Fee Collection, Industry Report, LOS Insurance Tools; Disasters and Storms; Insurance Input Sought; USDA’s New Map

Time flies. It was four years ago many of us were watching the mess called “Tiger King. Summer is upon us again. “People are complaining about this being the hottest summer in the last 150 years. I’m more of a glass half full kind of guy. I’m thinking of it as the coldest summer in the next 150 years!” Whether or not you believe in climate change, past poor forest management practices, or that the severity of storm damage has increased, is of no consequence. What is of consequence is that insurance companies, government agencies (including Freddie and Fannie), large investors, servicers, and the rating agencies have either changed their pricing, or will, and that impacts your borrowers. (The current STRATMOR blog is “Catastrophe and Climate Risk Is Only Increasing”.) Homeowner’s insurance is just one example: I’ve heard from plenty of LOs, “They could afford the mortgage payment, but the monthly insurance premium killed the deal.” And how do you think the thousands of homes lost in wildfires, tornadoes, hurricanes, and flooding impact the inventory situation? (Today’s podcast is found here, and this week’s are sponsored by Visio Lending. Visio is the nation’s premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Hear an interview with Carrington’s Steven Winokur on an overview of the non-QM space, evolution, and investor appetite.

Software, Products, and Services for Lenders and Brokers

Mortgage leaders: The home insurance market is facing unprecedented volatility with carriers declining new business and increasing premiums to an all-time high. This can delay closings and even lead to DTI exceeding acceptable limits once insurance costs are factored in. Matic, a digital insurance marketplace built for the mortgage industry, helps borrowers save time and over $600 annually by shopping multiple A-rated carriers at once and providing transparent pricing and coverage options. With flexible integration capabilities, Matic adds visibility and control, allowing lenders to foresee potential issues that could result in delayed closings. To learn how 100+ mortgage enterprises like New American Funding, PRMG, and USA Mortgage are partnering with Matic, book a demo today.

Loansifter and Uplist partner to provide brokers more options to connect with agents. This collaboration enables mortgage brokers to access Loansifter’s live pricing directly through Uplist’s innovative technology platform. Brokers are leveraging this new integration to showcase their competitive real-time rates to potential home buyers at their agent’s listings. By leveraging Loansifter’s extensive database of over 120 wholesale investors, Brokers are now providing clients with the most competitive and up-to-date financial information available with a push of a button. Brokers don’t get left behind.

“Mortgage Machine is excited to invite you to an informative webinar featuring Tim Anderson, a renowned industry expert in digital mortgages. Join us as we explore the latest innovations in SMART documents, eClosing, eNotes, and the benefits of a fully digital mortgage workflow. During this insightful webinar, Tim Anderson and Dan McGrew will dive into the cutting-edge advancements of MISMO V.3. Throughout this webinar, you’ll witness firsthand how Mortgage Machine, an all-in-one LOS, provides this completely digital workflow experience. Click here to register for this must-attend webinar on Thursday, June 27th at 12 pm CT and stay ahead of the curve in digital mortgage solutions.”

NEW: Learn which loan products are performing and how to cater to today’s home buyers with Maxwell’s Q1 2024 Mortgage Lending Report. Maxwell’s latest Mortgage Lending Report shows that borrowers continue to pursue HELOCs, VA loans, and FHA loans as higher interest rates persist. Meanwhile, first-time home buyers are displaying resilience despite market challenges, with loan volume growing at twice the rate of the overall market. Today, first-time buyers make up nearly 30% of the market—their highest share since Maxwell began tracking this data. Want to access exclusive data that sheds light on today’s market, along with actionable tips to get ahead of the competition? Click here to get your copy of Maxwell’s Q1 2024 Mortgage Lending Report.

What would be a “10 out of 10” experience for your upfront fee collection? It would probably look something like this… Borrower gets a text message that they have an appraisal fee due, they pay on their iPhone and the LOS is automatically updated. Good news, that’s exactly what Fee Chaser does. Book 15 minutes to check it out.

