Non-Agency, Disclosure Products; Dive Into Economic News Pushing Rates

Depending on the product, 20-25% of the nation’s loans come from California. “Appraisal firms and appraisal management companies utilizing independent contractor appraisers in California, as well as any California appraisers working as independent contractors themselves, should get familiar with Assembly Bill 5 (AB-5), California’s new ‘gig worker’ law that aims to curb the classification of service providers and workers as independent contractors by businesses, rather than as employees.” That state has a lot going on, including California’s Nancy Pelosi’s announcement of the formal impeachment inquiry, only the fourth time in American history that a sitting president is facing one. (Many analysts believe this announcement carries more political significance than practical consequence, given the composition of the Senate, and won’t impact mortgages.)

Lender Products and Services

AIME's mission is to support and empower independent mortgage experts. The AIME Fuse 2019 National Conference connects you with the people and solutions to grow your professional skills and solidify your place in our fast-paced industry. Reserve your spot today as it promises to be an event you won't want to miss. Use Promo code FUSEChrisman for $25 off your purchased ticket. Register here today!

Fall expo season is here for the mortgage industry, which means it’s time to plan a strategy for making the most of what can be an overwhelming few days. Cloudvirga Co-Founder Kyle Kamrooz provides a three-part guide to ensure you come away from the events you attend this season with an action plan to improve your business.

If you’re heading to the MBA Annual this year, be sure to check out Tequilatopia. TMS and South Street Securities are hosting a joyous soiree that promises to be as unique and weird as the city of Austin. Make your way through tequila tastings and margarita stations, and enjoy delicious Mexican food while hanging with friends. The party happens on Monday, October 28 from 5-8 pm at Café 605 in the Hotel Van Zandt. Want to get on the guest list? Reach out to your TMS CAREspondent VP or email the TMS team.

Last week MCT became the first organization to complete integration to the full suite of Fannie Mae's Pricing & Execution - Whole Loan® APIs. This integration to Fannie Mae's Manage Commitment API allows lenders to pair off, extend, and modify existing commitments directly within MCTlive! This unique integration dramatically enhances commitment management for secondary marketing managers. The new API extends MCTlive! Rapid Commit functionality, which intelligently completes product selection and delivery for all loans to investors or agencies with a single click. “We’ve been surprised to find many lenders unaware of the advances in loan committing technology,” said Phil Rasori, COO of MCT. “These features are saving lenders hours of time every week and preventing potentially costly mistakes by eliminating manual data entry.” MCT has a long history of first-to-market innovation and has closely collaborated with Fannie Mae to innovate with the purpose of solving problems for mutual clients. Read more about its technology collaborations.

From a single web-based borrower portal to centralized tracking to automated alerts and notifications, the second generation of Floify’s Disclosure Desk has it all! By integrating this powerful, enterprise-grade functionality into your lending workflow, you can provide borrowers with the convenience of a single access, end-to-end mortgage experience. From there, they’ll be able to quickly receive, review, eSign, and return their loan documents in the same mobile-friendly web portal they use to complete their loan application, submit documentation, and track their loan progress. Learn more about Floify's new Disclosure Desk and how it can help you build and maintain a compliant, yet efficient, disclosure process your LOs and borrowers are going to enjoy – request a live demo.

The final installment of the new three-part series, “The 30-Year Fix”, was just released by Maxwell this AM; “GSE Reform & The Fate of the 30-Year Mortgage” digs into the role GSEs have played throughout history in popularizing the 30-year fixed-rate mortgage and contemplates how GSE reform could impact America’s favorite mortgage product. No form or download required, it’s 100% free and a must-read for all mortgage professionals. Read Part 3 here. (If you're just tuning in, you can start from the beginning here!)

Join the Caliber Home Loans, Inc. Correspondent channel for its webinar, “Non-Agency Products from a Loan Officer’s Perspective”. Getting comfortable with Caliber’s Non-Agency suite of products is crucial to protecting your production from market changes while also expanding the dream of home ownership to borrowers whose stories don’t fit into agency guidelines. This webinar is being offered on Tuesday, October 1stat 11AM CT and Thursday, October 3rdat 1PM CT. Register here today!

Capital Markets

Business cycles happen regardless of the government. The United States has been on “recession watch” seemingly all summer as different market signals have intermittently flashed yellow and red. Manufacturing is straining under President Trump’s trade war, business investment is slowing, consumer confidence is showing cracks, and many economists expect that growth will weaken slightly over the next couple of years (without actually contracting) that distinction being crucial to whether the nation is actually headed for another recession. Fed Chair Powell said recently that “the most likely outlook for our economy remains a favorable one with moderate growth,” and “our main expectation is not at all that there will be a recession.”

While economic growth has moderated only slightly so far in 2019, forecasters think America is headed for a deeper pullback, as the economy is expected to expand by 2.3 percent this year (and 1.8 percent next year) after expanding at a clip of 2.9 percent in 2018, with some believing the domestic economy may even shrink in 2020.

If that happens, it would not necessarily mark the start of an “official downturn,” as despite many economists and news media defining a recession as two consecutive quarters of shrinking output, the U.S. does not. Instead, a committee at the National Bureau of Economic Research looks at a range of data — including early indicators, like industrial production and a monthly growth series — and uses that information to call a downturn.

But it is highly unlikely that the committee will declare a recession before the 2020 election, since data takes a long time to reflect a slowdown, and growth numbers, including the monthly G.D.P. index, still look firm. Historically, it has taken six to 21 months from the actual start of a recession to the formal declaration (2007 was announced 11 months late).

