Borrower Checklist, POS, Subservicer Products; STRATMOR on Purchase Business; Fannie’s Earnings

Is it a surprise to anyone that millions of renters could afford to buy a home with their mortgage payment not exceeding 30 percent of their income? Despite 39 percent of U.S. families renting in 2022, nearly 8 million qualified as “income mortgage-ready,” per Zillow, meaning they could likely handle a mortgage payment for a typical home in their area. Some portion of those want to rent, but other many potential homeowners may simply be unaware of their financial ability to purchase a home. It’s certainly up to lenders to tell them. Are they all waiting for lower rates, the term “lower” being subjective? The U.S. Federal Reserve is widely anticipated to hold the federal funds rate steady tomorrow, but everyone is expecting some kind of strong indication that it will begin easing policy in September. “Rob, are you hearing much about adjustable-rate loan production picking up?” Nope. Most think that rates are going to drop eventually, and it seems that borrowers are hesitant to have the same rate for 3 or 5 or 7 years. And capital markets staff aren’t in a rush to go through the trouble of setting up a new investor to do 3 loans a year with. (Today’s podcast is found here and this week’s is sponsored by Optimal Blue. Optimal Blue bridges the primary and secondary mortgage markets to deliver the industry’s only end-to-end capital markets platform, helping lenders maximize profitability and operate efficiently so they can help American borrowers achieve the dream of homeownership. Hear an interview with TD Bank’s Scott Lindner on optimism amongst home buyers despite market challenges.)

Lender and Broker Software, Products, and Services

Is a standing call with your servicer enough when it comes to proper oversight? Is there a specified cadence for how often a lender should be meeting with their servicer? Ultimately, it is your responsibility to oversee your subservicer, so you must understand what is expected of you and the key actions you need to take to maintain oversight and comply with regulations. Tune in to this video where the experts at Richey May answer the most frequently asked questions about subservicer oversight requirements. Whether you’re considering leveraging a subservicer or navigating the general complexities of oversight, Richey May’s mortgage compliance experts can help. Contact us today for more information.

Stand out with the only mortgage point of sale fully customized for your business. In today’s competitive mortgage marketplace, customizing workflows and borrower experience is crucial to differentiation. With the industry-first configurability of Maxwell Point of Sale, lenders can define workflows for any mortgage product, while configuring triggers and business rules to align the borrower experience to operational processes. Maxwell Point of Sale also features more than 60 third-party integrations, allowing lending teams to seamlessly connect with other vital pieces of their workflow, from credit and verifications to pricing and disclosures. It’s no wonder that Maxwell Point of Sale is the top ranked mortgage point of sale on Capterra with 4.8/5 stars. Want to learn more? Let us know and we’ll show you what Maxwell can do for you and your borrowers.

Mortgage technology companies have a way of making things waaaay more complicated than they need to be… What if it was 10 times easier to get conditions from borrowers? What if you could send a Needs List to a borrower right from the LOS that was clear and descriptive, and the borrower could upload docs right into the eFolder? Check out LiteSpeed by LenderLogix. Built for Encompass® by ICE Mortgage Technology, it’s the technology your borrowers are looking for.

Lenders Going After Purchase Business

In its July Insights Report, STRATMOR Group explains why the upcoming surge in purchase business will not look like the last time the industry saw a wave of new business and that it won’t benefit all lenders equally. In “How to Win the Coming Battle for the Purchase Money Market,” his second article in a two-part series, STRATMOR Senior Partner Garth Graham explains that a new approach to originating purchase loans will be required to increase the profit earned from each loan. Garth says there may not be enough deals to go around, and the Realtors who might have dealt with buyers in the past may not have the opportunity to work with them in the future. “If you’re counting on your business referral relationships to bring you your share of the coming wave of new purchase-money business,” says Garth, “stop.” Instead, he suggests lenders follow four steps, which he outlines in the article.

STRATMOR Ops Workshop

While we were all hoping for a modest rebound in the housing market during the spring and summer selling season, it simply has not materialized. It’s still a challenge to earn profits on the production side of the house. Based on MBA Quarterly Performance Report data, 58 percent of lenders were not profitable on production (excluding servicing) for Q1 2024. Operations executives have tried to keep their core team together, but even that has become problematic as staff reductions continue. So, what can lenders do now to continue to streamline operations and weather the enduring downturn? Join STRATMOR Group for its virtual Operations Workshop, August 13,14, and 15, to interact with STRATMOR advisors and peer lenders about improving operational efficiency, overcoming recent challenges and pain points, and current trends in mortgage operations. The three two-hour virtual sessions are designed specifically for senior operations executives. Contact STRATMOR to learn more and reserve your seat today.

