Cybersecurity, TPO, Verification Tools; Tech Tracking Whereabouts; Why Rates Are Where They Are

It is “Take Your Child to Work Day” next Thursday which, if you work from home, is probably like a day off from school for the tyke. (I won’t be bringing my son Robbie to work, who, as I write this, is pedaling from Chicago to New York and bunked down last night in Union Home’s Bill Cosgrove’s humble abode.) I do not track his exact whereabouts, but we all know that, in having a smart phone, one gives up pretty much all of their privacy. For example, a new working paper posted to the National Bureau of Economic Research sought to examine the polling data that indicates 22 percent of Americans reported attending religious services on a weekly basis. They did this by looking at geodata from smartphones of 2 million people in 2019, and found that while 73 percent of people did indeed step into a place of worship on a primary day of worship at least once over the course of the year, just 5 percent of Americans studied in fact did so weekly, significantly smaller than the data people reported to pollsters. (Found here, this week’s podcasts are sponsored by Optimal Blue. OB’s smart solutions automate critical functions like pricing, hedging, trading, and social media. More originators and investors rely upon Optimal Blue’s integrated solutions, data, and connections to support their unique business strategies, no matter how complex. Hear an interview between Robbie and me on a variety of topics in mortgage that are germane to the Daily Commentary.)

Lender and Broker Products, Software, and Services

Operations leaders! You don’t want to miss this event if you care about improving your operations! Join Femi Ayi, EVP Operations at Revolution Mortgage, Brooke Smith, Senior Manager, Loan Sourcing Digital Solutions at Fannie Mae, and Jodi Eberhardt, Strategic Integration Director at Freddie Mac, and Richard Grieser, VP, Marketing at Truv, as they highlight different strategies to provide customers with a more transparent, efficient borrowing experience. Freddie Mac’s Loan Product Advisor® asset and income modeler (AIM) and Fannie Mae’s Desktop Underwriter® (DU®) validation service play a critical role for lenders committed to streamlining origination processes and improving loan quality. However, the key to optimizing borrower verification workflows and ensuring compliance is partnering with the right provider that helps lenders improve loan quality and save hundreds of dollars per loan compared to traditional verification providers. Come join us! “Minimizing Risks with GSE Borrower Verifications”, April 24 2:00 PM ET Use code TRUV100 to participate FOR FREE, even if you are not an MBA member! Register now.

“AFR Wholesale® is thrilled to announce the renewal of our partnership with AIME for 2024, underscoring our commitment to the wholesale channel. As we continue our collaboration, we are committed to providing essential resources, comprehensive training, and robust support to independent mortgage professionals and the wholesale channel. This partnership will allow AFR to set new industry standards, promote best practices, and deliver exceptional services to our clients and partners. We also will look to spearhead innovative initiatives aimed at boosting operational efficiencies and enhancing customer experiences. Reflecting on a history of successful collaborations, we are excited about the potential for even greater achievements. This announcement is just the beginning, as AFR plans to unveil several exciting partnerships and updates in the coming weeks. Join us in driving change in mortgage lending. To get involved, contact us at sales@afrwholesale.com, 1-800-375-6071, visit AFR.”

In the wake of frequent breaches within our industry, we are reminded of the precarious position mortgage lenders and their customers’ data are currently in. These repeated security incidents emphasize an undeniable truth: robust cybersecurity defenses are not merely an option; they are imperative. A breach can mean the difference between a thriving business and a devastating collapse. There is a very real risk to mortgage companies right now; you’re not just guarding data, you’re safeguarding trust, livelihoods, and the very integrity of the financial system. It’s a responsibility to take seriously, and it’s time to double down on cybersecurity. Richey May’s cybersecurity team is here to help: Check out the latest post detailing the often-overlooked risks in the industry.

Capital Markets

One can’t ignore the U.S. Federal Reserve’s role in interest rates. (The current STRATMOR blog is titled, “Relying on the Fed: How Did This Happen?”) The “experts” have been predicting multiple rate cuts in 2024. Sure enough, the much-awaited Fed pivot has materialized, but it’s not what investors had been expecting. The Fed change was supposed to signal a reverse of its contractionary monetary policy path, keeping rates high, which has been in place since March 2022.

But that is not the message, especially after three consecutive months of stronger-than-expected inflation readings. Fed Chair Jay Powell said, “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence. Last year, rebounding supply supported U.S. growth in spending and also employment, alongside a considerable decline in inflation. The more recent data show solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2 percent inflation goal.”

