Construction, Non-QM Products; Lots Going on at Fannie/Freddie
A new analysis from the real estate brokerage firm Redfin shows the typical homeowner in the United States now stays in their house for 13 years, five years more than they did in 2010. This lack of movement, especially among aging baby boomers, has helped create inventory shortages and pushed up prices. Salt Lake City, Fort Worth, Houston, San Antonio, and Dallas are the cities with the longest median homeowner stays, all more than two decades. [Insert joke about large families, or no one else wanting to live there, here.] Real estate agents are nervously watching the way house transactions occur, more and more without their 6% commission. For example, one recent entrant is Offerpad, one of the original iBuyers, or instant buyers of homes, currently operating in a dozen metros nationwide that allow homeowners to unload their properties quickly and easily without a Realtor (with a capital R).
Lender Products and Services
'The place to be for the RFP' - Vendor Surf, the authority on the vendor marketplace, is pleased to welcome Accenture, Credit Plus, Incenter, Mylo Insurance Solutions, Partners Credit & Verification Solutions and Sutherland Mortgage Services. Including their affiliated companies and brands, these six top-shelf brands represent nearly 70 vendor categories on our search engine... still the ONLY ONE in the industry. You can instantly identify potential vendor partners - just as fast as you can select your search filters... in just minutes (or seconds!). Absolutely nothing else compares. Oh, and use our free sourcing help and advice as well. We help ensure you choose wisely. Proudly celebrating our 2-year anniversary.
Are you ready to “Own your market with non-QM?” Join National Mortgage Professional Magazine and John Wise, Regional Sales Manager with Angel Oak Mortgage Solutions, as they focus on the alternative lending space. They’ll discuss how today’s non-prime/non-agency market is completely different than the old subprime, what programs are available to help challenging borrowers, how to identify and reach potential non-QM borrowers, how to qualify and actively market to add volume, and how to use alternative lending to successfully differentiate yourself. John Wise has 30 years of experience in finance and real estate and over 15 years of direct experience leading sales and operations for a wholesale, nationwide lender. Mr. Wise has experience in retail and wholesale mortgage sales and operations, as well as expertise in both the conventional and non-prime mortgage space. Listen to his take on non-QM and how he uses it to build his customers' business today! Own your market with non-QM webinar takes place on Thursday, November 21 at 1PM ET/10AM PT. Click here to register.
The inaugural IMN Non-QM conference just ended, and the consensus was overwhelming optimism for this growing sector of the industry. The key take-away was the need for the industry to work together and focus on education; Starting with dispelling the myths of what it means to do Non-QM loans. For example, many of the loans underwritten by Deephaven Mortgage are strong FICO, low LTV borrowers, who do not fit inside the ever-narrowing box created by conforming loan rules. Loan officers need to know how to identify Non-QM loans earlier in the process instead of using this sector as a fallout solution for conforming products. Between our knowledgeable Account Executives and suite of IDENTI-FI technology, we enable originators to place loans that might otherwise not qualify. To find out more about Deephaven's Non-QM products and amazing technology, email brokerinfo@deephavenmortgage.com (Wholesale) or sales@deephavenmortgage.com (Correspondent), or visit Deephaven.
Many mortgage-related firms are up to their eyeballs in refinancing volume right now, which has made 2019 a fantastic year for the industry. The MBA is already telling us that, in 2020, while the business will be there, it will be more of a purchase market again, recently forecasting a 1.6 percent increase in purchase originations for 2020…along with a 24.5 percent drop in refinance at the same time. With the holidays coming and winter right behind them, 2019 is all but over. Have you locked down your costs for purchase business? LodeStar helps lenders and service providers work together to keep costs low and efficiency high with compliant, TRID-focused technology. Don’t wait for the next market change. Plan for it now! Check LodeStar out here.
Stearns Wholesale Lending is excited to announce the release of the Stearns Interest Only Conforming & High Balance Loan Program. With 30- and 40-year fixed rates, the interest-only loan is available for both purchase and cash-out options up to 95% with no mortgage insurance. Even more exciting is the ability to leverage a loan amount up to $726,525 regardless of county limits. Merely run DU to obtain Approved-Eligible (or in certain circumstances Approved-Ineligible) findings, check against the guidelines, and that’s it! Click HERE for Wholesale Leadership to reach out to you.
If you lose your borrower to a lender who uses Sales Boomerang, you'll never get that borrower back again. Sales Boomerang's Borrower Intelligence System makes it practically impossible for you to win back your lost deals if they were lost to a lender using Sales Boomerang. "Sales Boomerang is not a 'nice-to-have,' it's a utility. It's like having running water and electricity," said Larry Masino, Director of Marketing at Annie Mac Home Mortgage. "Why is this even a question for anyone in the industry? This is a must-have if you care about your customers, loan officers, and your referral partners," observed Nick Rutherford, Technology Director at Homestead Funding Corp. Your borrowers deserve a lender who's not thinking about today's transaction because they're already planning for the 7th or 10th. Stop the madness and schedule a demo NOW!
Looking to grow your Single Close Construction business for FHA, VA, USDA and FNMA? Then look to partner with GSF Mortgage Corporation (GSF). Lenders, brokers, and builders are seeing the advantage of working with GSF, helping set a record month of production. All options allow for maximum LTV’s, including FNMA at a 95% LTV. No requalifying after initial closing for the borrower. Every step of the process is handled internally, meaning no third party. Your builder will be vetted within 7 days by GSF. Your loan scenario and structure are calculated same day by GSF’s team of Construction Resource Specialists. All draws are handled by GSF. Is your builder looking for an advance at the closing table? No problem. Is your borrower worried about their rate at the time of modification? No worries, our float down option at modification will provide piece of mind. Contact Robert Stephens to learn more.