Conventional Conforming News

Fannie announced its second quarter 2024 results: $4.5 billion net income for the second quarter of 2024, with net worth reaching $86.5 billion as of June 30, 2024. Net income increased $164 million in the second quarter of 2024 compared with the first quarter of 2024, primarily driven by increases in net interest income and benefit for credit losses. $95 billion in liquidity provided in the second quarter of 2024, which enabled the financing of approximately 330,000 home purchases, refinancings, and rental units. Acquired approximately 213,000 single-family purchase loans, of which approximately half were for first-time homebuyers, and approximately 45,000 single-family refinance loans during the second quarter of 2024. Financed approximately 72,000 units of multifamily rental housing in the second quarter of 2024; a significant majority were affordable to households earning at or below 120% of area median income, providing support for both workforce and affordable housing.

In a joint release, six federal regulatory agencies issued a final rule, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, designed to help ensure the credibility and integrity of models used in valuations for certain mortgages secured by a consumer’s principal dwelling. In particular, the rule will implement quality control standards for automated valuation models (AVMs) used by mortgage originators and secondary market issuers in valuing those homes.

When Hurricane Maria hit Puerto Rico in 2018, one of the most persistent challenges encountered in aiding recovery was the number of homeowners who couldn’t readily get the support they needed because they didn’t have a clear title to their property. These homeowners were facing challenges around heirs’ property, or tangled titles, where the property ownership has been left to multiple heirs. Fannie Mae partnered with the Housing Assistance Council (HAC) to estimate the prevalence of residential heirs’ property on a national scale and better understand the scope of the issue. In a new Perspectives blog, Tim Carpenter, Fannie Mae Senior Director of Disaster Recovery & Resilience, reviews the results of this pioneering research and what they’re learning by bringing the industry together to help address the problem of tangled titles. Learn more by reading the full research report.

Fannie Mae updated Selling and Servicing Guide pages to enhance your experience. All Guide topics have new URLs, with temporary redirects in place until January 2025. To avoid disruptions, please update your bookmarked links as soon as possible.

After July 30, the Appraiser Quality Monitoring (AQM) list will not be available on the AQM page. Access to Fannie Mae Connect will be required for viewing.

Fannie Mae recently announced that the Model Form for the Connecticut Security Instrument (Form 3007) has been revised to increase clarity in Paragraph 26(a) “Notice of Default”.

Paragraph 26(a)(vi) has been revised to read: “Borrower’s right to deny in the foreclosure proceeding the existence of a Default or to assert any other defense of Borrower to acceleration and foreclosure.”

Effective Friday July 26th, PHH Mortgage began accepting 1.5 – .5 Temporary Buydown options.

Fifth Third Correspondent Lending Communiqué, edition 2024-2-7.24.24 has the following topics: All Conforming Products: Attorney Title Opinion Letters, and Fifth Third LendingSpace Portal.

AmeriHome Mortgage posted reminding Sellers that for loan applications dated on or after 4/1/2024 with an eligible ACE + PDR offer from LPA; Lenders will be required to use the Uniform Property Dataset and submit PDRs to Freddie Mac using the bACE API. See Product Announcement 20240713-CL for details.

Citi Correspondent Lending Bulletin 2024-07 includes credit policy updates on Appraiser License/Certification Requirements, Hazard Insurance, Assignment of Sales Contract, 10-Day PCV (Pre-Close Verification) – LPA, additional reminders, ​clarifications, and notices.

Pennymac stated its alignment, in Announcement 24-70, with Freddie Mac’s removal of restrictions for custom MI and LPMI. Changes effective with applications dated on or after June 5, 2024.

Capital Markets

This week’s focal point is the Federal Open Market Committee (FOMC) rate decision tomorrow, followed by Fed Chair Powell’s press conference, where he will be asked many different questions that try to draw clues about future rate cuts. While no cuts are expected at this meeting, the most significant insights are likely to come during the press conference. His remarks are likely more important than whatever July’s payrolls print is on Friday. Investors currently expect three rate cuts by year-end, but keep in mind that previous forecasts have predicted a more dovish Fed than in reality throughout this whole tightening cycle.

Going into that meeting, recent economic data includes stronger-than-expected Q2 GDP, which helped temper expectations for early rate cuts. Personal spending data for June showed a 0.3 percent increase, with personal incomes rising by 0.2 percent month-over-month, indicating a slight economic weakening. This suggests the Fed’s tightening is working without causing significant economic damage.

There was little in the way of market-moving news overnight, and today’s economic calendar won’t have much either. Later this morning we have Redbook same store sales, although it is followed by May house price indexes from Case-Shiller and FHFA, JOLTS job openings, and Dallas Fed Texas services for July. We begin the day with Agency MBS prices roughly unchanged from Monday’s close, the 10-year yielding 4.17 after closing yesterday at 4.18 percent, and the 2-year yielding 4.39.