PPE, Audit and Risk, AI/ML Adoption, Closed-End 2nd Products; Lenders and Court Cases; CRA News

“Sometimes it takes me all day to get nothing done.” But things are always changing. When I was a kid I “got a drink of water.” Now kids “hydrate.” Really? A few years ago, a good originator could do 10-20 loans per month. Now, it is rumored that 80 percent of volume is being done by 40 percent of originators, and lenders have instituted minimum production numbers: “If you’re not funding 2 loans per month, we’re going to let you find success elsewhere.” Diving into 2023’s production via NMLS looking at 234,000 records, Ingenious found that only 24 percent of originators did 24 units or more! 30 percent did 18 or more units, 40 percent did 12 or more units, and 60 percent did 5 or more units. Has the “norm” changed? Certainly a portion of marketing has shifted to people under the age of 40s, and Mortgages with Millennials with Kristin Messerli and Robbie Chrisman talking about Overlooked Strategies to Win with Millennials tomorrow at 1PM ET. Today’s podcast can be found here and this week’s is sponsored by Calque. With The Trade-In Mortgage powered by Calque, lenders help their clients negotiate a lower purchase price, reduce their interest payments, and eliminate PMI. Hear an interview with Truv’s Richard Grieser on the latest verification solutions and how lenders can combat fraud.

Lender and Broker Software, Products, and Services

Introducing The 2024 Lender Playbook: 4 Tips to Drive Profitability in a Recovering Market. How will the coming election, housing inventory, and Fed action impact the mortgage market (and your lending success) this year? There’s a lot going on in 2024, and market recovery won’t be straightforward. The good news? You can still build a strong, forward-thinking plan for resilience and profitability. Tenured industry experts from Maxwell’s senior team helped create this guide to teach you how to reduce costs, win borrower business, and capture intermittent loan volume as it reemerges in the market. To get a leg up on the competition and build agility into your business, click here to download The 2024 Lender Playbook: 4 Tips to Drive Profitability in a Recovering Market.

Unleash Opportunities with LoanStream’s new Closed End Seconds webinar on Tuesday, February 20th, for borrowers who want to tap into their equity without refinancing or help them save money by avoiding costly mortgage insurance. Plus, it’ll include an update on the upcoming CalHFA Dream For All Loan Program. Reserve you or your Team’s spot now for this informative webinar.

The human circulatory system is more than 60,000 miles long! Running a system that complex would take all your waking energy if it wasn’t automated by your brain’s blood-flow command center. As the command center of your mortgage operation, your LOS similarly coordinates hundreds of loan tasks at once so you can focus on building relationships and running your business. And soon, your LOS could become even more powerful, adaptive, and proactive thanks to AI and machine learning. But is your organization ready? A new blog from Dark Matter Technologies offers tips for building an AI/ML adoption strategy so you can plan today for a more productive tomorrow.

“In a year where companies are trying to differentiate themselves, MQMR has that solved. While we know culture eats strategy for lunch, leaders didn’t think this could be done in a virtual environment. Happy to report that MQMR has built a thriving culture with teammates in 14 states and 3 continents, a world-class employee NPS in the high 70s, and 50%+ of its clients are multi-product clients, many of whom have been doing business since 2011. For lenders seeking an audit, risk, and compliance partner, there’s only one to choose from, so choose the one that not only delivers results but someone who has a fun culture to work with! MQMR takes care of its teammates because MQMR knows those teammates take care of you. Check out our fun year-end video with an inside look at the beating heart of our culture and in case you missed Saturday’s Spotlight, MQMR was the featured company!”

Polly, leading provider of innovative mortgage capital markets technology and operator of the industry’s first cloud-native, commercially scalable product and pricing engine (PPE), just announced the appointment of industry powerhouse Troy Coggiola as COO. Coggiola’s appointment follows a record year for Polly, both in industry adoption and product innovation. As COO, Coggiola will lead Polly’s product, implementation, support, and design teams, ensuring seamless cross-organization collaboration as the company continues to scale. Coggiola is the latest in a string of notable leadership hires; Parvesh Sahi, former SVP of Business and Client Development for ICE Mortgage Technology, joined the company as CRO in 2023. Former Fannie Mae executive and industry veteran Andrew Bon Salle, as well as former Ellie Mae CEO and mortgage industry visionary Jonathan Corr sit on the company’s board of directors. Read the press release.

Legal News and Regulations

This has absolutely nothing to do with mortgages, but what happens in the court system can be puzzling. What is the value of a human life? 33-year old Bryn Spejcher, convicted of killing her boyfriend Chad O’Melia by stabbing him 108 times during a “cannabis-induced psychosis,” received two years’ probation and ordered to perform 100 hours of community service according to the Ventura County Star. That’s it. (Ventura County Superior Court Judge David Worley, appointed by Republican Governor Arnold Schwarzenegger.)

Connecticut Banking Commissioner Jorge L. Perez issued a temporary order to cease and desist against LoanSnap, Inc., and notifying LoanSnap that its state mortgage lender license will be revoked and a civil money penalty will also be issued against it. The charges against the California-based mortgage lender include alleged violations of the Truth in Lending Act and the Fair Credit Reporting Act, but the focus was on unlicensed origination activities. According to the allegations, department examiners discovered that from at least August 29, 2022, to December 2, 2022, LoanSnap employed individuals who were not licensed as mortgage loan originators in Connecticut yet acted as mortgage loan originators by taking residential mortgage loan applications, soliciting Connecticut borrowers for residential mortgage loans, and offering or negotiating terms of residential mortgage loans. These unlicensed mortgage loan originators worked in out-of-state call centers and their titles were described as “sales development representatives” or “call center representatives.”

