Management, LO Jobs; Marketing, Processing, Default Products; High Balance Pricing
Some things are uncertain, like whether colleges, driven by ticket & TV income, bring back their football players when the rest of the student body “remains virtual” this autumn. (Harvard law school is online for the fall semester, for example, leading to a tuition lawsuit, of course.) Or if your company is giving you July 3 off (the bond markets are closed). Other things are certain, like the mortgage-level data from the 5,500 institutions reporting HMDA data for 2019. Or states putting anyone who visits certain states into quarantine. I receive emails all the time from brokers and LOs who are certain their high balance pricing is the worst in the industry. Why? An explanation is below in the Agency section.
Lender Services and Products
Overstated & Understated Credit Scores are byproducts of socio-economic volatility. Heck, not all 700s are safe (or 600s risky) in the best of times! What’s your plan to understand borrowers holistically? Then, originate, fulfill, buy, and sell most efficiently across all channels using that deep insight. The actionable Mortgage Risk & Fairness Score is predictive, data-driven “intelligence” to pro-actively manage COVID-19, credit quality, financial inclusion, and capacity risk. It enables lenders to easily deploy advanced risk & behavioral analytics (propensity, segmentation, ability, and “willingness” to pay) that are validated (top 10 bank) & vetted (CFPB, OCC, Fed). Backward-looking Scores+DTI+LTV+ATR data & calcs struggle with this. “The Score” doesn’t replace existing acquisition or underwriting processes. But, at the tip of the spear, and as an ‘intelligence’ adjunct to underwriting, it will increase volume, inclusiveness, confidence, margins, efficiency, and capacity, and decrease risk. Click for info.
As COVID-19 continues to profoundly impact every aspect of business, Sourcepoint understands mortgage servicers must adapt quickly to a new normal. Its experienced Omnichannel Contact Center and Collections teams, and default support staff are available to serve your borrowers and ease their concerns, not only during normal times but also during periods of uncertainty. Backed by the most comprehensive set of servicing and collection licenses and a 5,000+ global workforce with US and global centers, Sourcepoint’s teams are well equipped to help your borrowers through these difficult times, whether fielding customer service inquiries, navigating through a forbearance application and the approval process to ensure they get the assistance needed in a timely manner, or working through loss mitigation or modification strategies, Sourcepoint is here to help. Learn more about Sourcepoint’s default servicing capabilities.
“Mortgage lenders today are all trying to find the right resources to maximize the opportunity of today’s rate environment. At Sutherland, we partner with our clients to create operational flexibility, scale, and process expertise. Being an experienced Business Process Transformation company with a global reach enables us to reduce costs while aligning the right mortgage specific resources that are experienced in Processing, Underwriting, Closing and Quality Control support. Whether you are looking to close more loans or increase your quality assurance scale, Sutherland is here to achieve your goals. To schedule a discovery call on our capabilities, email Neil Armstrong, AMP.”
Maxwell is back with another blog series: The Land of Unequal Opportunity takes an honest look at the housing & mortgage industry’s troubled past and the role we’ve played in perpetuating racial inequality. Our history might be uncomfortable to confront, but building a better future starts with accountability for our past mistakes. Thus, Part 1 tackles the problematic history (and enduring legacy) of redlining that continues to suppress Black homeownership rates and widen the racial wealth gap today. Read "The Land of Unequal Opportunity, Part 1: A History of Redlining and Its Lasting Impact on Black Homeownership" here.
Where the Agencies go, the industry will follow. Just think what would happen if we didn’t have them?
At some level, pricing matters. “Rob, my high balance conforming pricing stinks. Why?” Recall that around Thanksgiving Freddie and Fannie come out with the conventional conforming loan amounts for the following year, including loan amounts for high-cost areas. Conforming loan limits impact high-balance loans and jumbo loans. LOs know that the various programs come with different lending rules, potentially higher interest costs, down payments, and lending fees. Rates, vary, of course, and high-balance loans typically come with tighter requirements than regular conforming loans. Interest rates for jumbo loans can higher than for conventional loans because a borrower is asking for more money, so the loan carries more risk for a lender. But remember that jumbo loans do not have a 50+ gfee, which is why jumbo rates can be lower than conforming rates.
A big piece of the pricing pie is composed of the propensity to prepay the loan. And that hurts high-balance conforming loans, and has since SIFMA, the organization that creates delivery requirements for securities, set up the percentage of loans in high-cost areas that are allowed in mortgage-backed security pools. SIFMA laid out the definition of loans to borrowers in high-cost areas as “defined in 12 U.S.C. 1717(b)(2) (i.e. areas where 115% of the median home price exceeds the conforming loan limit) where the balance of the loan exceeds the conforming loan limit (“Superconforming Loans”) should be limited to no more than 10% of the total principal balance of a pool at the time of issuance to be eligible for good delivery in TBA (the loan details making up the pool “to be announced” when the security is created) trades.”
