Hedging, TPO and Broker Programs; Servicing, QC, Consulting Products; CFPB Report on Lending; STRATMOR and MortgageCX

Seen on someone’s laptop here in Phoenix: “If Pete Davidson can date a Kardashian, you can be a homeowner.” From a business viewpoint, if you think mortgages are bad, try NFTs. I don’t know what I was thinking, sinking my entire 401(k) into that sector a few years ago. My collection of fake, imaginary art is now worthless!? It’s good to keep things in perspective. If you think rates in the U.S. are too high, try being a lender in Pakistan (22 percent) or Turkey (benchmark rate at 25 percent.) Although buyers in the U.S. don’t have to contend with rates like that, what are the big concerns in the home buying experience? A sizeable portion believe that they will not be able to afford the mortgage payment. Almost as many believe that they won’t be able to save, or don’t have enough, for a down payment. Some think that their home will not be a good investment. And there is a portion who believe that they can’t trust the real estate agent or the lender. LOs certainly have their work cut out for them. (Today’s podcast can be found here and this week’s is sponsored by Built. Built is powering smarter and faster money movement for the entire construction and real estate ecosystem, all while reducing risk. Hear an interview with Fidelity National Financial’s Chuck Cain on the controversy surrounding Attorney Opinion Letters in lieu of title insurance.)

Lender and Broker Software, Programs, and Services

Let’s face it: We’re all feeling the impacts of rising loan origination costs. What if you could come back from MBA Annual23 with winning strategies to help you optimize your cost management, boost your profitability, and take control of your bottom line by matching you with the right tools and workflows? With Certified Credit, you can! Certified Credit’s suite of Cascade solutions automates your lead generation, prequalification, VOE, and UDM processes to help you reduce origination costs. Plus, when you pair leading automation with milestone ordering, you take your efficiency to a new level, standardizing your workflows and mitigating errors and delays. Ready to learn how you can enhance your cost management and operational efficiency? Grab your spot with Certified Credit at MBA Annual23!

Long time industry vet Rich Swerbinsky has formally launched his consulting business, Onward & Upward Consulting targeting individuals or firms looking to start, scale, or reinvent a business, individuals looking for a one-time or recurring career consultant who can be impactful at a very reasonable price, and individuals looking for a career coach or mentor that can help them get the absolute most out of the natural gifts, skills, and experiences they possess. In addition, Onward & Upward does time management seminars for companies and their employees.

“Unlock Success at the MBA Annual Conference! For over 16 years, Accenture has been the powerhouse behind some of the industries’ preeminent participants, big and small. We’re not just a support system; we are the driving force that partners with our clients to transform their processes into a catalyst for success. In today’s challenging market, opportunities for partnership are abundant, but not always obvious. Accenture thrives on solutions, and more importantly, seeks to partner with you for your aggrandizement. Join us in historical Philadelphia and let’s discuss how Accenture can tailor solutions to your unique needs. See you at the conference!”

ACES Q1 2023 Mortgage QC Trends Report found that critical defect rates declined for the second consecutive quarter! But lenders are advised to remain vigilant to ensure the downward trend continues. A summary of the findings includes the overall critical defect rate declined 3.26% ending the quarter at 1.78%, income/employment remained the leading defect category Legal / Regulatory / Compliance. FHA defect share declined after two consecutive quarters of increase, and appraisal defects increased. “Lenders reported a pre-tax, per-loan net loss of $1,972 in Q1. This result is an improvement over Q4 2022’s record $2,812 per-loan loss and reverses the trend of production losses that began in Q4 2020,” said ACES CEO Trevor Gauthier. “We expect this data to continue to improve in the coming quarters. Making strategic investments in tech and optimizing operations, especially in QC, can have a significant impact on protecting existing revenue amidst challenging market conditions.”

In uncertain markets, time matters. For loan servicers in need of immediate insights into their portfolio, having on-demand access is a game changer. Enter Velocity Servicing, a LoanCare division designed to turn distressed loans into performing portfolios faster. Backed by LoanCare Analytics, a proprietary advanced data analytics platform with real-time access to portfolio data, the team at Velocity Servicing is able to manage troubled loans with speed and accuracy. With an ownership model that ensures distressed loans are prioritized, Velocity Servicing and LoanCare Analytics help maximize your ROI and keep you one step ahead of the curve. Click here to schedule time with the team at the MBA Annual Conference next month in Philadelphia.

