. German Chancellor Angela Merkel said she will "fight to last hour" for an orderly Brexit.

There’s no market-moving news early this morning although we did have weekly mortgage applications from the MBA for the week ending March 15 (apps +1.6%, refis jumping 4%). Day two of the FOMC meeting resumes with the Federal Open Market Committee statement, projections, and press conference at mid-day. The Summary Economic Projections are likely to draw the most attention with market participants looking for the Fed’s thoughts in light of slowing global growth, while the dot plot will be scrutinized for how close the Fed is to their terminal rate for this cycle. We begin today with agency MBS better nearly .125 from Tuesday and the 10-year yielding 2.59%.

Jobs and Promotions

Continuing its aggressive growth, non-QM lender Angel Oak Mortgage Solutions has added to its impressive roster of Account Executives in March. Antoinette Hendryx, Rob McCorkel and Geoff Ogden came on-board in Northern California, Tuan Huynh, Jill Polce and Sam Yeo in Southern California with Jodie James in Columbia SC, Ben Scribner in Philadelphia, Leanne Wood in Scottsdale and Brady Sweet covering Jacksonville/Pensacola. These new AEs are already in their communities, teaching brokers and correspondents how easy it is to work with Angel Oak. Angel Oak Mortgage Solutions  is still looking for more Account Executives in markets across the country. To learn more, view the latest job openings on the Careers Page or email Regional Sales Manager, John Wise.  

Calling all loan officers! Nationwide lender, NewRez, is seeking high producing loan officers and sales teams in Massachusetts, Florida, Indiana and Nevada to join its growing team. “NewRez offers a wide breadth of industry leading products and flexible lending guidelines to create unique options for borrowers. As an industry leader in mortgage fulfillment, origination technology, and marketing support, NewRez continues to grow and invest in fulfilling our customers dreams of homeownership.” Contact Vince Daino, VP of Recruiting and Business Development to learn more about the open positions available within NewRez.

Congrats to Dave Stevens, former president and CEO of the Mortgage Bankers Association (MBA), who has joined Radian’s Board of Directors.

And ComplianceEase announced that Sheila Meagher has joined the company as SVP of Sales & Client Success, following the promotion of her predecessor, Dan Smith, to SVP of Government Relations. Congratulations!