Daily Mortgage News – Daily Mortgage News & Commentary

Sorry for the length of the commentary today, but there’s a lot going on. In most of the U.S., the 2019 maximum conforming loan limit for one-unit properties will be $484,350, an increase from $453,100 in 2018. There is more detail below. Although modestly good news for lenders, as noted yesterday, jumbo mortgage rates are very attractive relative to conforming rates in many areas, so some argue the conforming mortgage limit is currently somewhat less meaningful. What is more meaningful, besides the new URLA/1003 coming at us, or the creator of SpongeBob SquarePants passing away, is Amazon. Amazon customers control about 75% of total US household wealth, according to a Bain and Co survey. That’s a lot of leverage and data on buying habits, should it decide to go into the residential biz.

Jobs, promotions, & personnel moves

Verity Search a well-known search firm in the industry, helps lenders procure top notch Managers, Support and Production talent. President Jim Boghos believes times are changing and like lenders, the search firms must also now evolve. “As margin compression has affected the lenders, recruiting firms must also now adapt. Those who don’t will experience a shrinking business. For years lenders have struggled with the risk of paying 3rd party recruitment fees. Announcing POP, (Partner Origination Platform) by Verity Search. We are proud to offer this cutting-edge concept in mortgage production building.” Recruiter and Lender goals and objectives are aligned. Verity is filling a major gap in the business without charging exorbitant up-front placement fees. This shared risk model has already seen tremendous early success. “POP removes limitations by ensuring the lender investment associated with opening new branches. The failure rate is now all but eliminated. We are rewriting the rules of recruiting engagement. Verity becomes your trusted partner and guarantees your growth”.

NBT Bank is searching for a Director of Residential Lending. This is an exciting opportunity to join a growing organization and build out the Residential Lending department. The ideal candidate will be a team player with 10-15 years management experience in mortgage banking and will have successfully led the growth of company. Recently named the Regional Winner for New England in MONEY Magazine’s Best, NBT Bank is a full service community bank approaching $10 billion in assets and operates through a network of more than 150 branches across 6 states in the Northeast. For further confidential questions, please contact AVP Ali Brained.

With loan originations forecasted to be lower in 2019 and more pressure on margins, are you looking for a well-respected visionary SVP/C-level banking/mortgage executive with a proven track record to improve overall business results and maximize operational and technology efficiencies? This well-respected business leader has proven expertise across areas of mortgage operations and servicing, technology, risk and vendor management, business strategy, financial analysis and mergers and acquisitions. Please contact me.

What if changing jobs was less stressful? What if you could switch companies and not lose any momentum? What if you had a team by your side to make every phase of your transition simple and fast. What if moving your business to a Top 10 National Purchase Lender was all it took to achieve your career goals? PrimeLending takes the “what if” out of the equation with first-rate recruiters who make your needs their priority, offering support through every step of the process. You can feel confident making a move with PrimeLending recruiters Peter Briggs and Bobbi Jo Wiggins guiding the way. Peter, who works with Uly Kim in the Southern California and Kelly Lee in Northern California, and Bobbi Jo, who covers South Texas with Joe Thompson and North Texas with Dawn Robinson, are mortgage industry veterans with the expertise, the dedication and the knowledge to make your move to PrimeLending easier than you could ever imagine. If you’re always wondering “what if” about your career, it’s time to connect with Peter or Bobbi Jo today.

Considering a change? At MortgageRight, we set ourselves apart by offering lower rates, better pricing and higher compensation! We’re making a name for ourselves across the nation by operating with thinner margins than other industry players. We saw the rising interest rate environment coming ahead of time and decided in advance to put several key strategic factors into place that would help our producers win in a market like this one! Very simply, we can offer lower rates and/or a higher comp, and we can back our claims up 100%! But don’t take our word for it. Check out this recent example: We recently on-boarded a branch manager who was able to increase his comp by 50BPS AND offer 1/8 better RATE to his customers! Give us the opportunity to show you how our model can help you win more deals in any environment. We’ll be happy to put any candidate in touch with recent hires and existing LOs to discuss our strengths, see what we have to offer, and hear our vision for the future. For a pricing engine walk through, contact Mike Russo (866-425-5456) or visit our website.

Movement Mortgage landed two more top producers this month. Movement announced VA specialist Grant Schneider has joined the company as a Market Leader in Colorado Springs, Colorado. Schneider specializes in serving clients relocating in the Armed Forces, as well as homebuyers of all types in Colorado. In addition, Movement announced Ryan Cotter has joined its growing team in the Midwest as a Market Leader in Chicago. He is a 20-year veteran of the mortgage and real estate industries and most recently managed a captive mortgage referral relationship with a leading Chicago real estate firm where he was also a President’s Club mortgage originator. Click here to learn more about a career at Movement Mortgage.

On Q Financial announced the promotion of Shane Miller, to the role of Senior Vice President – Eastern Divisional Manager. In his new role, Miller will lead the company’s Eastern states through growth and service, as well as expanding On Q into untapped markets.

Valuation Partners announced that Jason Kitch will join its sales team in the Northeast Region as VP, responsible for business development and client services in NY, NJ, PA, DC, MD, DE, CT, RI, MA, VT, NH, MN, and WV. “He has served as an originator, a mortgage insurance account executive and manager, and also spent 10 years as a correspondent representative in the Northeast.”

Congrats to Carolyn Covington has joined Infrrd as the Director of Mortgage Business. Infrrd is the world’s leading provider of Intelligent Data Capture for the Enterprise. “Its proprietary blend AI Enabled Computer Vision, NLP and Predictive Algorithms automate the extraction of structured, unstructured data and image content providing deep insights to guide business decisions and save time for banks, credit unions, as well as any type of mortgage company.”

Lender products and services

Imagine increasing your borrower NPS by 25% in less than two months. That’s exactly what happened for a regional credit union that implemented Maxwell’s digital mortgage point-of-sale solution. Maxwell continues to be the leading digital mortgage solution for small- to mid-size lending teams looking to improve their borrower experience and increase profitability. I’ve seen firsthand the results and impact Maxwell can have across many different organizations, from independent lenders to banks and credit unions. Their platform enables teams to easily launch an all l-encompassing digital experience to their borrowers, while providing industry leading tools and integrations to help improve loan officer efficiency across the organization. To learn more about Maxwell visit www.himaxwell.com or request a demo here.

Here’s a webinar on “Construction Lending in the Age of TRID: A Community Banker’s Guide.” TRID has been a complicated and sometimes confusing force in lending since it was brought into effect in 2015. Understandably, the assumptions and concerns regarding workload increases and new requirements under TRID have led some community bankers to forgo construction lending altogether. On November 29 at 10AM PST, join Land Gorilla to understand the history, myths, and realities regarding TRID, find the impact it’s had on community banks regarding construction lending, and learn how to leverage technology to overcome any possible hurdles in this new age of lending. Register today!

ARMCO Boosts QC Process Efficiency and Security with Latest ACES Upgrade – Single sign-on supports company’s strategy to best support enterprise-level customers – ACES Risk Management (ARMCO), the leading provider of enterprise financial risk management solutions, has announced new product enhancements that increase QC process efficiency and security for lenders and servicers using its auditing platform ACES Audit Technology. The top features of this upgrade include the addition of single sign-on capability, and integration with DataVerify. Access the full press release.

Deephaven Mortgage, a leading Non-QM lender, shines the light on Non-QM through its loan programs & technology, aimed at making loans responsibly for millions of Americans locked out of the market. The primary mortgage origination market continues to experience challenges in the form of margin compression, low inventory, and declining volumes. Originators are actively evaluating the introduction of Non-QM products to help offset some of the current market dynamics. Deephaven continually evaluates its products knowing the target market is significant. Studies show 16+M self-employed Americans (Bank Statement Loans), 83M Millennials (Non-Warrantable Condos), 75M Baby Boomers (Asset Depletion), and 57M Americans earned more in 17′ than 16′ (1 Year Alt Doc), and these are just a few underserved segments that represent a significant opportunity for originators. To find out more about how Non-QM can grow your business, contact Deephaven Wholesale or Deephaven Correspondent. (Sources: Bureau of Labor Statistics, CNN.)

“Here’s a hi-tech breakthrough in lending to self-employed borrowers. Amidst rising interest rates and declining origination volume, lenders must cast a wider net for customers, a growing number of which are self-employed. To capitalize on this trend, lenders need a simpler, faster way to underwrite mortgages for Americans who are their own bosses. To this end, Freddie Mac has integrated fintech vendor LoanBeam’s technology with Loan Product Advisor®, our automated underwriting system, to introduce the first and only integrated self-employment income solution for the market. LoanBeam’s software uses optical character recognition technology to extract and digest a borrower’s tax returns and other financials, and then calculate a total income figure that aligns with Freddie Mac’s guidelines. This integration offers lenders several advantages, including an automated review of the accuracy of qualifying income, eliminating the need to chase down unnecessary documents that support residual/excess income and certainty that the income calculation is eligible for representation and warranty relief.” Learn more.

Non-depository and depository M&A news

Just to clarify on yesterday’s announcement of the sale of Leader Mortgage to Firstar Bank – this is not the same Leader Mortgage that is a division of Leader Bank, which is a roughly $2 billion mortgage lender in the greater Boston area.

Guaranteed Rate announced that it will acquire certain assets of Honolulu HomeLoans (HHL) and Hawaii Lending Alliance (HLA). G-Rate will license new branch locations in downtown Honolulu and several other locations and maintain its existing branch locations in Honolulu and Aiea. “I am thrilled that Honolulu HomeLoans and Hawaii Lending Alliance are becoming part of Guaranteed Rate,” said former HHL President and CEO Anders Hostelley, who joins Guaranteed Rate as a Regional Manager, continuing to lead that business unit. “Many of the former HHL/HLA loan officers joining Guaranteed Rate are fluent in international languages including, Vietnamese, Ilocano and Tagalog.”

Depository banks are out of control! The M&A in the last four weeks has continued unabated. During this time it was announced that…

Florida’s CenterState Bank Corp. (Nasdaq-GS: CSFL) will acquire Birmingham, Ala.’s, National Commerce Corp. (Nasdaq: NCOM) in a $850 million combination, creating a Southeastern regional bank with branches in Florida, Georgia and Alabama and combined deposits of $12.8 billion.

Simmons Bank ($16B, AR) will acquire Reliance Bank ($1.5B, MO) for $62.7mm in cash (37%) and 4mm shares of stock (63%) or about 1.59x tangible book. Silicon Valley Bank ($55B, CA) will acquire investment bank Leerink Partners (MA) for $280mm in up-front cash and $60mm to be paid over 5 years. BancorpSouth Bank ($17B, MS) will acquire both Grand Bank of Texas ($345mm, TX) for about $51.75mm in cash (21%) and stock (79%) and Merchants Bank ($221mm, AL) for about $37.5mm in cash (21%) and stock (79%). This is an aggregate price to tangible book of about 1.65x. Advia credit union ($1.7B, MI) will acquire Golden Eagle Community Bank ($150mm, IL). BankFirst Financial Services ($974mm, MS) will acquire FNB Of Central Alabama ($271mm, AL). In Tennessee FirstBank ($5B) will acquire 11 TN and 3 GA branches from Atlantic Capital Bank ($2.7B) for a 6.25% deposit premium and a 0.68% discount on purchased loans. The branches hold $602mm in deposits and $381mm in loans. In Kansas Guaranty State Bank and Trust Co ($273mm) will acquire The Jamestown State Bank ($17mm).

In Texas Amarillo National Bank ($4.1B) will acquire Lubbock National Bank ($1.1B), and American Momentum Bank ($1.1B) will acquire Commercial State Bank ($676mm). In Illinois Heartland Bank and Trust Co ($2.9B) will acquire State Bank of Lincoln ($345mm), and Byline Bank ($4.8B) will acquire Community Bank of Oak Park River Forest ($326mm) for $42mm in cash (16.5%) and stock (83.5%) or 1.65x tangible book. First Midwest Bank ($14.8B, IL) will acquire wealth management investment advisor Northern Oak Wealth Management Inc. (WI). The First ($2.5B, MS) will acquire Florida Parishes Bank ($382mm, LA) for $86.1mm in stock (100%) or about 1.90x tangible book. In Massachusetts North Easton Savings Bank ($553mm) will merge with Mutual Bank ($518mm). Peoples Bank ($4.0B, OH) will acquire The First Commonwealth Bank of Prestonsburg, Inc. ($311mm, KY) for $45.4mm in cash and stock or about 1.98x tangible book. Evansville Teachers FCU ($1.5B, IN) will acquire American Founders Bank, Inc. ($88mm, KY). Citizens Bank ($124B, RI) will acquire wealth management firm Clarfeld Financial Advisors LLC. In Iowa Fidelity Bank & Trust ($816mm) will acquire State Bank ($378mm). Enterprise Bank & Trust ($5.5B, MO) will acquire Los Alamos National Bank ($1.3B, NM) for $213mm in cash (18%) and stock (82%) or 2.02x tangible book. In Nebraska Heartland Bank ($442mm) will acquire both Jefferson County Bank ($42mm) and The First National Bank of Fairbury ($144mm. In Indiana Horizon Bank ($4.1B) will acquire Salin Bank and Trust Co ($918mm) for $135.3mm in cash (18%) and stock (82%) or about 1.62x tangible book. Peoples Bank ($4.0B, OH) will acquire The First Commonwealth Bank of Prestonsburg, Inc. ($311mm, KY) for $45.4mm in cash (25%) and stock (75%) or 1.98x tangible book.

Orrstown Bank ($1.6B, PA) will acquire Hamilton Bank ($525mm, MD) for $58.5mm in cash and stock or 1.31x tangible book. Software company Kony will acquire the innovation unit of Umpqua Bank ($26B, OR) known as Pivotus. (Pivotus is a software-as-a-service company that connects customers with their financial institution through a personal banker where they can communicate via voice, video and text chat.) In New Jersey OceanFirst Bank ($7.8B) will acquire Capital Bank of New Jersey ($483mm) for $80mm in stock (100%) or about 1.73x tangible book. Blackhawk Bank ($772mm, WI) will acquire The First National Bank of McHenry ($175mm, IL) for $23mm in cash (100%). In South Dakota First Savings Bank ($740mm) will acquire The Roberts County National Bank of Sisseton ($54mm).

Conventional conforming loan limits

FHFA, which overseas, uh, oversees Freddie and Fannie, announced an increase to the maximum conforming loan limits for single-family mortgages eligible to be acquired by Fannie Mae and Freddie Mac in 2019 to $484,350 from $453,100. This reflects the average increase in FHFA’s House Price Index (HPI) of 6.9% since 3Q17. The maximum for high-cost areas increased by the same percentage, to $726,525. (High cost areas are defined as those where 115% of the local median home value exceeds the baseline loan limit. The cap is set at 150% of the baseline loan limit.) After holding flat starting in 2006, conforming loan limits have now increased three years in a row. Officially the new cap becomes effective in 2019, but some lenders are jumping the gun.

Does this help private MI companies? Not so much, since the industry average home price is closer to $250,000.

Capital markets

The U.S. 10-year closed Tuesday at 3.06%, where it began the week, on another day that lacked any market-moving news. And Donald Trump talking trash about the Federal Reserve doesn’t count. The only news of note was a report President Trump is expected to meet with China’s President Xi Jinping over dinner on December 1. (Trump has said he expects to raise more tariffs on China – that should help the digestion.) As far as economic releases went, the Conference Board’s Consumer Confidence Index dipped slightly in November, though the previous mark from October was the highest reading since 2000. In housing, the Case-Shiller 20-City Index rose 5.1% in September on top of last month’s 5.5% increase while the FHFA Housing Price Index for September increased 0.2% on top of last month’s increase of 0.4%.

This morning we learned that MBA mortgage applications for Thanksgiving week were +5.5%, refis less than 38%. Next up was the 2nd update on Q3 GDP (expected to downtick to 3.3% from 3.5%, it was unrevised at 3.5% with final sales also falling 0.2% to 1.2%). The advance trade deficit widened $1 billion, and wholesale inventories rose. Ahead are October new home sales and the Richmond Fed’s manufacturing and services indices. We also have some Fed speak, with Fed Chair Powell speaking on “The Federal Reserve’s Framework for Monitoring Financial Stability” at noon. Today begins with the 10-year yielding 3.06% and Agency MBS prices nearly unchanged.

“I saw a documentary on how ships are kept together. Riveting.”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Servicing: Don’t Underestimate Liquidity.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2018 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Yes, MLO commissions are dropping. But the traditional 6% real estate agent commission continues to be under attack as well, the latest salvo fired from Clever, a real estate startup that connects homeowners to top rated agents in their area that list their home for less commission. (“Our main goal is to connect potential sellers and buyers to top performing agents based on the homeowner’s specific needs, but we also write guides, share tools, and teach our readers pretty much everything they need to know about the mortgage process via our blog.” Questions? Contact Chris Milko.) Realtors are also watching Ribbon Home, Zillow Offers, and Open door.

Jobs

A nationwide wholesale lender has immediate opening for a team in key US markets. This heavily capitalized lender leverages a centrally located and seasoned fulfillment team. Broad product portfolio and competitive rates offered along with an experienced leadership team dedicated to expansion. Send me a confidential note if you and your team are ready to start a new in 2019.

PRMG continues to expand its national footprint by opening 5 new Retail Locations during the month of October! Along with the drive and ambition to bring the American Dream of Homeownership to all cities across the country, PRMG has now opened its doors in

Indianapolis, IN; Homestead, FL; Melbourne, FL; Columbus, OH and Mentor, OH. PRMG is Built by Originators for Originators^TM and is devoted to continuously growing its retail platform. If you are a Motivated Loan Originator who wants to be progressively better, contact Chris Sorensen (909.262.0452).

And remember that any displaced employees (the latest rumors focus on Cendera and United Bank, Hartford, CT, unfortunately) can place their resumes on www.LenderNews.com for free.

Lender products and services

Borrower satisfaction has always been the main focus to lenders large and small. Many state the benefits of repeat business, increased referrals, and stronger relationships with realtors as their motivators, but very few in our industry know how to track the ROI and level of investment they should be putting towards their borrower focused initiatives. A new eBook, “Borrower Satisfaction & Profitability” brings together focus areas and industry data, enabling lenders to track and monitor the impact of their borrower satisfaction efforts. An exclusive to Rob Chrisman subscribers today and a must read for all mortgage lenders, Download Your Free Copy Here.

We now live in the age of digital mortgage processes. Lenders who use outdated technology, or none at all, to interface with their customers are experiencing a sharp rise in loan production costs, as well as a decrease in overall borrower satisfaction. Tech-focused non-banks like Quicken Loans continue to absorb more and more market share every year, and now dominate the list of top lenders by volume. At the same time, less agile institutions have seen their origination volumes and lending departments shrinking by the day because this new generation of borrowers expects to transact digitally with mobile options. They also expect to be continuously informed. And when they work with lenders who employ Floify’s point-of-sale technology, they get to check all those boxes. In just 30-minutes, see for yourself how the innovative platform can immediately put your team on the leading edge of mortgage tech, and keep it there!

Protect your earnings and be prepared. Digital lending and virtual consumer experiences are all the hype in today’s market. And while there are a lot of benefits, it doesn’t come without its risks. Real, tangible risks. Wire transfer fraud, which saw a 480% increase just a few years ago, can cause a major upset to a company’s bottom line and become a huge resource waster. Learn more with Informative Research’s new article about the “4 Answers on Wire Transfer Fraud that Criminals Don’t Want You to Know.” With so many areas open to exploitation, companies can never do too much to understand wire transfer fraud and prevent losing thousands of dollars at a time. For more detailed information, contact one of our team members at info@informativeresearch.com.

“Lenders, cut 80% off your essential LOS/PPE tech spend. The ReadyPrice retail and wholesale enterprise-strength LOS with an embedded multi-investor PPE and proprietary ‘error trapping’ tech is the answer for any sized lender (or brokers wanting to become bankers). The ReadyPrice all-in-one retail and wholesale platforms are fully configured out of the box, are up to 80% less expensive than heavy, ‘mature’ competitors, come complete with D1C, deep Fannie DU, EarlyCheck, etc. integrations and can be stood-up in a couple of weeks. Or, you can easily and inexpensively customize/configure it to easily fund thousands of loans per month from thousands of MLO’s or brokers, for example. The ReadyPrice LOS/PPE has funded over 300k units for $70 billion and is leading the way forward for today’s mortgage bankers as we utilize essential mortgage tech.” Call them at (408) 357–0931 or email hello@readyprice.com to receive a free demo today.

Did you know that, according to HubSpot, 39 percent of marketers say proving the ROI of their marketing is their top marketing challenge? When developing your plan for 2019, build it with confidence. Consult with the mortgage and fintech industry communications specialists at Seroka Brand Development. Seroka has been creating and executing successful marketing and PR communications plans for over 30 years. Today’s plans demand a contemporary approach that utilize a blend of digital, social media and traditional tactics along with the right tech stack to generate positive awareness, build engagement with your brand and drive conversions. And, with Seroka, you’ll have access to detailed campaign measurement and analytical tools to confidently evaluate your success, often in real time. Seroka can also help with specific campaigns or special projects. So #TurnUpYourBrand and make Seroka’s experience your advantage. Learn more here or email info@seroka.com to schedule a free consultation.

JMAC LENDING’S Non-QM submissions are through the roof. With streamlined features such as our 3-month bank statements option and Buyer Pre-Approval for bank-statement loans, it’s easy to see why JMAC is leading the Non-QM surge. Many brokers feel Non-QM loans are too complex. Not for the underwriters at JMAC, since we were one of the first to offer non-QM products. We’re here to help our clients navigate these products and assist with scenarios. In fact, non-QM scenarios are answered quickly by our experienced Account Executives. To speak with an AE, and to submit a scenario, contact sales@JMACLending.com or call 844.888.5622. You can also fill out our scenario form to find assistance right now! Experience the JMAC Difference today.

Are you a hunter or a farmer? And what does this have to do with the business of lending or subservicing anyway? This new white paper from TMS gives a fresh take on subservicing and how the cost of acquiring a new customer (“Hunting”) is often lost. Instead, lenders hand over their new, precious customers to a subservicer who doesn’t help them retain (“Farming”) that customer for future value. Partner with a subservicer who will deliver the same level of customer service your customers have come to expect from you. Make sure you’re a farmer. If not, you risk a lasting negative effect on business.

NAMB national is just a few weeks away. While many are concerned with what the future holds, REMN Wholesale sees massive opportunities for brokers who need to offer more than the basic vanilla products. If a borrower doesn’t fit nicely into a QM loan these days, and to be honest, many don’t, REMN now offers the Simple Access program. Supported by one of the top customer service teams in the industry, REMN’s Simple Access non-QM program provides a unique opportunity to work with quality borrowers who don’t qualify for QM loan products. REMN believes that products and technology are nothing without the necessary people to support them, which is why it continues to grow by recruiting some of the best account executives in the industry. Recent additions to the REMN team include Jim Collins in Connecticut and Christine Garcia, who will be handling all of Los Angeles County.

Events & training in the first half of December

The Federal Financial Institutions Examination Council (FFIEC) will hold a webinar on December 6 to promote awareness and understanding of efforts to develop alternative reference rates to LIBOR, because of the uncertainty as to continued availability of LIBOR after 2021: view the FFIEC November 19^th press release.

Register now for the MBA’s December 6th Increasing Sales with Women Homebuyers webinar and learn the best practices and strategies to reach one of the fastest growing buyer segments in the nation.

Lenders One is hosting The Executive Roundtable December 5-6 in Miami, FL, including a session on developing a strategy and growth plan in a down market with executive coach Gary Peck, a best practice roundtable led by our sponsor Fannie Mae, and a market outlook and business forecasting led by Mike Fratantoni from the MBA.

The 2018 NAMB National Conference will be held December 8th-10th in Las Vegas including a session featuring Freedom CEO Stan Middleman and Angelo Mozilo comparing the beginnings of their companies, the evolution of lending, and discussing their thoughts on what the future holds.

The MBA is starting a brand-new study on HELOCs and home equity lending and servicing, which will include benchmarking data on portfolio characteristics, utilization rates, draw activity, repayment options, as well as statistics on new commitments such as processing times and pull-through. The study is for MBA members who originate and/or service these products; the participants will help design both the survey instrument and outputs. The initial planning call is on Tuesday, December 11 at 2PM ET. Register for the call here. Download the informational flyer or contact Marina Walsh with questions.

On December 11^th, industry leaders, Patrick Stone and Ken Markison will discuss the economic and compliance environment in 2019. Register for this Economic and Regulatory webinar here.

October Research, LLC’s annual Economic and Regulatory Outlook webinar is 12/11 at 2PM ET.

Don’t miss registering for the December 15^th NMMLA annual Teddy Bear and Blanket Drive luncheon with guest speaker, Mayor Tim Keller.

National MI issued its training for December. A Look Ahead to Social Media Trends 2019: PDT, Dec 13, Oh, Shift! Session #3 – Flow: PST, Dec 12, A Look Ahead to Social Media Trends 2019: PDT, Dec 13. Click here: National MI to register for these classes.

Capital markets

Once again stocks grabbed the headlines, but secondary marketing groups saw some volatility yesterday. The U.S. 10-year closed Wednesday’s session at 3.04% as early action was reversed by Fed Chairman Jay Powell’s dovish remarks saying that interest rates are “just below” neutral. In his estimation, rates “remain just below the broad range of estimates of the level that would be neutral for the economy,” however, these words were digested as “dovish” by capital markets. Accordingly, the Federal Reserve’s Financial Stability Report acknowledged that asset prices “appear high relative to their historical ranges, ” and escalating trade tensions, geopolitical uncertainty, or other adverse shocks could produce a sharp decline in asset prices. The report also acknowledged that business sector debt relative to GDP is historically high with signs of deteriorating credit standards.

Powell’s comments nudged one veteran originator to pen, “The Federal Reserve continually and repeatedly states that it is data-driven. That’s fine in 1980, but with the advent of the computer the world is driven by real time data algorithms, if you will. Even the average person receives news almost instantaneously.

“It seems the data the Fed is using, for better or worse, is trailing the real world by 60-180 days. This reminds me of ten years ago. In late Feb 2007 a New Century AE comes into my office and says that their warehouse lines were frozen, 3 weeks later they were gone, by late June the wholesale subprime market was gone, in August the jumbo market was in dire straits, and in early September the FRB Chairman says the subprime market is ‘contained.’

“Yes, that is rehashing the old, what seems like a few weeks ago for some, but it is still relevant. In July and Aug, I was being told by friends they were seeing a huge slowdown in real estate. I was fortunate and didn’t see it until late September. November has been a disaster. The Fed had been worrying about an over-heating economy, and still on target to raise rates. Today was a positive, but only by one person.

“At one point I saw something that said about 20% of homes had second mortgages. I don’t know where that is today, but I still have loans being subordinated because HARP excluded them, the CLTV wouldn’t work, or because the cash out LLPA was too high. Every jump in the discount impacts that chunk of the economy. A 1% increase in a $200k HELOC is $166 per month. As an originator I see a lot of them, and that $166 doesn’t help the economy.”

Looking at today, we’ve seen November’s Personal Income and Spending (strong at +.5% & +.6%, respectively) weekly jobless claims (+10k to 234k, 6 month high), and core PCE only +.1%. Fed Chair Powell, who turned heads yesterday, will be back speaking though he is not expected to make any major market-moving comments. The October Pending Home Sales Index is seen unchanged at 10:00am (versus +0.5% previously). We then turn to some action from the Fed, which will release the minutes from the November 7-8 meeting at 2PM ET, the same time as Fed Presidents Mester, Evans, Harker, Kashkari, Rosengren and Kaplan all participate in an Economic Development forum discussion. We begin today with the 10-year yielding 3.00% and Agency MBS prices better by .250.

(Thanks to Brian L. for this oldie but goodie.)

The Will

His nurse, his wife, his daughter and two sons, are with him.

He asks for two witnesses to be present and a video recording made to document his last wishes. When all is ready, he begins to speak.

“My son, Gabe, I want you to take the Ocean Reef houses.”

“My daughter Sarah, you take the apartments between mile markers 100 and Tavernier.”

“My son, Larry, I want you to take the offices over in the Marathon Government Center.”

“Barbra, my dear wife, please take all the residential buildings on the bay side on Blackwater Sound.”

The nurse and witnesses are stunned as they did not realize his extensive holdings, and as Bernie slips away, the nurse says, “Mrs. Pender, your husband must have been such a hard-working man to have accumulated all this property!”

The wife replied, “He has a paper route!”

Rob

As one Native American said, “Only a white man would cut two inches from the top of a blanket, sew it to the bottom, and think he has now has a longer blanket.” (Feel free to use that one wherever you like.) Winter is coming, with its increased blanket needs. According to the Census Bureau, while the majority of U.S. households are heated by electricity (39%) or utility gas (48%), 2% rely on wood for heat. Weighing in for the top two counties reliant on wood (with populations of 65,000 or greater) is Apache county Arizona accounting for 61% and McKinley county New Mexico at 39%. On the low end, Nevada county California and St. Lawrence county New York utilize 17% wood heat.

