Servicing, Operating System, Prospecting Tools; STRATMOR on Profitability; Lending and Government Policy

“Did you ever notice that when you put the two words “The” and “IRS” together, it spells “Theirs”? The impact of taxes and tax cuts (potential or expiring) are a topic here in Austin at the MBA’s IMB conference. GSE “reform” in the form of coming out of conservatorship appears a near certainty and is certainly a topic; ex-FHFA Director Dr. Mark Calabria will be discussing his thoughts on where Freddie and Fannie go from here tomorrow on Thursday’s Big Picture. AI, machine learning, and algorithmic bias is discussed in the tech sessions. Ever heard of DeepSeek? China’s artificial intelligence chatbot is wreaking havoc on our stock market… just don’t ask it any questions about Chinese human rights and politics. In a related issue of “just not including valuable information,” a friend of mine’s daughter who works for FEMA spent the entirety of last week scrubbing the term “climate change” from FEMA’s website. (Today’s podcast can be found here and this week’s is sponsored by Figure. 50 percent of the top IMB’s use them, and if you haven’t examined your HELOC/HELOAN strategy recently, it’s time to get on it. Hear an interview with TidalWave’s Diane Yu on the latest realities when it comes to capabilities of AI in the mortgage industry and how her company now allows for instant language translations during the origination process.)

Broker and Banker Products, Software, and Services

In 1992, Eric Lawes, using his metal detector, was searching for a dropped hammer when he instead uncovered the Hoxne Hoard in an English field. The discovery included nearly 15,000 Roman coins, gold and silver jewelry, and silver spoons, valued at $2.6 million. Much like hidden treasures underground, valuable opportunities may be buried in your borrower database. MMI’s Refinder tool helps loan officers identify refinance prospects by configuring and analyzing existing data. By pinpointing clients who could benefit from better rates or cash-out options, Refinder enables LOs to strengthen relationships and drive unexpected business growth. Watch a personalized video to see how many of your borrowers are ready for a refinance conversation and uncover a new treasure of opportunities today!

MAXEX Expands Liquidity Options: Non-Delegated Non-QM & DSCR Coming Soon! Starting in February, originators can access greater liquidity for non-delegated non-Agency loans through MAXEX’s multi-buyer exchange. MAXEX will offer fast pre-close underwriting, scenario reviews, and exceptions, with loan amounts up to $3 million at 90% LTV for various full-doc and alt-doc loan scenarios, and up to $2 million at 80% LTV for DSCR loan scenarios.

Visit our website to learn how these new options can enhance your lending strategy.

Much has been written about Lower’s acquisition of NeatLabs to create a one-of-its-kind Mortgage Operating System. Dan Snyder, CEO & Founder of Lower, expressed his excitement by stating, “Since our inception, we’ve combined cutting-edge technology with an elite level of customer service. With LowerOS, we are once again revolutionizing the mortgage industry, offering unmatched operational efficiency and an intuitive, frictionless experience for both borrowers and loan officers.” This strategic move will result in an all-in-one mortgage operating system that promises to revolutionize the industry. The new platform launching later in 2025 integrates a consumer-centric application, efficient loan underwriting workflow, product and pricing engine, disclosure document curation, and consolidated closing processes into a single, streamlined platform. Industry professionals interested in joining the leader in mortgage innovation are invited to join a discovery call this Thursday, Jan. 30th at 3 PM EST to learn about “Life at Lower.” For more information, contact Craig Montgomery.

Servicing Products and Events

“If you’re headed to Dallas for MBA Servicing, join Covius and Guardian Asset Management at our private cocktail reception downtown Tuesday, 2/4 at 6 p.m. Serving farm-to-table fare and scratch cocktails with a vintage twist, our evening at 3Eleven Kitchen & Cocktails is sure to be the perfect kick-off to MBA Servicing! RSVP here. Be sure to also schedule a meeting to talk with the Covius team while at the conference to learn more about our solutions designed to help servicers control risk and assure compliance, including default title, loss mitigation, title curative, REO & auction, doc prep, compliance solutions and more.”

“In 2024, Servbank navigated the evolving financial landscape with innovation and steadfast commitment. From strategically expanding our senior leadership team to adopting the newest technology, Servbank has been at the forefront of providing stability in an ever-changing market. Our dedication to delivering a best-in-class experience is reflected in our achievements, including boarding 148,000 new loans, and establishing 10 new client partnerships. With record-high satisfaction rates and NPS scores from both clients and customers, Servbank’s 2024 Year in Review blog offers an insightful look at a year of milestones. See how our mission of creating excellence in all we do is setting the stage for an even more successful 2025. Read the full Year in Review here.”

Servicing solutions, a sizzling panel, + socks, sushi, and demos, all can be found at MBA Servicing 2025 where Sagent will lead the charge. Don’t miss out on seeing Sagent’s next-gen platform Dara and its AI doc-processing component LIVE in booth (207) and on the HUB stage (2/6 at 10:45 AM CT). The performance stats are impressive: 3,000 pages per minute at 95% accuracy for trained documents, and it’s already processed over 2.8B documents. Also, on 2/5 at 11:30AM CT, Sagent’s CTO Omer Farooque will take the stage discussing real-world AI use cases that will truly benefit your servicing playbooks. Plus, Sagent has supercharged its sock game (don’t they always?), so snag a pair at the booth for your collection, which you could rock at the super-ritzy sushi party at TEN Sushi Cocktail Bar on Wednesday 7PM. For details about Sagent and its MBA Servicing schedule, click here.