“Loan Vision is excited to announce that registration is now OPEN for our 2024 Loan Vision Innovation Conference (previously the Loan Vision User Conference). With a focus on innovation, growth, and doing more with less, our new and improved annual conference is taking place in Chicago, Illinois from Monday, September 23rd – Wednesday, September 25th. This conference will deliver highly recognized names in mortgage banking as our speakers, enhanced social networking events, and a fresh agenda for both executives and users and will be aimed at redefining industry standards and setting a new benchmark for excellence. If you’re interested in sponsoring this event, please contact Haleigh Heilman. To learn more about this conference, register, and book your hotel, please visit here.”

Disasters, Catastrophes, Power, and Insurance

Does political orientation determine power source? The most solar power generation came from California (68,816 GWh) and Texas (31,739 GWh) in 2023. Texas also led the country in power generated from wind (119,836 GWh). Texas may be an oil state, but plenty there are betting on other sources. This data, combined with federal capacity forecasts, shows how renewable energy growth is driving America’s progress toward net-zero carbon emissions targets in the U.S.

For Happy Hour this week, ask your pals, “What company is the largest purchaser of renewable energy for the last four years?” Answer: Amazon.

But the U.S. is currently producing over 13 million barrels of crude per day, which is way more than any country on the globe, including Saudi Arabia. The output growth has helped tame gas prices and, perhaps more importantly, undermined the influence of OPEC and Russia following the invasion of Ukraine in 2022. This has clashed with the Biden administration’s clean energy agenda, though for the time being, inflation concerns and energy independence seem to be the top priorities, especially if they can be paired with climate spending towards the green transition.

Do energy or temperature issues matter to homeowners? Of course they do. Waters in the tropical portion of the Atlantic Ocean, around the Caribbean, are hotter than they have been for any other late May on record. The area is averaging around 84.7 degrees Fahrenheit, a temperature the waters usually don’t hit until August and September after a summer of warming up. This is bad for a lot of reasons, including the future of coral reefs, which are already experiencing a fourth global bleaching event this year, according to NOAA. The previous record-breaking May for sea temperatures in the area was in 2005, a notorious year that brought one of the most destructive and active hurricane seasons ever for the U.S.

The USDA recently released a new plant hardiness zone map as an update to its 2012 version, and as you can imagine, much of the country has on average gotten warmer. While NYC didn’t change zones, the new 30-year minimum temperature average was 2.7 degrees Fahrenheit warmer than the previous average. The map classifies the U.S. into zones based on an area’s average annual minimum temperature and is most useful for knowing which perennial outdoor plants will possibly not die in your area if you keep them outside. You can and will still kill your plants even if you plant according to the map, since it does not factor in how wet, dry, or volatile your area’s climate is. It also won’t tell you if your plants can actually survive the extreme heat of summer.

Lenders and servicers enact disaster relief policies based on FEMA’s declaration. So, in recent weeks we’ve had: Iowa Tornadoes – DR-4784-IA, West Virginia Severe Storms, Straight-line Winds, Tornadoes, Flooding, Landslides, and Mudslides – DR-4783-WV, Oklahoma Severe Storms, Straight-line Winds, Tornadoes, and Flooding – DR-4776-OK, Kentucky Tornadoes – DR-4782-KY, Texas Tornadoes – DR-4781-TX, and Arkansas Severe Storms, Straight-line Winds, Tornadoes, and Flooding – DR-4788-AR.

Lenders and Servicers React to Government and Disaster Updates

VA is strongly encouraging mortgage servicers to continue to pause foreclosures of certain VA-guaranteed home loans through December 31, 2024. This targeted moratorium will give Veterans and their families more time to explore all home retention options.

On 5/17/2024, with Amendment No. 2 to DR-4781, Texas counties Eastland, Hardin, Jasper, Jones, Lamar, and Waller were granted individual assistance by FEMA due to severe storms, straight-line winds, tornadoes, and flooding from 4/26/2024, and continuing. See AmeriHome Mortgage 20240512-CL Disaster Announcement for inspection requirements.