Employment & retail products

Caliber Home Loans, Inc., with a 25% growth rate in government volume between the Q3 2017 and Q3 2018, continues to report strong numbers – per IMF – throughout a challenging year for the industry. In 2018, Caliber has hired to-date 517 producers to join its national sales force, who will conservatively add $4.5 billion in annual purchase volume. Looking ahead, Caliber is excited to carry the positive momentum into 2019 and beyond. “Caliber is committed to establishing a local presence in markets across the nation,” said Caliber CEO Sanjiv Das. “Our loan officers are strong forces in their communities, and their stellar work has helped Caliber grow tremendously in the past few years. I can’t wait to grow our team further.” If you’re a motivated loan officer, looking to join a premiere purchase lender, visit JoinCaliberNow.com or reach out to Jeremy DeRosa.

Parkside Lending, LLC continues to expand its product offering! Now offering USDA loans, Interest Only loans down to $100,000 and Jumbo using DU findings. They’ve also launched Jumbo II allowing Restricted Stock Unit income, loan amounts to $4,000,000 and Non-Warrantable Condos. With Parkside’s simplified process, automated Loan Estimates, state and federal disclosures delivered electronically, access to underwriters, and a plethora of products, it is easy to see why brokers love working with Parkside. Parkside continues to grow and is excited to welcome Alan Michaels and Debbie Baider covering the Mid-Atlantic states. They bring incredible depth and experience in the Mid-Atlantic region. Parkside isn’t done with new product roll outs; HELOCs and more Interest Only & Non-QM programs are coming soon, plus a Bank Statement program. To find out more about these programs contact your Account Executive or Sales@ParksideLending.com. If you are an Account Executive looking to join a great team or are a mortgage broker who is not currently working with Parkside Lending, please contact us at Sales@Parksidelending.com.

Gateway Mortgage Group, has introduced an innovative program designed to protect a homebuyer’s down payment. The new Down Payment Protection program is offered through ValueInsured and has been integrated into most of Gateway’s mortgage loan products. This unique program offers homebuyers an optional insurance feature minimizing market risk on the value of their home and safeguard some, or all, of their down payment. If the market price drops and the home sells at a loss, up to the full amount of the down payment could be reimbursed in a turnkey, home inspection-free process that can take 30 days or less. “Gateway is always growing and innovating,” said Alan Ferree, president of Gateway. “This program allows us to differentiate Gateway from other mortgage lenders while providing our customers a unique option that offers peace of mind and simply makes sense for certain markets or borrowers.” For more information, visit Down Payment Protection at Gateway or contact your local Gateway Mortgage Group branch.

PRMG continues to expand its national footprint by opening 5 new Retail Locations during the month of November! Along with the drive and ambition to bring the American Dream of Homeownership to all cities across the country, PRMG has now opened its doors in Colorado Springs, CO; West Palm Beach, FL; Chicago, IL; Farmers Branch, TX and Federal Way, WA. PRMG is Built by Originators for Originators^TM and is devoted to continuously growing their retail platform. If you are a Motivated Loan Originator who wants to be Progressively Better, contact Chris Sorensen (909.262.0452).

Lender products and services

CALCAP Lending, LLC a leading wholesale lender in the high demand private money lending market is “Front and Center” at the upcoming NAMB 2018 conference in Las Vegas. We invite attendees to visit with us at Booth #400 to find out more about our competitive rental, fix-and-flip, foreign national, and construction lending business purpose lending programs, including CALCAP’s recently released Zero Point upfront option. On pace to double production from last year, CALCAP Lending has established a “Value Partners Program” dedicated exclusively to mortgage originators who are seeking to expand their production and income opportunities. To become a CALCAP Value Partner or to learn more about CALCAP Lending and the career opportunities we offer which include sales training, please click here or give us a call at 855-372-0960.

Professional Development has been proven time and time again as a vital step for achieving business growth. There are infinite possibilities, however, to realizing deep and everlasting success & happiness when we invest in ourselves personally as well as professionally. XINNIX, The Mortgage Academy, is committed to helping you thrive in every aspect of your life. As you focus on developing plans for your business in 2019, XINNIX is offering a great year-end opportunity to enrich your personal development as well with free registration to its December 12th webinar, Infinite Possibilities presented by XINNIX CEO Casey Cunningham. In this empowering session, you will learn how to plan and prioritize your personal and professional goals, implement a formula for success, and write and effective life mission statement that guides your decisions and priorities. CLICK HERE to register today for Infinite Possibilities on Wednesday, December 12 at 10 AM ET!

FundingShield reported an estimated $75 million per day in wire and closing fraud

exposure. This will result in exposure of $20+ Billion in 2018 despite reduced volume the sector remains a hotbed for cyber criminals and fraud. Wire fraud and cyber threats such as phishing, injection and business email compromise events spike during the holiday season when fraudsters take advantage of staff being on vacation, increased consumer transactions, increased remote access by staff and more back up teams supporting production and operations. Couple this with the expansion of digital lending processes, widespread use of wireless networks that may not be encrypted and properly secured, email server threats to known and new third-party relationships of lenders, closing and settlement companies and law firms and the risk is more prevalent. Jerry Halbrook, former President of Black Knight Inc. Origination Technology and Business Intelligence Divisions and Fundingshield Advisory Board member shared “Unknown parties to the transaction as well as known and trusted vendors are being exposed to these risks hence a proactive transaction level monitoring system is needed” Contact info@fundingshield.com to create a user centric risk and control strategy to get ahead of wire and cyber fraud attempts that go beyond a vendor vetting with active defenses at the loan level that save your firm on operational and risk cost.

M&A keeps on keepin’ on, and what about non-bank lending?

Capital One ($408B, VA) will acquire online shopping comparison engine Wikibuy. Wikibuy provides price comparison in real time, get coupon codes at checkout and receive price drop alerts on products and services to its more than 1mm members.

From Alabama comes news that Hometown Lenders, Inc., has acquired TotalChoice Mortgage Division, led by Michael Farrell, Divisional Manager. “In the upcoming months, TotalChoice Mortgage Division plans on adding production offices in North Carolina, Pennsylvania and Florida. These additions alone will increase the 2018 annual projected loan origination volume by $240 million. TotalChoice Mortgage is a division of Hometown Lenders, Inc., a privately held mortgage lender with locations in Columbus, Ohio, as well as other states. Hometown Lenders, Inc. maintains 37 active state licenses to originate residential refinance and home purchase loans. The company size is approximately 400 employees.”

Speaking of non-bank lenders, which regulators view as thinly capitalized versus banks in case something goes wrong, they now account for 44% of lending by the top 25 originators, up from 9% in 2009… Five of the largest ten are non-banks, as is the largest retail mortgage originator, Quicken Loans. Their market share for servicing mortgages, or collecting monthly payments, has risen from 5% in 2009 to 41% this year. The FDIC is certainly aware of, and concerned with, the trend.

Capital markets

The Fed is considering big change in how it sets US interest rates, possibly targeting the OBFR instead of the fed funds rate. But what is the OBFR? The Fed tells us that, “The overnight bank funding rate is calculated using federal funds transactions and certain Eurodollar transactions. The federal funds market consists of domestic unsecured borrowings in U.S. dollars by depository institutions from other depository institutions and certain other entities, primarily government-sponsored enterprises, while the Eurodollar market consists of unsecured U.S. dollar deposits held at banks or bank branches outside of the United States. U.S.-based banks can also take Eurodollar deposits domestically through international banking facilities. The overnight bank funding rate (OBFR) is calculated as a volume-weighted median of overnight federal funds transactions and Eurodollar transactions reported in the FR 2420 Report of Selected Money Market Rates. The New York Fed publishes the OBFR for the prior business day on the New York Fed website at approximately 9AM ET.”

To a large degree interest rates move based on supply and demand. How’s the supply going on the housing side of things? The phrase “housing market slowdown” isn’t exactly surrounded in positive connotation, but as the $220 trillion global housing market starts to cool off in some places against a backdrop of monetary policy normalization, there may be some reasons for calm. Price declines are impacting the most expensive cities, where they might not drag down consumption the way standard theory predicts. In theory, a housing price decline should leave households feeling less confident about their finances and less willing to spend. But the pace of home price increases has exceeded the rise in disposable incomes by so much in some markets that a little cool-off might instead make consumers less budget-constrained. Despite global property prices potentially peaking for the cycle in places now on the decline like London, New York, Stockholm, Hong Kong and many other cities, it may not lead to a significant weakening in consumption, as long as it remains modest and gentle. It may actually promote consumption in some areas.

The U.S. 10-year closed Thursday -1bp to 3.04% as Treasuries across the curve closed on a mostly flat note after backing off their opening highs after the market received another reminder of a weakening housing market in the form of a disappointing Pending Home Sales report for October. The FOMC Minutes from the November meeting acknowledged that almost all policymakers believe that another rate hike will be warranted “fairly soon.” Policymakers also noted that fiscal stimulus and a strong consumer could produce upside risks to inflation. Personal income and personal spending both beat expectations, while Real PCE, which is the component that factors into Q4 GDP forecasts, was up a solid 0.4%. The tamer the inflation readings support the Federal Reserve taking a more deliberate approach to raising the fed funds rate.

Today will see much of the markets’ attention in Buenos Aires as the G20 summit gets under way and continues into the weekend. With regards to the economic calendar, today is relatively light consisting of just Chicago PMI for November and an appearance by NY Fed President Williams. Additionally, the U.S., Mexico, and Canada are set to sign a new NAFTA deal. We begin today with the 10-year yielding 3.01% and Agency MBS prices better a smidge.

The wedding ceremony came to the point where the minister asked if anyone had anything to say concerning the union of the bride and groom.

The moment of utter silence was broken when a beautiful young woman carrying a child stood up. She starts walking slowly towards the minister.

The congregation was aghast – you could almost hear a pin drop. The groom’s jaw dropped as he stared in disbelief at the approaching young woman and child.

Chaos ensued. The bride threw the bouquet into the air and burst out crying. Then the groom’s mother fainted. The groomsmen started giving each other looks and wondering how to save the situation.

The minister asked the woman, “Can you tell us, why you came forward? What do you have to say?” There was absolute silence in the church.

The woman replied, “We can’t hear you in the back.”

And that illustrates what happens when people are considered guilty until proven innocent.

Rob

My cat Myrtle never pays attention to rumors. Pine-scented cat litter next door? She shrugs. Line-caught salmon for dinner every night up the street? Couldn’t care less. Not so, however, in mortgage banking as rumors and bad-mouthing by some continue. How would you like to receive this email from a respected owner of a mid-sized non-depository lender in the Midwest? “This industry is turning on itself. We hear so many rumors and have people attacking us and calling our agents with things that are not true. I have never seen so much in-fighting ever. Why is everyone trying to take down everyone else with these lies? Why are the recruiters allowed to say anything they want? How can we get our industry to raise its standards and stop acting like the old subprime reps? It’s so disheartening!” [Apologies to any old subprime reps.]

URLA: Shades of TRID rollout?

The GSEs (Freddie and Fannie) have redesigned the Uniform Residential Loan Application (aka Form 1003), developed a corresponding Uniform Loan Application Dataset, and created a new Desktop Underwriter Specification (DU Spec) for submitting the redesigned Form 1003 data to DU. Rumor has it that the Agencies originally were going to implement it last January but the additional data fields required weren’t (originally) collected in a typical loan file, leading to complexity issues, so they kicked the can.

Want to see what the borrower will see? Here you go. Freddie Mac has a nice graphic showing the timeline. Unfortunately for every single lender, and every loan officer who takes a loan app, there’s a big difference between “Start planning now” and actually having everything in order. Do I have to remind you about how smoothly TRID was implemented having a year or two lead time?

Why are the Agencies doing this now? “Changes in the mortgage industry and the regulatory environment have led to the need for the GSEs to reassess the information obtained at the time of loan origination. The URLA/ULAD initiative has the following objectives. First, to update the URLA form to collect loan application information that is relevant and useful to the industry in making a loan underwriting decision, as well as update the physical format and layout to enhance the collection of information and usability of the form. Second, to develop and publish an industry data standard in support of the URLA. The ULAD Mapping Document provides a cross reference for every field on the redesigned URLA to the equivalent data point(s) in the MISMO Version 3.4 Reference Model. And third, publish GSE-specific automated underwriting system (AUS) specifications for Desktop Underwriter® (DU®) and Loan Product Advisor® updated to MISMO v3.4 and including the new URLA data fields.

I am fielding notes of dismay about the length and complexity. Nearly a month ago I published this: “In a world where things are becoming faster, easier, and more accurate, we have this for lenders?” There are some questions that every lender should be asking, and every vendor, and the Agencies, should have answers for. Third-party integration? Implementation support? business process design, LOS modifications, LO sales training?

How long is the form? The length of the redesigned URLA will vary depending on the number of borrowers, the type of loan and the type of transaction. All the examples I have seen are 9 pages, more if overflow is needed. The URLA Rendering Document provides additional formatting guidance for technology solution providers and lenders to tailor production of the form according to system requirements.

Wholesale lenders accepting brokered loans, or correspondent investors buying loans, will you accept two apps from the same lender for several months? (Lenders may begin submitting loan application production files starting July 1, 2019. Lenders will be able to submit their existing datasets until February 1, 2020.) F&F currently tell us that new applications dated February 1, 2020, or later must use the new AUS datasets based on MISMO v3.4. Applications dated before February 1, 2020, but that have not closed (e.g. construction loans) will be accepted in the existing data formats until February 1, 2021, when only the datasets based on MISMO v3.4 will be accepted.

Can or should the redesigned URLA be viewed in a web browser? It appears that no, the GSEs recommend that lenders and technology solution providers download the forms to their computers and then open the forms using a PDF document reader such as Adobe Acrobat Reader or Adobe Acrobat Pro. Ask F&F, but if the forms are opened within a web browser, the fillable PDF versions of the form may lose some functionality and as a result, not perform as designed.

By using the new URLA, are Fannie & Freddie telling the loan officer how to ask the questions and in what order? Ask your Agency rep, but it appears that they are proposing the consumer interview sequence of questions and interview flow as an interactive PDF that can take the role of input form. Experienced LOs are good at knowing how to glean information from their borrowers, and how to ask questions. Will that be eliminated?

What if the LO can’t have all the questions answered in one sitting? Good Question: that is likely to be bigger than just a technology change and will require modified processes and training.

Has there been real testing of the proposed interview flow and data sequence to see how well all of the new 1003 data elements will handle overflow cases (e.g., when you have 5 other sources of income and the form for 3, more assets and liabilities than there is room on the form to handle)? Ask Fannie & Freddie!

If your company just spent several months, tens of thousands of dollars, and countless hours of LO training rolling out a new LOS, what now? I don’t know – ask your vendor!

John Haring, Director of Product Management at Ellie Mae, shot over, “While the new URLA and ULAD are fifteen months away, that’s not a lot of time to get prepared for the impact of the changes. At Ellie Mae, we are planning to deliver functionality in the July 2019 timeframe to coincide with the early release date of the URLA and allow customers and partners ample time to test and transition. Ellie Mae’s goal is to always minimize any regulation or industry change so that it becomes a ‘non-event’ for customers and partners.

“Nearly every mortgage application is collected on Form 1003 or Form 65 and the format has not changed significantly in the last 20 years. Fannie Mae and Freddie Mac, under direction of the Federal Housing Finance Agency (FHFA), have significantly redesigned the form. With this, lenders may choose to use the new URLA starting July 1, 2019, although the GSEs will not require it until on or after February 1, 2020 for new loan applications.

“The redesigned URLA takes a design thinking approach, with dynamic field collecting and a presentation of data tailored to the individual borrower and loan scenario. The goal is to provide greater efficiency, transparency and certainty for future homebuyers applying for mortgage loans and greater consistency for lenders who sell to both Fannie Mae and Freddie Mac.

“While the new URLA and ULAD are fifteen months away, that’s not a lot of time to get prepared for the impact of the changes. At Ellie Mae, we are planning to deliver functionality in the July 2019 timeframe to coincide with the early release date of the URLA and allow customers and partners ample time to test and transition. “Ellie Mae continues to educate and keep customers and partners updated on the latest with URLA/ULAD with a series of webinars, FAQs and resources for training. Your readers can find them all on Ellie Mae’s Compliance Central.

Will the proverbial can be kicked down the proverbial road, and implementation delayed? Perhaps, but for now, despite lenders being caught up in the glamor of the nebulous “digital mortgage,” every entity that takes a loan app, and every investor that buys loans based on the information contained in that app, had better focus on having an implementation plan and holding vendor partners accountable. Pronto.

DACA loans

“Rob, I am seeing some lenders, and hearing about others, offering DACA loans. And some with conventional loans. Any feedback or anything you are hearing that make these possible?”

First, yes, apparently some lenders are offering these loans to individuals who fall under the Deferred Action for Childhood Arrivals (DACA) – a kind of administrative relief from deportation. Service to their community? Competitive reasons? Generally, lenders will make the loans and investors will buy them if some minimum level of residency is met. Some investors, such as loanDepot’s wholesale channel, spell things out in terms of eligibility.

Personally, I would be hesitant about basing my entire business plan on originating these loans, but that’s just me. Like MSAs and joint ventures, lenders should know all aspects. One can start by seeing what the U.S. Government, in its infinite wisdom and with its ability to state things in language we can all understand, has to say: “On June 15, 2012, the Secretary of Homeland Security announced that certain people who came to the United States as children and meet several guidelines may request consideration of deferred action for a period of two years, subject to renewal. They are also eligible for work authorization. Deferred action is a use of prosecutorial discretion to defer removal action against an individual for a certain period of time. Deferred action does not provide lawful status.”

Here is what Fannie’s Guide has to say about this. “Borrower Residency Status: The Selling Guide is clear that lenders, not Fannie Mae, determine whether an individual is legally present, and decide upon the documentation used to make that determination (my bolding). On the specific subject of DACA, lenders may wish to review applicable judicial decisions to evaluate whether current DACA beneficiaries’ status is consistent with being ‘legally present’ in the United States. We have also been advised to let Lenders know it is their responsibility, as always, to look at the specific circumstances of the individual’s employment to determine whether our continuity of income representation and warranty is met.”

Freddie Mac is also very clear in its guide (bottom of page 26) that the “Sellers represent and warrant that the non-U.S. citizen borrower is lawfully resident in the United States. Freddie Mac does not specify the documentation required to establish lawful U.S. residency…”

From what I understand, verbally FNMA and FHLMC are classifying DACA Borrowers as “Non-U.S. Citizen, not lawfully in the U.S.,” therefore, not eligible for financing. In writing they refer the actual question back to the lender.

FHA? Same kind of thing. The Atlanta HOC has verbally confirmed with lenders that there are still no changes to its policy. Namely, these individuals are considered temporary residents which fall under non-U.S. citizens without lawful residency in the U.S. and are not eligible for FHA insuring at this time. Borrowers with deferred action status are not eligible for FHA financing because they are not on a pathway to residency and do not meet the guidelines printed in the manual. Additionally, these loans are clearly not eligible for USDA financing as GUS requires you to enter information that identifies their status in the US. When you do so, GUS will tell you that the borrower is ineligible.

This commentary discussed DACA borrowers in the autumn of 2016 and it probably still aligns with HUD’s current position on DACA borrowers. There are millions of these people here in the U.S. and many of them are trying to apply for loans. Many of these loans are closing even though most lenders agree they should not.

Perhaps most DACA borrowers have probably closed undetected under FHA financing because HUD has nothing published regarding the ‘Category’ a Borrower’s EAD card is issued under (few were monitoring the “Category” of the Borrower’s EAD card on FHA loans and only recently became aware of Category C-33 being an identification of a DACA Borrower). Most lenders know that potential borrowers with EAD cards issued under Category C-33 need to be underwritten under paragraph (c) of Section (9) for Residency Requirement.

Since HUD published Handbook 4000.1, lenders have been told to “follow what is published in the 4000.1”. Some believe that a DACA borrower holding a valid EAD card should be eligible for FHA financing until HUD publishes that EAD cards issued under Category C-33 are not eligible for FHA financing. Because without that detail most DACA Borrowers will meet all of HUD’s published requirements under HUD Handbook 4000.1 Section II.A.1.b.ii. (A).(9).(b) for a ‘Non-Permanent Resident Aliens’.

Some in the industry believe that politics are to blame for the confusion (imagine that!) but that the Agencies will wait for one of the loans to go delinquent and push them back for repurchase stating the lender shouldn’t have made the loan because the borrower did not have a lawful status. Let’s hope that’s not the case. Agencies are not charged with setting the Administration’s policy.

(Thanks to Tony H. for this one.)

A delightful angelic little boy was waiting for his mother outside the ladies room of the gas station.

As he stood there, he was approached by a man who asked, “Sonny, can you tell me where the Post Office is?”

The little boy replied, “Sure! Just go straight down this street two blocks and turn to your right. It’s on the left.”

The man thanked the boy kindly, complimented him on how bright he was and said, “I’m the new pastor in town. If you and your mommy come to church on Sunday, I’ll show you how to get to Heaven.”

The little boy replied with a chuckle; “You’re kidding me, right? … “You can’t even find the Post Office.”

Rob

I admit that I’ve become jaded over the years. Another potential government shutdown comes and goes. As always, our industry, and more importantly those with insurance, must deal with the potential uncertainty of the flood insurance program (NFIP) being caught up in the budget negotiating. So late last week we received, not a one-year extension, not a 6-month extension, not a one-month extension… a 7-day extension? Really? And this helps homeowners how? (A while back I asked someone in Congress about it, and they replied, “It’s complicated.”) To end on a more interesting note, I remember, back in high school days, a hypnotist coming to school and hypnotizing a couple students to act like there was a flood in the locker room or they were newly hatched chickens. What is also hypnotizing (for folks who like numbers) is watching this population graph of the states since 1900. (Thanks to Jeremy P. for sending this.)

Jobs & layoffs

New Penn Financial is looking for aggressive, knowledgeable and hard-working loan officers to fill key positions in its industry-leading Joint Venture channel. Partnered with some of the best real estate companies and builders in the nation, New Penn has openings within the following markets: Columbus and Cleveland, OH; Charleston, SC; Southeast, Southwest, and Central FL; Indianapolis, IN; Pasadena, CA; and Atlanta, GA. “New Penn is uniquely positioned to provide LOs with a captive audience,” said Corey Caster, Senior VP JV Retail. “We are very fortunate to have strong real estate and builder partnerships throughout the nation.” To learn more about how to augment your business with an in-house opportunity, and additional opportunities available for LOs and producing managers throughout the country, contact Vincent Daino, VP of Recruiting and Business Development.

Congratulations to Al Velasco, PrimeLending EVP and Western Division Manager, on being named one of HousingWire’s 2018 Vanguard Award winners! This prestigious recognition is given to select number of executives whose leadership has made a significant impact on their company and the housing and mortgage industry as a whole. Al’s countless intangible gifts and strengths add up to tremendous measurable benefits for PrimeLending. Across PrimeLending, Al has had a powerful and lasting effect as a big picture thinker, problem solver, talent developer and culture setter. This year, Al has played a key leadership role in PrimeLending’s branch expansion initiative, resulting in the addition of more than 30 new branches and 250 new LOs. He is an inspirational coach and team-builder known for guiding and mentoring young leaders. If you’re eager for the chance to discover your best by working with award-winning leaders like Al, contact Brian Miller today.

The Correspondent team at Home Point Financial is pleased to announce that Dan Sheehy has joined the company as Correspondent Institutions Manager. In this role, he will work with Home Point’s Delegated Correspondent clients in Maryland, Delaware, Northern Virginia and Washington DC. Commenting on Mr. Sheehy, Steve Landes, Senior Managing Director – Correspondent Division said, “Dan is focused on providing our clients with the products and strategic solutions they need to maximize their growth. We are excited to have him join the team and build our presence in the Mid-Atlantic region. To congratulate Dan, drop him an email. Looking to give yourself the gift of a new career this holiday season with a fast-growing company? Check out Home Point’s career page to learn more.

Want to start a WHOLESALE channel or make your existing wholesale much more profitable? Do it on the fly for a fraction of the cost of fancy, heavy, “legacy” platforms with ReadyPrice. The ReadyPrice retail & wholesale enterprise-strength LOS with an embedded multi-investor PPE and proprietary “error trapping” tech is the answer for any sized lender (or brokers wanting to become bankers). The ReadyPrice all-in-one RETAIL AND WHOLESALE platforms are fully configured out of the box, are up to 80% less expensive than heavy, “mature” competitors, come complete with D1C, deep Fannie DU, EarlyCheck etc. integrations and can be stood-up in a couple of weeks. Or, you can easily and inexpensively customize / configure her to easily fund thousands of loans per month from thousands of MLO’s or brokers, for example. The ReadyPrice LOS/PPE has funded over 300k units for $70 billion and is leading the way forward for today’s mortgage bankers as we utilize essential mortgage tech. Call (408) 357–0931 or email hello@readyprice.com to receive a free demo today.

Compass Analytics, a leading provider of pricing and hedge analytics platforms, is pleased to announce the addition of Frank Poiesz as the company’s Chief Revenue Officer. “Frank’s decades of experience in delivering financial services technology solutions to the mortgage industry, including pricing, eligibility and valuation technology, is a great match for Compass as we expand market share in pricing technologies for lenders and investors,” according to Rob Kessel, Managing Partner. Adds Frank, “I’m very excited to join the Compass team who bring to market the only full-featured capital markets platform from point-of-sale through the booking of servicing. Compass fills a crucial need of driving more profitable originations at a crucial time for our industry.” Be on the lookout for more news about Compass Analytics soon on LinkedIn.

“Due to growth, SocialSurvey is looking for Regional VPs of Business Development to open our Southwest, Midwest, and Southeast regions. Candidates must have proven success selling tech or services into the mortgage vertical. SocialSurvey, known for its mortgage reviews platform, now offers social media compliance monitoring as a part of our integrated platform. We create over 600,000 verified mortgage company reviews annually and share those reviews more than 4,000,000 times on social sites, Zillow, and Google to help boost online reputation. Social Survey also acts as an enterprise feedback tool that drives employee engagement and behavior. This is a great opportunity for somebody with the right experience and contacts. Are you ready for something different?” Send confidential resume and contact info to me for forwarding.

Evergreen Home Loans looks to build on the 100 loan officers hired so far in 2018 by seeking professionals looking to GROW their production and career. Professionals choose Evergreen due to its success growing Evergreen’s people (average production per Loan Officer at Evergreen increased 42% over the past 3 years) and high employee satisfaction. Recent awards include; #3 Best Workplace for women in 2018, a Best Medium Sized Workplace in 2018, and a Best Place to Work for Millennials in 2018 by Fortune and Great Place to Work. In addition, Evergreen was named the #1 company to work for on the list of Washington’s Best Workplaces by the Puget Sound Business Journal. Loan Officers who seek a company that provides the tools and culture to succeed – a place where 96% of employees surveyed are proud to tell others they work here, can find more information on the careers page.

Congrats to Dolph Meyerson and Steve Sofka who Supreme Lending (which will be 20 years old next year) has brought on as Area Managers. Supreme Lending has two hundred plus branches within the fifty states, has been regularly voted as one of the Top Places to Work.

“SoFi Is Cutting 7% of Staff and Will Revamp Its Ailing Mortgage Unit” is quite a headline for a company that other lenders feared a few years back. Three thousand miles away in Connecticut United Bank confirmed its own job cuts in a “reorganization” of the mortgage banking division.

Lender products & services

CLOES.online is now offering the newest format for online education designed for mortgage loan originators. Deb Killian, CRMS presents a full video, NMLS approved, online pre-licensing and continuing education classes that will change the way you think about online education. “These recorded presentations provide students with the information they need to succeed as mortgage originators. The courses are available 24/7 and not available anywhere else. Hear the rules and best secrets from a professional who was personally responsible for over $1 billion in loan originations. Get information you need to know about originations and why. Hear, read the material and see full video presentations. Receive accurate information the first time and get it right. CLOES.online is operated by Charter Oak Systems, LLC, NMLS Provider #1405047. Contact Deb Killian, CRMS for information on using CLOES.online to supplement your company training programs. We teach MLO competencies and we prove it.”

With the proliferation of POS systems, it’s easy to see the consumer direct model is a prime candidate for new technology. While it’s important to acquire new business, are we losing sight of the long-term relationship? What happens after the loan closes? “It’s important to provide the borrower with digital tools to support them throughout the process,” John McCrea, SVP of Business Development at MortgageFlex Systems said. “In 2 years will they still talk about a great online application process? Or will they mention that their mortgage rarely crosses their mind as the process just happens.” In addition to POS, MortgageFlex has also been making investments into servicing technology, looking to provide a better experience where the long-term consumer relationship is cemented. Moving servicing to the cloud and adding a fully functional portal are a couple of ways we are improving the consumer experience.

