Broker, Digital Products; G-Rate's Penalty; Sweeping Investor Changes
As analysts pour through Freddie Mac’s earnings announcement this morning, when in captivity it is important to settle in quickly and efficiently. It is also important not to fall for any phone scams! Here’s your tip du jour: “When in Doubt: Hang Up, Look Up, & Call Back.” Focusing on the general population, industry pundits continue to discuss how first-time home buyers, and owners seeking to take some cash out of their home, and ostensibly use the money to help them get by or pay off expensive credit card debt, are the ones most hurt by the FHFA’s price hits. And how lenders everywhere continue to grapple with capacity issues, the unforeseen consequences of forbearance, servicing until the aggregators come back, and liquidity. The stability of home is often in stark contrast with the changes, both wide-sweeping and minute, we’re seeing in residential lending. Are we having fun yet?
Lender Products and Services
Join NAN (Nationwide Appraisal Network) and the National Association of Mortgage Brokers, tomorrow, Friday, May 1st at 2pm ET for their COVID-19 webinar series, ‘Bringing Clarity to the Appraisal Process during COVID-19’. Joni Pilgrim, CEO of NAN, Steve Sussman, SVP of Sales and Strategy and Cristy Conolly, Chief Appraiser at NAN, are back with another webinar to give you an informative overview of the impact of COVID-19 on current appraisal practices. Focusing on temporary flexibilities and what they mean to you, loan criteria for Fannie/Freddie, and /FHA/VA/USDA, updates on turn times throughout the country and best practices moving forward in the new normal. Register Now. Your questions will be answered as NAN continues to stay in front of this quickly changing landscape while leading you to success as your AMC partner. To schedule a COVID-19 webinar training for your team, email sales@nationwide-appraisal.com today, or text your COVID-19 appraisal questions to 888-760-8899.
Dux Advisory, LLC (www.DuxAdvisory.com) announced this month it has developed a new methodology, working with a world class IT firm, to digitalize workflow processes. This methodology leverages the power of RPA and AI/ML to drastically reduce the manual interventions involved by automating the loan onboarding and/or validation processes in order to achieve significant efficiencies. For more information, please contact Richard Barrent.
QLMS remains a refuge of stability for mortgage brokers. It’s clear the broker community sees how well the lender is operating through this challenging time. In fact, in April alone, QLMS has approved nearly 600 new partners who are becoming Stronger Together thanks to QLMS’ industry-leading pricing, process, products and technology. While 98% of its team members are working from home, the lender continues to operate at an intensely high level. QLMS’ product mix is as solid and as balanced as possible and turn times have remained steady since the team shifted to remote work. Simply put, they’re open for business! If you aren’t one of the 37,000 LOs and processors partnered with one of the most prepared lenders in America, click HERE. The partner approval process has been optimized so you could be working with QLMS in as few as 24 hours after connecting with them.
With millions of Americans now unemployed or filing for unemployment, we’re already seeing double-digit decreases in purchase loan applications. Once the refi boom fizzles out, lenders can expect fierce competition for a significantly diminished pool of purchase loan applicants. Protecting today’s market share will be a business imperative. To help lenders hang on to their huge wave of recently acquired refi customers, Top of Mind has added Power Calls and Power Messaging to its “Client for Life” Workflow. Available to users of SurefireCRM, the Client for Life Workflow creates over 100 distinct opportunities to stay connected with borrowers over a five-year period. Originators don’t have to lift a finger to deliver a steady stream of award-winning, value-adding content through a carefully selected mix of digital, direct mail, voicemail and text message channels. Learn more about mortgage marketing content – and why it matters to achieving mortgage marketing goals — here.
How about some non-COVID mortgage news for a change? The Department of Justice let everyone know that Guaranteed Rate will pay $15.06 million to settle allegations that it violated Federal Housing Administration and Department of Veterans Affairs lending rules. “G-Rate” reached an agreement to settle charges that the company “knowingly violating material program requirements when it originated and underwrote mortgages” insured by the FHA or guaranteed by the VA. Per the DOJ, Guaranteed Rate violated rules where lenders are required to follow FHA and VA rules to ensure that only mortgages that meet “key credit and underwriting criteria” are insured or guaranteed by the government. The statement noted, “Guaranteed Rate… knowingly failed to comply with material program rules that require lenders to maintain quality control programs to prevent and correct underwriting deficiencies, self-report any materially deficient loans that they identify, and ensure that the underwriting process is free from conflicts of interest.”