On 5/22/2024, with Amendment No. 3 to DR-4781, FEMA declared federal disaster aid with individual assistance to 2 additional Texas Counties, Calhoun and Guada affected by severe storms, straight-line winds, tornadoes, and flooding from 4/26/2024, and continuing. See AmeriHome Mortgage 20240514-CL Disaster Announcement for inspection requirements.

On 5/22/2024, with DR-4782, FEMA declared federal disaster aid to Kentucky, 11 Counties granted individual assistance: Boyd, Carter, Fayette, Greenup, Henry, Jefferson, Jessamine, Mason, Oldham, Union, and Whitely. See AmeriHome Mortgage 20240515-CL Disaster Announcement for inspection requirements.

On 5/22/2024, with DR-4783, FEMA declared federal disaster aid with individual assistance to 11 West Virginia Counties: Boone, Cabell, Fayette, Kanawha, Lincoln, Marshall, Nicholas, Ohio, Putnam, Wayne, and Wetzel. See AmeriHome Mortgage 20240516-CL Disaster Announcement

for inspection requirements.

On 5/22/2024, with Amendment No. 8 to DR-4776, FEMA declared federal disaster aid with individual assistance to 5 Oklahoma counties, Kay, Lincoln, Okfuskee, Pottawatomie, and Washington. See AmeriHome Mortgage 20240517-CL Disaster Announcement for inspection requirements.

On 5/24/2024, with DR-4784, FEMA declared federal disaster aid with individual assistance has been made available to 4 Iowa counties, Adaire, Montgomery, Polk, and Story, affected by severe storms, tornadoes, and flooding from 5/20/2024 to 5/21/2024. See

AmeriHome Mortgage 20240518-CL Disaster Announcement for inspection requirements.

PHH Mortgage posted Announcement Disaster Alert: WV, KY, TX and OK. In addition to the previously declared counties, disaster declarations have been issued or modified pertaining to: West Virginia DR-4783: New Disaster declared. Kentucky DR-4782: New Disaster declared. Texas DR-4781: Additional Counties declared. Oklahoma DR-4776: Additional Counties declared.

On 5/27/2024, with Amendment No. 5 to DR-4781, FEMA declared federal disaster aid with individual assistance to Texas counties of Cooke, Denton, Montague, and Collin. On 5/29/2024, with Amendment No. 6 to DR-4781, FEMA declared federal disaster aid with individual assistance to Texas counties of Bell, Henderson, and Tyler counties. View AmeriHome Mortgage 20240520-CL Disaster Announcement and AmeriHome Mortgage 20240522-CL Disaster Announcement for inspection requirements.

AmeriHome Mortgage Disaster Announcement 20240523-CL provides information on Amendment No. 11 to DR-4776. FEMA declared federal disaster aid with individual assistance to 5 additional Oklahoma counties, Craig, Johnston, McClain, Nowata, and Ottawa.

PHH Mortgage posted Announcement – Disaster Alert: Arkansas, Oklahoma, Iowa, and Texas. In addition to the previously declared counties, disaster declaration have been issued or modified pertaining to: Arkansas DR-4788: New disaster declared. Oklahoma DR-4776: Additional counties declared. Texas DR-4781: Additional counties declared. Iowa DR-4784: New disaster declared.

The California MBA Wants to Hear From You About Insurance

“Our association has launched a public affairs campaign to draw attention to the insurance crisis that is affecting property owners throughout the state. We know that homeowners and commercial property owners are getting dropped from their insurance carriers, facing uncompetitive costly new polices, or having to turn to the FAIR plan or force-placed insurance as a last resort.

“California MBA has the opportunity to increase awareness of how the crisis is impacting homeowners and business owners and increase pressure on policymakers to adopt swift and meaningful solutions. We are developing materials and will be distributing messages through a variety of communication channels to encourage business community engagement and coalition activation.