The Decision Science team at BBM has created an advanced suite of propensity data models that help professional origination marketers identify homeowners who are actively in the market for FHA, VA, Jumbo and Non-Agency loan options. BBM is a professional origination strategy and data driven marketing firm focused exclusively on helping direct to consumer lenders recalibrate their marketing spend towards equitable clients that will help your firm regain market share and profitability. If you are looking to expand into profitable areas of conventional and non-agency originations then BBM may be just the answer you are looking for. We specialize in modeling big data attributes for predictable and probable outcomes and applicants that meet your enterprise profitability targets. Our average loan amount for active FHA/VA and Non-Agency applications exceed $350K and gross top line revenue of nearly $15,000. Let BBM show you how a targeted marketing strategy focused on propensity modeling and targeted revenue opportunity can change the trajectory of your company. Please contact Bill Senteno and visit www.bbm.company for more information.

Capital markets

We’ll see the November jobs report this Friday. To refresh your memory, jobs and housing drive the economy. Nonfarm payrolls increased by 250,000 in October, higher than market expectations of +190,000. Adjustments to August and September netted no change and the average gain over the last three months was 218,000. The number of employed increased by 600,000 and the labor force increased by 711,000. While the official unemployment rate remained at 3.7 percent, moving out one more decimal showed it increasing from 3.68 percent to 3.74 percent. Job gains were broad-based in October as Education and healthcare gain 44,000 jobs, Leisure and Hospitality gain 42,000 jobs, professional and business services gained 35,000 jobs, manufacturing gained 32,000 jobs, and construction added 30,000 jobs. Wages continue to inch up, increased 0.2 percent for the month and 3.1 percent over the previous twelve months. With the continued strength in the labor markets and inflation near the Fed’s target of 2 percent, the expectation remains that the Fed will increase the fed funds target by 25 basis points at its December meeting are potentially twice more in 2019.

Interest rates? The U.S. 10-year closed last week yielding 3.01% as markets were captivated by a saturation of coverage of the G20 Summit and the uncertainty hanging over the Saturday dinner meeting between President Trump and President Xi to discuss trade matters. Speaking of the summit, President Trump, Prime Minister Trudeau of Canada, and President Nieto of Mexico signed the USMCA agreement, replacing NAFTA on Friday. Other international news of note included China’s Official Manufacturing PMI for November which failed to meet expectations and registered a 28-month low. Eurozone preliminary November CPI was weaker than expected and piqued concerns about slowing growth. And the Bank of Korea raised its key interest rate for the first time in a year by 25 basis points to 1.75%, as expected.

We’ve begun the final month of 2018 and have a decent chunk of economic data for markets to digest and much Fed speak. Today kicked off with an interview between Vice Chair Clarida and Bloomberg. Fed Governor Quarles participates in a moderated Q&A later this morning. We will also have New York Fed President Williams and Governor Brainard speaking at the same conference this morning, before the day rounds off with Dallas’ Kaplan speaking in Plano. As far as releases go, final November Markit manufacturing PMI kicks off the data calendar at 9:45am followed by October construction spending and November ISM manufacturing PMI.

Tomorrow, we receive Auto and Truck Sales for November before the usual MBA Mortgage Applications Index on Wednesday, which also brings the latest ADP Employment Change for November; Revised Q3 Productivity and Unit Labor Costs; ISM Non-Manufacturing Index for November; and the Fed’s Beige Book. Thursday brings the jobless claims and October Factory Orders before Friday reveals University of Michigan Consumer Sentiment for December; and Wholesale Inventories for October. The week begins with rates higher: the 10-year is back up to 3.04% and Agency MBS prices are worse nearly .250.

From Houston Robert S. sent, “Did you hear about the dyslexic who spit in the tips jar?

Rob

Thinking about locking a loan tomorrow during the National Day of Mourning for George Bush? With the bond markets closed, plenty of mandatory execution desks, like Wells Fargo’s, will be closed. Check with the specific investor regarding best effort, bulk, AOT, and other commitment options tomorrow. Even though the market will be closed, Federal Reserve banks will be open. Plenty of lender’s lock desks will be issuing/posting rates and accepting locks. Many companies will be funding loans on Wednesday, December 5. And are independent mortgage bankers making any money funding these loans? Yes, a net gain but only of $480 on each loan in the third quarter, down from $580 per loan in the second quarter and $929 a year ago, per the Mortgage Bankers Association.

Vocations & promotions

Fidelity Bank Mortgage is headquartered in Atlanta, Georgia with Retail Mortgage production offices throughout the Mid-Atlantic and Southeast. Since 2008, the Mortgage division has grown to over 40 offices and over 600 employees. Fidelity Bank Mortgage is a Fannie Mae, Freddie Mac and Ginnie Mae seller/servicer also offering portfolio products such as Portfolio Doctor Loans for eligible doctors, Construction-to-Permanent Loans, Non-QM Loans, and more. “The majority of our operational support is in the local markets, providing for the best possible customer service. Fidelity Bank Mortgage has one of the highest production averages per Loan Officer according to MBA/STRATMOR Peer Group Surveys and boasts well above average Performance and Loan Officer Loyalty. We are expanding into new markets and interested in Top Sales and Leadership Talent.” Click here to contact David Rapson, Senior Vice President, Mortgage Production Manager, and view Fidelity’s eBook to learn more about the team.

Spiegel Accountancy Corp. (SAC) announced the promotions of Henry Chavez, CPA and Beeta Lecha, CPA, to Principal. The San Francisco Bay Area based CPA firm was established by Jeffrey B. Spiegel, CPA 27 years ago, and has since grown to be a powerhouse firm in the areas of lending and real estate. As department leads for their assurance and tax divisions, Chavez and Lecha bring extensive knowledge and technical expertise to their mortgage banking and private equity fund clients. Their promotions ensure continued customer service in their ever-expanding practice. Spiegel’s philosophy is to bring strategic, innovative solutions in the areas of assurance, accounting, tax compliance and tax planning to their mortgage banking clients.

“There is no other company that I can imagine working with” states Gregg Rudenberg, Producing Branch Manager and 9-year veteran of iServe Residential Lending. “I’ve heard the recruiting pitch and false promises that are prevalent in the industry and always preferred stability and leadership that I can trust so that I can continue to produce. iServe provides me access to the best products, service and gives me direct access to decision makers in the company. Best of all, I have a personal professional marketing associate assigned directly to me for ads, flyers, CRM, social media…like my very own marketing company at my fingertips. My deals close on time, and my Realtor base is happy, so why would I ever consider changing?” A powerful statement from a lender who is a good friend of this commentary. Reach out and see exactly what iServe has to offer. Management has immediate openings for originators in the Reno, San Diego, Castro Valley and Murfreesboro Loan Centers. Contact Allen Friedman in the West (415-298-2500) or Dennis Phillips in the East (615-497-6607).

“With all the talk of margin compression, everyone seems to be pointing at LO comp. But why isn’t there more discussion about trimming the fat from bloated retail shops who employ too many layers of middle management at corporate, have too many people involved in the loan process, and have outdated tech layered on top of slow LOS. Check out this 20 second video to see how Canopy Mortgage is trimming the fat from retail, keeping LO comp intact, and creating unheard of efficiencies with proprietary tech that allowed one loan officer to close 128 loans in one month. Do you believe there is a better way and need a fresh start? We’re growing rapidly; have an exploratory chat with Josh Neumarker (1-888-696-9076).”

“Submit non-QM loans in December, fund in December. ClearEdge Lending is service driven and sets itself apart by focusing on simplicity and speed at point-of-sale. Issuing LEs/CDs, full underwrites, loan scenario requests, or bank statement reviews completed same day or next day. Submission to close as fast as 11 days. Non-QM products are critical in today’s lending environment and at ClearEdge we are a leader in the space offering a broad menu of programs for mortgage brokers. We do not offer retail lending and are the end-investor which allows us to make critical credit decisions – – same day. Those interested in a growth-oriented career with ClearEdge Lending should email Matt Shaw for inside sales (Aliso Viejo, CA) and outside sales (CA & AZ) and Kelly Blackburn for account management, underwriting, disclosure specialist, closer/funder positions. Accepting new brokers, come join the ClearEdge Lending team.”

Caliber Home Loans, Inc. applauds the FHFA’s announcement to raise the maximum loan limits for 2019 by $31,250. Prospective homebuyers now have more purchasing power with conforming loan limits of $484,350 and higher cost areas up to $726,525. Caliber Home Loans is one of the nation’s premier purchase lenders – and as these new limits expand homebuyers’ options – now is a great time to help more families realize the dream of homeownership. Last month Caliber was ranked 3^rd by IMF for 2018 non-bank lender volume. As the industry continues to experience changes, Caliber is committed to growing its nationally distributed sales force. If you’re interested in joining one of the nation’s top mortgage companies, visit Caliber or contact Jeremy DeRosa today.

Wanna work for the Federal Home Loan Bank of Chicago and analyze risk? Here’s your chance!

Lender books, products, and services

Don’t just hope 2019’s production/profitability are an improvement over 2018’s. Take charge, drive results, to prosper in any economy. Get the book Conquering Shifts into the hands of all of your originators now, as part of your 2019 business plan. Many agree. “This book is a treasure trove of great and proven ideas that will assist seasoned salespeople in growing and improving their skill set.” Mike Hardwick, Churchill Mortgage. “Conquering Shifts is truly unique in that instead of simply teaching success principles or techniques, the reader sees exactly how they were implemented.” Marty Preston, Benchmark Mortgage. “If I read this book when I first began originating purchase loans in 2011, I can honestly say that I would be leaps and bounds ahead of where I am today.” Ryan Grant, Fairway Independent Mortgage. Authors Cindy Douglas and Kathleen Heck are offering a 15% discount for books purchased through December 15th.

I continue to be bullish on local and regional lenders to gain market share from large lenders. Smaller and mid-size organizations can use their size and nimbleness to get systems launched quickly and efficiently, mostly in part due to tech companies providing customizable digital mortgage solutions with low-effort deployment. Maxwell is a great example. Maxwell is the leading digital mortgage point-of-sale solution for small-to mid-size lenders across the nation. They’re scaling quickly, facilitating over $1.7B in origination volume per month. It’s incredible to see how a user-focused experience can take the industry by storm! As lenders, you should expect digital mortgage platforms to be deployed quickly, with minimal effort. The team at Maxwell has told me they are closing mortgages 45% faster than the industry average and reducing underwriting turns by 25%, substantially boosting production for their clients. Learn more about it here.

Did you know 90% of a customer’s lifetime value comes after the first transaction? How are you maintaining a human connection in the digital era – and doing so at scale? The customer journey cannot fall flat at any stage in order to meet the high benchmark of customer expectations. You can focus on the transaction and gain a customer for a day or you can focus on the relationship and gain a customer for life. Successful loan officers must build personal, human connections to add value for borrowers at every stage of the customer journey. It takes a customer-first approach if you want to earn customers for life. Hear from Total Expert Founder & CEO, Joe Welu, on how today’s technology empowers producers to drive lifelong revenue with relevant messaging across the customer journey.

Professional Development has been proven time and time again as a vital step for achieving business growth. There are infinite possibilities to realizing deep and everlasting success and happiness when we invest in ourselves personally as well as professionally. XINNIX, The Mortgage Academy, is committed to helping you thrive in every aspect of your life. As you focus on developing plans for your business in 2019, XINNIX is offering a great year-end opportunity to enrich your personal development as well with free registration to their December 12th webinar, Infinite Possibilities presented by XINNIX CEO Casey Cunningham. In this empowering session, you will learn how to plan and prioritize your personal and professional goals, implement a formula for success, and write and effective life mission statement that guides your decisions and priorities. CLICK HERE to register today for Infinite Possibilities on Wednesday, December 12 at 10 AM ET!

Trainings and Events in December

Tune in this Friday for a live video stream of Todd Pierson (The Mortgage Firm), Mike Donoghue (Premium Mortgage), Leo Dunn (Bay Capital), Phil Rasori (MCT), and myself as we discuss strategies to make the most of tight margins and what to expect in 2019. If you haven’t heard of the mortgage industry’s leading afternoon TV talk show, I suppose I can’t blame you. Now is your chance to join us for “Late Lunch with Rob Chrisman”, live from MCT Exchange in sunny San Diego, California on December 7^th at 12PM Pacific. On the show we’ll hear about the causes behind margin compression from MCT’s COO and Head Trader, Phil Rasori, the tactics employed by a diverse group of lender panelists to protect their profit margins, and the outlook for 2019. Don’t miss out, register today to view the live stream of “Late Lunch with Rob Chrisman” this Friday at 12pm Pacific.”

HaMMR author Ralph DeFranco, Ph.D. economist and recognized industry expert, is now blogging his analysis of housing data and house price risk as fresh updates come in. Arch MI’s December webinars are available for registration. Get prepped on a wide range of topics, including loan processing, appraisals, analyzing tax returns and more.

The Plaza Home Mortgage December Webinar Calendar has been published. Remember, if you can’t make it to a webinar, register anyway and Plaza will email you the recording.

Click here to access the Franklin American Mortgage Wholesale December Customer Monthly Training Calendar.

The FAMP Central Florida December 5th Luncheon is tomorrow! It will feature a Lender Panel covering Construction Perm, Financing Real Estate Investment Projects, 203k and HomeStyle Lending.

On Monday, December 10^th, Buckley Sandler attorneys are hosting a webinar to discuss developments in False Claims Act (FCA) litigation relevant to the financial services industry.

South Los Angeles County Chapter of CAMP is hosting John Reyes from Social Networx, Inc. Wednesday, Dec. 12^th at the Grand in Long Beach. Learn about content that engages your audience, promoting and broadcasting your videos to the masses and helping to grow your business in 2019.

Capital markets

The MIAC Capital Markets Group is pleased to announce its offering of $365mm of new origination whole loans. The collateral consists of 100% ARM Loans originated by a Bank as a portfolio product with an alt-doc component. The portfolio is concentrated in MI & FL with approximately 640 loans potentially qualifying for CRA credit. Loans >80 LTV are covered by PMI; this product has experienced near zero defaults over the history of the program. Parties should contact their MIAC sales representative at 212-233-1250 or Steve Harris for additional information on this servicing package.

There’s a lot of chatter about the yield curve inverting, possibly leading to a recession. But if the Fed stops purchasing securities, those longer-term rates could easily move higher – is that what we want? The U.S. 10-year closed Monday yielding 2.99%, falling below the 3% threshold for the first time in nearly three months as optimism surrounding news that President Trump and President Xi agreed to suspend further tariff actions for 90 days to allow more time to negotiate a possible settlement on some major trade issues dominated headlines throughout the day. U.S. Trade Representative Lighthizer will be leading the negotiations for the U.S., with the 90-day clock starting on January 1. President Trump tweeted that China has agreed to reduce and remove tariffs on imported cars from the U.S. Elsewhere internationally, Qatar said it is planning to withdraw from OPEC. And Canadian province Alberta says it will cut output by 325,000 barrels per day.

Today’s economic calendar has Redbook same-store sales for the week ending December 1, the ISM-New York Index and Business Conditions for November, and NY Fed President Williams speaking. Don’t forget the bond market is closed manana. As far as the GSEs are concerned, all issuer investor reporting, pooling and issuance activity, and capital markets data disclosure activity will remain on the normal schedule. Today begins with the 10-year yielding 2.96% and Agency MBS prices unchanged.

A child psychologist had twin boys—one was an optimist; the other, a pessimist. Just to see what would happen, on Christmas Day he loaded the pessimist’s room with toys and games. In the optimist’s room, he dumped a pile of horse droppings.

That night, the father found the pessimist surrounded by his gifts, crying.

“What’s wrong?” the father asked.

“I have a ton of game manuals to read … I need batteries … and my toys will all eventually get broken!” sobbed the pessimist.

Passing the optimist’s room, the father found him dancing for joy around the pile of droppings. “Why are you so happy?” he asked.

The optimist shouted, “There’s got to be a pony in here somewhere!”

Rob

There’s a saying: “You may not remember exactly what someone said, but you’ll remember how they made you feel when they said it.” Are you looking for a good article on what happens when loan officers work to improve the borrower experience? STRATMOR Group worked with Certainty Home Loans on this case study that offers insights into the seven commandments for achieving borrower satisfaction and real-life examples from loan officers who make providing a superior borrower experience a priority. Check out the article, “How Important Are Satisfied Borrowers to Growing Your Business?” at MortgageSAT.com.

Employment

To remain relevant in this industry, it requires passion, tenacity and integrity. Montana-based Mann Mortgage is Tried, Trusted and Proven and is looking for likeminded branch managers and loan officers to join its cooperative-based company. “As we start our 30th year in business, Mann is focused on the next 30 years with exciting recent branch additions in Virginia, Oregon, Montana, Minnesota, and Hawaii, adding to over 40 branches in 13 other states. Mann Mortgage has successfully launched two new game-changing products and services: a MannMade Construction Loans program (1-time closing construction-to-permanent loan), and borrowers, LOs, and processing teams are loving our new SimpleApp technology which allows for originating and closing loans faster and more efficiently! We offer the unique ability to work under our simplified expense management model, retail model and/or our HUB opportunities, and offer compensation plans with options! Finally, meet our Director of Risk Management and you’ll quickly understand why our Branch Managers keep calling him back with new ideas! If you are ready to do something with that entrepreneurial spirit of yours, please reach out to CEO Jason Mann.”

The Movement Mortgage Marketing team continues to push the envelope to support its LOs. The top 10 retail lender is surrounding Loan Officers with the air cover of a corporate social media, technology and branding strategy that promotes its unique position in the market. Movement then delivers a consultative, agency-modeled, full-service marketing team that provides LOs with personal coaching, branding and digital marketing. It’s one of the reasons Gary Vaynerchuck and VaynerMedia invited VP Jake Fehling to speak at his Agent 2021 event in Miami. Watch this hilarious new video explaining Movement’s unique approach. If you’re not being supported with aggressive, innovative and customized marketing support, check out the tools Movement offers here. You can also learn about career options by emailing Matt Hill.

Nations Lending “is excited to welcome these new employees to our family of branch managers: Brian Klotz (San Marcos, TX), Brian Clark (Greenwood Village, CO), Randy Epley (Charlotte, NC), Greg Franks (Southlake, TX), Adalgisa Aquino (Cranford, NJ), Jennifer Nina (Miramar, FL), Sheila Herring-Nelson (Bay St. Louis, MS). Our new retail platform is focused on growth and personal attention to each customer – with the very latest tech tools available for branch managers and LOs. We believe these next generation of branch leaders will help take our proven success to the next level – from coast to coast. Nations Lending, is an Ohio-based, full-service national lender licensed in 47 states. For more information and opportunity on how to join our growing organization, please visit the company’s website.”

For Loan Officers or Branch Managers looking for a change, MortgageRight sets itself apart from other companies by offering lower rates, better pricing and higher compensation. MortgageRight is making a name for itself across the nation by operating with thinner margins than other industry players due to several key strategic factors put into place by ownership in order to help their producers win in a market like this one. Very simply, they can offer lower rates and/or a higher comp and they can back their claims up 100%. But don’t take their word for it. They’ll put any candidate in touch with recent hires and existing LOs to discuss their strengths along with everything else they have to offer. For a pricing engine walk through, contact Mike Russo (866-425-5456) or visit www.branchright.com.

Guardian Mortgage, a division of Sunflower Bank, N.A., continues its nationwide expansion with two new branch locations: College Station, Texas, and Spokane, Washington. The company also announced the hiring of a Branch Leader in Albuquerque, New Mexico. These openings and new hires highlight the focus on growing in established markets, and new markets such as Spokane – Guardian’s first entry into the Pacific Northwest. “Our ability to continue growth through key alliances, adding experienced branches and proven producers in existing and new markets underscores our company’s strength. And we’ll continue to look for new opportunities with high performing teams and individuals.” said Guardian Mortgage president Mischelle Weaver. College Station is helmed by Dell Seiter, the Spokane office is led by Josh Martin. The new Albuquerque office is directed by Mitch Hollinger. Guardian Mortgage is enjoying rapid growth, and they’re always looking for top performers. Please visit its website for more.

Lender products, events, & services

Don’t miss this great opportunity to give back. For each new lender that signs up with TMS before Dec. 31^st and becomes approved, TMS will donate $250 to Family Reach —a national non-profit dedicated to alleviating the financial burden of cancer. You can sign up here.

The Great Leads Debate: Why Purchasing Leads Sucks and What Can Be Done About It

Join this strikingly candid webinar where Jason Frazier, The Agent Marketer and long-time opponent of lead shops, will go head-to-head with Heather Bauman, GM of MortgageLead.com, the revolutionary new lead delivery platform for loan officers. They will discuss and debate hot topics surrounding online lead generation in the mortgage and real estate industry, and answer questions from attendees in real time. Click here to register: https://agentlink.io/mortgagelead.

Join National Mortgage Professional Magazine for a Deal Desk webinar focusing on Alternative Documentation products on Thursday, December 6 at 2:00PM EST / 11:00AM PST. Each DealDesk is product focused, quick (30 minutes) and only featuring lenders that can offer originators unique and/or proprietary loan programs. This DealDesk will feature Deephaven Mortgage and their alternative documentation product. This is an opportunity to discover how other successful originators use the features of these products to put more borrowers in loans in addition to being able to ask your own questions. Register to submit your questions here, ask them live, or eavesdrop on what other attendees are asking.

“Simplified mortgage originations with Trelix. Trelix offers an industry-leading suite of fulfillment, quality control and due diligence products and services that can help you manage risk and lower costs in a complex industry. If your goal is to grow quickly, dramatically lower costs, and attract top producing loan officers, the Trelix end-to-end solution is perfect for your business. Lenders who utilize our end-to-end services experience up to 40% reductions in manufacturing costs while helping to significantly improve the borrower experience.” To learn more, connect with Justin Vedder.

Fannie & Freddie don’t stop

Yes, the hearings on FHFA were postponed today. But let’s play some catch up on Agency news. It’s good to see what they’ve been up to in the primary markets over recent weeks to keep things in context, especially as lenders inevitably follow their lead. Hey, you wanna read 11 pages on recapitalizing Freddie and Fannie? Here you go.

In comments to the Federal Housing Finance Agency, which is overseeing the planned merger of government-sponsored enterprises Fannie Mae and Freddie Mac into the uniform mortgage backed security platform next year, SIFMA called for clarification on a number of issues. Christopher Killian, managing director of securitization and credit markets at SIFMA, noted the FHFA has “a supreme amount of power over the GSEs and should lay out how they will handle the UMBS market in writing.”

Fannie’s trading desk reports that, “Whole Loan and Loan Delivery will be updated the weekend of Dec. 8 to include the 2019 loan limits for loans delivered to Fannie Mae on or after Jan. 1, 2019. For loans or pools delivered through ASAP Plus or ASAP Sale, the new loan limits will not be effective until Jan. 1, 2019. The 2018 loan limits apply to any loans or pools funded in an Early Funding transaction prior to Jan. 1, 2019, even if such loans are intended to go into an MBS that will be issued in 2019.”

In recent months Freddie Mac announced organizational changes in its Multifamily business. The promotion of Robert Koontz to SVP, Multifamily Capital Markets and a new organizational structure for its Multifamily Capital Markets department. The changes integrate two functional areas: Multifamily Investments and Advisory and Multifamily Research and Modeling into the Multifamily Capital Markets department under Koontz. In his new role, Koontz will oversee these areas, while continuing his core responsibilities, including pricing, structuring, investor relations and sales, and securitization. Freddie Mac Multifamily is the nation’s multifamily housing finance leader. Historically, nearly 90 percent of the eligible rental homes we fund are affordable to families with low to moderate incomes. Freddie Mac’s Duty to Serve plan aims to expand affordability and address America’s most persistent housing problems.

The following statement was released September 27, 2016 by Freddie Mac and is attributed to Gina Healy, vice president of credit risk transfer of Freddie Mac’s Single-Family Business:

“Freddie Mac continually explores ways to responsibly broaden access to mortgage credit while reducing risk to taxpayers. This is fundamental to our effort to build a better housing finance system. To better manage the counterparty risk underlying the important role that mortgage insurers play in high-LTV lending, the eligibility requirements are designed to cover minimum financial and operational requirements for private mortgage insurers approved to do business with Freddie Mac and selected by lenders.

Capital markets

They’re closed today, but the Treasury market saw a further yield curve flattening Tuesday, with the U.S. 10-year losing 7bps to close at 2.92% amid diminished confidence of a near-term solution to U.S.-Sino trade tensions. President Trump tweeted that Bob Lighthizer will take over from Steve Mnuchin, Larry Kudlow, Wilbur Ross, and Peter Navarro in future tariff negotiations. China is said to be considering a cut to the tariff rate on U.S. auto imports from 40% to the original 15% by the end of the year. President Trump tweeted on Monday that China had agreed to reduce and remove tariffs on imported cars from the U.S.

The 30-year dropped 10bps while shorter dated Treasuries only fell two to three bps, and the 5-year yield (2.79%) fell below both the 2-year (2.80%) and 3-year (2.81%) yields. That inversion with the flattening action triggered the economic slowdown narrative, which diminished investor confidence in the stock market (the S&P closed -3% on the day) and spurred some safe-haven positioning in the Treasury market. New York Fed President Williams said there are signs the economy could be slowing more quickly than thought, though the baseline economic view remains very positive.

Despite today’s bond markets being closed in honor of President Bush, several economic events will still take place as scheduled. We have the MBA mortgage applications figures for the week ending November 30. (Mortgage apps were +2% last week with refis contributing 40%. Yes, they’re still out there! For you FHA lenders, FHA biz is about 10% of overall apps.)

On the Fed front, the Fed will still release the latest Beige Book at 2PM ET and Fed Governor Quarles will speak at Stanford University. Tomorrow’s calendar is even busier than usual, with some of today’s usual scheduled releases being moved back a day. Thursday’s calendar includes several employment related releases including job cuts from Challenger, ADP employment, initial jobless claims for the week ending December 1, Q3 (final) Productivity and unit labor costs, the October trade deficit, Markit Services PMI, ISM nonmanufacturing PMI, and October factory orders before Atlanta Fed President Bostic, NY Fed President Williams, and Fed Chair Powell all take the stage.

(Warning: rated PG for being a bad pun.)

There is a factory in Northern Minnesota which makes the Tickle Me Elmo toys. The toy laughs when you tickle it under the arms.

Well, Lena decides to give up the real estate biz and is hired at The Tickle Me Elmo factory and she reports for her first day promptly at 8:00 am.

The next day at 8:45 am there is a knock at the personnel manager’s door. The foreman throws open the door and begins to rant about the new employee.

He complains that she is incredibly slow and the whole line is backing up, putting the entire production line behind schedule.

The personnel manager decides he should see this for himself, so the 2 men march down to the factory floor. When they get there the line is so backed up that there are Tickle Me Elmo’s all over the factory floor and they’re really beginning to pile up.

At the end of the line stands Lena surrounded by mountains of Tickle Me Elmo’s. She has a roll of plush Red fabric and a huge bag of small marbles.

The two men watch in amazement as she cuts a little piece of fabric, wraps it around two marbles and begins to carefully sew the little package between Elmo’s legs.

The personnel manager bursts into laughter. After some hysterics, he pulls himself together and approaches Lena.

“I’m sorry,” he says to her, barely able to keep a straight face, “But I think you misunderstood the instructions I gave you yesterday.”

“Your job is to give Elmo two test tickles.”

Rob

I’ve been in capital markets since the mid-1980s. No presidential administration has eliminated business cycles. Although stocks have given up their gains from 2018, rates have been moving lower as of late (including this morning due to political issues). At what point, if ever, do people and analysts talking about an economic downturn actually cause an economic downturn? The problem, of course, is that anyone with any money in the stock market has seen their net worth decline, including those saving up for a down payment. Lenders are focused on thinking about aligning their cost structures with current loam volumes, but it is good to know what is going on rate-wise.

Are we going to see another refi boom? Any investor who purchased a fixed-rate mortgage, as a whole loan or in a pool, in the last six months is suddenly concerned about their investment (the loan) paying off early. Can small lenders afford early payoff penalties? And if rates fall, generally a good thing for lenders, but property values fall 10%, what does that do to anyone who obtained a 90% LTV loan in the last year? Refinance with no equity? I’ve seen this movie…

Yes, mortgage prices are based on supply and demand, and MBS traders price them numerically as a spread off of the risk-free U.S. Treasury market. Most mortgage REITs tend to reference “basis” risk in their discussion around sensitivity to Agency MBS spreads. Spread, or basis risk, is simply the risk that Agency mortgage assets (or any other asset) will underperform a benchmark product with similar duration, such as interest rate swaps or treasury securities. Spreads are, therefore, one good metric to identify relative value for holding Agency MBS, or how much one is paid in excess of treasury yields to own the idiosyncratic risks inherent in Agency mortgages (the biggest being prepayment risk). While the duration of MBS and a hedge may be similar, spread widening implies the yield on mortgages has increased relative to that hedge, which all else equal, should improve the levered return available on new investments. Most mortgage REITs prudently hedge to a tight duration gap in their portfolio, but spread risk mostly goes unhedged.

