Broker, Marketing, DPA Tools; GSE Changes; Yield Curve, Employment, and Mortgage Rates

Some people save $2.95 a day by making coffee at home rather than stopping at Dunkin’ or Starbucks. It adds up! Something didn’t add up for WeWork which reported this morning that it lost $1.25 billion in the 3rd quarter. I think that’s the combined whole net worth of about 1,000 small brokers and bankers. Perhaps WeWork could use a loan, from… Google? Next year you’ll be able to bank at Google via a partnership with Citigroup and a credit union. All the talk months ago about Amazon entering residential lending, what about Google? (By the way, yesterday Nike cut off selling through Amazon.)

Lender Services and Products

Maxwell’s ground-breaking loan application, QuickApply, for their digital mortgage point-of-sale platform is designed to ease one of the biggest friction points of a borrower’s experience: the 1003.It gathers the borrower’s information from Maxwell’s network of data providers to pre-populate fields in the loan application, filling in personal information, employment history, income, real estate owned, financial assets, liabilities, and more. This new application enables clients to increase their application volume and improve borrower experience by reducing the burden on the consumer applying. Along with QuickApply, their point-of-sale platform is a must-see for all independent lenders and regional credit unions & banks looking for a digital mortgage solution to enhance and evolve the human relationship between borrower and loan officer. To learn more about Maxwell and QuickApply or request a personalized demo for your business, click here.

“Join Golden State Finance Authority for an in-depth look at the new GSFA OpenDoors™ down payment assistance program! OpenDoors is a game-changer when it comes to helping homebuyers in California purchase a primary residence with little-to-no money out of pocket. The GSFA OpenDoors Program features homebuyer assistance up to 7% of the loan amount, flexible FICO score and DTI requirements and enhanced pricing. FHA, VA, USDA and Conventional Loan financing is available. Plus, GSFA delegates the loan process to the Participating Lender so no additional compliance review from GSFA is necessary, making the process simple and easy for both borrower and Lender. Ready to start closing more loans? Join us for a Lender Training Webinar. and view Program guidelines at www.gsfahome.org. You don’t want to miss out on this EXCITING new Program!”

‘Tis the season to begin planning for 2020, and your marketing strategy should be a top priority during the process. However, your plan shouldn’t just be good, it should be outstanding, like you and your team, if you expect to compete and win in today’s environment. No need for it to be too detailed, but it should be flexible enough to accommodate changes in your goals and objectives as the year progresses. Seroka Brand Development assists companies in the mortgage and fintech industries with all aspects of planning, including brand and strategy development, marketing, PR, digital and social media, and more. Seroka’s planning also includes a strategy to develop content for a company’s existing marketing automation system or sales engagement platform. If you’re interested in working with the industry experts for your 2020 marketing needs, contact Seroka today. 

Take a more personalized and targeted approach to marketing home equity. In this ebook, Blend prompts you to consider each customer’s priorities, then walks you through creating smart campaigns, crafting relevant messaging, and choosing the right channels to reach your audience. Read it here.

“Caliber Home Loans, Inc. continues to transform the mortgage process for our customers by making significant changes to our Customer Support Centers. Our growing teams of Support Center employees now respond to a broader range of customer needs than ever before, and with more representatives available during peak call times, we’ve never been better at supporting our customers. Caliber is a top 10 non-bank servicer (IMF) with over 600,000 customers, giving us the opportunity to support the needs of our customers before, during and after closing. We’re driven to build relationships with our customers and are looking for originators who are too! Visit us online or email Brian Miller today.”

Conventional Conforming Moves

There’s a lot going in Fannie & Freddie Land. There’s the new FHFA Strategic Plan and 2020 Scorecard, and the FHFA’s Request for Input on pooling practices for the TBA UMBS Market. If you want a quick read, there’s “Fannie & Freddie: A Snapshot”. It is clear that there is no deadline to end the GSEs conservatorships. And any GSE footprint reductions would be modest and tactical: do we really need to subsidize cash out refis, or investor properties?

Powered by FHFA, Fannie Mae, and Freddie Mac, the Mortgage Translations clearinghouse offers translated resources that lenders, servicers, and housing professionals can leverage to help clients with limited English proficiency. In addition to Spanish, the clearinghouse now includes translated mortgage documents and a glossary in traditional Chinese.

As of October 23rd, Fannie Mae began waiving the $75 Framework homeownership course fee, removing the cost burden for your borrowers.

Fannie Mae and Freddie Mac (the GSEs) published the updated static version of the redesigned Uniform Residential Loan Application (URLA/Fannie Mae Form 1003). This reflects the changes directed by FHFA that were announced in August 2019.

In a recent survey, Fannie Mae reached out to nearly 200 senior mortgage executives to better understand how lenders balance front- and back-end digital transformation investments and how they assess the success of each.

The Fannie Mae October Appraiser Quality Monitoring (AQM) list has been posted.

A provision of the Taxpayer First Act that becomes effective Dec. 28th requires persons receiving tax return information to obtain express taxpayer permission to share return information with any other third parties. Fannie Mae sellers and servicers must comply with this law. Read more in the Fannie Mae Selling and Servicing Notice.

Freddie Mac released a white paper detailing how the USDA Section 538 loan guarantee program is supporting thousands of rural, multifamily housing units throughout the United States. More than 51,000 rental units have benefited from the federal subsidy since its first investment in 1998, and another 8,000 affordable units are set to be built or preserved in 2020. Read the Freddie Mac Release for key finding and other information.