Guaranteed Rate admitted that it “failed to adhere to the applicable self-reporting requirements, that its FHA underwriters received commissions and gifts in violation of program rules, and that there were instances in which its government underwriters were instructed not to review documents that were relevant to the underwriting decision… and… certified and the government insured and guaranteed loans approved by Guaranteed Rate that were not eligible for FHA mortgage insurance or VA loan guarantees.”
It all began when former Guaranteed Rate employee Anthonitte Carranza (under the whistleblower provisions of the False Claims Act, which allow people to sue on behalf of the government for false claims and to receive a share of any recovery) blew the proverbial whistle. Carranza will receive $2,443,000 as her share of the government’s recovery. The DOJ stated that Guaranteed Rate took “significant measures” to stop the practices in question, both before and after being notified that the government was investigating its lending practices, which the government looked favorably upon.
COVID-19: Changes Abound
Welcome back to piggyback market, not prevalent since 2007!
“TCF National Bank is committed to our mortgage broker and banker partners in the HELOC business. As of Monday, May 4, 2020, we are making the following temporary changes to continue supporting you and your team, now and in the future. Suspending the following channels: Standalone transactions and Handoff/referral standalones. Increasing the minimum broker tri-merged FICO to 720. Reducing the maximum combined loan-to-value ratio on piggybacks to 85%. Reducing the maximum combined loan-to-value ratio on delayed piggybacks to 80%. These adjustments are temporary. We continue to be flexible and will make adjustments to our policies as the current environment stabilizes.”
Mr. Cooper is closing its wholesale-broker platform. It will still honor all “current loans” for “potential closings.” “Today, Mr. Cooper announced that we are exiting our Wholesale business. This decision does not impact the Mr. Cooper Correspondent Lending Channel and allows us to focus on our strategic priorities and the long-term success of Mr. Cooper. We are proud to be a leading Correspondent investor and will continue to make material investments to technology, operations and program innovation to drive your success.”
Flagstar Bank told correspondents that effective for new Agency and Government locks as of Friday, May 1, 2020, the existing Cash-Out Refi adjustment will be increased to -5.000.
Caliber also specified its VVOE/VVOI Cash Out policy. “No exceptions or alternatives for verifying verification of employment and income are allowed. As a reminder, the (VVOE/VVOI) verification must be completed within 3 business days of the note, and must be obtained by an HR representative, owner or digital vendor. Refer to the COVID-19 Loan Overlays in AllRegs for additional VVOE/VVOI requirements.”
And there was Caliber’s Announcement CL20-24 with updates to Cash Out Refinance Loan Level Price Adjustments (LLPAs) – All Conventional Products (only). Effective with Commitment Confirmations issued on or after April 28, 2020, we are updating the LLPAs for all Conventional Cash Out Refinance Mortgages. All updates will be reflected on the rate sheets published on and after April 28, 2020.
Capital Markets
Treasuries & MBS see-sawed back and forth yesterday before closing mixed as the curve steepened. Morning movement centered around the Q1 GDP report, which registered the sharpest contraction since 2008. It marks the official end for the longest economic expansion on record, and foreshadows how bad the Advance Q2 GDP report will be given that shutdown measures in the U.S. didn't start to gain traction until the latter half of March. The afternoon revolved around the FOMC statement, in which the Fed left rates unchanged and reiterated its commitment to do everything it can, for as long as necessary, to combat the economic weakness and disruption resulting from the coronavirus pandemic.
The committee said the virus poses big risks over the “medium” term to employment and overall demand, and that inflation pressure is muted. Also reiterated was concern regarding the disruption of credit and liquidity to both consumers and businesses, to which the Fed plans on keeping QE flexible. The interest on excess reserves (IOER) was left unchanged and, on forward guidance, the Fed kept the language that will maintain the target range for the funds rate until it is confident that the economy has weathered recent events.
MBA Chief Economist Mike Fratantoni sagely stated, “The Federal Reserve has pulled out all the stops to help the economy and financial markets weather the current pandemic. In its statement, the Fed made clear that supports would remain in place until the economy regains full employment and inflation trends return to normal. Of note to the mortgage industry, while the announcement did not specify a pace for agency MBS and CMBS purchases, it did highlight that, ‘the Federal Reserve will continue to purchase Treasury securities and agency residential and commercial mortgage-backed securities in the amounts needed to support smooth market functioning.’ It is clear the Committee wants its actions to result in lower rates for mortgage borrowers, and recognize that this can only happen in the context of orderly markets. We expect that the Fed will continue to modulate its purchases over the next few weeks, so long as markets remain stable.”