Looking at the economy, many believe that a dramatic slowdown in our economy is imminent but not necessarily reflected in stats – yet. Sure enough, as we wind up 2018, going back to October most US economic indicators continue to look strong. Retail sales increased 0.8 percent in October following a small decline in September. October’s increase was driven by higher gasoline prices and service station sales are expected to fall in November due to declining oil prices. Most categories, however, were in positive territory for the month and consumer conditions are strong heading into the holiday season. Consumer prices increased in October, driven by energy prices as well. Again, these were expected to decline in November. Core CPI was up 0.2 percent in October and up 2.1 percent for the previous twelve months, in line with the Fed’s inflation target. Industrial production inched up 0.1 percent and manufacturing output increased 0.3 percent for the month despite a decline in auto production. Small business optimism remains high and many reported plans for hiring and capital expenditures. Respondents were less enthusiastic about earning expectations as wage pressures and borrowing costs continue to rise.

Non-depository lenders exist because warehouse banks exist and secondary market investors exist. In the secondary markets the Agencies are doing deals, laying groundwork for a single security, and transferring credit risk away from taxpayers to willing buyers. MLOs should know that all these help rates for their borrowers. And next year the secondary markets, and with them the primary markets as beneficiaries, can look forward to the single security!

On December 20, Freddie Mac priced a new $937 million offering of Structured Pass-Through K Certificates, which are multifamily mortgage-backed securities. The company expects the K-086 Certificates to settle on or about December 28, 2018. The K-086 Certificates are backed by corresponding classes issued by the FREMF 2018-K86 Mortgage Trust and guaranteed by Freddie Mac. The trust will also issue certificates consisting of the Class B, Class C, Class D and Class R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of K-086 Certificates. The A-1 class has principal of $43.6 million, a weighted average life of 6 years, a coupon of 3.67%, a yield of 3.28%, and a dollar price of $101.99. Class A-2 has principal of $832.99 million, a weighted average life of 9.86 years, a coupon of 3.86%, a yield of 3.49%, and a dollar price of $102.99. Finally, the A-M class has principal of $61.35 million, a weighted average life of 9.91 years, a coupon of 3.92%, a yield of 3.55%, and a dollar price of $102.99. K-Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds. K Certificates typically feature a wide range of investor options with stable cash flows and structured credit enhancement.

On December 7th, Freddie Mac priced three new K-deals, structured pass-through certificates backed by floating-rate multifamily mortgages. The first deal, K-F54, mostly mortgages with 10-year terms, has a size of $818 million and is expected to settle on or about December 14, 2018. The pool has a weighted average life of 9.55 years, a coupon of 1-month LIBOR plus 48bps, and a dollar price of 100.00. The second deal, a K-P Series offering comprised of two groups, one group of first-lien and junior-lien mortgages with fixed interest rates and a second group made of first-lien and junior-lien mortgages with hybrid interest rates. Freddie Mac expects to issue approximately $684 million in K-P05 Certificates, which are expected to settle on or about December 17, 2018. The certificates are guaranteed by Freddie Mac and are backed by 60 seasoned multifamily mortgages from the company’s retained portfolio. There are two offered classes to this deal. Class A has a principal amount of $244.5 million, weighted average life of 2.36 years, a coupon of 3.203% with a yield of 3.13% and a dollar price of $99.99. Class AH has a principal notional amount of $440.5 million, weighted average life of 2.56 years, a coupon of 3.254% with a yield of 3.26% and a dollar price of $99.81. The third deal, K-J23, was backed by underlying collateral consisting of supplemental multifamily mortgages. The $161 million in K-Certificates are expected to settle on or about December 14, 2018. Freddie will have two offered classes, class A-1 consisting of $53 million with a weighted average life of 2.75 years, coupon of 3.17%, yield of 3.11%, and dollar price of $99.99, while class A-2 has a principal amount of $109 million, weighted average life of 3.71 years, coupon of 3.75%, yield of 3.26%, and dollar price of $101.4973. K-Deals are a part of Freddie’s business strategy to transfer a portion of the risk losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds, with the certificates normally featuring a wide range of investor options with stable cash flows and structured credit enhancement.

On December 17, Freddie Mac Multifamily priced a $1.1 billion offering of Structured Pass-Through K-Certificates backed exclusively by multifamily mortgages on seniors housing properties. The K-S10 certificates, Freddie Mac’s tenth K Certificate offering backed exclusively by seniors housing, are expected to settle on or about December 20, 2018, and include two senior principal and interest class, one interest-only class and one class entitled to static prepayment premiums, all unrated. Class A-7 has a principal amount of $648 million, a weighted average life of 6.81 years, a discount margin of 56, and a coupon of 1-month LIBOR + 56. Class A-10 has a principal amount of $537 million, a weighted average life of 9.60 years, a discount margin of 61, and a coupon of 1-month LIBOR + 61. Freddie Mac Multifamily sources its seniors housing loans from a select group of multifamily lenders and purchases a variety of seniors housing loans including those backed by independent living properties, assisted living properties, memory care properties and senior properties with a limited amount of skilled nursing care.

Also on the 17th, Freddie Mac priced a new $555 million offering of Structured Pass-Through K-Certificates. The K-1509 Certificates, which are expected to settle on or about December 20, 2018, are backed by corresponding classes issued by the FREMF 2018-K1509 Mortgage Trust and guaranteed by Freddie Mac. The K-1509 Trust will also issue certificates consisting of the Class X2-A, X2-B, B, C and R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of K-1509 Certificates.

On December 18, Freddie Mac priced a new $634 million offering of Structured Pass-Through K-Certificates backed by floating-rate multifamily mortgages with ten-year terms. The approximately $634 million in K-F56 Certificates are expected to settle on or about December 28, 2018.The K-F56 Certificates will not be rated, and will include one senior principal and interest class, one interest-only class, and one class entitled to static prepayment premiums. The K-F56 Certificates are backed by corresponding classes issued by the FREMF 2018-KF56 Mortgage Trust and guaranteed by Freddie Mac. The KF56 Trust will also issue certificates consisting of the Class B, C and R Certificates, which will be subordinate to the classes backing the K-F56 Certificates and will not be guaranteed by Freddie Mac. Class A is offered with a weighted average life of 9.69 years at a discount margin of 56 and a dollar price of 100.00.

On December 13, Freddie Mac priced a new $794 million offering of Structured Pass-Through K-Certificates backed by floating-rate multifamily mortgages with seven-year terms. The K-F55 Certificates are expected to settle on or about December 20, 2018, will not be rated, and will include one senior principal and interest class, one interest-only class, and one class entitled to static prepayment premiums. The K-F55 Certificates are backed by corresponding classes issued by the FREMF 2018-KF55 Mortgage Trust and guaranteed by Freddie Mac. The KF55 Trust will also issue certificates consisting of the Class B, C and R Certificates, which will be subordinate to the classes backing the K-F55 Certificates and will not be guaranteed by Freddie Mac. Class A has a weighted average life of 6.71 years, and a coupon of 1-month LIBOR + 51 for a 100.00-dollar price.

On December 19, Freddie Mac priced a new $720 million offering of Structured Pass-Through K-Certificates, which are multifamily mortgage-backed securities. The K-SL1 Certificates are backed by one loan with floating and fixed rate components and twenty-three underlying properties controlled directly or indirectly by Starlight Group Property Holdings Inc. K-SL1 is expected to settle on or about December 28, 2018. The transaction collateral is part of Freddie Mac’s single-asset, single borrower (SASB) series of certificates, which transfers first loss credit risk on either one or multiple properties owned or controlled by a single sponsorship group. The K-SL1 Certificates will not be rated, and will include three senior principal and interest classes, one interest-only class, and one class entitled to static prepayment premiums. The K-SL1 Certificates are backed by corresponding classes issued by the FREMF 2018-KSL1 Mortgage Trust (K-SL1 Trust) and guaranteed by Freddie Mac. The K-SL1 Trust will also issue certificates consisting of the Class B, C and R Certificates, which will be subordinate to the classes backing the K-SL1 Certificates and will not be guaranteed by Freddie Mac. The AFL class, consisting of $160 million in principal, has a weighted average life of 4.87 years, a discount margin of 47bps, and a yield of 2.8335% for an even 100-dollar price. The $400 million AFX-1 class has a weighted average life of 5.90 years, with a discount margin of S+55bps, a yield of 3.2869% and a dollar price of $100.35.

On November 19^th, Freddie Mac announced its second Agency Credit Insurance Structure Forward Risk Mitigation transaction, which transfers up to $400 million of credit risk on a reference pool of single-family loans with a maximum unpaid principal balance of $12 billion. ACIS AFRM is an innovative front-end credit risk transfer offering that allows Freddie Mac to transfer mortgage credit risk simultaneously with the acquisition of loans by securing committed private capital and by providing stable pricing over a pre-determined time horizon. The industry’s largest and most diversified loan reference pool and a multi-tranche structure that accommodates investors with varied appetite for risk. The transaction attracted high demand among insurers and reinsurers, more than doubling the number of counterparties compared with the first ACIS AFRM transaction announced in January 2018 on this reference pool consisting of 30-year fixed-rate loans acquired between Jan. 1, 2018 and June 30, 2019, with loan-to-value ratios between 61 percent and 97 percent. Since the ACIS program inception in 2013, Freddie Mac has placed more than $10.6 billion in insurance coverage while expanding its investor base. Since 2013, the company has transferred a significant majority of the credit risk on approximately $1.2 trillion of UPB on single-family mortgages and grown its investor base to more than 230 unique investors, including insurers and reinsurers.

The U.S. 10-year closed last week unchanged at 2.79% as news of the impending U.S. government shutdown dominated the media cycle throughout the day. The House passed a bill that funded several government departments and provided $5.7 billion in funding for border security but it did not pass the Senate. Separately, but adding to the confusion, U.S. Trade Adviser Peter Navarro told Nikkei that an agreement with China in 90 days will be difficult to attain. China’s annual Economic Work Conference concluded with a statement suggesting, among other things, “Significant cuts to taxes and fees will be enacted in 2019.” China is also said to be maintaining a course of “prudent” monetary policy, which some think leaves the door open for providing policy stimulus via rate cuts.

And to put a bow on the week of Fed news, New York Fed President Williams said that being data dependent means listening to the markets and that the balance sheet runoff is not “inflexible,” implying the Fed could reevaluate its view in 2019 if necessary. Finally, in other MBS-related news, President Trump named current Comptroller of the Currency, Joseph Otting, as acting director of the FHFA beginning on January 6 when he replaces Mel Watt, whose term is expiring. Mr. Otting is expected to serve in the role until Mark Calabira, who has been nominated, can be confirmed.

The only scheduled economic release on today’s calendar is the November Chicago Fed National Activity Index (+.22% versus +.02 expected). There’s an early bond market close ahead of Christmas Day tomorrow. Wednesday brings S&P Case-Shiller Home price Index for October before things pick up Thursday with MBA Mortgage Applications for week ending Dec. 22; Initial and Continuing Claims; FHFA Housing Price Index for October; New Home Sales for November; and Consumer Confidence for December. The week closes with Advanced International Trade in Goods for November; Advanced Retail Inventories for November; Advanced Wholesale Inventories; and Pending Home Sales for November. We begin today with the 10-year yielding 2.77% and Agency MBS prices roughly better .125 on the partial government shutdown spooking the markets – they don’t like uncertainty.

Thanks to Alabama’s Brandon Snider for sending this “Twas the Night Before Closing” video!

“’Twas the night before closing, when all through the house

Not a creature was stirring, not even a mouse;

The boxes were packed in the garage with care,

In hopes that their moving van soon would be there;

The realtors were nestled all snug in their beds,

While visions of commission checks danced in their heads…”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

This government shutdown is over 215 miles of fencing along a 2,000-mile border. Rate-wise, there is growing thought that the Fed has overshot rate changes and that there will be 0 increases in 2019. In other “fun with numbers” news, STRATMOR tells us that, traditionally, 82% of residential production comes from 40% of the loan officers out there. Lenders have certainly been fervently cutting back on the 60% of MLOs who are only producing 18% of closed volume. And while we’re talking about the changing face of loan officers, here’s a nice study on age groups: not every originator is in their 70s.

Jobs

National MI is expanding its sales team and adding an additional Sales Account Manager who will reside in the Indiana and Kentucky area. Responsibilities include to promote the sale of National MI products, services, and programs to clients through a consultative selling approach via personal sales calls and email/phone contact. This individual will also assist in sourcing new business from originators and will manage the relationships of specific clients by serving as a customer advocate, educator, and loan issue problem-solver. Experience in client relationship management and training is imperative, and strong research, process improvement, and presentation skills are required. Headquartered in the San Francisco Bay Area, National MI is a U.S.-based, private mortgage insurer enabling low down payment borrowers to realize homeownership. National MI has a GREAT culture, compensation and benefits. For the complete job posting, see National MI’s careers page.

Lender marketing product

Stop Losing Money in 2019! With the mortgage industry becoming increasingly difficult to survive let alone thrive, companies are in search of new marketing strategies to compete in this new era of credit. The Decision Science team at BBM has created an advanced suite of propensity data models that help professional origination marketers identify homeowners who are actively in the market for FHA, VA, Jumbo and Non-Agency loan options. Our average loan amount for active FHA/VA and Non-Agency applications exceed $350K and gross top line revenue of nearly $15,000. If you’re marketing is not reaching these levels of performance than let BBM show you how a targeted marketing strategy focused on propensity modeling and targeted revenue opportunity can change the trajectory of your company. For more information about BBM Marketing Services and about becoming an approved origination partner please contact Bill Senteno.

Legal resolution/settlement

Did Shellpoint Mortgage and New Penn Financial LLC violate the Massachusetts Act Preventing Unlawful and Unnecessary Foreclosures and the state’s Consumer Protection Act? Whether or not they did, $4 million exchanged hands.

Shutdown, a reminder that the government impacts 90% of all home buyers

A lack of liquidity can shut down a company faster than anything. U.S. Treasury Secretary Steven Mnuchin contacted the chief executives of the nation’s six largest banks over the weekend to reassure the markets they have access to sufficient liquidity to continue normal operations. The move follows a distressing week in which an interest-rate rise and mounting US-China trade tensions unsettled the markets, and the US government entered a partial shutdown. Much to the markets dismay, President Donald Trump spoke to his advisers about exercising executive powers under the Federal Reserve Act to fire Federal Reserve Chairman Jerome Powell. Trump has repeatedly attacked Powell and the Fed over their decision to raise US interest rates as both equity and bond markets flash warning signs of a possible recession ahead.

Congressional appropriations expired at midnight on Friday, 12/21/2018, and a partial shutdown of government services deemed non-essential has been implemented. As Congress has not passed a budget or a budget extension, a partial shutdown of government services deemed non-essential has been implemented.

Results of the shutdown include the furlough of certain federal employees and a curtailment of certain operations at several federal agencies. Examples of mortgage loan related activities that may be impacted include, but are not limited to: verification of employment for borrowers who work for federal government agencies, Social Security Administration SSN and SSI validations, Internal Revenue Service tax return and W-2 transcript generation, new conditional commitment issuance by USDA, and various operations of the Federal Housing Administration. But issuance and renewal of flood insurance policies by the NFIP has been re-authorized to May 31, 2019, so we can look forward to having that used as a bargaining chip all over again.

What about lenders funding loans under various programs? Of course, lenders and investors will set their own policies, but going through my inbox on lenders… Fannie Mae and Freddie Mac? No impact. Using history as a benchmark, from 2013 here was Fannie’s response and Freddie’s approach. (Neither has sent out a similar update for this shutdown.) VA? No impact. FHA? No impact on issuing new case numbers and insuring loans. It appears that DELRAP condominium approvals can continue to be processed, but HRAPS condominium approvals cannot be processed and should not be submitted to some lenders for processing during the government shutdown. USDA? Appears it will temporarily be unable to issue new commitments or guarantee closed loans.

The Internal Revenue Service (aka, IRS) will be unable to issue tax return transcripts. (For loans that require IRS Transcripts, some lenders are asking the underwriter to condition the loan for the borrower to obtain transcript from IRS website. Lenders seem to be saying that any loans with discrepancies must be resolved prior to investor delivery, and that completed 4506-T forms continue to be required. If Form SSA89 is required, lenders appear to be asking that the validation of the social security number must be received prior to closing. Or lenders will continue to fund conventional and government products without the required transcripts, but they must be obtained post-closing once they are available. It seems that most conventional and government products do not require transcripts for W2/fixed-income borrowers, unless tax returns are needed in the file for other purposes.

My informal poll of lenders who do jumbo, transcript requirements for jumbo and non-conforming (like portfolio, niche, expanded and closed-end seconds) products, lenders are requiring LOs to require the transcripts to be obtained prior to closing. Of course it depends on the jumbo investor criteria. The same with bond (aka, housing authority products, Housing Finance Agency) programs: check with the individual agencies first but in general I am seeing that these products will require the transcripts to be obtained prior to closing.

For loans that require flood insurance, proof of flood insurance coverage is required prior to closing. LOs know that the FHA does not accept private flood insurance. And for borrowers employed by the federal government who are on a mandatory furlough from their jobs must return to work prior to closing to use the income for qualification purposes. Yes, the National Flood Insurance Program (NFIP) was reauthorized over the weekend through May 31, 2019, but they are advising that no new policies or renewals will be issued during shutdown. From what I am reading investors and lenders are stating that flood insurance requirements must be met prior to closing and cannot be waived.

A quagmire? Any lender doing a loan for an impacted Federal employee where a Verbal Verification of Employment (VVOE) is required. Some lenders are saying that for conventional and VA products, if a borrower is employed by the federal government and a Verbal Verification of Employment cannot be obtained prior to closing due to the shutdown, a VVOE dated after closing will be acceptable. But for FHA and USDA products, my informal poll shows that unless FHA/USDA (as applicable) issues an announcement advising they will allow the VVOE to be obtained after the note date, a VVOE must be obtained prior to closing. Housing Authority products will be based on the direction provided by the housing authority. Check with jumbo investors for their criteria but it seems most of these products will require the VVOE to be obtained prior to closing.

For the IT folks, FHA systems such as FHA Connection, CHUMS, etc., will generally be operational, however actions that require intervention by FHA personnel will either be delayed or suspended. CAIVRs is expected to be available but FHA is not able to ensure that information contained in CAIVRs will remain up-to-date.

USDA issued a policy that any LO or lender should read. In the past it has not issued Mortgage Loan Note Guarantees during government shutdowns. Most lenders are accustomed to the vagaries of the rural program and accept loans with contingent Conditional Commitments issued by Rural Housing “subject to the availability of commitment authority” if available.

Capital markets

Besides the shutdown, the main headline so far this month was that Federal Reserve increased the target for the Fed Funds rate by 25 basis points. Widely expected, what wasn’t expected was the Fed’s outlook for prolonged economic strength over the next two years compared to the financial market’s expectations for the economy to cool. As it stands, the Fed is expecting three additional rate hikes during that timeframe. Needless to say, the markets weren’t happy with the guidance and the recent sell-off continued and received additional fuel when a funding agreement could not be reached at the end of the week; causing a partial government shutdown. Other economic headlines were mixed as real disposable income increased 0.2 percent and real consumer spending increased 0.3 percent. Q3 GDP was revised lower to +3.4 percent. Existing home sales increased for the second straight month in November however remain 7.0 percent lower than one year ago. New housing starts increased 3.2 percent in November spurred by a nearly 25% increase in multi-family dwellings. Meanwhile single family starts have fallen for the last three months. It is probably no surprise that builder confidence eased in December.

Inflation? Not really. In the last week or so we’ve learned that increasing consumer inflation took a pause in November as falling gasoline prices kept the consumer price index unchanged for the month. On a year-over –year basis, prices increased by 2.2 percent, down from October’s 2.5 percent annual increase. Core inflation remained near the Fed’s target, increasing 2.2 percent from October to November. The decrease in energy prices offset increases in shelter, used cars and trucks, transportation services and medical care. Services make up the largest portion of the core index and have seen steady increases month-over-month and firms become more willing to raise prices to keep up with the tight labor market. It is unlikely that this upward pressure will subside in the near-term. Shifting to retail sales, total sales rose 0.2 percent in November as gas station sales were down 2.3 percent due to the drop in fuel prices. Holiday sales which exclude gas stations, auto dealers and food service establishments, rose 0.8 percent in November and 4.4 percent for the year. While trade concerns abound, economic data continues to show the US economy humming along as we move into 2019.

Looking at the markets from Monday, which was a holiday-shortened trading day, the plummet in stocks grabbed the headlines while the “flight to safety” helped bond prices. Money moved from stocks into shorter-dated maturity instruments. There was news around the world: U.S. Trade Adviser Peter Navarro saying that an agreement with China in 90 days will be difficult to attain, Defense Secretary James Mattis’ resignation, China suggesting there would be significant cuts to taxes and fees, a plan to withdraw 7000 troops from Afghanistan, about half of the current deployment, and some momentum behind the idea of calling a second referendum on Brexit.

In this country New York Fed President Williams stated that being data dependent means listening to the markets and that the balance sheet runoff is not “inflexible,” implying the Fed could reevaluate its view in 2019 if necessary. Monday we saw, as equities sold off, the yield curve steepened. President Trump named current Comptroller of the Currency, Joseph Otting, as acting director of the FHFA beginning on January 6 when he replaces Mel Watt, whose term is expiring although Mr. Watt was under investigation of sexual misconduct in the workplace. President Trump continued his tirade against the Fed, tweeting, “The only problem our economy has is the Fed. They don’t have a feel for the market. The Fed is like a powerful golfer who can’t score because he has no touch – he can’t putt!” The 10-year note closed yielding 2.75%.

There is little news of substance today. If you like two-month old news, this morning we’ll have the S&P/Case-Shiller Home Price Indexes for October at 9AM ET, expected to show a slight increase. Also ahead are the Richmond Fed Manufacturing and Services Indexes, and the Treasury auctioning off $18 billion in reopened 2-year notes and $41 billion 5-year notes. With all of this going on, there isn’t much move so far in rates this morning: the 10-year is yielding 2.75% and Agency mortgage-backed security prices are worse a few ticks (32nds).

I was not ready for retirement and was looking for a new adventure.

So, I decided to take up FENCING.

My neighbors have threatened to call the police if i don’t put it back.

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

The US taxpayer has been bearing the credit risk of 90% of all new origination over the past 10 years. What about property/collateral risk? Yesterday FEMA issued a new opinion disallowing new or renewal flood insurance policies during the partial shutdown of the federal government. NAR weighed in. “Today’s ruling comes contrary to Congressional intent and is in conflict with FEMA’s decision to allow NFIP operations during the 16-day government shutdown in 2013. NAR and its 1.3 million members are extremely disappointed by this abrupt and ill-conceived change of course. Last week, Congress passed legislation to fully reauthorize the NFIP through May. The surprise FEMA ruling, however, jeopardizes tens of thousands of home sales across America, as NAR estimates up to 40,000 closings are disrupted each month that the NFIP cannot issue flood insurance policies.”

Lender products & services

As Zillow and others enter 2019 focused on real estate and mortgage collaboration, one home-resource portal seems to be out in front with their own innovative collaboration model.

YourHome1Source.com launched in 2015 by home industry and ecommerce execs is growing rapidly. The innovative web portal offers resources and solutions across 20+ home buyer/home owner categories. Many home industry brands are already participating. YourHome1Source® attracted home-product business mogul, Kathy Ireland and kathy ireland® Worldwide became a YH1S partner in 2018. If your organization is seeking collaborative strategies to reach today’s digital homebuyer, this may be your solution. “Some companies may fall behind, spending millions of dollars developing independent online strategies when they could move ahead now and benefit significantly from our growing Alliance. We offer an immediate, cost-effective digital solution. Opportunity is at the door, says CEO, Sean Stockell.” Inquire here.

The holiday break is here and time to re-evaluate your process and how technology can help improve your efficiency in 2019. Digital mortgage providers like Maxwell can be impactful tools to drive efficiency for your team. Maxwell is specifically designed for small- to mid-size lenders where customization is desired and personalization from the loan officer is critical to achieving a satisfied borrower. Today, the Maxwell team reports that lenders on their platform are closing loans 45% faster than the national average, collecting docs 73% faster, and driving NPS and satisfaction up 25%. These numbers highlight how Maxwell increases efficiency, drives agent referrals, and offers true ROI on technology. To experience Maxwell, click here and set up time for your customized demo. Cheers to better lending in 2019!

What is driving digital transformation within our industry? The pace of innovation is critical in today’s digital age. As leads are staying in the pipeline for a longer period of time, the personal connection between the loan officer and their leads is more important than ever. You can focus on the transaction and gain a customer for a day or focus on the relationship and gain a customer for life. Stop wasting time and money on digital transformation – unless you’re focused on three specific trends. Hear from Total Expert Chief Customer Officer Sue Woodard on Three Trends for Sales and Marketing in Mortgage Lending.

Simplify your underwriting process with Loan Product Advisor® asset and income modeler (AIM). Through the expertise of third-party service providers, AIM automates the manual processes of assessing borrower assets and income. AIM reduces the burden of traditional documentation, speeds up the loan origination process and helps you close loans faster. Freddie Mac is working hard to bring you solutions that create efficiencies for your business and improve the borrower experience – giving you a competitive edge. These capabilities are available for Loan Product Advisor submissions and resubmissions on and after December 9, 2018. Gain greater efficiency in your underwriting processes with AIM – get The Freddie Edge^SM.

Non-QM origination volume continues to grow at a robust pace, and as we near the finish line for 2018, the velocity of growth, interest in the product, and capital investment are at an all-time high. Deephaven Mortgage is committed to helping the industry continue its upward trajectory. To help originators & executives learn more about the Non-QM marketplace, Deephaven has partnered with NMP on several informative webinars that you shouldn’t miss: “What & Why of Non-QM” and learn about “How to build a Non-QM focused business.” Find out more about how Non-QM can help you grow your business by contacting us at brokerinfo@deephavenmortgage.com (Wholesale) or sales@deephavenmortgage.com (Correspondent).

Vendor news

According to this site there are 1,446 vendors that touch the mortgage biz. How does anyone keep track? Let’s play some catch up on what a random sample have been up to!

Secure Insight has teamed up with DocMagic Inc. to develop and host an online training program to teach attorneys, title agents, notaries and other entities how to accomplish clear, compliant and completely paperless eClosing transactions. “Getting over the adoption hump starts with ease of use and adequate training so users feel comfortable conducting business within the eMortgage ecosystem,” stated Andrew Liput, president of Secure Insight. “We partnered with DocMagic because their Total eClose solution is one of the easiest and most intuitive in the industry, which is conducive to adoption for title agents, attorneys and notaries to understand and leverage.”

Finicity has been selected as a service provider for the new Freddie Mac Loan Advisor automated income and asset assessment capabilities. Due to its established expertise within the mortgage lending industry and its innovative digital lending solutions, Finicity’s ability to source loan application data across a borrower’s’ financial accounts provides Freddie Mac with a faster, easier way to verify data upfront.

IDS announced it has built a brand-new interface with mortgage loan origination and servicing technology provider MortgageFlex Systems that operates on the MISMO® Version 3.3 data standard. Developing a new integration based on this advanced data standard ensures joint IDS-MortgageFlex customers can fully comply with a host of regulatory requirements that operate off the MISMO Version 3.3 standard, including TRID 2.0 and the Uniform Mortgage Data Program (UMDP). Joint users can complete all document preparation functions within MortgageFlexONE Origination, ensuring it remains the system of record throughout the transaction and eliminating potential data transfer errors. In addition, users also have access to additional functionality within idsDoc from the MortgageFlexONE Origination platform, including hybrid eClose and eSign capabilities and a full range of state and federal compliance audits.

AFR Wholesale has partnered with Floify. By utilizing Floify’s point-of-sale integration, AFR’s broker partners will be able to quickly and easily process borrower loan applications, securely send and receive supporting documentation, automatically deploy status updates and reminders via email and SMS, and more – all from a single, intuitive user interface. Floify’s point-of-sale platform has been shown to improve the loan origination experience for brokers and borrowers via the solution’s native automations, saving as much as 15 hours of processing time per loan.

Vendorly launched its Contract Management feature to enhance insights into contract terms, performance and spend analysis within the vendor management solution. Contract Management is available as a new feature for existing customers using the Vendorly platform, or as an independent software-as-a-service (SaaS) offering. Its platform also offers its customers managed vendor oversight services including vendor due diligence, document management, annual assessments, information security assessments, financial condition reviews and on-site audits.

After winning the 2018 Ellie Mae Hall of Fame award for Digital Mortgage Excellence, TruHome Solutions executives are excited to further improve the experience for their customers by using the new LendingConnect solution allowing TruHome to simplify the online application process for its clients’ members. “LendingConnect is the perfect digital beginning to the mortgage process,” said Shara Wessel, VP of Mortgage Solutions, at TruHome. “The software fully-integrates with our loan origination systems.”

