Best-Ex, Outsourcing, LOS/Servicing, Portfolio, CRM, QC Products; Conventional Conforming News; 30-year Rates Hit 8 Percent

Unlike lenders who are dealing with 8 percent on rates sheets, sports fans and sports bars are reveling: NBA, MLB, NFL, NHL, all at the same time… And Philadelphia is in the thick of it. A lot of halftimes. Is our industry “down 20-0 at halftime?” Here are the thoughts of Fairway CEO Steve Jacobson on not giving up, having shots taken at you, and using the tools lenders and LOs have to keep helping their clients, including technology. The word “technology” was mentioned about 4,698 times this week at the conference in Philly. If you’re wondering what a great use for AI is, it is summed up in this two-panel cartoon. Gallus Insights CEO Augie Del Rio summed it up nicely. “A machine will always beat a person. A person with a machine will always beat a machine.” But one of the messages this week was how lenders are shedding, yes shedding, expensive unused technology in an effort to cut costs. It is easier said than done, but IT staff are hard at work evaluating usage and expenses across the industry. (Today’s podcast can be found here: Sponsored by nCino, maker of the nCino Mortgage Suite, built for the modern mortgage lender. The nCino Mortgage Suite unites the people, systems, and stages of the mortgage process. Hear an interview with Candor’s Tom Booker on AI developments in the underwriting space.)

Lender and Broker Software, Products, and Services

The Optimal Blue team can’t wait to head to New York Nov. 9 – 10 for the only event dedicated 100% to mortgage servicing rights. Don’t miss an opportunity to catch industry experts Mike Vough and Vimi Vasudeva as they speak on their passions at IMN’s 9th Annual Residential Mortgage Servicing Rights Forum. On Nov. 9, Mike’s session will explore the economics of retain vs. release decisioning in today’s market. Then on Nov. 10, Vimi will cover “Valuation, Modeling & Risk Inputs: Volatility, Liquidity, Credit, Market, Duration & Correlation.” Both sessions will offer valuable insight to support your business strategies. And as always, experts from Optimal Blue will be ready to answer questions and discuss your goals in the expo hall.

Discover How Lennar Mortgage Increased QC Audit Output by 30%! Lennar’s commitment to quality, value, and integrity is why they partnered with ACES Quality Management. “By partnering with ACES, we have witnessed an overall improvement in the quality of our reviews. The platform has enabled us to focus on pre-funding reviews and allocate our resources to other areas where defects need correction,” said Hilda Melendez, Quality Control Systems Director at Lennar Mortgage. Since implementing ACES, Lennar has increased audit output by 30%, enhanced the organization’s ability to meet regulatory requirements and provide an efficient means of demonstrating due diligence during audits, increased flexibility, improved access to information, and enhanced data-sharing capabilities with other business units, and witnessed an overall improvement in the quality of their reviews. Watch Hilda Melendez’s success story today.

Plug-n-play your way to better relationship marketing with Velma, an effortlessly simple CRM tailor-made for smaller lenders, banks, and credit unions. Say goodbye to expensive, complex systems. Velma delivers budget-friendly marketing automation solutions featuring zero implementation fees and seamless, hassle-free setup. With hyper-personalized engagement, effortless efficiency, and a proven track record with over 40,000 mortgage professionals since 2007, Velma simplifies your journey, supercharges your marketing, and keeps your loan officers doing what they do best. Join the Velma revolution today and transform your lending business!

Discover the Planet Management Group difference: a comprehensive suite of portfolio optimization and servicing solutions built to support, enhance, and drive performance of mortgage-based assets. PMG leads in proactive residential and commercial asset management. Gain a competitive edge through flexible asset strategies, and customized workflows. Our bespoke client reporting offers real-time insights, empowering investors to easily pivot in dynamic markets. Partner with PMG and experience unmatched diligence, transparency, and dedicated support. Email or call (585) 512-1030 and discover the PMG difference today.

For the first time, mortgage lenders and servicers have access to a single software suite built on a single database. MortgageFlex offers the industry’s first and only unified platform, made up of the MortgageFlexOne browser-based LOS and the companion browser-based servicing platform. The company provided a detailed overview of its new unified platform, explained why they built it and suggested that it could allow depositories that service their own loans to take a leadership position in the industry when the business returns in a new White Paper entitled, “The Depository’s Secret Weapon: A Unified Loan Origination and Servicing Platform,” is available on the company’s website now. “The days of depending upon multiple technology partners are ending,” COO Craig Bechtle said. “Our software will allow them to do that with the help of a single technology partner and a unified tech stack.” Download the paper today.

“Turn fixed costs into variable costs on a dime. When the market zigs, lenders need the flexibility to zag. Richey May Advisory brings the mortgage industry expertise and agility you need to convert fixed costs into variable costs. Our difference maker is your ability to outsource services to highly trained experts in a model that fits your needs. Whether that means loan-level accounting, advisory, business intelligence, compliance support, cyber services, internal audits, or underwriting automation, we have the tools, knowledge, and experience to deliver value and improve your financial performance unlike any competitor, anywhere. You’ll feel it almost immediately in your day-to-day operations. Even better, you’ll notice the difference in your bottom line. Reach out or visit our website to learn more about how we can help your operation.”

Conventional Conforming News

Despite official word not expected until Thanksgiving, that hasn’t stopped some groups from pre-empting the FHFA’s calculations & announcement by coming out with their own 2024 conventional conforming loan limits. It is always best to check with the company itself, but a quick tally shows that Guild, Pennymac, CMG, Supreme, SWBC, Guaranteed Rate companies, United Wholesale (UWM), Rocket, Arch, Enact, Essent, and National MI have all raised their limits pretty much to the easy to remember $750k. This despite misleading headlines claiming falling real estate values. A permanent formula was established under the Housing and Economic Recovery Act of 2008 (HERA). If you’re interested, look for Section 1124, pages 39-40.