The TBA market is the most liquid, and consequently the most important secondary market, for mortgage loans. Investors don’t like a lot of variance in the loans making up a pool, so homogeneity is important. In an effort to “minimize liquidity disruption in this important market,” SIFMA limits the inclusion of higher-balance loans to 10 percent of the total balance of a pool eligible for TBA delivery. (SIFMA said “minimize,” not “eliminate.”) Borrowers in high-cost areas can still have access to Freddie Mac and Fannie Mae’s programs, so are not penalized by living in those areas and needing financing. But at a price.
Investors are concerned that prepayment behavior on high balance conforming mortgages is quite different than “regular” conforming conventional loans. Basically, if an investor buys a $1 million pool, and one loan for $100,000 pays off, oh well. If a $600,000 loan pays off, that is a problem. So SIFMA limits the higher-balance inclusion to 10 percent of a given pool, helping investor modeling and expectations, and thus helping the liquidity of the market. A portion of loans, instead of being underwritten to jumbo criteria, flow through DU and LP and into GSE hands and out of the private mortgage market. And lenders are very cognizant of that 10% cap, and price high-balance conforming loans accordingly: originating conforming conventional loans that can’t fit into securities for good delivery will sit on a warehouse line until they fit into a pool. And investors and lenders will price to avoid that.
To help limited English proficiency (LEP) borrowers who are experiencing mortgage-related difficulties due to the coronavirus national emergency, FHFA in coordination with Fannie Mae and Freddie Mac added new translations to the Mortgage Translations website. Site visitors can now choose English, Spanish, traditional Chinese, Vietnamese, Korean, or Tagalog when accessing scripts that servicers use when discussing COVID-19 forbearance with borrowers. The revised Mortgage Assistance Application (MAAp) is also available in the same six languages. For additional information about the assistance and protections provided by the Federal government during the pandemic, visit CFPB.gov/housing.
Yesterday Fannie Mae updated LL-2020-02, Impact of COVID-19 on Servicing, to modify the financial eligibility and reporting requirements for non-depository sellers/servicers. “The temporary policy change relates to the calculation of the liquidity requirement for sellers/servicers who service mortgage loans that are in a forbearance due to COVID-19 hardships. Fannie Mae Form 1002, Mortgage Bankers Financial Reporting Form, is being updated to capture COVID-19 forbearance activity. This Lender Letter update also extends the suspension of foreclosure-related activities through June 30.”
Fannie Mae’s Here to Help campaign offers servicers the resources and information needed to assist homeowners facing a hardship related to COVID-19.
Fannie Mae posted updated In Case You Missed It (ICYMI) which includes an overview of Selling Guide updates, Servicing Guide updates, new and updated Lender Letters, and Desktop Underwriter®/Desktop Originator® release notes.
As of June 17th, Fannie Mae has updated nine of the AAA matrices. Review each jurisdiction-specific AAA matrix revision history for additional details.
Capital Markets
Markets have increasingly moved more due to news headlines surrounding COVID-19 than actual economic releases. It was a similar story yesterday, as coronavirus concerns weighed amid more record increases in certain hot spots, and Treasuries and MBS rallied across the curve as a result. Florida and California both set daily records for new cases. New York, New Jersey, and Connecticut now require visitors from virus hot spots to quarantine for 14 days. And the WHO warned cases in Latin America haven't yet peaked even after rising 25 percent to 50 percent within the past week in some countries.
Separately, the U.S. is weighing new tariffs on $3.1 billion of exports from France, Germany, Spain, and the U.K., which could proliferate into a trade fight later this summer. As far as economic releases went, the FHFA Housing Price Index for April increased 0.2 percent. Chicago Fed President Evans warned that recurring outbreaks will probably hurt U.S. growth and keep unemployment levels elevated for some time, saying that spikes of infections "might be made worse by the faster-than-expected reopenings." Fed speak rolls on today, with Dallas Fed President Kaplan, Atlanta Fed President Bostic, and Cleveland Fed President Mester all set to take the stage. Also with regards to the Fed, bank stress test results will be released in the afternoon. The central bank has purchased a massive $765 billion of mortgage bonds since March 16, and while the Federal Reserve is unlikely to slow its latest bout of quantitative easing, the 10-year Treasury yield isn’t forecast to drop any further, which does not bode well for lower mortgage rates.