Other economic authorities may point it out first, as evidenced by staff of the Federal Reserve believing by March 2008 that the economy was moving into recession — a full nine months before the official dating from the committee. The Fed is more reactive now at the first sign of trouble than in the past, poised to support the economy quickly and preventatively. Which means America could see a lot of shaky economic indicators without falling into a full-blown recession, though a sustained growth pullback would leave the economy more vulnerable to unhappy surprises, increasing the risk that a global event or domestic political drama will ignite an actual recession.

The Fed lowered the Fed Funds rate range 25bps last week citing global economic weakness as well as subdued US inflation in a move that was widely expected. It was a busy week that started with a spike in oil prices and continued with a spike in the overnight lending rate which caused the Fed to intervene in repo operations for the first time since 2008. Despite some brief moments of concern prior to the FOMC statement, the Fed lowered the range for the Fed Funds rate in a split decision that showed increasing dissent among the committee. Additionally, the dot plot released with the statement showed only a few and not a majority of committee members expected another rate cut this year while the market still expects a cut to come at the final meeting of the year in December. Fed Chairman Powell reiterated that global trade remains uncertain and the Fed will respond accordingly. However, despite calls from President Trump to lower rates further and even into negative territory, as some other central banks have done, Powell doesn't currently think the Fed would move that low.

U.S. Treasuries retreated on Wednesday, nullifying gains made earlier in the week (the 10-year yield closed +10 bps to 1.73 percent) after the release of a much stronger than expected New Home Sales report for August. New home sales surged 7.1 percent month-over-month, making it the second-highest paces sales month since October 2007. The impact of low mortgage rates clearly affected buyer demand, with the higher-priced West region seeing the biggest increase among all regions. That report coincided with the Trump administration's release of notes from President Trump's call with Ukraine's President Zelensky, which showed no direct quid pro quo that Democrats opening impeachment proceedings would have hoped for. Both of those events dwarfed yesterday’s weekly MBA mortgage applications survey, which eased prepayment concerns after the recent rally in rates, as application activity plunged while mortgage rates were little changed.

In Fed-related events, the New York Fed announced that future repurchase operations will be upsized after yesterday's operation was oversubscribed once again. Overnight repurchase operations will be upsized to $100 billion from $75 billion while 14-day term repo operations will be increased to $60 billion from $30 billion. Separately, Chicago Fed President Evans said that the Fed is "well-positioned" after making two rate cuts. And across the globe, the Reserve Bank of New Zealand left its official cash rate unchanged, but signaled willingness to lower rates in the future. The overnight repurchase agreements hold down interest rates and stabilize the money markets. It was the latest in a series of capital injections through repo transactions since a liquidity shortage caused overnight interest rates to spike last week.

(Recall that the NY Fed acted as instructed by the Federal Open Market Committee “to undertake open market operations as necessary to maintain the federal funds rate in a target range of 1-3/4 to 2 percent,” is conducting repurchase operations during the week. In general they are oversubscribed, as total bids exceeded the allotted amount by almost $9 billion, suggesting that other repurchase operations will be conducted. Separately, the Wall Street Journal reported that primary dealers have shown little interest in 50-year bonds, due in part to concerns that issuance of 50-year debt could draw demand away from 30-year bonds.)

On the trade front, President Trump and Japan's Prime Minister Abe signed a limited trade deal expected to be followed by a broader agreement, as the two sides have yet to agree on a plan for removing U.S. tariffs on Japanese vehicles and auto parts. Finally, China’s Beige Book observed that Q3 economic performance in China was the weakest so far in 2019.

We have already had several economic releases out this morning: Initial jobless claims for last week (213k), August Advance International Trade in Goods ($72.8 billion), Q2 GDP, third estimate (unchanged at +2.0%), and retail inventories were flat. Later this morning brings August Pending Home Sales, KC Fed Manufacturing, and a Treasury auction of $32 billion 7-year notes. The Fed will conduct a GNII FedTrade operation when they will purchase up to $358 million 3 percent and $123 million 3.5 percent. The day also contains a bevy of Fed speakers, with Dallas Fed President Kaplan, St. Louis Fed President Bullard, Vice Chair Clarida, San Francisco Fed President Daly, and Minneapolis Fed President Kashkari all scheduled to make remarks. We begin the day with Agency MBS prices better by .125 and the 10-year yielding 1.70%.

Employment

NRL Mortgage is having an incredible 2019! Last month NRL set another record in fundings, and, prior to that, originations have increased over 29% year over year! “Our business is growing and we're hiring nationwide for talented Branch Managers and Loan Originators in 48 states. NRL Mortgage attributes its incredible performance to technology, a very streamlined operations model, and talented producers and people that get what it takes to be successful. NRL Mortgage does not plan on slowing down and just added a few more branch locations last month. If you would like your 2020 to be the best year of your origination life, reach out to Ron Zach, CEO of NRL Mortgage, today so you can start before 2019 is over. To learn more, visit us at www.explorenrl.com

NewRez Wholesale, a nationwide and heavily capitalized lender, is looking for experienced Account Executives with an entrepreneurial spirit to join its growing team. Opportunities are available in the following areas under their respective Regional Managers: Arizona, Florida, Nevada, San Jose and San Diego, California (John McElhone), Western PA (Shawn Crowley), Wisconsin, Minnesota, Tennessee, and Houston, Texas (Tony Hale). "We are excited to expand the team with new talent in new territories," says Mark Melini, VP National Wholesale Sales Manager. "Our growing product suite, flexible lending guidelines and fast broker onboarding process makes NewRez a great place to take your career to the next level.” To learn more about available opportunities, contact Mark Melini.