STRATMOR on Innovation and Profitability in 2025

2025 marks STRATMOR Group’s 40th year guiding mortgage leaders to make smart strategic decisions, solve complex challenges, streamline operations, improve the borrower experience, increase profitability, and accelerate growth. To kick off this milestone year, STRATMOR advisors share the most crucial steps mortgage leaders should take to ensure continued growth and innovation. In “Resolve to Evolve: Actionable Insights to Thrive in 2025,” STRATMOR advisors offer practical recommendations to help mortgage lenders and solution providers optimize their operations, increase customer satisfaction, adapt to market changes, and more. Check out the January Insights Report today.

Lending and Government Policy

This week the residential lending industry came face to face with a memo from the OMB. “Career and political appointees in the Executive Branch have a duty to align Federal spending and action with the will of the American people as expressed through Presidential priorities. Financial assistance should be dedicated to advancing Administration priorities, focusing taxpayer dollars to advance a stronger and safer America, eliminating the financial burden of inflation for citizens, unleashing American energy and manufacturing, ending ‘wokeness’ and the weaponization of government, promoting efficiency in government, and Making America Healthy Again. The use of Federal resources to advance Marxist equity, transgenderism, and green new deal social engineering policies is a waste of taxpayer dollars that does not improve the day-to-day lives of those we serve.

“This memorandum requires Federal agencies to identify and review all Federal financial assistance programs and supporting activities consistent with the President’s policies and

requirements. To implement these orders, each agency must complete a comprehensive analysis of all of their Federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of the President’s executive orders. In the interim, to the extent permissible under applicable law, Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.

“This temporary pause will provide the Administration time to review agency programs and determine the best uses of the funding for those programs consistent with the law and the President’s priorities. The temporary pause will become effective on January 28, 2025, at 5:00 PM.”

But what does that exactly mean when it comes to existing FHA, VA, and USDA lending programs, down payment assistance, and any other programs related to the Federal Government?

MBA’s President and CEO Bob Broeksmit, CMB, released the following statement requesting clarification from federal government agencies on the Office of Management and Budget memo released on January 27:

“The Federal Housing Administration, Department of Veterans Affairs, and Rural Housing Service at the Department of Agriculture must clarify that the January 27 OMB memo calling on federal agencies to temporarily suspend payments for federal grants, loans, insurance and loan guarantees does not apply to the single family and multifamily loan insurance or guarantee programs at their agencies.

“Americans are going to the closing table tomorrow and deserve to know that their loan will close on their home purchase. Without this clear assurance that the federal government will insure new loans or pay claims under these programs, there will be severe harm to borrowers and disruption to the mortgage market.”

Fortunately, a Federal judge temporarily blocked the Trump Administration’s freeze on federal grants and loans. “The order capped the most chaotic day for the U.S. government since Trump returned to office, with uncertainty over a crucial financial lifeline causing panic and confusion among states, schools and organizations that rely on trillions of dollars from Washington.”

The FHA released a statement saying its single-family programs remain operational, including Title I and Title II mortgage insurance, and that it is not subject to the pause in federal grants or loans specified in the president’s order. “The U.S. Department of Housing and Urban Development (HUD) has confirmed with the Office of Management and Budget (OMB) that all Federal Housing Administration (FHA) Single Family Title I and Title II mortgage insurance programs remain operational and are not subject to the pause in federal grants and loans outlined in OMB’s memo to federal agencies today.”

Ginnie Mae (which guarantees timely payments on federally-insured loans) said the pause on agency grants, loans, and other financial assistance programs “does not apply to Ginnie Mae” and that “Ginnie Mae’s activities will continue unimpeded.”

Fannie Mae and Freddie Mac, which back conforming mortgages, are in government conservatorship, aren’t explicit government agencies and thus shouldn’t be affected. At least at this point…

Capital Markets

Today’s capital markets section is all about expectations, which have as much influence on mortgage rates as actual events. We learned yesterday that U.S. consumer confidence fell sharply in January, reaching its lowest point in four months, driven partly by growing concerns about the labor market and the broader economic outlook. More people are expressing difficulty in finding jobs, while expectations for wage increases have also declined, alongside a decrease in the number of individuals who view business conditions favorably. Consumers remain notably pessimistic about future employment opportunities. After a brief spike in confidence following the 2024 election, the January reading places consumer sentiment squarely in the middle of the range it has occupied over the past 18 months.

While investors have accepted that the central bank probably won’t cut interest rates today, they’ll be looking for any signal from Chair Powell on where inflation is going (according to markets, the first potential movement is a rate cut in May, which is still seen as a toss-up). Expectations have ratcheted back up towards more cuts this year, with the probability of two or more cuts at 74 percent. That number was closer to 50 percent last week. Trump’s continued criticism of the Fed and threats to its independence contribute to a sense of uncertainty in the market. Furthermore, Trump’s strong rhetoric on tariffs, urging global companies to either manufacture in the U.S. or face penalties, adds a negative sentiment to the rates market, making it more difficult for investors to navigate the current economic landscape.

Today’s economic calendar began with the release of the Weekly MBA Mortgage Index, -2 percent which includes an adjustment for MLK Day and with 30-year rates vacillating around 7 percent. We’ve also received the December advance International Goods Trade Balance (-$122 billion, a huge increase), which was previously -$102.9 billion, along with advanced Retail Inventories (-.3 percent), versus being up 0.3 percent last month, and advanced Wholesale Inventories (-.5 percent versus an expected increase). The day will conclude with the January FOMC Rate Decision, where the Federal Reserve is expected to maintain rates between 4.25 percent and 4.50 percent, consistent with the prior decision. We begin the day with Agency MBS prices little changed from Tuesday’s close, the 2-year yielding 4.19, and the 10-year yielding 4.52 after closing yesterday at 4.55 percent.