Genworth Mortgage Insurance has launched its GenRATE^SM, a proprietary risk-based pricing engine providing lenders with a more granular approach to pricing for borrowers pursuing homeownership. With the introduction of GenRATE, lenders can opt-in to this proprietary pricing solution or choose from Genworth’s standard published rate card. “Demand for more dynamic pricing is growing, both in our industry and more broadly. Offering lenders the option of either rate card or risk-based pricing is the best way to show lenders that we understand and can continue to meet their evolving needs,” said Rohit Gupta, President and CEO, Genworth Mortgage Insurance. “Maintaining our standard rate card to complement GenRATE allows us to still offer the transparency and simplicity some lenders prefer while addressing other lenders’ shifting prioritization towards more dynamic pricing.” LOs can obtain GenRATE MI quotes quickly through their Loan Origination Systems, Optimal Blue or Rate Express.

Shutdown update

As best I can tell there has been no identifiable progress in funding deal talks. Of course, the lack of government spending impacts GDP, and roughly 25% of the federal government could remain shuttered into 2019. As we know the new Congress is set to begin on January 3, which will give Democrats the House which makes funding for a border wall less likely.

The FHA has issued FHA Info Bulletin #18-52 which provides additional clarity for HUD mortgagees regarding which systems are operational, and which FHA customer support operations are functional, though limited. The FHA’s reverse lending program has been put on hold along with USDA mortgage insurance endorsements.

As noted in the first paragraph, regarding flood insurance, policies that were in force before midnight on December 21, 2018 remain in force and the NFIP will process and pay claims under those policies as usual but will not have authority to borrow any additional funds from the U.S. Treasury. During the shutdown, the NFIP will not issue new policies, increase coverage on existing policies, or issue renewal policies. Some private flood insurance may be an acceptable alternative for the GSEs and other investors, but not for FHA loans.

IRS Tax transcripts are unavailable during the shutdown — investor requirements may differ regarding funding of loans with a signed 4506-t but no actual transcript pull. Lenders should verify investor requirements prior to funding.

Individual lenders and investors have various polices and procedures, depending on a variety of factors (their appetite for risk, how long they think the shutdown will last, if they offer portfolio products, and so on). For example, First Community Mortgage published its wholesale policy, Freddie Mac’s, Mortgage Solution Financial’s correspondent and wholesale policies,

Capital markets

There are certainly those who believe that “the real” economy is not being reflected in the statistics that the markets, and the Fed, are seeing. For example, the first wave of statistical releases during the fourth quarter continues to paint a positive picture of the US economy with many metrics near multi-decade highs. US unemployment officially remained at 3.7 percent for the third consecutive month however rounding to two decimals saw the rate drop from 3.74 percent to 3.67 percent. When the unemployment rate touched 3.5 percent in December 1969, a recession was right around the corner in January 1970 and by the end of the year unemployment had risen to 6.1 percent. The rate always moves in a cyclical pattern of highs and lows with the average gap from valley to peak being 3.7 percentage points during the last 10 cycles. The largest gain since World War II occurred during the 2007 to 2009 cycle which saw unemployment rise from 4.4 percent to 10.0 percent.

While the unemployment rate is a lagging indicator, telling us where we’ve been, initial unemployment claims are considered to be a leading indicator. Since dropping to a low of 204,000 in September, initial claims have trended up. While it may be too soon to tell if the uptrend will be sustained, it is a signal worthy of one’s attention; especially given recent layoff announcements from some large employers. For 2019 housing remains a concern as both new and existing home sales have trended lower since peaking in 2017 and a continued increasing rate environment challenges affordability.

Rates yesterday moved higher, a little intra-day volatility aside, regardless of maturity. U.S. Treasuries ended the midweek session with losses across the curve. The $41 billion 5-yr Treasury note auction was viewed as weak, which doesn’t help, although the S&P Case-Shiller 20-City Home Price Index increased 5.0% in October (about as expected), and the 10-year T-note closed yielding 2.80%.

Besides incredible stock market volatility, for thrills and chills this morning we’ve already had the usual Initial Jobless Claims (216k, about as expected). Ahead are the FHFA House Price Indexes for October, consumer confidence for December (expected to decline), new home sales for November (expected to increase), and a $32 billion 7-year note auction by the Treasury. This morning starts with rates lower, mostly because of risk aversion/flight to quality given the stock market volatility: the 10-year is currently at 2.75% and Agency MBS prices better than last night by .250.

A man is on trial for killing and eating a spotted owl.

He tells the judge, “I’m sorry it was endangered, but I had been lost in the woods for five days and I was starving.”

The judge deliberates a while and dismisses the case.

Before the man leaves the judge whispers, “Between you and me, how did it taste?”

The man replies, “It was sort of like a cross between a bald eagle and a harp seal.”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

“Rob, should we be staffing up for another refi boom?” It seems like most lenders are pausing during the holidays to take stock of current staffing levels before adjusting them one way or another. Or running “what if” scenarios through someone like Riivos. In terms of the pool of eligible loans to refinance, who’s left out there? The loans you originated since September? If their property values haven’t slid, watch out for early pay-off penalties from investors! In terms of much older loans, most analysts will tell you that the amount of “refinance-able” mortgages just isn’t very big, and that the vast majority of every loan over 5.5% hasn’t been refinanced simply because for one reason or another, the borrower can’t. (By the way, Freddie Mac reported the 30-year fixed mortgage rate fell last week to 4.55%, its lowest level since early September. The rate is down 39bp from the 2018 high set in the first half of November but are 60bp higher from the 3.95% low from a year ago.)

Automation product

Looking for ways to grow your business? Freddie Mac is collaborating with clients to deliver automation and insights that provide a competitive edge. Cut back on documentation and reduce time to close with Loan Product Advisor® automated income and asset assessment capabilities. Save borrowers time and money with ACE appraisal waivers, now available for certain condo unit loans. Grow your condo business with Freddie Mac’s unit-level condo exception tool, Condo Project Advisor^SM. Get greater efficiency with simpler collateral QC and underwriting in Loan Collateral Advisor® Get The Freddie Edge^SM.

Let’s play some catch up with FHA & VA changes around the biz

FHA posted the following: For appraisals processed under the Fully-Automated Protocols (initial appraisal logged in FHAC November 30, 2018, and thereafter), once the appraisal logging is completed, the lender will immediately receive one of the following messages on the FHAC Logging Screen: A: SECOND APPRAISAL IS NOT REQUIRED. B: PROPERTY SUBJECT TO HECM APPRAISAL RULE SECOND APPRAISAL REQUIRED. (see Fully-Automated Protocols in Mortgagee Letter 18-06). Depending on the message received, the lender should proceed accordingly. No further action is required if message A is received. However, if message B is received, the lender must obtain and upload a second appraisal into the Appraisal Slot 2 position. View the FHA Resource Center for questions or additional information about FHA’s new automated appraisal logging procedures for HECMs.

Beginning December 24, Wells Fargo Funding sellers could take down Best Effort and Mandatory Commitments at the 2019 effective loan limits. VA Loans at the 2019 loan limits can be delivered no earlier than January 2, 2019. VA loans using the 2019 effective loan limits must meet all VA and Wells Fargo Funding requirements. The FHA loan limits are effective with case numbers assigned on or after January 1, 2019. Wells Fargo sellers can take down Best Effort and Mandatory Commitments at the 2019 limits beginning January 2, 2019.

loanDepot Wholesale recent updates include information on automation of interim disclosures and loan limit increases for FHA and VA loans.

The Fifth Third Correspondent LendingSpace portal will be updated with the new 2019 loan limits for conventional products effective Friday December 21st and for FHA products on the weekend of December 29th.

PRMG announced the release of its WHEDA FHA and Conventional Down Payment Assistance Programs for the Wholesale Channel. Watch its pre-recorded training webinar for details.

The Plaza Home Mortgage BREEZE loan origination system now gives wholesale mortgage brokers a new option in generating both required disclosures and the LE at the point of sale. The disclosures that will be sent to the borrower include Broker state and federal disclosures and Plaza lender state and federal disclosures, as well as a Fannie Mae 1003 Application. For FHA and VA loans, the 92900-A or 26-1802a forms and other required program disclosures will be included. Loan originators will have the option of electronically signing the Fannie Mae 1003 and other forms that require their signatures. Once the disclosures and LE are received by the borrowers, they can consent and sign them electronically, and notifications will automatically be sent via email keeping the originator informed at each step. All documents are then automatically stored in BREEZE’s imaging system where originators can access and save for their record. As always, mortgage brokers can continue to use their own systems to prepare disclosures and the LE or submit the loan to Plaza which will create and issue the LE to the borrower.

The FHA Connection’s Application Coordinator User Identification (ID) assignment process has been automated as of November 9^th. FHA has discontinued mailing paper documentation to a mortgagee’s chief executive officer when a new user ID has been assigned to one of their employees. Notifications will be delivered via e-mail to the mortgagee’s administrative contact assigned in FHA’s Lender Electronic Assessment Portal (LEAP) system.

The Veterans Administration generally requires an annual fee of $100 per third party originator for each entity that sponsors their origination. Beginning on Veterans day, American Financial Resources (AFR) will now pay this fee on behalf of its brokers and correspondents on AFR-related VA loans.

PRMG posted its Product Update 18-57 which includes updates to Agency Fixed, DU Refi Plus, Home Possible, FHA and VA products, Silver Medal, Ruby Jumbo, Niche products, Expanded Access and all Housing Authority programs.

loanDepot’s LIBOR 5/1 ARM caps for the Conforming and High Balance ARM – DU programs are changing from 5/2/5 to 2/2/5. This change represents a positive for Borrowers in an increasing rate environment. loanDepot has also expanded its CMT 5/1 ARM offering to include the FHA 203(K) Standard Program.

Plaza Home Mortgage has updated its FHA FICO price adjustments with most LLPAs improving. There are improved FHA price adjustments for FICOs under 680: FICOs from 580 – 619 have improved by 1.75, FICOs 620 – 659 improved by .250. These improvements apply to all FHA programs. Improvements for FHA FICOs > 720 (excludes 203k), have been reduced by .250 or .500 depending on FICO.

PennyMac Correspondent Group has posted an announcement on the Release of Non-Delegated FHA and Temp Buydowns.

Capital markets

Why do capital markets matter? In short, efficient markets are essential to facilitate investment and capital formation that grow and sustain a vibrant economy.

In the secondary markets the Agencies are doing deals, laying groundwork for a single security, and transferring credit risk away from taxpayers to willing buyers. MLOs should know that all these help rates for their borrowers. And next year the secondary markets, and with them the primary markets as beneficiaries, can look forward to the single security!

On October 31, Fannie Mae priced the first benchmark Credit Risk Transfer transaction utilizing a REMIC structure (CAS Series 2018-R07), a $922 million note offering that represents Fannie Mae’s inaugural CAS REMIC transaction. This is the seventh and final credit-risk sharing transaction of 2018 under the Connecticut Avenue Securities (CAS) program, Fannie Mae’s benchmark issuance program designed to share credit risk on its single-family conventional guaranty book of business; the most actively traded credit-risk transfer product in the market. Enhancements to the program allow CAS notes to be issued as REMICs, advancing Fannie Mae’s goal to support the long-term growth of the program by making the product more attractive to market participants, including real estate investment trust (REIT) investors and international investors. Going forward, all CAS offerings will be issued as CAS REMICs making the offering more attractive to a broader range of investors over the long run. The reference pool for CAS Series 2018-R07 consists of more than 98,000 single-family mortgage loans with an outstanding unpaid principal balance of approximately $24.3 billion. With the completion of this transaction, Fannie Mae will have brought 30 CAS deals to market since the program began, issued $36 billion in notes, and transferred a portion of the credit risk to private investors on over $1 trillion in single-family mortgage loans as part of the CAS program.

On October 31, Freddie Mac priced a new offering of $1.01 billion Structured Pass-Through Certificates (K Certificates) backed by floating-rate multifamily mortgages with seven-year terms, expected to settle on or about November 13, 2018. The K-F53 Certificates will not be rated, and will include one senior principal and interest class, one interest-only class, and one class entitled to static prepayment premiums. The K-F53 Certificates are backed by corresponding classes issued by the FREMF 2018-KF53 Mortgage Trust (KF53 Trust) and guaranteed by Freddie Mac. The KF53 Trust will also issue certificates consisting of the Class B, C and R Certificates, which will be subordinate to the classes backing the K-F53 Certificates and will not be guaranteed by Freddie Mac. K-Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds, featuring a wide range of investor options with stable cash flows and structured credit enhancement.

On October 23, Freddie Mac prices a $436 million offering of Structured Pass-Through Certificates backed by multifamily loans sold to a third party and securitized by Freddie Mac. The class A offering of the K-I03 Certificates have a weighted average life of 2.07 years, a discount margin of 25, a coupon of 1 month LIBOR +25, and are expected to settle on or about October 31, 2018. K-Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds.

On October 26, Freddie priced a $1.1 billion K-Deal (K-082) of multifamily mortgage-backed securities. The K-82 Trust will also issue certificates consisting of the Class X2-A, Class X2-B, Class B, Class C, Class D, and Class R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of K-082 Certificates. There are four offered classes, with class A-1, A-2, and A-M all having a 3.92% coupon and yields ranging from 3.56% to 3.83%. The dollar price of the A-1 class is $102.08, A-2 is $101.19, and A-M is $100.70. There is a $187 million X3 class, which has a coupon of 2.29%, a yield of 5.72%, and a dollar price of $16.62.

On October25, Fannie Mae priced its second issuance of Secured Overnight Financing Rate (SOFR) securities, issuing $2 billion of 6-month, $1.5 billion of 12-month, and $1.5 billion of 18-month floating-rate corporate debt. Building on its first SOFR issuance in July 2018, this second transaction was designed to provide additional points on the SOFR curve and serve as a benchmark for market participants. With six maturity points, total orders exceeded $18 billion from a broad array of investors, showing momentum in the SOFR market for floating-rate securities, including S&P’s confirmation of SOFR as an anchor rate for S&P-rated money market funds; the Federal Reserve’s announcement that enables issuers to shorten the lockout period ahead of coupon payments for some floating-rate securities to two days; and additional SOFR transactions from a variety of issuers.

On November 19, Freddie Mac priced a new offering of $1.2 billion in multifamily mortgage-backed Structured Pass-Through K-Certificates, expected to settle on or about November 27, 2018.The K-084 Certificates are backed by corresponding classes issued by the FREMF 2018-K84 Mortgage Trust (K-84 Trust) and guaranteed by Freddie Mac. The K-84 Trust will also issue certificates consisting of the Class X2-A, Class X2-B, Class B, Class C, Class D and Class R Certificates, which will not be guaranteed by Freddie Mac and will not back any class of K-084 Certificates. K-Deals are part of the company’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds. K Certificates typically feature a wide range of investor options with stable cash flows and structured credit enhancement.

Rate-wise yesterday, it was a decent day for anyone waiting to lock as MBS pretty much rallied back to Monday’s levels and the 10-year closed at 2.74%. The U.S. Treasury’s auction of $32 billion in 7-yr notes was “solid,” a good indicator of demand, and initial jobless claims continue to print at low levels that don’t suggest any meaningful softening has occurred in the labor market despite the concerns about a slower growth outlook. The Conference Board’s Consumer Confidence Index decreased in December good November, and the numbers indicate a growing belief that the pace of economic growth will decelerate in the first half of 2019. The FHFA Housing Price Index rose 0.3% in October after increasing 0.2% in September. Slow and steady!

But it’s a global market, and our rates are influenced by what is happening elsewhere. There are growing expectations that the Bank of Japan to ease monetary policy in 2019 if equities remain weak. Despite, once again, growing tensions, mid-level talks between trade officials from China and the United States are expected to take place during the week of January 7.

This morning, Advanced trade indicators for November were scheduled to kick off this morning’s calendar but due to the government shutdown, the report has been delayed. But we’ll have Chicago PMI for December at 9:45am ET (expected to decline), Pending Home Sales Index for November at 10am ET (projected to increase). Friday begins with rates little changed from last night’s close: the 10-year is yielding 2.75% and Agency MBS prices are better by a few ticks.

Every year on New Year’s Eve, when everyone’s counting down the final ten seconds to ring in the new year, I get up off the couch and stand up.

I stand up and raise my left leg and just leave it raised for a little while until the countdown finishes and midnight strikes, so that I always start the new year off on the right foot. (bah-da-bum)

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

Congrats to anyone involved in lending and real estate: The Federal Emergency Management Agency will issue and renew flood insurance policies, reversing an unexpected and controversial ruling the agency released earlier this week. Some critics said they wished the “no issuance” ruling to stand to increase ire against the government…

Cybersecurity

One time I saw a sign in a clothing store, “Genuine authentic Ultrasuede.” “Accept no imitations!” I thought to myself. Speaking of authentication, in financial services, many lenders and banks no longer rely solely on passwords anymore. Today they, and especially banks, rely more on two factor authentication (2FA). This type of authentication checks a user’s identity using a combination of two different pieces of evidence (factors) such as, something the user knows, and either something the user has, or something the user is. A typical example here is a logon ID with a password and a system generated code sent to the user’s mobile phone or email.

Unfortunately, hackers are good at breaking nearly any security protocol, including the use of text messages as the second factor. They do this by either intercepting software codes or exploiting account-recovery systems. Some hackers have even targeted phone carriers to get to bank account information by rerouting and forwarding codes in transit, to their evil lairs. Lenders and bankers should be careful here and when something seems the least bit odd with a customer- ask, ask, and ask again.

Steve Brown with PCBB notes, “One way thieves acquire texted authentication codes can be to send an unsuspecting person a text or to simply call their mobile number. Thieves then pose as a bank representative and claim they have seen suspicious account activity. The scammer then makes a big to-do about not giving them any personal information for security reasons but tells the customer to expect a text from the bank asking for an authorization code to fix the problem. The thief then attempts to log into the customer’s online account using previously stolen login information and when the actual text message code is sent to the customer for authorization, he provides it to the thief, thinking it’s the bank.”

Four major US wireless carriers have teamed up on “Project Verify“, an app due out in 2019 that is supposed to seamlessly verify the user’s identity using a multi-factor profile based on their personal mobile device. While this doesn’t do much good if the user’s phone is stolen, it is a big step in the right direction.

If you’re interested in more, check out Verizon’s 2018 Data Breach Investigations Report (DBIR), considered by many as the guide to what’s happening in enterprise cyber-attacks. Verizon looked at more than 53,000 global incidents that resulted in more than 2,200 successful system breaches across several verticals, including education, government, healthcare retail, and financial services over the past year. The findings paint a detailed, if somewhat disturbing picture of how the business of cybercrime and its attack vectors are evolving.

In some ways, for example, the more things change, the more they stay the same across all industries. For instance, 68% of enterprise breaches still take a month or more to be discovered, according to respondents. In many, if not most cases, attackers are relying on the same tried and tested malware, phishing techniques, and fraud scams that they have been employing for years. Case in point, arguably the most damaging attacks of the past year have relied on variants of older malware strains, known and unpatched vulnerabilities, and social engineering.

“Banks are where the money is,” and given that the majority of breaches are financially motivated, banks and credit unions are often targeted. And cyber thieves have long since realized that community banks and credit unions may be less equipped to identify certain scams. But there are some things for management to think about that could aid community banks in better understanding how breaches could be impacting them, and what they can do to mitigate the risk of a successful attack.

First, remember that financial services are not the most compromised sector. Rather, healthcare organizations were on the receiving end of 24% of attacks, #1. But small businesses were victims in 58% of all attacks, which is one of the biggest and most alarming changes in the cybercrime landscape in the past year.

Second, about 73% of attacks are conducted by outsiders vs. 25% that came from insiders. Even more worrisome, 60% of outsider attacks were backed by organized crime rings or nation-state groups. User errors like sending an email to the wrong recipient or incorrectly configuring web servers play a role in only 17% of breaches. Training your staff about suspicious emails is critical. I know companies that regularly send false malicious emails to their employees to see if anyone opens them or clicks on an embedded link, at which point training is required.

It’s been 5 years since ransomware emerged as a threat, and this most recent year was the first time it was the most prevalent form of malware. Ransomware was identified in roughly two out of five of all malware exploits. Off-the-shelf tools, ease of use, and little risk (since attackers don’t need to resell their stolen data, just hold it ransom) have made this a favored attack of advanced and newbie attackers alike.

General housing & lending environment

Mortgage applications for new homes are down roughly 25 percent year over year as climbing interest rates are taking their toll on the number of consumers in the market for new home mortgages. Less-discussed is how rising rates are affecting non-bank mortgage lenders whose success came during the periods with zero or near-zero interest rates. A year ago, the average interest rate on a 30-year fixed rate mortgage was 3.99 percent; it now sits over 4.80%.

Non-bank lenders now represent the majority of mortgage underwriting done in the U.S., originating roughly 52 percent of all deals. Large non-bank players like Quicken may continue to thrive in a rising rate environment, while smaller non-bank lenders may struggle in the new environment, as unlike banks or credit unions, these lenders have neither deposits to fund themselves nor (in most cases) other lines of business to buoy them through a slow housing market. Instead, they often rely on short-term bank loans – now also at a more expensive rate. What remains to be seen is if consolidation is a natural part of the interest rate cycle, or if a decline in refinance volume will spell disaster for the non-bank lending industry.

Rate-wise, the Fed, as expected, raised short term rates again this month, meaning the 80 percent figure representing Q3 cash-out refinance applications to overall refinance applications will only increase. The cash-out option played in the housing crisis a decade ago. Many homeowners sought to take the cash out of their homes right before the market crashed, leaving them underwater on those loans post-crash and for several years after. Fortunately, this time around, homeowners are at present pulling a lot less money out of their houses than they were right before the crash. This could change with rising rates as consumers who don’t really understand all the consequences of a cash-out refi are pressured to pursue them by underwriters trying to keep their volume up and make profitability targets.

But with the Fed moving rates higher a couple weeks ago, and on pace to raise them again once or twice in 2019, it seems likely that cash-out refinances will continue to make up the majority of mortgage refinancing in the U.S. Whether that increase will be enough to keep the non-bank lenders in the market in the face of falling purchase mortgages and interest rate refinances, probably depends on the size of the company.

Small-time investors who poured into real estate in the past decade to take advantage of low borrowing costs and rising home values are starting to cut back, indicating the market’s short-term risk-takers see limited upside, and potentially worse, ahead. Fewer than 46,000 single-family houses and condos were flipped in the third quarter, the smallest number in three-and-a-half years for a market that is expected to make up 5.5% of home sales in 2018. The number of new home loans issued with terms of three years or less, typically used by investors looking to make a quick profit, dropped by 11% in Q3 2018 YoY from 2017. Higher interest rates have been putting a damper on the U.S. housing market, long a boost to the economy post-2008 recession that now looks to threaten to turn into a drag. Additionally, a years’ long rush higher in home prices has stalled in recent months; the S&P CoreLogic Case-Shiller National Home Price Index showed home-price gains slowed across the nation for the sixth month in a row in September. While the current decline doesn’t suggest a housing crash on the scale of the one a decade ago, it looks similar to the drop-off in 2014 as higher rates made mortgages costlier. Even if when the market crashes, investors have a hard time imagining losing money in the long run.

First-time homebuyers may be facing rising affordability issues, but they are still outpacing the share of repeat buyers in the housing market, and the gap is actually widening. The share of first-time homebuyers is even higher for FHA loans, which allow for lower down payments even with lower credit profiles. That figure is about 83% in today’s market, up from a historical figure closer to 80%. The GSE share of first-time homebuyers was at only 25% during the early 2000s, hit nearly 40% during the housing bubble, fell during the recession, but has increased once again to nearly 50% today. The rising share of first-time homebuyers can be attributed to the lack of repeat buyers in the housing market, as falling home prices after the recession prevented many homeowners from accumulating equity in their homes. While homeowners may have more equity, they are not likely to want to give up their low mortgage rates they locked in during the recession. Homeowners hanging on to their homes and not moving up, combined with the lack of new home construction, will cause inventory to continue to tighten and home prices to increase for starter homes.

After nearly a decade of low levels of building, housing stock is well short of what the United States needs. Research from Freddie Mac finds that if supply continues to fall short of demand, home prices and rents are likely to outpace income and household formation will fail to reach potential. Housing supply has been a major challenge facing the housing market in 2018 and will continue to be for years to come, according to its latest Insight. According to Freddie Mac research, the current annual rate of construction is about 370,000 units below the level required by long-term housing demand. Loosely estimated that at least 50,000 American households each year can’t buy or rent a home because it hasn’t been built.

The U.S. construction industry is suffering from a shortage of skilled workers. The count of unfilled jobs in the construction industry reached post-Great Recession highs in 2018, according to the National Association of Home Builders.

The U.S. Census Bureau released its five-year estimates, 2013-2017, from the American Community Survey (ACS), which provides statistics for every county in the nation totaling 3,142 counties. One of the perspectives gauged differences in income growth across the counties. The survey says median household income nationally increased 1.9%, from $56,587 to $57,652 in inflation-adjusted dollars between the two five-year periods. The percentage of people in poverty decreased from 14.9% to 14.6%. These rates vary across the nation’s counties but in general, median household income is higher in urban counties than in rural areas. Likewise, poverty rates tend to be lower in urban areas than in rural areas. Detailed information regarding income growth and poverty rates portion of the survey can be accessed here. The ACS data release features more than 40 social, economic, housing and demographic topics, including homeownership rates and costs, health insurance, and educational attainment. It is the only full data set available for the 2,316 counties with populations too small to produce a complete set of single-year ACS estimates. View highlights of the survey here.

A man walks into a bar, and notices a few steaks hanging from the ceiling.

When he asks the bartender about it, the bartender replies, “If you can jump up and hit one, drinks are on the house for the night, but if you miss, everyone’s drinks are on your tab for the next two hours. Do you want to try?”

The man decided not to take the risk. He thought the steaks where too high.

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

How important is it for lock desk personnel to charge the correct fees for rate lock extensions? Very. Lock mistakes were included in Wells Fargo’s latest settlement with states, this time around for $575 million. There were other non-mortgage items listed, however, including opening millions of unauthorized accounts and enrolled customers into online banking services without their knowledge or consent, improperly referred customers for enrollment in third-party renters and life insurance policies, improperly charging auto loan customers for force-placed and unnecessary collateral protection insurance, and failure to ensure that customers received refunds of unearned premiums on some optional auto finance products. (In other legal news, the video industry is scrambling since athletes don’t own their tattoos! Time to lawyer-up with copywrite attorneys.)

Capital markets

Today is the last trading day of the 2018, and the 10^th day of the government shutdown. Some wonder why the government is shutdown when Donald Trump promised to make Mexico pay of the wall. That aside, Federal Reserve officials are considering a switch to a new wait-and-see approach on rate hikes after a likely interest-rate increase at their meeting in December. The new approach could slow down the pace of rate increases next year, and though the broad direction of short-term interest rates will be higher in 2019, as the benchmark rate rises, the Fed is less sure how fast they will need to act or how far they will need to go in assessing how the economy is holding up under moves they have already made. Under the evolving “data dependent” strategy, the Fed could step back from the predictable path of quarterly hikes it has been on for most of the past two years, raising the possibility it might delay rate increases at some upcoming meetings.

Under the old pattern, the Fed would raise rates again in March, but officials now don’t know when their next rate move will be after December as recent market turbulence for now hasn’t much dented the Fed’s view that the U.S. economy is on solid footing, with growth strong and unemployment low.

Inflation, however, has softened in recent months, and falling oil prices probably reduces the Fed’s sense of urgency about raising rates to prevent the economy from overheating. Federal Reserve Chairman Jerome Powell said in a speech last week that under uncertainty of this kind, the prudent decision is to be careful. Any shift from the predictable path of quarterly increases for past two years will have to be communicated. As part of its shifting plans, officials are weighing how to modify language in a central bank policy statement that since December 2015 has described plans for “gradual increases” in the fed-funds rate. In January, officials qualified the phrase by adding the word “further” to signal greater conviction in their plans.

Lenders know that President Trump has criticized the Fed repeatedly for raising rates this year. Fed officials have said they will respond to economic data and not the White House when they set policy. In addition, Fed officials have stressed they are paying greater attention to the delayed impact of their own policy moves. In September, Fed officials estimated that a neutral rate might be between 2.5% and 3.5%, though they are doing their best to avoid interest rate guidance, as Alan Greenspan experimented with in 2003, when inflation was low and the job market soft. The Fed raised rates in quarter percentage point increments at 17 straight meetings between June 2004 and June 2006, and along the way assured investors it would proceed at a “measured” pace. Many believe the Fed’s “measured pace” guidance was a mistake because it locked them in to predictable rate changes and betrayed their own uncertainty about the outlook, and have been clear to investors they do not plan to repeat the strategy.