Today’s economic calendar is just about done and dusted. Initial Claims for week ending June 20 (1,480,000, -60k) and Continuing Claims for week ending June 13 (19.5 million), Durable Goods Orders for May (+15.8 percent, strong) and orders, excluding transportation (+4.0 percent). Q1 GDP - Third Estimate (still -5.0 percent). Advanced Retail Inventories (-6.1 percent), and Advanced Wholesale Inventories (-1.2 percent). For those who like Treasury news, there are results from a $41 billion 7-year Treasury note auction this afternoon. The NY Fed will conduct two FedTrade purchase operations totaling up to $4.35 billion starting with $1.373 billion UMBS15 2 percent and 2.5 percent followed by $2.977 billion UMBS30 2 percent through 3 percent. We begin the day with Agency MBS prices nearly unchanged again and the 10-years yielding .66 after closing yesterday at 0.69 percent after the jobless claims and durable goods data.
Employment
“Caliber Home Loans is taking positive action, building diversity, raising our voices, and looking ahead. Our reputation as a great company to work for is illustrated by Caliber’s sponsorship of Employee Resource Groups (ERGs) which provide career networking for professional and personal development. These principles begin at the top with Sanjiv Das, CEO, and are echoed throughout our leadership and by Caliber team members. Currently, we have ERGs representing Military Veterans, Women in Business, and the LGBTQ community. Join Caliber, where diversity is celebrated, and mutual respect is core to our culture. If you have an interest in one of our posted job opportunities, please contact Jonathan Stanley for consideration. If you are interested in a sales opportunity at Caliber, please contact Brian Miller for immediate consideration.”
Synergy One Lending (“Synergy One”) is pleased to announce the Management-led asset purchase (“MBO”) of the company’s distributed retail channel and the Synergy One brand from Mutual of Omaha Mortgage. The terms of the acquisition were not announced. The MBO was led by industry veterans Steve Majerus, CEO, and Aaron Nemec, President. Synergy One has quadrupled its loan production in three years, breaking into the top 100 retail mortgage lenders in 2019 ranked #53 in Scotsman’s Guide. “Aaron and I are sincerely grateful for the opportunity to lead Synergy One into the future. Our confidence in our team and our collective ability to execute couldn’t be higher,” said Majerus. Synergy One is based in San Diego, CA, is currently licensed in 29 states and has Operational HUBS in Roseville, CA, Boise, ID, Denver, CO and Dallas, TX. If you're looking for high growth opportunities contact Aaron Nemec.
A profitable, well-capitalized, regional full-service independent retail mortgage banker is looking for an established Regional Production Manager to help create and develop mortgage origination branch opportunities in the midwestern part of the country, Colorado, Arizona, Kansas, and New Mexico markets. “We are searching for an outstanding talent and proven retail sales leader with a demonstrated track record of hiring and managing multiple production offices across several states. We offer an entrepreneurial sales support environment, FNMA/FHLMC/GNMA direct seller/servicer/issuer status and are well-positioned to compete for more growth with state-of-the-art operations/support technology and a company -wide commitment to providing exemplary customer service. The Regional Production Manager will report to the CEO. If interested in the next step, please send a confidential resume and qualifications to Chrisman LLC’s Anjelica Nixt.”
“We’re hiring! Home Point Financial just announced 400% year over year growth, and we continue to grow at record pace. As a result of our growth (not just the current environment) we’re hiring an additional 69 senior underwriters as well as 105 operations positions. At Home Point, we offer an incredible bonus program, opportunities for overtime, and 100% remote work to fit your lifestyle during today’s challenging times. However, it’s our culture that makes us shine. Our ‘We Care’ commitment is a verb not a noun, which is evident through our initiatives. This, coupled with a supportive leadership team and multiple career development opportunities, makes Home Point a premier place to call home. We are the second-largest wholesale mortgage lender (per IMF), have an amazing partnership between sales and operations, and have welcomed 445 team members to our family since March. Join us! To apply please visit the careers section of our website or send your resume to John Eite.”
“ACC Mortgage is hiring additional remote Non-QM underwriters and experienced AE’s to handle the increased volume and return of a healthy Non-QM market. ACC not only has the most complete Non-QM offering, we provide accounts, leads, and the support for the account executives to be successful. We have a leading comp plan with support, leadership, and stability. If interested in joining our family, please send your resume to the president, Robert Senko, for consideration.”
Guaranteed Rate Affinity, a mortgage origination joint venture between Guaranteed Rate and Realogy, has hired industry veteran Joe Daly as National Renovation Sales Leader to advance the company’s renovation lending programs. Congratulations!