Changes in Freddie/Fannie
With Announcement 2019-07, The Fannie Mae Servicing Guide has been updated to include changes or clarifications related to the following: Canceling Property and/or Flood Insurance When Fannie Mae Acquires the Property. Reporting Anti-Money Laundering Activity. Miscellaneous Revisions. Consolidation of Application and Approval of Seller/Servicer Policy. Update to Contacts.
Fannie Mae is supporting the Alternative Reference Rate Committee’s (ARRC) recommendation to replace the London Interbank Offered Rate (LIBOR) with a new index based on the Secured Overnight Financing Rate (SOFR) to ensure a seamless transition away from LIBOR by the end of 2021. Fannie Mae intends to use the fallback language that the ARRC has recommended for newly originated adjustable rate mortgages (ARMs). Fannie Mae anticipates publishing in the first quarter of 2020 updates to its uniform ARM notes to incorporate the recommended fallback language for all newly originated ARMs. Fannie Mae will work closely with the ARRC, the Federal Housing Finance Agency, Freddie Mac and other industry participants throughout the transition away from LIBOR.
As part of this transition, Freddie Mac Single-Family anticipates publishing updates in the first quarter of 2020 to all its uniform ARM notes and other legal documents for ARMs, as appropriate and will incorporate the ARRC recommended fallback language for all newly-originated ARMs. Until such updates are implemented, Freddie Mac Sellers are reminded to continue using the current versions of the uniform ARM notes when selling to Freddie Mac. Freddie Mac will work closely with the ARRC, the Federal Housing Finance Agency, Fannie Mae, and other industry participants on a thoughtful and deliberate process throughout all phases of this transition to SOFR-based ARMs within the home mortgage lending industry.”
Capital Markets
What is on the minds of top capital markets personnel, besides the flattening yield curve, regarding the GSEs? The Mortgage Bankers Association is on it. There’s the new FHFA Strategic Plan and 2020 Scorecard, the SEC’s review of asset-level disclosure requirements for residential mortgage-backed securities, and the FHFA’s Request for Input on pooling practices for the TBA UMBS Market.
We can expect lots of action with the FHFA Strategic Plan, like it being data and market driven. Expect the FHFA to work with the FHA on eliminating overlap to strengthen both with offerings to borrowers being about 95% of what it is today. Remember that the GSEs were designed to create access to capital markets and a level playing field. There will be a big focus on exiting conservatorship rather than grand IT schemes.
The 2020 Scorecard is out there to help ensure safety & soundness. It points toward an exit from conservatorship (but no firm timeline), an effective QM rule, and an “end state” of Freddie and Fannie being private companies with the FHFA being their regulator.
The FHFA’s request for input on pooling practices is of interest. We now have the single security (UMBS). Trading began in the spring, their first issuance in June. One could say that it’s been a success because it’s been a non-event with no material disruption in markets. There is concern, however, about misalignment of prepayment speeds but safeguards were put in place and the FHFA can take actions to align prepay speeds. When F&F come out of conservatorship there will be more leeway to diverge, and this could lead to prepayment divergence which would dampen liquidity, leading to an RFI about pooling parameters. Seller-servicers are now incented to deliver most of their TBA eligible loans & securities put them into large multi-lender pools. 20-30% would probably go into spec pools. We’ll probably see the market watching “multi-lender versus single lender versus spec pools” activity.
Turning to economic news and the bond market, housing starts came in a little light, at 1.31 million but the big news was the permits number, which rose to 1.46 million. This is up almost 15% compared to October 2018 and is the highest print since the bubble years. The action was in the Northeast and the South. Completions were up big as well, coming in at 1.26 million, which is up double digits compared to last month and a year ago.
Yesterday was about as boring a day as Treasury markets could experience. There were no notable economic releases and no new news on the U.S./China trade war, though President Trump did reiterate his warning that tariffs on imports from China will be increased if a trade deal is not agreed upon, or Brexit. Japan's Lower House approved the trade deal with the U.S., but that nary caused a ripple stateside. In the Eurozone, new car registrations increased by the strongest rate in a decade. Domestically, the Atlanta Fed's GDPNow forecast for Q4 GDP was increased, and housing starts and total building permits both beat expectations. U.S. Treasuries recorded another round of gains, including the 10-year closing the session -2 bps to 1.79 percent as yields on longer-dated treasuries hit their respective lows from early in the month. MBS saw tighter swap spreads, led by the front end, which saw lower coupons wider with higher coupons not trading much better amid concerns about a pick-up in supply.
MBA mortgage applications for the week ending November 15 were down a little over 2 percent, but purchase applications were 7 percent higher than a year ago. (The stats haven’t changed much recently: refis are about 60 percent, ARMs less than 5%, FHA & VA 25%, USDA rural less than 1%.)
For economic news ahead we only have the release of the minutes from the October 29/30 FOMC meeting this afternoon. We begin the day with Agency MBS prices up .125 and the 10-year yielding 1.75%.
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Citizens Bank is hiring experienced Mortgage Loan Officers who want to spend time with their customers, give them sound advice and explain things as clearly as possible. “This team strives to grow through exceptional loan officer development and support. We develop strong relationships with our Retail Banking and Realtor Partners while keeping a keen focus on customer satisfaction,” says fellow Citizens Bank Producing Sales Manager, Lance Fultz. At Citizens Bank, you’ll receive training, room for advancement and the opportunity to help fellow Citizens own a home. If that sounds like a company you want to build your sales career with, apply to Citizens Bank today. For questions, please email Home Mortgage Recruiting.