So a few weeks ago, unanimously, the Federal Open Market Committee decided to raise the fed funds target by 25 basis points in an announcement that nearly mirrored November’s statement. Once again, they highlighted a strong economy, job gains, low unemployment and household spending has indicators that “some further” increases in the target rate would be necessary in the New Year. The expectation, however, has shifted down from three potential rate increases to two according to the members’ dot plots. These plots suggest that the committee believes that a maximum target of roughly 3.15 percent is seen as the neutral point for this cycle. Historically, this is below the maximum of 5.41 percent reached during the last tightening cycle in 2007. The economic projections released with the statement do suggest a slightly lower outlook for 2019 and judging by their reactions, the financial markets were expecting a more dovish tone from the committee regarding future interest rate hikes. Regardless, this announcement marks a change from the consistent every other meeting rate increase we’ve seen over the last year to one of fewer rate hikes. While the degree of those hikes is still expected to be 25 basis points at a time, the timing of those potential hikes will be more difficult to predict in 2019, thus creating an air of anticipation around each meeting.

As I have mentioned, many believe that the current state of the economy is not reflected in the rosy statistics. Economic data recently continues to paint the picture of continues economic expansion in the US during the fourth quarter while markets grapple with issues abroad. Industrial production increased 0.6 percent in November despite flat manufacturing output. Nominal retail sales inched up 0.2 percent in November as falling energy prices held down sales at gasoline stations and continue to fall so far through the first half of December. Despite the drop in gasoline prices, expectations remain high for good holiday shopping metrics due to favorable conditions for consumers. Headline consumer prices were held in check in November due to the aforementioned drop in gasoline prices, but core CPI increases 2.2 percent on an annual basis as the cost of services continues to rise. Total mortgage applications managed a modest increase of 1.6 percent as both purchase and refinance applications increased and rate fell for the third consecutive week. As expected, the Fed increased the target for the Fed Funds Rate another 25 basis points given previous commentary regarding economic conditions and the pace of further increases.

Even in November most of the economic discussion from the previous week centered on the Fed and trade. Multiple Fed speakers reaffirmed the Fed is comfortable with the current pace of interest rate hikes. Would more rate increases give the Fed more ammo to lower rates in the event of a recession? Additionally, we heard that the Fed thinks rates are approaching a “neutral” level; meaning neither stimulative nor restrictive to economic conditions. None of the speakers, however, defined what rate would constitute “neutral” in their view. his change of tone has led many to suggest that the Fed may be close to changing the current rate hike timing of every other FOMC meeting as we move into 2019. It is important to note that beginning in 2019, there will be a press conference with Jerome Powell upon the conclusion of all 8 FOMC meetings instead of the current 4. Previously, we’ve only seen rate changes following FOMC meetings with scheduled press conferences.

A speech by Fed chairman Jerome Powell at the Economic Club of New York introduced some uncertainty into the market’s estimates for future rate increases when he said interest rates were near a level that the Fed would consider to be neutral. Mr. Powell’s comments have caused many to rethink the potential number of rate increases in 2019. The PCE deflator, a main indicator of inflation, remained at the Fed’s inflation target of 2.0 percent in October. The updated to Q3 GDP was unrevised at +3.5 percent and corporate profits in the third quarter rose 10.3 percent from one year ago. Global growth is slowing, however. Consumer confidence was slightly off it’s 18-year high in October to a still very strong reading of 135.7 and it is expected that this optimism will continue to drive consumer spending through the holiday season. In addition to strong consumer confidence, personal income rose 0.5 percent in October with all categories showing gains for the month. While the rising rate environment has caused some concern in the housing market, consumers continued to spend on durable goods, which increased 0.4 percent in October.

What should LOs tell clients who are sitting on the fence about the direction of rates and the economy? After the first Republican unified government since 2005-2006 produced a clear inflection point in the nation’s fiscal policy over the last two year, the U.S. returns to operating under a divided government come 2019, which is generally less conducive to sweeping legislative changes. It is unlikely that Republicans in the Senate and White House will agree to any major changes to the 2017 tax reform bill proposed by Democrats in the House. Conversely, Democrats in the House are unlikely to agree to tax cuts anywhere near the magnitude that occurred in 2017.

Spending is more complicated, as the U.S. is operating under a two-year budget deal that expires on September 30, 2019. Currently, inflation-adjusted discretionary spending will decline in FY2020, leading the federal component of GDP to be a drag on economic growth, as it was from roughly 2011-2014 when there was a significant contraction in discretionary spending. All politicians want to keep their jobs, and a slowdown in growth headed into the 2020 election might lead policymakers to boost spending more meaningfully than forecasted. Conversely, a divided Congress and president could engage in a prolonged budget standoff in 2019 that results in a debt ceiling mess and a sharper deceleration in federal government spending than predicted. Without the 2018 midterms sparking policy outcomes that provide a significant boost to growth and a subsequently more hawkish Fed, interest rate expectations are for the deficit to continue widening over the next few quarters, but for the pace of widening to slow by H2-2019, likely slowing overall growth.

Sales of both new and existing homes have been weakening for the past six months and home price appreciation has finally broken from its earlier breakneck pace, even in many of the nation’s hottest housing markets. Inventories remain tight but are now growing again, and bidding wars are far less common, giving slightly more buying power in this soft sellers’ market.

Although it has improved in recent months, first-time buyers have been struggling with affordability, and higher mortgage rates are discouraging many potential buyers. With demand cooling, inventories have begun to increase and price appreciation has moderated. While prices are rising less rapidly, prices are still rising faster than wages, and higher interest rates are giving buyers pause. The lack of affordable product in the markets where potential home buyers would like to live has helped explain why sales turned down well ahead of this fall’s rise in mortgage rates. With home values and rents soaring near city centers, growth is also creeping back out toward the suburbs, particularly those that are developing their own urban cores. Demand remains strong for amenity-rich apartments located near the city center or in the metro area’s second or third largest employment centers.

Looking at Friday’s bond market, aside from some minor movement between maturities and coupons, rates didn’t do much. The 10-yr note finished at its best level since early February (2.74%, down .05% for the week) while 2s and 5s settled at their best levels since the start of June. The slope of the yield curve was little changed Friday but it steepened during the week. The 2s10s spread ended the week six basis points wider at 22 bps while the 2s30s spread widened by 12 bps to 52 bps. Will it help ARM market share?

The MNI Chicago Business Barometer, aka the Chicago PMI, decreased in December but the overall reading remained elevated thanks to strong order backlogs and an increase in the Production Index.

We learned on Friday that Pending Home Sales decreased slightly, as expected, but is down nearly 8% from a year ago. In a “pay no attention to the man behind the curtain” moment, NAR chief economist Lawrence Yun said there was no reason to be overly concerned and he expects solid growth potential over the longer term given the strong jobs market. He observed that the report had not yet captured the recent decline in mortgage rates, and there is the little issue of the government shutdown leading to fewer homes sold and slower economic growth.

Today is expected to be fairly quiet given an early bond market close and no major economic releases. Rates aren’t much different than Friday evening with the 10-year currently yielding 2.73 percent and agency MBS prices down/worse a couple ticks.

I have only one resolution: To rediscover and remember the difference between wants and needs. May you have all you need and want all you have. Happy New Year!

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

Last week I noted a STRATMOR study that shows, pretty much year in and year out, that traditionally, 82% of residential production comes from 40% of the loan officers out there. Thank you to Kirk H. who sent a note and video on Price’s Law: The square root of the people in any domain do 50% of all the work. If there are 100 FTEs at your company, are 10 of them doing half the work? If so, let’s hope you’re one of the ten since lenders will continue to adjust their costs to their volume as we head into 2019. Speaking of streamlining, lender M&A is expected to continue into 2019, the latest example coming from Massachusetts where New Fed Mortgage Corp. will acquire Commonwealth Mortgage LLC.

Jobs

Top-ranked lender Inlanta Mortgage, Inc. is growing again, adding its newest office in Destin, Fla. The new office is led by Balenda Hetzel, Regional Production Manager, with Loan Officers Bonnie Manthey and Melody Glasgow, and Loan Partner Rhonda Summers rounding out her team. “We are excited to kick off our 25th anniversary year with the opening of our Destin office and are thrilled to have Balenda on board to lead this new team,” said Paul Buege, president and COO. “Our new location allows us to grow into new markets that include Louisiana, Alabama and Georgia, as well as expand into new areas of Florida.” Drop Balenda and her team a congratulatory email. Looking to be part of a fast-growing, top-ranked mortgage workplace with cutting-edge technology partnerships? Check out Inlanta’s career page, or contact Inlanta’s Shaun McGuire, Director of Branch Development, via email or 262-439-4277.

Carrington Mortgage Service (CMS), a well-established wholesale lender originating and funding FHA, VA, GSE and Non-QM loan is seeking experienced Wholesale Underwriters to work out of its Anaheim office. VA designation and/ or Non-QM experience is required. CMS has seen tremendous growth throughout 2018, with much of that growth coming out of the Anaheim office. If you are eager to join a company that is growing, and one that would value your skills, please email your resume Darryl Bradshaw or Bela Donine.

“While other lenders ease their way into the new year, Nations Lending is poised to pounce on markets from coast-to-coast. Our strategic vision has already seen the opening of 10 new branches in 2018 Q4, and resolution to accelerate our retail growth platform and expand our footprint in 2019. If you’re in Raleigh, Atlanta, Nashville, San Antonio, Cincinnati, Dallas, or the states of California, Colorado, and Florida, we want to hear from you. Consider aligning yourself with Nations Lending, a well-established, Ohio-based, full-service national lender licensed in 47 states. We invest in our branches, helping them to reach and support their success. Make the only New Year’s resolution you won’t regret – Join the Nation! If interested in a Branch Manager role, contact Division Retail Store Sales Manager, Jordan Gerard (337-501-0155) or Division Retail Branch Sales Manager, Derek DeGuits (732-580-5038). For more information and opportunity on how to join our growing organization, please visit the company’s website.”

Congrats to Craig Schimelman who has been brought on by Athas Capital Group as its VP of Wholesale Originations. Craig has made a name for himself in the non-QM world, having created national footprints for non-QM lenders and investors as well as bringing on and training wholesale AEs around the nation. Craig has opened up Athas’ new Atlanta office, and is in search of talented AEs for Athas’ Eastern Division. Athas Capital Group was founded in 2008 to serve a market filled with borrowers deserving of credit but did not fit the conventional lending box. “Our flexible products offer financial solutions to meet these challenges, with options for both owner-occupied and nonowner-occupied residential properties in 36 states…and growing. Athas Capital Group also offers financing for income-producing commercial properties, including multi-family, mixed-use, office and retail buildings as well as hard money loans.”

PRMG continues to expand their national footprint and finishes 2018 strong with the opening 3 new Retail Locations during the month of December! Along with the drive and ambition to bring the American Dream of Homeownership to all cities across the country, PRMG has now opened its doors in Jonesboro, AR; Wilmington, NC and Beaufort, SC. PRMG is Built by Originators for Originators^TM and is devoted to continuously growing their retail platform. If you are a Motivated Loan Originator who wants to be Progressively Better, contact Chris Sorensen (909.262.0452).

Lender products and services

LegacyTexas Bank, Warehouse Lending is eNote Ready!! “LTB is a national warehouse provider with unparalleled service and a staff of industry veterans. eNote readiness adds to our streamlined and paperless process for funding a full suite of residential loan programs. If you need a warehouse lender who can fund your eNotes, and provide competitive terms on warehouse lines up to $100 million, contact us today: Martha Reitz (972-801-5792) or Michelle Marrapodi (972-801-5781).”

Stearns Wholesale is waiving appraisal fees on all FHA loans in January. Borrowers can save $525-$625 when they choose an FHA loan with Stearns now through January 31, 2019. Stearns is 100% committed to making it easier for our brokers to deliver a superior customer experience every single time. Available for both purchase and refinance loans, the fee waiver is handled through SNAP 2.0 so customers will not be charged for the appraisal. In addition to the fee waiver on FHA loans, Stearns is also reducing the loan level pricing adjustment by 25 basis points for FICO scores between 580-619 and 660-679.

VA Cash-outs

What our military leaders think about Donald Trump aside, let’s focus on borrowers. “Rob, are you hearing that some vets are paying $14,000 in fees to obtain $20,000 in their own cash from a refinance, thus having their UPB go up by $34,000? That sounds like a crime to me.” If true, a headline like that isn’t what our industry needs. But let’s take a step back.

Recall that in May the “Protecting Veterans from Predatory Lending Act” (“VA Act”) was signed into law, effective as of that date, as section 309 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174). The VA Act, codified at 38 U.S.C. 3709, provides new statutory criteria for determining when, in general, the VA may guarantee a refinance loan. The VA Act also requires VA to promulgate regulations for cash-out refinance loans within 180 days after the date of the enactment of the Act, specifically for loans where the principal of the new loan to be VA-guaranteed or insured is larger than the payoff amount of the loan being refinanced.

Based on the way the VA Act structured new section 3709, VA-guaranteed or insured refinance loans are now effectively grouped into three categories: (i) interest rate reduction refinancing loans (herein “IRRRLs”), (ii) cash-outs in which the amount of the principal for the new loan is equal to or less than the payoff amount of the refinanced loan (herein “Type I Cash-Outs”), and (iii) cash-outs in which the amount of the principal for the new loan is larger than the payoff amount of the refinanced loan (herein “Type II Cash-Outs”).

Buckley Sandler LLP writes, “On December 17, the Department of Veterans Affairs (VA) published an interim final rule in the Federal Register to amend its rules on VA-guaranteed or insured cash-out refinance loans as required by Section 309 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (codified as 38 U.S.C. § 3709). (See also, VA Circular 26-18-30 for a summary of the rule.)

“The interim final rule, which revises the current regulation, 38 CFR 36.4306, bifurcates cash-out refinance loans into two types, (i) Type I, the loan being refinanced is already guaranteed or insured by VA and the new loan amount is equal to or less than the payoff amount of the loan being refinanced; and (ii) Type II, cash-outs in which the amount of the principal for the new loan is larger than the payoff amount of the refinanced loan.

“Under the interim rule, for both Type I and Type II, the VA will permit a cash-out refinance provided: Reasonable Value (the new loan may not exceed an amount equal to 100 percent of the reasonable value of the dwelling or farm residence that secures the loan), Funding Fee (the funding fee may be financed in the new loan amount; however, any portion of the funding fee that would cause the new loan amount to exceed 100 percent of the reasonable value of the property must be paid in cash at the loan closing), Net Tangible Benefit (the loan must provide a net tangible benefit to the borrower, which can be satisfied in one of eight ways (i) the new loan eliminates monthly mortgage insurance, whether public or private, or monthly guaranty insurance; (ii) the term of the new loan is shorter; (iii) the interest rate on the new loan is lower; (iv) the payment on the new loan is lower; (v) the new loan results in an increase in the borrower’s residual monthly income; (vi) the new loan refinances an interim loan to construct, alter, or repair the home; (vii) the new loan amount is equal to or less than 90 percent of the reasonable value of the home; or (viii) the new loan refinances an adjustable rate loan to a fixed rate loan), Disclosure (the lender must provide the borrower, and the borrower must certify, net tangible benefit information, a loan comparison disclosure, and an estimate of the amount of home equity removed from the refinance, in a standardized format, on two separate occasions: not later than 3 business days from the date of application and again at closing), and as required by the current regulation, any borrower paid discount must be considered reasonable in accordance with § 36.4313(d)(7)(i) and the loan must also otherwise be eligible for the VA guarantee.

“For Type I cash-out refinances, the VA also requires (i) all the fees and incurred costs to be scheduled to be recouped within 36 months after the date of loan issuance; (ii) a loan seasoning period of the later date of 210 days after the date of the first payment made and the date the sixth monthly payment is made on the loan; and (iii) under the net tangible benefit requirement, for a fixed interest rate to a fixed interest rate, the rate must be reduced by 50 basis points and for a fixed to adjustable interest rate, the rate must be reduced by 200 basis points.

“For Type II cash-out refinances, if the loan being refinanced is a VA loan, the same loan seasoning requirement applies (the later date of 210 days after the date of the first payment made and the date the sixth monthly payment is made on the loan). There are no additional restrictions on fee recoupment or rate reductions. The interim final rule takes effect February 15, 2019, with comments due on or before the effective date.”

Prashant Gopal, the U.S. real estate reporter with Bloomberg News wrote a piece focused on the high price some veterans are paying by doing cash-out home loans. “Lenders, who can

charge thousands of dollars in fees, are encouraging veterans to extract as much as 100 percent of their home equity.”

The story prompted one industry vet to comment, “There is some real bad stuff going on now with lenders churning VA cash outs, telling veterans that this is a benefit they have earned, yet charging the veteran 4-5 points in total fees to get a little bit of their equity. The VA funding fee on a cash out is 3.3% by itself, so they are paying a ton of fees, which is just added to their loan balance. In some cases, they are being charged more in fees than the cash they are getting back. Total rip-off of our veterans, and the most disgusting part is the lenders doing this are wrapping themselves up in the flag, saying they are sticking up for veterans when they are just ripping off their face.”

Capital markets

The decline in rates continued Monday as the U.S. 10-year ended the abbreviated New Year’s Eve session yielding 2.69% on no real market-moving news. Any news of note came on the Chinese trade front, with President Trump tweeting over the weekend that he had a “long and very good call” with China’s President Xi Jinping, adding that “big progress” is being made.

China’s President Xi spoke over the weekend, touting the reforms that have been implemented in 2018 though his rosy comments haven’t matched recent Chinese economic readings. China reported its first contractionary reading of the official Manufacturing PMI since 2016. Turning to Europe, the Italian parliament passed their 2019 budget by a 327-228 vote. Basic income for the poor and jobseekers will reportedly begin in April. Separately, European Commission President Jean-Claude Juncker said that the EU is ready to negotiate a new deal with the United Kingdom once the British Parliament approves the current withdrawal bill.

Today’s U.S. economic calendar is light before picking up tomorrow and Friday with ADP, vehicle sales, Treasury supply, December payrolls plus the return of Fedspeak, including Chair Powell with Atlanta Fed President Bostic as a panelist at a meeting in Atlanta on Friday. Today’s calendar sees only the non-market moving Markit Manufacturing PMI at 9:45am ET. Rates are lower again today due to the impact of the shutdown: we begin today with the 10-year yielding 2.65% and Agency MBS prices better by .125.

My Mom told me if I didn’t get off my computer and do my homework, she’ll slam my head on the keyboard, but I think she’s ltjnstjhvjqprjnbkthshidm5j2kdjt

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

According to the National Association of Realtors (NAR, not the NRA), Americans 36 and younger represented the largest share of home buyers (34%) in 2016. It was the fourth straight year in which this age group paced the home buying landscape, and my guess is that it was that way in 2017 and 2018. (By the way, the two top areas for people in their 20s and 30s to buy a home were in The Beehive State.) Lenders have found that someone in their 20s may not want a loan officer fifty years older than them handling their loan, especially if the LO is grieving over the death yesterday of the Captain in the Captain & Tennille. Speaking of age, how old is your house? An estimated 50 percent of China’s housing stock is of such poor quality it will need to be demolished. That includes everything built before 1999.

Jobs

Ameris Bank is rapidly expanding, closing out 2018 by announcing the acquisition of Atlanta-based Fidelity Southern/LION in December. Ameris Bank Mortgage is expanding across all its business channels and currently seeking seasoned independent or bank-affiliated loan officers, retail branches, and distributed retail mortgage companies throughout AL, AR, DC, FL, GA, KY, MD, NC, SC, TN, TX, VA, and WV. Ameris provides a diverse product offering to grow your business and a great culture of fun and success in which you and your team will thrive. Our products include true bank portfolio offering inclusive of Super Jumbo, Jumbo, Expanded Credit, Foreign National, Alternative Income, Construction-to-Permanent, and Non-QM purchase products. Ameris offers an excellent compensation package including 401K and health insurance, office set up with computers, phones, and iPad as well as lease takeover. To learn more contact Mark Puca, Ameris Bank Mortgage Recruiter.

A new year and a fresh landscape? 2019 will undoubtedly bring changes across the mortgage industry. Now is the time to take charge of your own changes! Take a look at Montana-based Mann Mortgage where Tried, Trusted, Proven is not only their tagline, but their foundation. With 29 years of success, Mann Mortgage is no stranger to weathering the storms. How? They stay true to who they are! Through experienced leadership, Mann is in great financial health and poised for growth. Highly coveted branch manager positions in new markets are available. Start this year off with a sales-first, entrepreneurial company where your input is valued. With the best backroom in the business, an ever-expanding product matrix and a direct line to the executives, YOU CAN make a difference for your customers and your team! If you’re ready to make a big impact in 2019, reach out to CEO Jason Mann.

Lender products and services

2018 was another strong year for Caliber Home Loans, Inc. All areas of the organization worked together to increase its production numbers and solidify its place in the market as the #3 non-bank lender in the country. Production at the leading lender rose by 2.5% in the first nine months, per IMF, while industry volume declined by 5.6% in the same time period. Caliber worked to maintain its competitive edge through a purchase-driven sales strategy and the introduction of innovative products and technology solutions. Since launching its jumbo non-Agency product in June, Elite Access, Caliber’s overall non-Agency volume has grown by 122%. And through the efficient management of operations and a suite of three mobile apps, loan fulfillment times were reduced significantly. Caliber is proud of the company’s performance in 2018 and looks forward to expanding its reach in the years to come.

In order to humanize complex financial transactions and create customers for life, it’s critical for banks and lenders to leverage their data and technology to deliver relevant, personalized content. Banks and mortgage lenders sit on mountains of customer data – but it’s often siloed in different departments. Data is the foundation for delivering a personalized experience throughout the customer journey, building trust and keeping customers coming back for life. The Total Expert team was recently on the road hosting Accelerate 2019 in San Francisco, Chicago, Dallas, Chicago and Boston. Hear from industry leaders in banking, mortgage lending and technology about the state of the industry and what it will take to “accelerate into 2019.”

2019 is the year for increased efficiency and improved profitability for independent lenders. Digital mortgage point-of-sale providers like Maxwell can be impactful tools to drive efficiency for your team. Maxwell is specifically designed for small- to mid-size lenders where customization is desired and personalization from the loan officer is critical to achieving a satisfied borrower. Today, the Maxwell team reports that lenders on their platform are closing loans 45% faster than the national average, collecting docs 73% faster, and driving NPS and satisfaction up 25%. These numbers highlight how Maxwell increases efficiency, drives agent referrals, and offers true ROI on technology. To see why top lenders across the country have chosen Maxwell, click here and set up time to learn more. Cheers to better lending in 2019!

LegacyTexas Bank, Warehouse Lending is eNote Ready!! LTB is a national warehouse provider with unparalleled service and a staff of industry veterans. eNote readiness adds to our streamlined and paperless process for funding a full suite of residential loan programs. If you need a warehouse lender who can fund your eNotes and provide competitive terms on warehouse lines up to $100 million, contact us today! Martha Reitz (972-801-5792) or Michelle Marrapodi (972-801-5781).

Upcoming events in January

Here’s one take on the “10 best conference cities.” And Ginger Bell writes, “If planning is on your to do list this week, you may want to check out the event calendar on The Mortgage List.”

Rates are rising! When was the last time you sold an Adjustable Rate Mortgage (ARM)? Now is the time to re-educate yourself and understand how the ARM works, but more importantly to learn how to have the appropriate conversation with your customer. Join Sierra Pacific Mortgage on January 10 at 10:00am PST for a free webinar on Selling in a Rising Rate Environment. Using a consultative approach when discussing ARMs may add more opportunities for sales and closings in 2019. Register now.

The December 20^th US Bank Correspondent training opportunity in concert with Freddie Mac regarding HomeOne Mortgage is at full capacity. Register now for an added additional training on Tuesday, January 8^th.

Join MBA St. Louis and distinguished speaker Mr. William Emmons at the January 10^th Lunch Program for a discussion on the risks facing the U.S. economy in 2019 and how the St. Louis area economy may fair in the year ahead. Registration and networking begin at 11:00 at Orlando Gardens – Dorsett Location.

Franklin American rolled out its January 2019 Wholesale “Customer Training Calendar.” This month’s calendar offers a variety of training opportunities such as “Seizing Market Share”, “Goal Setting”, “Self-Employed Borrowers”, “Appraisal Review, Recent Changes and What’s Ahead”, and “Detecting and Avoiding Fraud in Loan Files” to name a few.

Join the MMA’s January 16^th Breakfast Meeting for a panel discussion on the future of closing mortgages. The MMA will bring you three speakers who are experts in their fields. Jeff Carlson: speaking on Online Notary, Brandt Keefe: speaking on eClosing/Hybrid closing and Kevin Buechler: speaking on eNotes.

Register now for the 2019 New England Mortgage Expo at the Mohegan Sun Casino on Friday, Jan. 18^th & 19^th. Each year, the Expo stages an extraordinary event celebrating, advancing and supporting the men and women who finance residential and commercial real property with top speakers and great hands-on sessions and a wealth of opportunities from exhibitors and sponsors.

If you’re near Philly, buy your tickets now for the Women’s Leadership Workshop on January 15. Learn about effective communication, networking, work habits and general professional development, identifying and creating “your brand,” as well as refine the skills necessary to “tell your story”. Contact Dan Beam for details.

The Oklahoma Mortgage Bankers Association is set to facilitate and coordinate the inaugural Mortgage Leadership Program class of 2019. Registration is $600 and includes the OMBA annual expo, one night of accommodations for the expo at the Hard Rock Hotel in Tulsa, food, drinks & snacks, course materials & meetings, OMBA capitol days, networking opportunities throughout the metro and one free career coaching session. (If interested, worth a call despite expiration.)

National MI is offering the following four webinars in January. On the 9^th, Oh, shift! Session #4 – Change. The fourth webinar in a powerful six-part series. Best-selling author and Executive Coach, Jennifer Powers, MCC’s “Change” helps you to identify the changes you deserve to make and gives you tools to make them. On the 10^th is Meme, Myself, and I; Taking Instagram to the Next Level. Sarah Vita of Cultural Outreach will provide an in-depth look into building your Instagram following, and steps you can take to build strategic partnerships with influencers and brand ambassadors. On the 17^th, Appraisal Review, Recent Changes, and What’s Ahead!. In this 90-minute session led by Luke Tomaszewski of the eValuation Zone and Diehl Mortgage Training and Compliance, participants will learn how to read and review an appraisal to spot issues that can affect mortgage financing. And on the 22^nd How to Avoid the Email Delete Barrier and Get More Replies. Join Kendra Lee, founder of KLA Group, a sales and marketing agency, prospect attraction expert and email authority, and discover strategies you can use to increase your email response rates and make email work for you.

Secure Insight is sponsoring a FREE webinar on mortgage fraud on Mortgage Fraud Prevention Day, January 24. Lender may sign up for a free 30 min webinar on Mortgage Fraud issues sponsored by Secure Insight on Mortgage Fraud Prevention Day, Thursday, January 24. Contact alevy@secureinsight.com to register.

On January 30^th, MBA Compliance Essentials is providing a new webinar focusing on State licensing requirements that impact both first-party and third-party servicers, owners of mortgage servicing rights (MSRs) and other activities that can trigger licensing.

Capital markets

Ever wonder how rate sheet pricing is set, and your price is never as good as everyone else’s seemingly is? Even if the common refrain is, “We look at ___ (fill in with Wells, Chase, AmeriHome, Penny, etc.) and add .125% to their pricing,” those larger banks and correspondent investors are basing rates on a variety of economic factors. Banks have a borrowing cost, and their spread is the difference between what the bank pays to borrow money and the interest the bank collects on a mortgage. Every company needs to make a margin on loans to pay the bills needed to run the company and turn a profit. Otherwise, when they sell the price, or rate, to the borrower, that company will not make any money on the loan.

When you hear that the Federal Reserve has raised interest rates, that means the base borrowing cost for banks borrowing from the Federal Reserve has increased, and non-depository mortgage banks are faced with higher warehouse costs. As the pricing is marked up through the supply chain, each part of that chain needs to add their profit to the price. Servicing value fluctuations are included (hopefully).

Today, most mortgage companies have pricing engines that make the process of building in margins simple. The secondary market team will work with accounting and look at their cost to produce a loan, decide on their requisite margins, and add those to the pricing engine while trying to be competitive. When the pricing engine pulls in raw pricing for the day, it adds those margins and then displays the rate and price with the margins already built in. Because prices in the secondary market are highly liquid, those making pricing decisions are constantly provided with the exact price they can sell a loan for, and thus bake in their margin and set rates accordingly.

Is your lock desk busy? Good for you because the MBA reports that mortgage applications decreased nearly 10% from two weeks earlier for the week ending December 28. (The results include adjustments to account for the Christmas holiday. On an unadjusted basis, the Index decreased 46 percent compared with two weeks ago.) This despite the 30-year fixed-rate mortgage declining to 4.84 percent, its lowest since September 2018. Refis are still about 43% of apps, ARMs account for nearly 8%, and FHA/VA is roughly 20%.