Are you interested in learning more about the current market outlook and how to identify affordable lending and potential mortgage pricing for borrowers? Join Freddie Mac’s Ajita Atreya and Mia Jones, along with MCT’s Paul Yarbrough on October 5th at 10am PT for a webinar entitled “MCT and Freddie Mac Present: Current Economic and Housing Outlook, Affordable Lending Strategies and Technology Solutions”. In this webinar, panelists will provide a current economic outlook, discuss affordable lending solutions and explain how API integrations are utilized to help our mutual clients identify and price affordable mortgage loan opportunities for borrowers. Register for the webinar today or join MCT’s newsletter to receive timely updates.

Broker and Correspondent Programs

Luxury Mortgage Corp.® is thrilled to announce a reduction in interest rates by 25 basis points for borrowers in Low-to-Moderate Income (“LMI”) communities. This rate reduction applies to the purchase or refinance of a primary residence located in an LMI census tract. At Luxury Mortgage®, we are committed to ensuring everyone in our diverse communities has equal access to mortgage financing. We invite you to join us in embracing this initiative and offering this incentive to benefit your LMI consumers. Whether you choose to support your existing consumers or utilize this incentive to develop a new business strategy, we eagerly anticipate your participation in this exciting opportunity to contribute to our shared communities. If you are not an approved broker, now is the perfect time to become one. Click here to initiate the process of becoming an approved wholesale broker.

“Google search data, market surveys, and industry trends indicate that a HELOC is one of the most marketable solutions in the current mortgage environment. As such, a HELOC has become an essential tool for winning new business and strengthening business with current borrowers. Symmetry’s HELOCs grant you the ability to capitalize on this market demand and expand business with and for your clients. Checkout this “HELOC Talking Points” flyer with five perfect scenarios for introducing a HELOC to your borrowers. Contact your Symmetry Lending area manager to discuss Symmetry’s proven benefits, review HELOC sales strategies, or review program details.”

Are you creating affordable new mortgage solutions in the communities you serve? The introduction of ONE+ by Rocket Mortgage provides an incredible opportunity for Rocket Pro TPO partners and real estate professionals. With this product, eligible clients provide 1 percent towards the down payment and the other 2 percent down payment requirement is covered, plus clients are not responsible for paying the mortgage insurance! And your clients may be able to use Rocket’s 3-2-1 Temporary Buydown for additional payment relief. Are you ready to help clients whose student loan repayments are set to resume? Rocket Pro TPO is preparing broker partners to be part of the solution with their Student Loan Busters! From cash out options to home equity loans, clients can potentially reduce their monthly payments, streamline their number of separate payments, and take advantage of tax benefits. Interested in learning more about a Broker or Non-Delegated Correspondent partnership? Contact Rocket Pro TPO to learn more.

“At Newrez Correspondent we know that Partnerships and Memberships have their benefits. Recently we’ve partnered with LoanNex to share our Non-QM offering with more lenders and also partnered with The Marketplace to provide unbranded marketing materials to our clients. In addition, we became a member of the Lenders One Cooperative to expand our network and joined the American Bankers Association to enhance our reach through our Bank and Credit Union division. These are just a few of the key reasons you should be meeting with us at the Annual MBA in Philly, so click here to set a time with your Regional Sales Manager at the Loews Hotel October 15th to 18th.”

STRATMOR on Customer Experience

Did you know that your future revenue directly depends on your ability to produce delightful experiences? And that means more than just having a likeable LO. According to data from STRATMOR’s MortgageCX program, what drives referrals and repeat customers is 83% based on process and just 17% based on the LO/borrower relationship. Without a pristine process, you lose any chance to turn your loan into more loans. MortgageCX (now integrated with Encompass and available on ICE Marketplace) can help ensure you’re not leaving referrals and repeat business on the table. With MortgageCX, each employee receives their own clear path to improvement. Laser focus your CX strategy: Reach out to STRATMOR Customer Experience Director Mike Seminari and learn more about what MortgageCX can do for you.