The U.S. District Court for the Southern District of Florida denied Freedom Mortgage’s motion to stay a case filed by the CFPB after Freedom argued that judicial economy (the preservation of the court’s time and resources) favored the stay because the defendant’s pending motion to dismiss is premised on the same constitutional issue addressing the CFPB’s funding structure now before the Supreme Court. Orrick reports that, “In opposition, the CFPB argued that the Supreme Court may take months to issue a ruling, the public interest in enforcement of consumer protection laws, and the failure to show how an adverse ruling in the Supreme Court case would definitively result in dismissal of this case… The District Court sided with the CFPB, stating that as of now, the CFPB ‘is a valid agency that is entitled to enforce the consumer financial laws.’ With the stay denied, the court will now consider the defendant’s motion to dismiss.”

Mortgage banks don’t accept deposits, so can’t reinvest them in the local community. But that hasn’t stopped some states from pushing CRA requirements onto some institutions. The Illinois Department of Financial and Professional Regulation issued a proposed rule pursuant to the Illinois Community Reinvestment Act (ILCRA). The ILCRA is modeled off the Community Reinvestment Act but expands its scope of covered financial institutions to include credit unions and licensed entities. Orrick reports that, “The proposed rule establishes a framework and criteria by which the Department will evaluate a covered mortgage licensee’s record of helping to meet the mortgage credit needs of Illinois, including low- and moderate-income neighborhoods and individuals, through different tests and performance standards depending on the number of loans made by a covered mortgage licensee. Tests and considerations for evaluating licensees’ record include a lending test, service test, performance record, data collection and reporting, and content and recordkeeping of information received from the public.

“To mitigate the impact on small businesses, a licensee that has made less than 200 home mortgage loans in Illinois in the last calendar year will not be subject to the service test. Furthermore, licensees that made less than 100 home mortgage loans in Illinois in the previous calendar year will have less frequent examinations than those with more than 100. Based on the licensee’s performance under the lending and service tests, the proposed rule specifies that a licensee’s rating of ‘outstanding,’ ‘satisfactory,’ ‘needs to improve,’ or ‘substantial noncompliance’ will affect how frequently they are evaluated. Compliance with the proposed rule is required six months from its effective date, and comments are due by February 26.”

Capital Markets

Last week closed with economic growth in the fourth quarter beating forecasts as gross domestic product increased 2.5 percent for the year. Importantly, the PCE Price Index, the inflation number that matters most to the Fed, rose 0.2 percent month-over-month, as did the core rate which excludes food and energy. Trends in annual inflation numbers continue to move lower and now sit at an almost three-year low, even with strong holiday spending. That report capped a year that began with economic “experts” warning the public of a guaranteed American recession, but inflation retreated at a much faster rate than the Fed anticipated, all while a robust job market kept driving consumer spending. The most recent data has led to more optimism that the economy can power through the Fed’s efforts to corral inflation.

This week is packed with market moving potential including the latest Federal Open Market Committee decision followed by Chair Powell’s press conference on Wednesday afternoon with the Quarterly Refunding announcement Wednesday morning. The December jobs report will be released on Friday where early estimates are for an increase of 178k in headline payrolls (versus 216k in December). Besides payrolls, the U.S. calendar includes updates on home prices, ADP employment, productivity / unit labor costs, manufacturing PMIs with factory orders and Michigan sentiment. Sweden’s Riksbank and the BoE will release their latest decisions on Wednesday and Thursday morning.

Today’s calendar sees just one data point, the non-market moving Dallas Fed Texas manufacturing for January, due out during the day. There are some short-duration Treasury auctions, and the Quarterly Refunding estimate will be announced. We begin the week with Agency MBS prices better by .125-.250, the 10-year yielding 4.10 after closing Friday at 4.16 percent, and the 2-year is at 4.33.

Employment and Transitions

“We are looking for “The Best Account Executive Ever.” If this should be your title, contact me, Allen.Middleman@FreedomMortgage.com. Outstanding Account Executives understand the value of their relationships and so do we. Yes, product expertise is essential but first-rate relationship management puts you head and shoulders above your competition. Explore your options with Freedom Mortgage Wholesale. We are Historically, Currently and 4EVER Wholesale. Let’s connect today. Everyone wants rates to structure winning loans for their borrowers. Have you seen what Freedom is offering? Freedom Mortgage Wholesale is making brokers and borrowers happy. Check out our FHA and VA rates for best execution…for free on LenderPrice. Reach out to Freedom for more information at 855.915.4800. Freedom Mortgage Wholesale is Historically, Currently and 4EVER Wholesale.

A&D Mortgage announced the hiring of Tommy Williams, Betsy Marvin, and Lori Welton as Account Executives. “These three industry veterans bring a wealth of experience and expertise to A&D Mortgage, especially in the Conventional mortgage business” and join recent hires Andrew Taylor and Bobby Frank. Andrew Taylor is now A&D’s Senior Vice President of Wholesale Lending Sales and Bobby Frank is Senior Vice President of Wholesale Lending Strategy. Congratulations all around!

FHA Program Analyst (Computerized Home Underwriting Management System (CHUMS) Coordinator) in Santa Ana, CA. Job duties include coordinating activities related to the CHUMS

Lender Access System (CLAS). Update software to the CKAS system to permit enhancements. Monitor and assign program code identifiers for CHUMS users. Analyze CHUMS data and develop new methods of correlating and disseminating. FHA Job Announcement 24-HUD-589-P.

FHA Senior Single Family Housing Specialist (Quality Assurance Division) Job duties include acting as HUD expert and advisor required for compliance on the lender origination and servicing practices. Prepare correspondence, technical back-up documentation, status reports, schedules, and other information. Identify actions necessary for the correction of the lender’s deficiencies. FHA Job Announcement 24-HUD-587-P.