As always, the Federal Reserve is watching the data as it comes out. But things will be higher for longer. At least the next rate move is still forecast to be a cut. Things could get rocky for lenders and borrowers if that shifts to a hike, which could happen if price pressures resurface and put a so-called soft landing into doubt. And now we have the yield on the benchmark 10-year U.S. Treasury note up at its highest level since November, above 4.6 percent versus a yield of 4.25 percent in the last week or two and starting the year at 3.88 percent, meaning that the 10-year is now nearing a full point rise for 2024!

As today’s podcast interview alluded, it’s been pretty quiet out there in terms of market-moving news. Weekly jobless claims showed no change from last week’s level and there was a better-than-expected Philadelphia Fed survey for April yesterday, which prompted some selling. Investors bought plenty of Treasuries to close 2023 and open 2024, betting on several rate cuts this year from the Fed. However, Fed speakers hammering home patient rhetoric on interest rates (several more Fed speakers reiterated yesterday that they do not feel urgency to cut rates at this time) due to a reluctance of the U.S. economy to cool, has forced investors to abandon bets on a rally, giving way to a wave of selling.

Accordingly, mortgage rates surged in the latest Primary Mortgage Market Survey from Freddie Mac, with the 30-year rate above 7 percent for the first time this year. For the week ending April 18, the 30-year and 15-year mortgage rates jumped 22 basis points and 23 basis points versus the prior week to 7.10 percent and 6.39 percent, respectively. Those rates are 71 basis points and 63 basis points higher than this time last year.

Inflation is back below 3 percent, but hotter-than-expected readings for the rental category of housing in the first few months of the year are a big reason the Fed has held back on the rate cuts that Wall Street has been hoping for. Markets seeing the biggest rent declines are the ones where there’s been the most construction. The Northeast and Midwest have experienced lingering high inflation, while the West and South have seen it moderate rapidly.

Existing-home sales fell 4.3 percent in March to a seasonally adjusted annual rate of 4.19 million, a widely expected decline given the recent slip in purchase mortgage applications and solid gains registered in the first two months of 2024 from increased supply and a temporary dip in mortgage rates. Sales were down 3.7 percent from the previous year. The median existing-home sales price rose 4.8 percent from a year ago to $393,500, the ninth consecutive month of year-over-year price gains and the highest price ever for the month of March. The inventory of unsold existing homes grew 4.7 percent from one month ago to the equivalent of 3.2 months’ supply at the current monthly sales pace.

There is no data of note on today’s economic calendar, though there is one Fed speaker, Chicago President Goolsbee. For capital markets folks, today is Class D 48-hours. We begin the day with Agency MBS prices better by .125-.250, the 10-year yielding 4.59 after closing yesterday at 4.65 percent, and the 2-year is at 4.96.

Employment

“At Evergreen Home Loans, our mission is simple: equip our clients with affordable strategies to not only buy a home but to make a winning offer. Our unique approach helps families secure their futures and build generational wealth. As we navigate a fluctuating housing market, Evergreen Home Loans remains committed to innovation and client success. Our tailored solutions emphasize stability and long-term prosperity, ensuring that homeownership is a reality for first-time buyers and seasoned investors alike. By fostering a supportive environment and providing strategic financial guidance, we empower our clients to turn their dreams of homeownership into tangible assets that benefit generations. We’re expanding our team and invite skilled loan officers and branch managers to explore the career opportunities we offer. Join us in making a difference and shaping the future of homeownership. To view all openings visit: Careers.”

Synergy One Lending continues to reemerge as one of the industry success stories in 2024. The addition of 12 new branches and the successful expansion of the company’s footprint into several new markets has provided an even stronger foundation of profitable growth as it prepares for even more ahead. A vision with a P&L structure built to grow market share, relentless execution and adoption of leading-edge technology and a culture that is focused on their 3 core values (delighted customers, inspired employees and a pristine reputation) are leading indicators of the company’s trajectory. Be part of it and Make Your Mark by reaching out to Aaron Nemec at (208) 794-7786 or Eric Kulbe at (303) 717-0293.

Geneva Financial, operating in 48 states, announced that Jessie Ermel has joined its leadership team as Chief Compliance Officer where Jessie will drive quality control and compliance for the company’s mortgage operations.

Our industry lost another veteran recently with the death of Alabama’s John Johnson. John was CEO and co-founder of MortgageAmerica, Inc. from 1978 to 2012. But John’s mortgage career began in 1966 at Colonial Mortgage Company and then Molton-Allen & Williams. He served as the Mortgage Bankers Association of Alabama President in 1980-1981 and chaired the organization’s Convention in 1982. John was awarded the Certified Mortgage Banker designation in 1982. was a member of the Board of Directors of the Mortgage Bankers Association of America from 1999-2003, served as Chairman of the Residential Board of Governors in 2001-2002, and was Chairman of the Board of Directors for MERS in 2006. Guys like this helped make our industry what it is today, and he’ll be missed.