The CFPB’s Report on Lending

The Consumer Financial Protection Bureau (CFPB) released its annual report on residential mortgage lending activity and trends. Mortgage applications and originations declined markedly from the prior year, while rates, fees, discount points, and other costs increased. Costs and fees rose 22 percent from the prior year to an average of $5,954 per file. Overall affordability declined significantly, with borrowers spending more of their income on mortgage payments (average monthly mortgage payments increased more than 46 percent) and lenders more often denying applications for insufficient income.

Black and Hispanic borrowers were denied loans at higher rates, received smaller loans, were charged higher interest rates, and paid more in upfront fees than white and Asian borrowers. Lenders denied loan applications due to insufficient income at higher rates than at any point since that data was first collected and reported in 2018. Most refinances during the reported period were cash-out refinances and overall refinance activity dropped by more than 73 percent. Home-equity lines of credit were the only form of refinancing to see a rise. In a reversal of recent trends, the median credit score of refinance borrowers declined below the median credit score of purchase borrowers.

Capital Markets

Successful capital markets folks know how critical it is to realize the best available price when selling closed loans into the secondary market. But doing so is a time-consuming, time-sensitive, and incredibly detailed process. Fortunately, Optimal Blue has released its next generation hedging and loan trading platform, CompassEdge, to address these challenges. CompassEdge uses real-time inputs from MBS securities, agency cash, co-issue, bulk-bid, and even best efforts, thanks to the embedded industry-leading Optimal Blue PPE. The powerful platform also uses automated optimization tools to address securitization options, spec pools, and high balance de minimis. CompassEdge empowers users to wring every basis point from today’s precious pipelines and to make the best retain/release decisions, thanks to live loan-level MSR valuations with unparalleled efficiency. To take your best execution to the next level with CompassEdge, start the conversation with Optimal Blue or schedule a meeting with our capital markets experts during MBA Annual.

Usually, economic news impacts stocks and bond prices differently. A piece of news that indicates a slowing economy causes stock market weakness, and also helps bond prices, driving rates down. But not as of late. The recent surge in rates because of hawkish Fed rhetoric following the September FOMC meeting continued yesterday. Ongoing (re-re-re-) repricing of “higher for longer” Fed sentiment sent rates sharply higher and the curve sharply steeper for the third straight session. That was despite the U.S. Treasury conducting an even stronger $49 billion 5-year note sale following Tuesday’s solid $48 billion 2-year note sale. Durable Goods orders rose 0.2 percent in August based on higher defense spending. And Minneapolis Fed President Kashkari said that a government shutdown or prolonged UAW strike could act to lower inflation and reduce the need for the Fed to further hike rates

Today’s economic calendar is under way with the final look at Q2 GDP (generally viewed as old news, it was unchanged at +2.1 percent) and weekly jobless claims (204k, up 2k). GDP was expected to be unchanged from the prior reading at 2.1. The core PCE deflator registered +3.7 percent, as expected.

Later this morning brings the Pending Homes Sales Index for August, KC Fed manufacturing for September, a Treasury auction of $37 billion 7-year notes, Freddie Mac’s latest Primary Mortgage Market Survey, and remarks from Chicago Fed President Goolsbee, Fed Governor Cook, Chair Powell, and Richmond President Barkin. We begin the day with Agency MBS prices are roughly unchanged from Wednesday night and the 10-year yielding 4.61 after closing yesterday at 4.63 percent. The 2-year is yielding 5.11 percent this morning.

Employment

‘Atlanta based Highland Mortgage welcomes Bryan Lovell as VP, Area Manager. Bryan’s wealth of experience, proven track record, and exceptional leadership is a valuable addition to our organization. We look forward to the insights and innovation he’ll bring to our team. When asked “why” Highland Mortgage, Bryan replied, ‘My belief is every company offers products, good rates, on-time closings, and a solid tech stack. Those are the minimum expectations to be in business today. Highland is built on trust, and transparency. In a market where many are wondering what is behind the curtain within their own companies, the leadership team at Highland Mortgage has a solid vision, believes in 100% transparency, and is flexible to listen to what Loan Originators and Branch Managers want. Simply put, Highland was founded by originators, for originators, with every decision made to help them grow and succeed in every market.’ For more information on Highland Mortgage contact Mickey Schilling, VP, National Sales, or go here.”