During the weekend of Nov. 18, Desktop Underwriter® (DU®) Version 11.1 will be updated to help expand access to credit for more homebuyers. Updates include changes to the LTV, CLTV, and HCLTV ratios for certain two- to four-unit transactions, and updates to align DU with recent Selling Guide announcements, and more. View Fannie Mae Release Notes for details.

Freddie Mac Guide Bulletin 2023-19 announces updates pertaining to Rental income requirements, Transition to Uniform Property Dataset (UPD), and Desktop appraisal eligibility.

Fannie Mae October Selling Guide SEL-2023-09 offers information on update requirements for rental income use towards qualifying. Clarifies policy that property data collection must be obtained and submitted to Property Data API prior to the note date. And other miscellaneous updates.

Freddie Mac developed HeritageOne for enrolled members of federally recognized Native American tribes living in tribal areas to provide more access to conventional, fixed-rate mortgage financing and make it easier for you to navigate the complexities of lending in Native American tribal areas.

In celebration of Hispanic Heritage Month, Freddie Mac introduces its Wealth Building Toolkit. The Toolkit provides educational resources and direct-to-consumer materials to prepare homebuyers for homeownership and help them build wealth through homeownership and other sources of financial enablement.

Fannie Mae October Servicing Guide, SVC-2023-05, updates the Loan Modification Agreement including with additional instructions, updates Fannie Mae’s minimum requirements for law firms selected and retained for default-related legal services, and other miscellaneous updates.

Fannie Mae announced a new Sponsor-Dedicated Workforce (SDW) product to create and preserve workforce housing through the company’s network of Delegated Underwriting and Servicing (DUS®) lenders. With its pricing and underwriting benefits, the product incentivizes conventional and social impact Fannie Mae multifamily borrowers to elect rent restrictions on eligible properties for the life of the loan, helping support workforce-income renters. The SDW product will be offered to borrowers who agree to preserve or create a minimum of 20% of units in a multifamily property at levels affordable to residents earning between 80% area median income (AMI) or, in certain cost-burdened designated metro areas, up to 100-120% AMI. The rent restrictions will be documented in the loan documents and compliance will be confirmed annually by DUS lender partners.

As mentioned above, some out there have raised their conventional conforming loan limits. For example, “Rocket Pro TPO… has taken early action on conforming loan limits to provide more opportunities for homebuyers. The company’s proactive approach aims to help borrowers access affordable financing options and navigate the competitive housing market… The new limits allow borrowers to secure larger loans without having to resort to jumbo mortgages, which often come with higher interest rates and stricter qualification requirements. Recognizing the importance of these increased loan limits, Rocket Pro TPO has taken swift action to implement them ahead of schedule. This proactive approach enables the company’s broker partners to offer their clients more financing options and better serve their needs.”

National MI announced the temporary increase to AUS conforming loan amounts in National MI Announcement: UW 2023-03.

Pennymac Correspondent raised its Conventional loan limits to $750,0001, effective Wednesday, October 11, 2023. View Announcement 23-70 for details.

Capital Markets

Are you looking to improve your loan sale efficiencies and optimize your executions? Join MCT’s Phil Rasori, Paul Yarbrough, and Justin Grant on October 25 at 11 A.M. Pacific for a practical guide to maximizing your loan trading profits during a one-hour webinar. In this webinar, panelists will provide a current market overview and review strategies for improving loan sale performance. You’ll leave ready to analyze performance and make actionable changes to boost profitability. Register for the webinar or join MCT’s newsletter to receive upcoming educational content.

Rate news & housing news… with the risk-free 10-year Treasury at 5 percent, and a spread of 3 percent, 30-year mortgage rates are at 8. Ugh. But the U.S. market receives a fair bit of housing data this week and we learned yesterday that housing starts increased 7.0 percent month-over-month in September to a seasonally adjusted annual rate of 1.358 million units, though that was below expectations. Single-unit starts were up 3.2 percent, which is welcome for a supply-challenged housing market. Building permits declined 4.4 percent month-over-month to a seasonally adjusted annual rate of 1.473 million as weakness was concentrated in permits for multi-unit dwellings.

The Federal Reserve’s Beige Book for October described overall economic activity since September as little changed from August. Manufacturing activity was mixed, though the overall outlook improved in some Districts. Overall employment increased slightly while prices grew at a modest pace. Consumer spending was mixed while tourism continued to improve. Loan demand declined slightly to modestly while consumer credit was stable. Speaking of the Fed, New York Fed President Williams said that he is not yet ready to declare victory over inflation while Fed Governor Waller said that he expects that one more rate hike will be needed.

There is definitely hope that higher rates will allow the Fed to hold steady during the next Federal Open Market Committee meeting. Today’s calendar is under way with Philadelphia Fed manufacturing for October (-9, up from a -13.5) and weekly jobless claims (198k; 1.7 million continuing). Later today brings Existing home sales in September, Treasury’s announcement of month-end supply (consisting of $51 billion 2-year notes, $52 billion 5-year notes, $38 billion 7-year notes, and $26 billion 2-year FRNs), a Treasury auction of $22 billion 5-year TIPS, Freddie Mac’s latest Primary Mortgage Market Survey, and several Fed speakers including Chair Powell. We begin the day with Agency MBS prices worse .250 and the 10-year yielding 4.95 after closing yesterday at 4.90 percent.