These rates must be helping lenders somewhat. The U.S. 10-year closed Wednesday yielding 2.66% as U.S. fixed-income security prices were helped by another reminder of slowing growth in China, President Xi Jinping’s remarks stating no one can change the fact that Taiwan is a part of China and that independence activities will not be tolerated. (Remember, geopolitical uncertainty will usually depress U.S. rates. Taiwan’s President Tsai Ing-wen responded, saying that Taiwan will never accept a “one country, two systems” solution. Across the Atlantic, the European Central Bank appointed three temporary administrators to Banca Carige, Italy’s tenth largest lender, after the majority of the bank’s board resigned after failing to win shareholder approval for a capital raise. Separately, but also of note, Bloomberg reported that December was the first month in at least a decade without high-yield debt issuance in the United States.

Today’s employment indicators started with job cuts from Challenger for December (44k cuts, -17% for the month but +11% for the year, with the construction biz making the lion’s share of cuts) and the ADP Employment report (the addition of 271k workers versus expectations of 190k, very strong), and weekly initial jobless claims for the week ending December 29 (+10k to 231k). ISM-New York Business Conditions Index December is next up at 9:45am and precedes December ISM manufacturing PMI and November construction spending 15 minutes later. We begin today with the 10-year yielding 2.65% and Agency MBS prices worse .125.

(Thanks to Stephen G. for this “gem.”)

Heard at the police station:

“I will not say a word without my lawyer present.”

“But you are a lawyer.”

“So where’s my present?”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Some view the end of one year and the beginning of another as an artificial construct, created by human intervention. Others take careful note of what happened during the year. For those in the latter category, Freddie Mac tells us that at the end of 2018 the average interest rate on a 30-year fixed-rate mortgage was 4.55%. Every borrower out there, however, still wants the 3.31% we saw in November 2012, the record low for the national average. In the good news column, however, was that, for the first time since 2006, the FDIC tells us that no bank failed in 2018. On top of that, researchers at the Federal Reserve have found that extra capital that banks must carry to comply with US stress tests has increased lending. The finding contradicts claims that the Dodd-Frank Act has reduced credit.

Employment & promotions

CMG Financial is proud to announce the addition of Regional Sales Manager, Mark McCauley, and his team. Mark will spearhead growth throughout New England and oversee recruiting and onboarding. Mark has over thirty years of experience and has served the greater New England area in distinguished leadership positions for two decades. “My team and I are excited to partner with CMG Financial and gain access to a wide menu of innovative loan programs to grow our market share,” said Mark McCauley. CMG’s culture of strong loan officer support and superior customer service combined with proprietary products have created an environment to attract and serve the nation’s top originators and resulted in a 41% year-over-year growth in production. If you’re in the Northeast and would like to grow your business in 2019, contact Mark McCauley (603-315-0673).

11 MORTGAGE is pleased to announce the addition of yet another industry champion, J.D. Meadows, to its exclusive team. J.D. come with 13 years of TPO under his belt. He will assume the role of Northern California Area Sales Manager.

National MI is expanding its sales team and adding an additional Sales Account Manager who will reside in the Indiana and Kentucky area. Responsibilities include promoting the sale of National MI products, services, and programs to clients through a consultative selling approach via personal sales calls and email/phone contact, assisting in sourcing new business from originators, and will manage the relationships of specific clients by serving as a customer advocate, educator, and loan issue problem-solver. Experience in client relationship management and training is imperative, and strong research, process improvement, and presentation skills are required. National MI is a U.S.-based, private mortgage insurer enabling low down payment borrowers to realize homeownership and has great culture, compensation and benefits. For the complete job posting, see National MI’s careers page.

LoanLogics, focused on loan quality technology for mortgage manufacturing and loan acquisition, announced that David Parker has joined the company as SVP of product management. Congrats!

Lender services and products

Are you looking for a USDA One-Time Close product that can be sold to your correspondent investor right after closing and before construction has begun? Spare your borrowers the hassle of going through multiple closings. And, bundle their building costs and mortgage costs into one loan. It’s a win-win and saves you and your borrowers much-needed time. Check out the new USDA One-Time Close purchase option TMS Correspondent recently rolled for its partners.

In response to a slowing market, we are seeing a resurgence in joint ventures, as mortgage lenders and realtors join forces to build relationships and revenue. While RESPA is still very much in force, there is undoubtedly opportunities for mortgage lenders and realtors to “become one.” But how do you meet the compliance challenges of real estate and mortgage joint ventures? How do you help protect your investment? JVerify can help you achieve a successful, lucrative and longstanding joint venture. JVerify is a premier compliance management system from Strategic Compliance Partners (SCP) designed to help keep joint ventures compliant and competitive, with protocols that prevent unlawful steering, annual risk assessments, and much more. Contact SCP to learn how JVerify can protect your joint venture.

“As promised, Parkside Lending, LLC continues to expand its product offering! We’ve added more Non-QM products, including a new Asset-Income program that allows for asset depletion over 7 years vs the typical 10 years with a MAX DTI of 47%, a 12-month Bank Statement program with utilization of either Business or Personal bank statements, One Year Tax Return program and a NO FICO program. With Parkside’s simplified process, automated Loan Estimates, state and federal disclosures delivered electronically, access to underwriters, and a plethora of products, it is easy to see why brokers love working with Parkside. Parkside will continue to expand our new products in 2019 and will continue to enhance our systems to make the lending process as efficient as possible for our customers and their borrowers. To find out more about these programs and experience the Power of Caring, or are interested in working with Parkside Lending, contact your Account Executive or Sales@ParksideLending.com.”

From Maryland…

The MMBBA Professional Development Program is a leadership development program for future and emerging leaders working in the residential mortgage lending industry, providing opportunities for future leaders to develop advanced industry expertise, gaining access to direct mentor opportunities with local industry leaders, meeting with peers, building leadership skills, and participating in the Maryland Mortgage Bankers and Brokers Association. Tomorrow’s game-changing executives are today’s Future Leaders, and this program provides the connections and exposure needed to take the next step in advancing their careers.

Government shutdown continues to impact borrowers

Do you have borrowers that need a USDA rural housing loan? Here’s what borrowers are reading in the press about their problems under the shutdown.

Ginnie Mae issued a release of information regarding its operations during a lapse in government funding, as did Freddie Mac and Fannie Mae.

The Federal Government shutdown has no direct impact on Freddie Mac. It will continue normal operations without interruption during the shutdown. Review its 2018 system and customer service hours of operation for Freddie Mac technologies. Borrowers who may be impacted by the shutdown are eligible for relief options, including forbearance, as detailed in Chapter 9203 of the Freddie Mac Single-Family Seller/Servicer Guide (Guide).

Remember that The FHA has issued FHA Info Bulletin #18-52 which provides additional clarity for HUD mortgagees regarding which systems are operational, and which FHA customer support operations are functional, though limited. The FHA’s reverse lending program has been put on hold along with USDA mortgage insurance endorsements.

First Community Mortgage Wholesale posted announcement 2018-21 Regarding the Government Shutdown.

Mortgage Solutions Financial posted Announcement 32-18C regarding the Federal Government Shutdown.

Remember that this spring, 2019, FHA buyers of newly constructed single-family homes will no longer be required to purchase 10-year protection plans on high loan-to-value ratio mortgages. The Department of Housing and Urban Development recently issued the final rule, streamlining single-family home-warranty requirements for FHA insurance.

As a result of the Federal Government shutdown due to a lapse in appropriations, until further notice the Federal Housing Administration’s (FHA) Office of Single-Family Housing and its mortgage insurance program will be operating with limited services. As was the case in previous shutdowns, under a lapse in funding, FHA’s actions and decisions about which operations continue, or not, are governed by the Constitution, statutory provisions, court opinions, and Department of Justice (DOJ) Opinions, which provide the legal framework for how funding gaps and shutdowns have occurred in recent decades. A full descriptions and details can be found in the Department of Housing and Urban Development’s (HUD) Contingency Plan for Possible Lapse in Appropriations document posted on HUD.gov.

Capital markets

The Treasury yield curve has flattened further, and traders view that as an indicator that the US economy is close to recession. (The flat curve is an indicator; by itself it does not cause a recession.) The spread between three-month and 10-year yields narrowed to 18.6 basis points earlier this week, the tightest compression since the financial crisis. Investors widely appear to be betting that swings in the market and changes in hiring and consumer spending could stall economic growth and hold interest rates steady through 2019. The Federal Reserve predicted two more rate hikes in 2019, but federal funds futures show a 91% chance the rate will be the same or lower at the end of the year.

This morning we had the December jobs data. Is there a “natural unemployment rate” upon which economists agree? The natural unemployment rate has generally trended lower over the past forty years, although it does tend to edge higher when the economy enters recession. Current estimates have the figure around 4.1%, above the 3.8% unemployment rate averaged during Q3-2018, but below the 4.6% estimate of the Congressional Budget Office. Rather than putting weight in a precise estimate of the natural rate, it is better to conceptualize it in terms of a range (e.g. currently 3.6% to 4.6%).

If the actual unemployment rate (3.7%) is still within our estimated range, the Fed likely can continue to raise rates at a gradual pace (25 bps at every other FOMC meeting). If the actual unemployment rate were below the bottom end that range, the Fed may find it necessary to undertake a more aggressive pace of rate hikes, but because the actual unemployment rate is near the bottom of that estimated range, the Fed probably has a few more rate hikes to go. Although wage growth has trended higher in recent years, it is still well short of rates that prevailed at this point in previous cycles. Therefore, there is the risk that limited slack in the labor market could lead to further wage acceleration going forward, which could cause inflation rates to move markedly above the Fed’s target of 2%.

But lenders are more interested in the U.S. 10-year dropping a whopping -11 bps to 2.55% as Treasuries across the curve ended Thursday all in the same direction in response to Apple’s first revenue guidance cut since 2002, which was blamed on weak demand in China. Is Apple’s revenue drop an isolated case, or will other companies have to tone down expectations of their own? White House Council of Economic Advisers Chair Kevin Hassett said he expects more companies with exposure to China to follow in Apple’s footsteps, cutting their guidance. On the bright side, we were witness to a much stronger than expected ADP Employment Change report (actual 217K; expected 170K) ahead of today’s release of the Employment Situation report from the Bureau of Labor Statistics.

The market is starting to believe in the prospect of a rate cut before the end of 2019, as the implied probability of a rate cut in December jumped to 46.1% from just 9.6% on Wednesday. Fed Chairman Jay Powell’s remarks today will be watched closely for signs of a change to the Fed’s outlook. Finally, British Prime Minister Theresa May met with European officials yesterday, including EU Council President Donald Tusk, German Chancellor Angela Merkel, and Dutch Prime Minister Mark Rutte. Ms. May is seeking to secure concessions regarding the Irish border ahead of the Brexit withdrawal bill vote expected during the week of January 14.

Turning to today, here are the December payrolls figures. Nonfarm payrolls, expected to increase 185k versus 155k previously, were strong at +312k. Hourly earnings were +.4% (+3.2% year over year, very strong), and the Unemployment Rate clocked in at 3.9%, up a shade, as was the participation rate. Markit Services PMI will be released at 9:45am with expectations for a slight downturn. We’ll have a lot of “FedSpeak” with Fed Chair Powell (participating in a joint discussion with former Chairs Yellen and Bernanke), Atlanta Fed’s Bostic, Richmond Fed President Barkin, and St. Louis Fed Bullard. After the unemployment data we find rates higher versus Thursday’s close: the 10-year is yielding 2.62% and agency MBS prices are worse .250-.375.

(Thanks to Doug F. for “The New Senior Pick-up Line.”)

An elderly gentleman walks into an upscale cocktail lounge. He is in his mid-eighties, very well-dressed, hair well-groomed, great looking suit, flower in his lapel and smelling slightly of an expensive after shave. He presents a very nice image.

Seated at the bar is a classy looking lady in her mid-seventies.

The sharp old gentleman walks over and sits alongside her. He orders a drink and takes a sip. He slowly turns to the lady and says:

“So, tell me … do I come here often?”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

The new year is off to a bang with VA cash-out changes coming, rumors of a well-known AMC exiting the business, state law changes, borrowers wanting a Nordstrom experience at a Costco price, M&A continuing, and the government shutdown. (By the way, despite the IRS remaining closed during the partial government shutdown, on Monday, January 7, it will begin processing requests for tax transcript information made through the Income Verification Express Service (IVES) program.) Julian Hebron with The Basis Point penned a piece on “The Most Overused Financial Technology Word of 2018.” Hint: It isn’t “digital,” which is unexpected. Let’s see what is on reader’s minds!

VA cash-out program comments

David G. writes, “I don’t condone predatory lending behavior nor question the need of only originating loans that truly benefit the borrower, but much of the benefit evaporates because of high closing costs determined by location. Individual state laws dictate and govern the closing process. The top 10 states with the highest closing costs are HI, VA, WA, CA, PA, VT, MD, DE, NY, DC. Coincidentally, some of these states house a high percentage of veterans and active military personal.

“A state mortgage tax coupled with a laundry list of other state dictated fees like attorney fees, recording fees, environmental fees, restriction, encroachment and mineral fees can account for over 60% of the cost associated with non-VA refinanced home loan. For VA loans, I understand some of these fees are waived but many are not. The VA caps the lenders compensation to 1% of the loan amount, so the balance of fees are usually generated by the state and required third parties. If the states want to help our veterans and active military personal waiving redundant refinance fees paid the first time around may be a good suggestion. It’s easy to blame the lender, but there can be no comparison between fees on a $250,000 cash-out refinance and a $2 ATM charge.”

Mike Swaleh, a branch manager at Fairway Independent, had some thoughts on the VA cash-out situation. (“The VA funding fee on a cash out is 3.3% by itself, so they are paying a ton of fees, which is just added to their loan balance.”) “Any idea what percent of vets are disabled (FF waived)? Any idea what percentage of VA IRRLS have points charged? To add some perspective, I think it would be helpful to know that, and more, about the make-up of the refinances being done. Fairway did a lot of IRRRLs in 2016, but almost all of them were either priced above PAR, to reduce or cancel out the FF, or at par if they were exempt. I don’t think we charged points on a single one, and often gave LCs to cover standard closing costs as well.

“There are plenty of lenders taking advantage of vets out there, but at Fairway we try to do just the opposite, not just with our American Warrior Initiative events but also by the way that we do business. We used to have clients call us with offers in hand from one large national lender in particular that charged 3-4 points (and would sometimes even be an ARM, though thankfully not often), and we would instead show them how to compare that to our offers of two still-lower-than-what-you-have-now rates, one with rolling in closing costs and prepaids and one with credits to cover everything and roll in nothing. There’s a right and a wrong way to do things; we need to stop the former but save room for the latter.”

HMDA

As an executive summary, late in 2018 the CFPB announced the availability of a beta version of a Home Mortgage Disclosure Act (HMDA) data platform for companies to test the filing of 2018 data. The CFPB has now announced that the beta testing period is closed and the HMDA data platform is open for the filing.

Under the title of, “Things that cost lenders a lot of money and don’t add anything to revenue,” last month the CFPB released final policy guidance applicable to the public disclosure of data collected and reported pursuant to the Home Mortgage Disclosure Act (HMDA). The following applies to data collected by financial institutions in 2018, which will be reported and made publicly available in 2019.

Public loan-level HMDA data will exclude:

(1) universal loan identifier or non-universal loan identifier.

(2) date the application was received or the date shown on the application form.

(3) date of action taken by the financial institution on a covered loan or application.

(4) address of the property securing or proposed to secure the covered loan.

(5) credit score or scores relied on in making the credit decision.

(6) unique identifier assigned by the Nationwide Mortgage Licensing System and Registry for the mortgage loan originator, and

(7) result generated by the automated underwriting system used to evaluate the application.

In addition, the publicly available data will exclude free-form text fields used to report the following data: race, ethnicity, the name and version of the credit scoring model used, the principal reason or reasons the financial institution denied the application, and the automated underwriting system name.

The following public loan-level HMDA data will be modified to reduce the precision of most of the values reported for the following:

(1) loan amount or the amount applied for will be disclosed as the

midpoint for the $10,000 interval into which the reported value falls, and there will be an indication as to whether the reported value exceeds the applicable dollar amount limitation on the original principal obligation in effect at the time of application or origination.

(2) age of an applicant or borrower will be provided in bin values in ranges such as: 25 to 34; and will indicate whether the reported value is 62 or higher.

(3) ratio of the applicant’s or borrower’s total monthly debt to the total monthly income relied on in making the credit decision under 36 percent and over 50 percent will be reported as bin values; however, values greater than or equal to 36 percent and less than 50 percent will be reported without modification.

(4) value of the property securing the covered loan or, in the case of an application, proposed to secure the covered loan, will be disclosed as the midpoint for the $10,000 interval into which the reported value falls.

(5) number of individual dwelling units related to the property securing or proposed to secure the covered loan, will be reported as bin values in ranges such as 5 to 24; 25 to 49; 50 to 99; 100 to 149; and 150 and over.

(6) number of individual dwelling units related to the property securing or proposed to secure the covered loan, that are income-restricted will be disclosed as a percentage of the total number of individual dwelling units related to the property securing the covered loan.

“As reflected above, in this most recent policy guidance, the Bureau changed the treatment of the following data fields from its original proposed approach: total debt to income ratio, number of individual dwelling units securing or proposed to secure the loan, and the number of individual dwelling units that are income-restricted. Moreover, the Bureau intends to commence a rulemaking in the spring of 2019 that will enable it to identify more definitively modifications to the data that it determines to be appropriate under the balancing test applied and incorporate these modifications into a legislative rule.”

Regarding HMDA… we’re off to the races! The CFPB announced that the filing period for HMDA data collected in 2018 opened on January 1. The beta testing period for the 2018 HMDA Platform is closed. “The objective of the beta platform release was to provide financial institutions with an opportunity to determine whether their sample HMDA data complied with the reporting requirements outlined in the Filing Instructions Guide for HMDA data collected in 2018. The beta period also allowed the Bureau to gain valuable information regarding the performance of the system and provided an opportunity to make any necessary enhancements. All test data uploaded during the beta period has been removed from the system.

“All user accounts created during the 2018 beta testing period and during the filing period for data collected in 2017 will be maintained for the 2018 filing period, and users can login to the 2018 HMDA Platform using their existing credentials. We encourage financial institutions to continue providing feedback on their experience using the HMDA Platform and to direct any questions regarding the HMDA Platform to HMDAHelp@cfpb.gov.”

M&A

After the courtship and marriage ceremony of two companies joining forces, with the usual platitudes about “expanding our reach,” “cultural mesh,” and “perfect fit,” the actual work begins. Frank Fiore of Matchbox LLC addressed that in a note to me this week. “Rob, with all of the merger and acquisition activity, there is always a lot of excitement around the announcement of the union of the two companies, but it is once the agreement is signed, the real fun begins, from a technology standpoint.

“There are a number of options that companies face from just the LOS perspective: handling of the pipeline (migrate loans or wind down the pipeline), merging of workflows, migrating functionality between same systems, standing up a new environment as opposed to absorbing one company into a complex legacy environment, handling of data and reporting, training and support. This speaks nothing to migration and handling of Product and Pricing engines and Secondary data and pipelines, vendor integrations and conversions, HMDA, NMLS, and document conversion.

“The technical aspect of a union of firms is one that requires experienced companies that ask the right questions and provide the right options and solutions. We are seeing many companies make poor decisions because they either did not explore or were presented with the right options from a technology perspective. These unions are supposed to create efficiencies and economies of scale but it won’t be achieved without a well-thought-out technology migration plan. Especially if there are two Encompass based clients coming together, there are a number of items to be determined and options that can be considered for the short and long term.” Thanks Frank! (If anyone is in need of some guidance on this front, please contact Frank Fiore at matchbox to discuss your current or future plans to see if the matchbox and Ignite teams could be of service to you.)

Three missionaries were imprisoned for their faith: a Baptist, a Mennonite, and a brunette capital markets person. They were scheduled to be shot at sunrise at which time they were lined up against the prison wall.

The firing squad leader yelled, “Ready! Aim!” and the Baptist yelled, “Earthquake!”

Everyone went to run & hide from the earthquake and the Baptist climbed over the wall & got away.

After a while they lined up the Mennonite and the brunette capital markets person and the leader shouted, “Ready! Aim!” and the Mennonite yelled, “Tornado!”

Everyone hid from the tornado and the Mennonite climbed over the wall & got away.

After a while they found the capital markets person and put him against the wall.

“Aha!” he thought, “All I have to do is call out some natural disaster, and I can get away too!”

The leader bellowed, “Ready! Aim!” and capital markets person yelled, “Fire!”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Let’s start the first 5-day workweek of 2019 off with something entirely non-mortgage related, although “unintended consequences from revenue-based decisions” come to mind. Weight can be a serious matter. (I admit that I have trouble keeping the pounds off with my diet of Cap’n Crunch for breakfast, salami and cheese for lunch, and pasta in cream sauce for dinner.) Recently, upon arriving at the gate on a United flight at the Denver Airport, the passengers were all told to stay seated when the plane stopped, something about unloading some luggage from the rear. Turns out there are certain 737s that were stretched to add a few more rows, but this changed the balance on the things and they discovered that when the passengers at the front of the plane got off first (as they invariably do), the stretched jet would tip backwards from all the weight still in the back as shown in this short surveillance video.

Jobs & career moves

“New Year – Fresh Start! Are you an experienced Wholesale Account Executive wanting to make a change? Looking for a company with an entrepreneurial mortgage culture of collaboration, team-based success, and the security of working for a bank? Then it’s time to call Florida Capital Bank’s Andrea Lefebvre, SVP, National Director of Production (617.899.1428), or Bob Eisendrath, National Account Manager (414.350.3986). FLCB is agency approved and has a suite of portfolio products along with money back service level agreements that will set you apart from your competition. Come join our bank and have some fun again with a team environment where everyone is passionate about delivering an exceptional customer experience with every loan. We offer competitive compensation, an energized culture, and an experienced operations & support staff. Florida Capital Bank is an Equal Opportunity/Affirmative Action Employer.”

In retail news, congrats to John Bianchi who was named EVP for National Sales at loanDepot where he will work with the executive team to “cultivate and enhance market presence, develop differentiated products and services and create market penetration strategies designed to fuel individual producer as well as channel and company growth.”

Lender products and services

“Happy New Year! Here’s to having a fresh start with a better warehouse line. With the industry facing reduced originations and compressed profit margins, you may find your warehouse lender revisiting the terms of your agreement. Now is the perfect time to make a change and partner with a bank that is more agile with the terms and conditions of a warehouse line. At FLCB (Florida Capital Bank) we’ll negotiate customer specific terms, regarding covenants, haircuts, pledge accounts, per loan fees, line rates, non-usage fees and more. We have over 80 approved takeout investors, in addition to our own competitive products. Make 2019 the year to partner with a cost effective and efficient warehouse team. Call Dan Hastings, CMB, National Warehouse Sales Manager at 318-547-1357 to ring in the New Year with a warehouse line tailored with the best terms to meet your 2019 business goals.”

Have you heard about the Anything and Everything Home portal YourHome1Source®? That’s [YH1S.com]YH1S.com for those challenged on the keyboard! This innovative and fast-growing platform was launched in 2015 by home industry and ecommerce execs. Sean Stockell, CEO says, “[YH1S.com]YH1S provides broad resources and solutions for homebuyers and homeowners – all in one place. Visitors search and find a myriad of home topics quickly, i.e. buy, sell, build, remodel, loans, insurance, warranties, security, kitchen, garden, furniture & décor, inspectors, contractors, green home, etc. Homebuyers find advice, videos, products and services in seconds. Business mogul, Kathy Ireland® became a business partner in 2018. “Kathy was intrigued with YourHome1Source® because our platform is convenient and builds trust with today’s digital home-consumer. We feature many of Kathy’s products today,” says

Sean Stockell, CEO. “For all home industry segments, we offer immediate and cost-effective digital strategies to reach new customers”, says Stockell. Inquire at

Marketplace@YourHome1Source.com.

New Penn Financial Is Now NewRez. Effective today, national mortgage lender New Penn Financial, LLC has changed its name to NewRez LLC (NewRez). Founded in 2008, the company was acquired by New Residential Investment Corp. in July 2018. The name change reflects the close alignment between NewRez and its parent company and the combined organization’s commitment to helping homeowners, investing in communities, and bringing value to its customer relationships and strategic partnerships. “This rebranding marks the completion of our transition into the New Residential family and the beginning of a bright new chapter for our entire organization,” said Kevin Harrigan, President and Chief Executive Officer of NewRez. The NewRez brand pillars include: serving as Trusted Advisors, providing Product Innovation and Leadership, ensuring Ease of Process, and playing an active role in Community Investment. Find more information about the NewRez brand and the company’s product offerings at www.newrez.com.

Momentifi CEO Gibran Nicholas is hosting a free webinar on Wednesday, January 9 at 2 pm ET: How Purpose-Driven Loan Originators Will Dominate the 2019 Mortgage Market. Topics include: how to identify the target market where you can win in 2019; how to articulate why your ideal clients and strategic partners should choose you vs. your competitors; and how to utilize technology to win more business with your target audience. Click here to register.

Vendor-mania

According to The Mortgage List there are 1,446 vendors that touch the mortgage biz. How does anyone keep track? Here’s a random sample.

Well, Equifax is back in the news, this time in a Wall Street Journal article about the company being “in the crosshairs” of the incoming Congress and Maxine Waters. All vendors are taking note of the many proposals focused on possible changes to how the industry handles consumer information.

Roostify announced that all consumer-facing aspects of its application platform are now accessible for customers with disabilities. Roostify is certified to Web Compatibility and Accessibility Guidelines (WCAG) 2.0, Level AA, enabling lenders to offer an Americans with Disabilities Act-compliant loan experience to their applicants. Homebuyers and homeowners can now take advantage of comprehensive screen reader usability, color contrast/font usage, enlarged display performance and keyboard controls throughout their home loan process.

The company’s consumer experience was recently certified by an independent third-party as being WCAG 2.0, Level AA-compliant. The AA designation represents a standard of accessibility for all users, including people with limited or no vision, limited or no hearing, colorblindness and limited mobility.

After receiving all the necessary regulatory approvals, Computershare Loan Services has completed its acquisition of LenderLive Financial Services, LLC and its operating subsidiary LenderLive Network, LLC, a leading fulfillment and secondary market service provider in the U.S. mortgage industry. LenderLive Network, LLC (LLN) has offices in the Denver and Jacksonville, Florida, areas. “This acquisition will further strengthen Computershare’s growth in the U.S. mortgage services market, adding scale to existing fulfillment and secondary market services provided by Credit Risk Solutions (formerly Altavera) and Capital Markets Cooperative, and providing an additional source of new servicing volume as well as further enhancing CLS’s ability to work with both government-sponsored and private market investors.”

Ellie Mae announced enhancements to Encompass Consumer Connect including identity, employment and income verification. “These enhancements help lenders provide a more streamlined application process to help foster interest, engage with homebuyers and convert more opportunities. Since the launch of Encompass Consumer Connect on July 9, 2018, Ellie Mae has seen more than 500 clients with more than 2,000 unique sites and over 140,000 applications in progress. Some lenders are seeing a three-day reduction in turn times from application to underwritten loan.”

The focus of Docutechs’ December Industry Spotlight is how Veri-Tax is assisting Lenders in satisfying Fannie Mae’s requirements.

Docutech is now supporting Coops, loans secured by a borrower’s ownership shares and lease in a cooperative unit (“cooperative loans”), in Alaska, Illinois, Indiana, Massachusetts, Michigan, Minnesota, New Jersey, and Pennsylvania. Read more information about Docutech’s update here. The company announced its collaboration with Tavant, the leading digital mortgage products and platforms company to provide lenders and borrowers with a more efficient and digitized mortgage origination experience. Docutech’s ConformX dynamic document generation engine and Solex eDelivery and eSignature technology will be integrated into Tavant VΞLOX digital lending platform enabling a more modern, digital mortgage experience. Through this integration with FinConnect, a component of VΞLOX, lenders can seamlessly select Docutech as their document provider for a streamlined document integration process. Likewise, borrowers will be able to electronically receive and sign disclosures anytime on any device though Solex by way of Tavant’s consumer direct portal – FinXperience Consumer.

Subsequent to Docutechs’ state-by-state construction-to-permanent review, discussed in a previous post, it has modified and added several documents for Texas construction-to-permanent loans. This was necessary because Texas construction loans are not structured the same as they are in other states. The post Document Updates: Construction-to-Permanent Changes for Texas Loans appeared first on Compliance.

Capital markets

For lack of a better “benchmark,” despite the fact that most 30-year mortgages have a maturity (e.g., payoff) of 7-8 years, the lending industry tends to follow the yield on the 10-year risk-free Treasury note. And for those who track these things, the yield on the 10-year Treasury note ended 2018 at 2.68%, up 0.27 percentage points from the 2.41% it finished at on 12/31/17. The 10-year note yield was 2.57% on 8/05/11, the day that the rating agency S&P downgraded the USA from a top-rating that our nation had held for 70 years. Remember that?