“We will be calling for the Legislature and Insurance Commissioner to take actions that will lead to more reliable rates, greater insurance availability, and safer communities. As such, we would like to show the harm that is occurring across the state from this crisis.

“Can you help by sharing examples of how the insurance crisis is impacting your business or your customers? We would like to point to real-life examples of the consequences across California. Here is a link to fillable form to enter any helpful information or examples. (Any questions should be addressed to California MBA CEO Susan Milazzo.)

Capital Markets

In terms of the bond market and interest rates, do you want the good news or the bad news first when it comes to inflation? Year-over-year core PCE inflation, which strips out the volatile food and energy components, was unchanged in April at 2.8 percent. However, there was a noticeable decline in discretionary services from March.

The good news is that, if sustained (it was the smallest month-over-month advance of the year), this could help ease overall services inflation over the coming months and relieve some of the stalling progress against price pressures. The bad news is that inflation isn’t actually decelerating, and we are starting to see consumers dial back spending that drives the economy. Expectations are that the Fed will rely on several months of data showing inflation is firmly decreasing before starting the easing cycle.

Everyone has an opinion, of course, and disinflation should continue during the second half of the year as higher borrowing costs feed through to the economy per Federal Reserve Bank of New York President John Williams. “The behavior of the economy over the past year provides ample evidence that monetary policy is restrictive in a way that helps us achieve our goals,” Williams says, noting an interest-rate increase is unlikely.

The holiday-shortened last week of May was relatively quiet in terms of other economic releases. GDP growth for the first quarter was revised down from an initial reading of 1.6 percent to 1.3 percent as additional data showed consumers pulled back on goods spending more than previously thought. In April, inflation adjusted spending fell 0.1 percent with a reduction in goods spending driving that result. Spending on services increased, however it was due to mostly non-discretionary items such as housing and healthcare.

Meanwhile, home prices continue to increase despite increasing inventory heading into the Spring. Nationally, home prices are 2.7 percent above their June 2022 peak and when combined with mortgage rates above 7 percent have limited sales. Mortgage purchase applications in May fell to a three-month low. For those that like to track the 10-year U.S. Treasury, it fell 18 basis points over the month of May.

This week has plenty: the May employment report on Friday, various purchasing managers indices, construction spending, factory orders, JOLTS, ADP, Challenger job cuts, the trade deficit, and productivity / unit labor costs. Treasury supply will consist of just T-bills with the details of the mini-Refunding announced Thursday. The Fed is in blackout ahead of next week’s FOMC. Regarding MBS, May agency prepayments will be released after Thursday’s close with roll trading picking up with Class A 48-hours on Tuesday, June 11.

The week’s economic calendar kicks off today with final May manufacturing PMIs from S&P Global and ISM. That will be followed by construction spending for April, seen increasing 0.1 percent month-over-month versus -0.2 percent in March. We begin the week with Agency MBS prices a few ticks (32nds) better than Friday’s close and the 10-year yielding 4.47 after closing last week at 4.51 percent; the 2-year is at 4.86.

Employment

“Kind Lending is seeking experienced Wholesale Account Executives in the mortgage lending industry. We are one of the fastest-growing mortgage lenders in the country, committed to building a positive and collaborative team that prioritizes people and aims to bring happiness to our valued broker partners and their borrowers. Our team believes that kindness is crucial and places great importance on providing clients with a positive experience. Check out this brief message from our Chief Production Officer of TPO by visiting here. Join the #kindmovement and grow your business by taking advantage of Kind’s expanded product offerings and best-in-class operational experience. Don’t wait! Contact Delfino Aguilar or (619) 726-0377 to kickstart your career path to kindness!”

Tired of having outdated news on your website or a stale newsletter? A skilled writer has some extra bandwidth and is available to produce weekly, monthly, or as-needed mortgage-related content for lenders on their website, email marketing or digital advertising. Reach out to Dustin Hobbs.