Bayview | Lakeview Correspondent Announcement C2019-42 provides information on Freddie Mac Bulletin 2019-20 and USDA PN 529.

Capital Markets

Some people in lending care about what is going on in the economy, while others don’t. I get it. For those that do, in some recent testimony before the House, Fed Chairman Powell discussed the relationship between the unemployment rate and inflation, namely that the level of unemployment necessary to induce inflation is currently lower than previously believed. Every Thursday we receive the prior week’s jobless claims, and on the first Friday of the month we receive the employment data from the prior month.

Historically, the Fed has held steadfast to the belief that there was an unemployment figure out there that when dipped below, the economy would see an uptick in inflation. We hear a lot of talk about the Phillips Curve, which explores the relationship between (low) unemployment and (rising) inflation. It assumes that as unemployment gets lower, workers can and do demand higher wages, resulting in an uptick of inflation. The classical belief was that an unemployment rate below 6 percent would trigger inflation. Now, seeing unemployment rates around 3.5 percent and inflation of 2 percent would be impossible by that thesis. But, classically speaking, there has been an inflation-safe rate of unemployment. And once unemployment falls without the economy slowing (e.g. GDP continues to increase) inflation is eventually a consequence. This sounds reasonable, but if it does exist, it certainly is not as large as 6 percent.

The fallacy in the simplistic notion is that it is some quantifiable constant or even predictable, but as we have seen recently, the unemployment rate is no longer a valid predictor of inflation. There have been a lot of small but contributory factors which have caused the non-acceleration of inflation, such as weaker labor unions for full time workers, weaker bargaining power for contract and temporary employees, the increase of technology and its subsequent impact on output, and the omnipresent option of outsourcing, as low-priced products and skilled labor from abroad keep domestic inflation tame. So should the Fed preemptively hike the funds rate before inflation gets out of hand as a result? The correlation between inflation and unemployment is not as strong as it once was or perhaps it was never as strong as believed, and with the economy being extremely complex and dynamic, the answer is seemingly “no.”

And the chatter about the inverted yield curve has quieted down. The U.S, economy has not fallen off a cliff. The yield on the 10-year Treasury note has traded below the yield on the 2-year note for a portion of 2019, but now we see a positive slope (20 basis points difference). In the past, the inversion has been a reliable indicator of recession. Despite global trade and economic uncertainties, underlying economic fundamentals are generally sound. The balance sheets of the household, non-financial, and financial sectors are generally in good shape, and financial conditions are not overly restrictive. But does the inversion of the yield curve signal an imminent recession? Or could we “talk” ourselves into one?

At the risk of making the mistake of claiming that “it’s different this time,” the yield curve at present may not be quite as reliable as a recession predictor as it has been in the past. The Fed purchasing Treasury securities as part of its quantitative easing program collapsed the term premium on long-dated Treasury securities, so the yield on the 10-year note at present is arguably 25 to 50 bps lower than it otherwise would be. So if not for the Fed’s QE purchases, the curve would appear normal.

True, financial conditions have tightened somewhat recently, but they are not as tight as they were at the end of last year, and certainly not as tight as in the months leading up to the financial crisis. With the recent volatility in the stock market and the widening of corporate bond spreads, there is plenty of uncertainty in the air. There are ongoing trade tensions between the United States and China, and the protests in Hong Kong could potentially lead to military intervention by China. The United Kingdom was supposed to crash out of the European Union on October 31, now delayed a few months. These uncertainties could potentially weaken business fixed investment spending even further. That could in turn hurt consumer spending, which has been strong, The likelihood is that strong economic expansion continues through the end of this year although it is prudent to acknowledge uncertainties in the outlook, noted above.

Looking at the bond market, yesterday U.S. Treasuries posted their second consecutive day of gains, including the 10-year yield closing -4 bps to 1.87 percent, as there were negative headlines surrounding U.S. – China trade talks. Fed Chairman Jerome Powell stuck to his view that interest rates will remain put for now, while signaling that the central bank will be ready to resume cutting if the U.S. growth outlook falters in what was otherwise an unremarkable address to the Joint Economic Committee. CPI and core CPI increased, as expected, which shows firming of consumer inflation, but likely not enough to spark the Fed into any action.

Today’s calendar began with PPI (+.4%, strong, core +.3%) and Initial Jobless Claims for the week ending November 9 (+14k to 225k). Later in the day, the Desk of the NY Fed will release the four-week MBS reinvestment estimate along with a new two-way FedTrade schedule. There are also eight Fed speakers scheduled for today! We begin Thursday with Agency MBS prices better by .125-.250 versus last night and the 10-year yielding 1.84%.

Jobs

“Is everything really bigger in Texas? At PrimeLending it is. As a Texas-based industry leader with a sales-centric focus on retail loans, we’re growing and hitting numbers like never before in our South Texas markets. Best of all, our branches and loan officers are gaining an unstoppable momentum that will continue to make our region bigger and stronger than ever. Why? Because we offer products that meet the needs of your borrowers, the tools to enhance the mortgage experience, and the support to keep your loans progressing and closing on time. That’s how we help you build your business in the Lone Star State. If you’re ready to go with a powerhouse lender like PrimeLending, we’re looking to expand even more in our Houston, Austin and San Antonio regions. The first step is talking with Bobbi Jo Deniz, South Texas Regional Production Recruiter, and Joe Thompson, Regional Manager about the perks of joining the PrimeLending team.”