The first economic releases of the new year have showed a slowdown in the production side of the economy as the ISM Manufacturing survey tumbled 5.2 points to 54.1; its lowest level since 2016. The primary driver of the lower reading was due to an 11-point drop in the new orders component as well as declining order backlogs. While the index is still in the expansion range, the declines were broad-based which are typical of those observed prior to the onset of a recession and will be watched closely by policymakers. Regardless, employment data remained strong as nonfarm payrolls increased by 312,000 in December and the prior two months’ data were revised upward. While there was mention of some catch-up due to hurricanes and fires this fall, December’s payroll numbers were good news and manufacturing and construction employment saw big gains for the month. So we start the year with a weak leading indicator, a strong lagging indicator and comments from Fed President Powell suggesting a wait and see strategy for policy changes.

Rates are certainly reflecting the possibility of a slowing economy. The U.S. 10-year closed last week yielding 2.66% as volatility reigned supreme over concerns surrounding tech markets, the trade war with China, and the U.S. government shutdown. China’s Ministry of Commerce confirmed that trade talks with U.S. officials will take place today and tomorrow, which added optimism into capital markets despite U.S. Trade Representative Robert Lighthizer reportedly saying that more tariffs may be needed in order to secure concessions from China.

Fed Chairman Jay Powell took part in a panel discussion with former Fed Chairs Yellen and Bernanke, at which Chairman Powell’s acknowledged that the policy course can be altered swiftly. It should be noted that the Fed Chair has said on multiple occasions that monetary policy is not on a pre-set course, and he took the time to reiterate that the Fed’s economic outlook has not changed significantly. On Friday, the implied probability of a December cut declined to 30.8% from Thursday’s 49.3%.

Other international news included the People’s Bank of China announcing plans to lower its reserve requirement ratio in two separate 50-basis point cuts later this month. Currently, the RRR for large banks is at 14.5% while the RRR for smaller banks is at 12.5%. And on the Brexit front, a poll conducted by The Telegraph showed that most Conservative lawmakers prefer a no-deal Brexit over the deal negotiated by Prime Minister Theresa May. Sammy Wilson, who is the Brexit spokesman for Northern Ireland’s DUP, said that his party cannot support the agreement negotiated by Prime Minister May.

This week marks the first full week of the year for markets, though the economic calendar is likely to remain disrupted with some releases potentially cancelled due to the government shutdown. Those releases include today’s factory orders, Tuesday’s trade, Thursday’s wholesale inventories and Friday’s budget. That leaves ISM nonmanufacturing, consumer credit, JOLTS, and CPI as the primary releases for the week. Fedspeak is also heavy including three speakers this weekend with Chair Powell and Vice Chair Clarida both scheduled to speak Thursday, as well as the release of the minutes from last month’s FOMC meeting on Wednesday.

Today’s economic calendar kicks off (no factory orders numbers due to the shutdown) with the December Employment Trends Index and the ISM Nonmanufacturing PMI, expected to decline. In the afternoon Atlanta Fed President Bostic will speak on economic outlook and monetary policy. We begin today with the 10-year yielding 2.63% and Agency 30-year MBS prices better by a solid .125 versus Friday afternoon.

Glass coffins… will they become popular?

Remains to be seen.

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

In HELOC news, “traditional” lenders know that online lender Prosper plans to offer home equity lines of credit this year. The threats to real estate agents’ business models also just keep coming. Besides Clever, Ribbon Home, Zillow Offers, and Open door, this is now www.HomeGo.com. Who wouldn’t want to sell their house in one day, and receive their cash in seven? Obtaining its true market value is a whole different issue, however. In that vein, recall that proposed banking regulations would allow real estate property valuations to be based on computer algorithms and not require evaluation by a licensed human appraiser for homes under $400,000. Data by the Census and National Association of Realtors finds 67% of US homes sell for $400,000 or less, so the proposal arguably makes the process of buying and selling homes cheaper, easier and faster. But many algorithms are untested.

Jobs & promotions

“The Real Estate market will always be shifting. The question is how will you compensate as the market continues to tighten? Revamp your marketing, extend your personal networking efforts, or distribute flyers to cars in the parking lot? (Please don’t. It makes us all look bad.) Here’s a brilliant idea to help manage market volatility in 2019: Increase your compensation.

How much money do you lose on every deal because you’re paying for the salaries for multiple layers of middle management? If you simply cut the fat, you’ll increase your take home! Canopy Mortgage is a flat organization that isn’t burdened with ‘legacy-costs’ meaning fewer people between you and your commissions. Canopy is currently hiring independent loan officers in AZ, CA, CO, FL, GA, ID, IL, IN, IA, KS, MD, MI, MO, NV, NJ, NM, NC, OH, OR, PN, SC, TN, TX, UT, VA, WA, WI. Contact Josh Neumarker, Director of Business Development at Canopy Mortgage (888-696-9076).”

“SocialSurvey wants to thank the mortgage industry for a fantastic 2018. We are excited to announce we surpassed 1mm reviews and now serve 150 lenders representing over 30,000 Loan Officers. Our platform has expanded from reviews and reviews sharing to now include social media monitoring and listings management. To keep up with the demand, we are hiring several Regional Vice-Presidents of Business Development with dedicated sales territories. If you have a proven track record of selling technology or services into the mortgage vertical, this is a unique opportunity to part of an amazing growth story. Send confidential resume and contact info to Gaby Mota to learn more.”

Freddie Mac announced the election of Aleem Gillani to the company’s Board of Directors. Mr. Gillani recently served as CFO and corporate EVP of SunTrust Banks, Inc. Congrats!

Lender products & services

“Want to start a WHOLESALE channel or need a better TPO Platform? Wholesale is expected to double in the next 24 months so it’s time to get into (or up) your TPO game. We can help. For a fraction of the cost of fancy, heavy, ‘legacy’ platforms, ReadyPrice can help you start or improve your channel and increase your profitability. The ReadyPrice all-in-one Pricing Engine, LOS and Wholesale CRM platform is fully configured out of the box, and up to 80% less expensive than other heavy, cumbersome competitors. It comes complete with D1C, deep Fannie DU integrations and can be stood-up in a couple of weeks. The ReadyPrice LOS/PPE has funded over 300k units for $70 billion and is leading the way forward for today’s mortgage bankers as we utilize essential mortgage tech. Call (408) 357–0931 or email to receive a free demo.

LegacyTexas Bank, Warehouse Lending is eNote Ready! LTB is a national warehouse provider with unparalleled service and a staff of industry veterans. eNote readiness adds to our streamlined and paperless process for funding a full suite of residential loan programs. If you need a warehouse lender who can fund your eNotes and provide competitive terms on warehouse lines up to $100 million, contact us today: Martha Reitz (972-801-5792) or Michelle Marrapodi (972-801-5781).

Happy New Year from Model Match! “As the industry’s leading strategic growth partner, we can help you recruit the quality talent your organization seeks to exceed your production goals in 2019. Model Match offers a full range of solutions to help our partners grow their business. Whether you’re looking to increase the effectiveness of your own recruiting efforts or need a trusted partner to attract high-quality talent for you, Model Match is your solution. Between our award-winning Talent Management Software and team of seasoned headhunting professionals, we ‘Model Match’ the right people, to the right company, at the right time. Click here to see the value we can create for you through our tailored recruiting solutions.”

2018 was a year of rapid change, as lenders set out to transform the customer experience. Customer expectations are changing faster than ever – making it even more critical to simplify and personalize the customer journey. Those that exceed customer expectations will yield massive returns by boosting customer retention and increasing profits. “Total Expert is proud to share key lessons on how organizations can deliver deeply personal content that adds big value for consumers. Read our top 10 blogs of 2018 to ramp up your marketing and sales efforts for 2019.”

“One of the reasons Native Americans are so underserved financially is a lack of awareness of Section 184, a HUD program specifically for Native Americans. 1^st Tribal Lending is the nation’s leading originator of Section 184 loans, having successfully closed thousands of loans for properties on the reservation, off the reservation, new construction and manufactured homes. 1^st Tribal Lending views on-reservation lending as a great part of our mission and has considerable experience working with Tribes and the Bureau of Indian Affairs Offices. We’ve also helped thousands of Native American Tribal Members purchase homes in urban areas. 1^st Tribal Lending is comprised of the most experienced Section 184 lending team in the nation. We understand this high touch, niche program, and our correspondent and broker programs are designed to support our customers throughout the process. Ready to get into Section 184 lending? Contact Brett Robinson to start.”

It’s looking like 2019 will be a year filled with challenges to overcome. Still, winning is possible, but only if you are agile enough to embrace change and lean into the winds of market challenges to find the opportunity within. A new eBook, “2019 Mortgage Lending Resolutions,” is a great read for those lending leaders looking for a strong start in the new year. Exclusive to Rob Chrisman subscribers today, it’s a must-read for all mortgage leaders and their teams. Download Your Free Copy Here.

Make 2019 the year you exceed all your production goals. Here’s how Anders G. increases his production with Usherpa: “Usherpa is awesome, and its training gave me great insight on how to mine my database for opportunities. Learning how to find and reach out to all the listing agents that I’ve done prior transactions with is incredible.” Learn how Usherpa can help you take your business to the next level.

Legal

Although news of lawsuits, settlements, and penalties have died down, they’re still simmering out there. The headline this week comes from a former employer’s allegations that builder Lennar Corp. and its mortgage subsidiary Eagle Home Mortgage made loans to unqualified buyers and violated federal laws.

M&A and new business rolls on

TMS announced it has sold its wholesale and retail origination lines to Atlanta-based AmeriSave Mortgage Corporation. TMS will turn its focus to correspondent, servicing, subservicing, and SIME (its servicing technology). “AmeriSave will welcome TMS employees associated with the business, and assume its new Plano, Texas and Chandler, Arizona offices… Recently, AmeriSave has embarked on significant expansion plans that include attracting top talent and considering other acquisitions.

“Beyond SIME, TMS has patents pending for artificial intelligence, block chain and has new versions of its one-of-a-kind servicing app scheduled for 2019. The company also plans to expand its client partner programs with custom apps, websites, as well as marketing and compliance consultative services. TMS will transition the originations business to AmeriSave in first quarter 2019.” TMS is a national lender and servicer licensed or exempt from licensing in all 50 states and the District of Columbia. AmeriSave has six locations across America and is a nationally-licensed consumer direct lender in 49 states, TPO and Retail.

Over in the depository arena, investment banking firm Keefe, Bruyette & Woods (KBW) downgraded its view of the banking industry. Reasons cited include the impact of higher interest rates and competition on funding, ongoing trade wars, slowing economic growth, weaker loan growth and a flattening yield curve. Certainly the bank mergers and acquisitions announced continued in December and through the holidays. We learned that…

In Georgia Heritage Bank ($502mm) will acquire both Providence Bank ($84mm) and The Heritage Bank ($532mm) for about $105mm in stock (100%), Colony Bank ($1.2B) will acquire Calumet Bank ($228mm) for $34.1mm in cash (45%) and stock (55%) or 1.72x tangible book, Ameris Bank ($11.4B) will acquire Fidelity Bank ($4.8B) for $750.7mm in stock (100%) or 1.76x tangible book, and Morris Bank ($718mm) will acquire Farmers & Merchants Bank ($190mm) for $23.6mm in cash and stock or about 1.6x tangible book.

In Ohio The Merchants National Bank ($711mm) will acquire The Citizens Bank of Logan ($200mm) for $33.3mm in cash (100%). First Savings Bank ($732mm, SD) will acquire Western Bank ($65mm, NM). In Illinois Wintrust Financial ($30B) will acquire 1031 exchange intermediary firm Elektra Holding Co., First Midwest Bank ($14.9B) will acquire Bridgeview Bank Group ($1.3B) for $145mm in cash and stock or 1.30x tangible book, and SENB Bank ($219mm) will acquire Gateway Community Bank ($90mm).

In Kansas GNBank ($629mm) will acquire The First National Bank of Girard ($80mm). In Kentucky Stock Yards Bank & Trust Co ($3.3B) will acquire King Southern Bank ($195mm) for $28mm in cash (100%) or 1.77x tangible book. Berkshire Bank ($12B, MA) will acquire Savings Institute Bank and Trust Co ($1.6B, CT) for $180mm in stock (100%) or 1.18x tangible book. The Bank of Delmarva ($738mm, DE) and Virginia Partners Bank ($420mm, VA) will combine in a merger of equals valued at $55.1mm. The deal is about 1.35x tangible book of Virginia Partners. In Missouri Citizens Bank ($121mm) will acquire Bank of Minden ($28mm).

In California United Business Bank ($1.3B) will acquire Uniti Bank ($344mm) for $63.9mm in cash (57.6%) and stock (42.4%) or about 1.37x tangible book, and Faciam Holdings Inc. will acquire Summit Bank ($281mm) for $56.13 per share in cash (100%). Cambridge Trust Co ($2.0B, MA) will acquire Optima Bank & Trust Co ($524nnm NH) for $67mm in cash (5%) and stock (95%) or 1.91x tangible book. In Texas Alliance Bank ($740mm) will acquire The First National Bank of Mount Vernon ($189mm), and Spirit of Texas Bank ($1.1B) will acquire The First National Bank of Beeville ($412mm) for $63.7mm in cash (51%) and stock (49%) or about 1.78x tangible book.

People’s United Bank ($44B, CT) will acquire Belmont Savings Bank ($3.0B, MA) for $327mm in stock (100%) or 1.6x tangible book. In Iowa FreedomBank ($267mm) will acquire Farmers and Merchants Savings Bank ($158mm). CenterState Bank ($12.3B, FL) will acquire National Bank of Commerce ($4.1B, AL) for $850.4mm in stock (100%) or about 1.99x tangible book. Don’t forget that Maryland’s Middletown Valley Bank ($429mm) will acquire residential mortgage lender Millennium Financial Group, thus offering loans to homebuyers throughout the Mid-Atlantic region.

Capital markets

The U.S. 10-year closed Monday yielding 2.68% as Treasuries and other fixed-income securities across maturities began the week all moving higher (rate-wise). Rates slid higher despite the release of a weaker than expected Non-Manufacturing ISM for December, reflecting a deceleration in non-manufacturing business activity in the final month of 2018 following the ISM Manufacturing Index in showing a slowdown in activity in December. The slowdown in the ISM figures threaten to bleed into a slowdown in earnings growth.

Internationally, China Daily noted that the People’s Bank of China will have room for additional cuts after the 50 bps cuts planned for later this month. The markets are keeping an eye on the U.S./China trade talks. And more than 200 British lawmakers have signed a letter urging Prime Minister Theresa May to rule out the possibility of a no-deal Brexit ahead of next week’s parliamentary vote. Leaders from Northern Ireland’s DUP have maintained their opposition to the backstop provision.

Today’s economic calendar kicked off early with the release of the NFIB Small Business Optimism Index for December, down for the fourth straight month. November’s trade deficit figures are postponed due to the partial government shutdown. November Job opening from JOLTS will be released at 10AM ET with expectations for 7.063 million versus 7.079 million previously. Finally, November consumer credit will be released at 3:00pm. We begin today with the 10-year yielding 2.70% and Agency MBS prices are down/worse a smidge.

(Thank you to Jerry D. for these, “Why I Love Getting Older;” Part 1 of 2)

1. My goal for 2018 was to lose 10 pounds. Only have 14 to go.

2. Ate salad for dinner. Mostly croutons & tomatoes. Really just one big round crouton covered with tomato sauce. And cheese. FINE, it was a pizza. I ate a pizza, are you happy?

3. How to prepare Tofu:

a. Throw it in the trash

b. Grill some meat, chicken, or fish

4. I just did a week’s worth of cardio after walking into a spider web.

5. I don’t mean to brag, but I finished my 14-day diet food supply in 3 hours and 20 minutes.

6. A recent study has found women who carry a little extra weight live longer than men who mention it.

7. Kids today don’t know how easy they have it. When I was young, I had to walk 9 feet through shag carpet to change the TV channel.

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

The co-founder and former CEO of Southwest Airlines, Herb Kelleher, died last week. I mention this because I read his obituary and the article noted his advice to employees in 2014 when they were upset by efforts to reduce costs and otherwise evolve. “What we’re talking about here is your future. If we don’t change, you won’t have one.” Just ask Sears, which is closing after 126 years in business. Hopefully that fate does not befall many lenders in the U.S., although this year as many things in store for our industry. Branches moving, companies moving, large and small. My guess is that we’ll see more headline-grabbing M&A coming soon!

Jobs & personnel moves

FirstBank Mortgage, a division of FirstBank with $5B in assets, is aggressively seeking loan officers and teams throughout TN, AL, & GA that possess an entrepreneurial spirit and love to work hard and have fun while doing it. “Backed by a management team of former producers, FirstBank Mortgage has the technology, training, pricing and marketing to help you exponentially grow your business and industry knowledge. Expansive product offerings include portfolio, jumbo, super jumbo, multiple down payment assistance programs and expanded credit programs. Come thrive in an environment where your voice is heard, your opinions matter and customers come first. Excellent compensation package included.” Click here to learn more.

Join the firm that’s aggressively pursuing a retail growth strategy. Planet Home Lending

opened more than 40 retail branches nationwide in the past 15 months. Discover what’s under the hood of the engine driving Planet Home Lending’s growth strategy, including an underwriting policy of “no overlays and no minimum credit scores on government lending.” “Whether you’re interested in working with us or for us, we’re always happy to chat about what you’re looking for and how we can help.” Contact Planet SVP Fobby Naghmi (703-473-2340) today.

Kwik Mortgage is looking for both supremely confident and stubbornly independent loan officers and branch managers who have the strength and capacity to build their own business in today’s evolving market. For over twenty years Kwik has made its way from coast to coast by sweating the details running a lean management structure while supporting its sales teams to work autonomously. Kwik has done the heavy lifting so you don’t have to deal with 30% plus in operations costs or 40% plus in corporate administrative costs and then wonder why your compensation and pricing continue to move around! If you are an experienced loan officer that can generate three funded units or $1 Million in fundings per month and enjoy working remote contact us today! If you are a branch team generating $2.5 million in business or 12 t0 20 units per month contact us today, we have both P&L and Corporate team options! Kwik is currently searching for Sales professionals in CT, NY, NJ, PA, MD, VA, GA, FL, OH, TX, CA, and Washington State. Please email Resume@kwikmtg.com to learn more about Kwik Mortgage!

United Capital Markets, Inc. announced the addition of Tim Covington as a SVP joining UCM’s St. Louis office. Tim will be responsible for analytics, business development and trading/hedging of mortgage servicing assets. He joins the UCM team after 19 years with Wells Fargo Home Lending as SVP and Market Risk Manager. Congrats!

And FundingShield announced that Faith Schwartz has joined its senior advisory board, bringing “a wealth of experience and relationships stemming from her leadership in the lending, fintech, non-profit and advisory space. Faith is currently president of automated verification provider FormFree.”

Lender products and services

In broker news, “UWM is dropping its pricing, making its pricing more competitive than ever. For years, United Wholesale Mortgage has topped mortgage brokers’ lists in a variety of categories, but pricing wasn’t necessarily one of them – until now. UWM has dropped its rates across the board, for conventional, government and jumbo, giving the nation’s No. 1 wholesale lender the best pricing in the country, to go along with its leading client service, technology, turn times and partnership tools. UWM has removed all state adjustments and most Loan Level Price Adjustments (LLPA), as well. Now, not only will mortgage brokers enjoy the fastest and easiest experience by working with UWM, they’ll also obtain the best rates for their customers.”

Trying to grow your business and help borrowers? Here’s a new USDA One-Time Close product that can be sold to your correspondent investor right after closing and before construction has begun. Spare your borrowers the hassle of going through multiple closings. And, bundle their building costs and mortgage costs into one loan. It’s a win-win and saves much-needed time. Check out the new USDA One-Time Close purchase option TMS Correspondent recently rolled for its partners.

Lending solutions provider Data Facts recently announced an exciting new appraisal product. The Verisite Plus Report gives current, comprehensive details for non-standard appraisal loans. Using the Verisite app, sellers, realtors, or appraisers securely take interior and exterior photos that are geo-located and sent back to the lender. These are combined with property data such as location, map, and comparable sales to create an appraisal. The Verisite Plus Report typically returns in 4 hours and costs $100 less than traditional appraisals. Trust Data Facts to provide you efficient mortgage lending solutions, such as credit reports, fraud products, tax return and social security verifications, a variety of lead generation tools, and more…all integrated within your LOS! Talk with a live person and take advantage of their personalized support for your business. Their 100% US based customer service team will help you increase efficiency so you can close more loans, faster and easier.

“Deephaven Mortgage continues to experience impressive growth in the Non-QM sector while staying committed to adding new products, capabilities, and technology to make the lives of originators nationwide more streamline. On the subject of making the process more streamlined, Deephaven’s Wholesale Division is excited to announce that it is now supporting credit reissuance including many of the most popular credit providers in the mortgage industry. Credit reissuance allows for greater predictability in scoring, pricing, and qualification along with improving the overall cycle time on loans. For additional details on how to start a new file with Deephaven Wholesale using our new credit reissuance process, please contact your Deephaven Wholesale Account Executive today or by emailing us.”

Correction in M&A news

Yesterday I noted that TMS sold its wholesale and retail origination lines to Atlanta-based AmeriSave Mortgage Corporation. TMS only sold its retail origination lines to AmeriSave, however. “This is a perfect fit. AmeriSave brings years of delivering a truly exceptional, tech-forward experience to homeowners during originations as we do at TMS in servicing customers for the life of the loan,” said CEO Darius Mirshahzadeh. “We feel good knowing that they will take great care of our customers and our people while we double down on being the world’s best servicer.” TMS remains focused on building their correspondent, servicing, subservicing lines of business and SIME subservicing platform.

Upcoming events in the next week

Momentifi CEO Gibran Nicholas is hosting a free webinar today at 2PM ET: How Purpose-Driven Loan Originators Will Dominate the 2019 Mortgage Market. Topics include: how to identify the target market where you can win in 2019; how to articulate why your ideal clients and strategic partners should choose you vs. your competitors; and how to utilize technology to win more business with your target audience. Click here to register. If you miss the live webinar, click here to access the recording.

Have you set your goals for 2019? If you’re ready to start setting money making goals, then join Sierra Pacific Mortgage on January 14 at 10:00am PST for a free one-hour webinar on achieving your goals. In this course, focused on goal setting, you will learn how to establish smart goals, how to work backwards to accomplish your goals, and how to analyze your current book of business and referral sources to help meet your next financial goal. Make 2019 your year. Register today.

Don’t miss the opportunity to register for the MBA-NJ webinar series beginning January 10^th, “Mastering Social Media in the Mortgage Industry”.

Sign up for Plaza’s January 11^th complimentary training webinar: Negotiate the Numbers. In this webinar, you will learn the fundamentals of calculating income for self-employed borrowers from personal and business tax returns.

Register for the January 15^th MBA Education Diversity and Inclusion Webinar Series. Get the tools you need to expand your reach by registering for the How to Boost Sales in the Multicultural Market webinar. Learn the best ways to connect with African-American, Asian and Hispanic audiences—the fastest growing populations in the nation with huge, untapped buying power.

Register for the MMA for breakfast on January 16^th. Presenters will discuss eMortgage and eClosing topics as these continue to gather momentum as states enact remote notary laws such as the one that recently went into effect in Minnesota.

New products

Taylor Morrison Home Corp. launched a 2-1 buydown from a fixed rate mortgage program during which Taylor Morrison will help pay some of the interest cost during the initial years of homeownership. The Taylor Morrison 2-1 rate buydown for Conventional and FHA financing for qualified owner-occupied borrowers with a minimum 680 credit score allows consumers to pay their mortgage payment at a rate 2% below the fixed rate mortgage the first year and 1% lower the second year before the mortgage returns to a fixed rate over the remaining life of the loan.

Hudson United Mortgage Services, LLC is now accepting appointments for its Second Look Program. “Any prospective homebuyer is encouraged to meet with a Hudson United Mortgage loan officer once they have received a mortgage estimate from another lender to receive competitive rates and discuss their best options. This ensures that clients are receiving the best mortgage rates available anywhere. Clients who meet with one of the Hudson United Mortgage loan officers will receive a $100 Visa Gift card following the meeting. To be eligible, you must show a Hudson United loan officer a signed purchase offer to buy a home and a mortgage estimate from another lender at the time of your free consultation. Then, the borrower will receive a Visa Gift Card, whether they apply for a mortgage through Hudson United Mortgage or any other mortgage company. This offer expires December 31, 2019.

Loan Stream Mortgage offers Bank Statement loans. Fixed Rate, 5/1 and 7/1 ARM’s up to $10,000,000 with interest only options available. Questions? Submit them too: inquiries@lswholesale.com.

Effective January 2^nd, PennyMac released its Non-Conforming NonQM Loan Program.

Fannie Mae launched the MH Advantage program, hoping to give future homeowners another option. Rick Walker, Collateral Policy & Strategy Risk Manager with Fannie Mae sat down with Appraisal Buzz to give us a closer insight into the new program. For details, read the Q&A discussion.

Elixir Mortgage Lending has 1 Month Bank Statement Loans available.

Citadel Servicing has a new ODF Plus Program for 5 to 35-Unit Properties. Contact sales@citadelservicing.com for more information.

Capital markets

The U.S. 10-year closed Tuesday +3 bps to 2.72% as Treasuries across the curve all moved in the same direction with markets receiving no updates on trade talks with China, though it was reported the talks will extend into today. Beijing was in the headlines twice, as North Korea’s Chairman Kim Jong-un reportedly arrived there for a visit that will continue through January 10. Finally, on the international front, Germany’s Industrial Production experienced its sharpest rate of decline since the financial crisis.

Today’s calendar kicked off with the usual mortgage applications from the MBA for the week ending January 4. In proof of a) an unusually slow week the prior week, and b) how flighty holiday week stats can be, applications were up over 23% with refis doing well. Up next will be three scheduled Fed President speakers: Atlanta’s Bostic, Chicago’s Evans, and Boston’s Rosengren. Finally, and most importantly, at 2PM the minutes from the December FOMC meeting will be released. We begin today with the 10-year yielding 2.74 percent and Agency MBS prices down/worse a couple ticks.

(Thank you to Jerry D. for these, “Why I Love Getting Older;” Part 2 of 2)

8. Senility has been a smooth transition for me.

9. Remember back when we were kids and every time it was below zero outside they closed school? Yeah, Me neither.

10. I may not be that funny, or athletic, or good looking, or smart, or talented… I forgot where I was going with this.

11. I love being over 70, I learn something new every day and forget 5 others.

12. A thief broke into my house last night. He started searching for money so I woke up and searched with him.

13. After sending this commentary out I think I’ll just put an “Out of Order” sticker on my forehead and call it a day.

14. November 4, 2018 marked the end of Daylight Saving Time. Hope you didn’t forget to set your bathroom scale back 10 pounds on Saturday night.

15. Just remember, once you’re over the hill you begin to pick up speed.

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Low Down Payments Can Help Borrowers AND Lenders.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Nov. 28: LO & mgt. jobs; non-QM product, construction webinar; lender and bank M&A going bonkers

Nov. 29: LO, AE jobs; broker, fraud, subservicing products; training & events in the next 2 weeks; Fed speech moves rates

Nov. 30: LO jobs; paper on fraud, construction product; FDIC & non-bank lending; the Fed to start watching OBFR instead of Fed Funds?

Dec. 1: DACA – lenders & investors decide residency; URLA/1003 questions for every MLO to ask

Dec. 3: LO & sales jobs, layoffs & promotions; sales, education products; bond market watching jobs & China

Dec. 4: LO & AE jobs; LO products; December events & training; servicing sale with CRA loans

Dec. 5: LO jobs, promotions; QC & fulfillment products, Alt-Doc webinar; recapitalize the Agencies?

Dec. 24: Rates go up, they go down; a deep dive into what is moving rates and deals being done by the Agencies

Dec. 26: MI jobs, marketing product; another mortgage settlement; shutdown update for lenders; rates are low cuz…

Dec. 27: Non-QM, marketing products; shutdown update, incl. flood insurance setback; there are over 1,400 vendors?

Dec. 28: Doc automation product; FHA & VA changes around our biz; Agency deals continue to share risk

Dec. 29: FEMA reverses flood ruling; cybersecurity notes; observations on general housing trends

Dec. 31: Rates, the Fed, world economies, affordability, and the shutdown – all tied together

Jan. 2: AE, underwriter, LO jobs; warehouse, marketing products; important VA cash-out changes on tap

Jan. 3: LO, production jobs; broker, digital products; Jan. events incl. ARM webinar; basic primer on how rate sheet pricing is set

Jan. 4: MI, LO, AE jobs & promotions; non-QM, joint venture products; Agency shutdown news; flat rates in 2019?

Jan. 5: Notes on VA cash-outs, what happens after a merger or acquisition; HMDA fields ready for input

Jan. 7: AE jobs, New Penn now NewRez, homebuyer product; sample of vendor news; rates reflecting slowdown

Jan. 8: LO & sales jobs; database, Section 184 products; Lennar/Eagle lawsuit; M&A continues unabated nationwide

Jan. 9: LO jobs coast to coast; non-QM, appraisal products; events this week; new buydown, 2nd look products