Another day, another central bank decision. The ECB is out with its latest statement (with economic contraction everywhere, easing rates and lowering financing rates). But the U.S. calendar has had some horrific releases as well: Weekly Initial Claims (around 4 million – over 30 million claims in six weeks), March Personal Income (-2 percent), March Personal Spending (-7.5 percent), along with March PCE Prices, March Core PCE Prices, and Q1 Employment Cost Index. Later this morning brings April Chicago PMI and the NY Fed will conduct two FedTrade purchase operations totaling up to $7.680 billion. After the continued terrible economic news, we begin the day with agency MBS prices little changed from Wednesday’s close and the 10-year yielding .61 percent after closing yesterday at 0.63 percent.
Employment and Co-op Business Opportunity
“If you would like to lower your per-loan operations cost and take your working capital out of your company, or if you would like to focus on the marketing side of your business, then consider becoming a subsidiary of our Mortgage Banking Co-Op. You receive all of your loan income including the mandatory pickup, and we supply the working capital and equity that’s needed. Out of your revenue, you pay for your subsidiary costs (i.e. typical branch-level expenses) and you pay your pro rata share of the Operations Center costs (i.e. overall costs divided by your pro rata share of the closed loans). You get all of the benefits of being a correspondent lender along with the efficiency of a large operations center - and you keep all of the income of your loan production. This is an opportunity to increase your income and lower your risk.” For further discussion, please feel free to contact Anjelica Nixt to forward your note; please specify opportunity.
A $10M/month government dominant production team, located in 3 offices in Missouri and 2 other states in the Midwest, is looking for a national lending platform to scale. The principal is not looking to speak with a regional or area manager to structure a P&L based relationship for growth. The ideal lending platform would be a Ginnie approved, independent mortgage bank, whose presence in Missouri and Midwest is lacking and would be willing to support a division and our ambitions for growth across target markets in the US. We have an Encompass User expert, two fantastic processors, onboarding coordinator, HR assistant and strong recruiting talent, we just need the right platform to grow. The right lender seeking to support our ambitions for growth should contact Anjelica Nixt; please specify opportunity.
“Guardian Mortgage, a division of Sunflower Bank, N.A., has been a mainstay in mortgage lending since 1965. As a thriving line of business for a national bank, we continue on a path of incredible growth throughout Texas, New Mexico, Arizona, Colorado, Kansas, Michigan, and the Pacific North West. We are looking for outstanding talent and proven leaders with a demonstrated track record of excelling in a winning culture. With operations centers situated in four time zones, our teams are well positioned to handle growth and provide exceptional customer service. As a FNMA/FHLMC/GNMA direct seller servicer, we service 98% of our loans supported by a team in Plano, TX. In addition to open positions in sales and operations, we are looking for producing management roles in TX, WA, KS, and MI. For consideration, visit www.GuardianMortgageOnline.com.”
“Freedom to Succeed! Freedom Mortgage is growing and looking for talented and experienced Wholesale operational professionals to help us serve the needs of borrowers, brokers and wholesale correspondents across the nation. Work from home opportunities for Loan Processors, Closers and Underwriters are available throughout the continental U.S. Prior to the COVID-19 pandemic, the vast majority of our teams already worked from home, so you will be ready to seamlessly and efficiently contribute to our goals on day 1! If you are fueled by your entrepreneurial spirit and are looking for a great work culture, please visit https://www.freedommortgage.com/career-experienced to review available positions and submit your resume.”
“On Q Financial’s mission is to simplify the mortgage process to make the dream of home ownership a reality for everyone. During this time of social distancing amidst the COVID-19 pandemic, On Q Financial is still open. Out of an abundance of caution, we are now working remotely and are still ready to help borrowers achieve the dream of homeownership. At On Q, all of our teams are working diligently to provide a smooth process for clients whether they’re purchasing or refinancing a home. With our Simplicity Mobile App and our Mortgages Simplified automated processing, it’s never been easier to remotely begin and complete the closing process on a new home or refinance. Borrowers are contacting On Q Financial if they’re looking to purchase or refinance. Should you want to take a closer look at potentially joining our company, please reach to https://onqfinancial.com/join-onq/ to arrange a quick 15 minute demo.”