7.18.24 Trigger Lead Legislation; Blue Sage's Carmine Cacciavillani on Mortgage Software; ECB Steady

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It’s not just Americans who can’t afford U.S. homes. International purchases of U.S. homes over the past year declined 36 percent to 54,300 properties ($42 billion), hitting a record low as foreign buyers balked at the dollar’s strength and a lack of available properties with owners continuing to cling to pandemic-era cheap mortgages. If those buyers are looking for somewhere affordable, maybe they should look at Detroit (MI), which has the most affordable housing as determined by median house price divided by median annual household income. The city is 10.4 times cheaper than in Santa Barbara (CA), the city with the least affordable housing. Or if they’d prefer to rent until rates drop, Flint (MI) has the highest rent-to-price ratio, which is 14.2 times higher than in Santa Monica (CA), the city with the lowest. By the time they are ready to submit a mortgage application, many in our industry are hoping that Senate Amendment 2358 (which includes the Homebuyers Privacy Protection Act of 2024) passes, curtailing the practice of firms seeking to confuse mortgage applicants by inundating them with phone calls, texts, or direct mail solicitations. Aka "trigger leads." More on that below. (Today’s podcast is found here and is sponsored by Calque. Calque provides a binding backup offer on a borrower’s departing residence, which empowers lenders to provide a bridge-like experience with easier qualification and less risk. Today's episode features an interview with Blue Sage’s Carmine Cacciavillani on building software platforms for the mortgage industry.)

Software, information, and services for lenders

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The mortgage servicing industry continues to face a delinquency dilemma as the gap between the average borrower rates for loans serviced remains half that of current interest rates. Despite rumblings of falling interest rates and increased rate cuts by the Federal Reserve, the mortgage servicing industry needs to remain diligent in pursuing loss mitigation solutions that meet the current economic landscape. As the industry scrambles to implement enhanced foreclosure prevention, the Veterans Administration has released new and expanded options for delinquent veterans, including the VASP program. Read Clarifire’s recent blog, “New Options Help Veterans Avoid Foreclosure,” to find out current foreclosure alternatives before the recent moratorium ends. Don’t wait to enhance your loss mitigation systems and strategy with CLARIFIRE ®, a modern, intelligent innovation that’s truly BRIGHTER AUTOMATION®.

The borrower was interested, qualified, and even pre-approved. Then, one day, they ghosted the LO. No explanation. Another borrower was interested but seemed unqualified and asked questions like a toddler at the grocery store. It felt like a waste of time. They closed with another lender. AI Call Assistant works with any CRM and predicts the likelihood of a loan closing with 90% accuracy after listening to one call. Schedule a demo today!

Optimal Blue released the Market Advantage report last week with June origination activity leveraging daily rate lock data from the Optimal Blue PPE, the industry’s most widely used product, pricing, and eligibility engine. June saw a small dip in interest rates, 8 bps lower than the close of May. Although purchase activity was subdued in June, this decrease in rates prompted a 39% month-over-month increase in rate-and-term refinance volume. “This behavior speaks to the ongoing inventory and affordability challenges consumers are experiencing,” said Brennan O’Connell, director of data solutions at Optimal Blue. Formerly known as the Originations Market Monitor, Optimal Blue issues the Market Advantage mortgage data report each month to provide early insight into U.S. mortgage trends. Unlike self-reported survey data, mortgage lock data is direct-source data that accurately reflects the in-process loans in lenders’ pipelines. Read the news release to access June origination data. 

PlainsCapital Bank National Warehouse Lending, a subsidiary of Hilltop Holdings (NYSE: HTH), offers funding for multiple mortgage products and programs with little to no additional requirements. FNMA HomeStyle, FHA 203K Full, Limited, and USDA Rural Housing renovation loans. Mortgage Revenue Bond and DPA loans with extended dwell times. Sub Limits for lower FICO scores, manufactured homes, renovation, construction and other unique mortgage products and programs. With over 30 years’ experience and a well-capitalized diversified financial holding company, we provide our customers with the confidence to meet their loan funding needs. If you are interested in learning more about PlainsCapital Bank National Warehouse Lending please contact Deric Barnett, (469)955-6786.

If you don’t have a down payment assistance (DPA) program, you’re missing out on business! Ginnie Mae’s latest report states the down payment needed for an FHA loan averages over $7,500 nationally. According to New York Life's Wealth Watch survey, the average American adult saved $6,138.06 in 2023. Who provides the difference? Click n’ Close’s (CNC) SmartBuyTM DPA options provide lenders with a single, simplified program to offer borrowers nationwide. With forgivable and repayable second lien options, CNC has expanded its DPA program with a proprietary Shared Appreciation mortgage, combining a below-market interest rate AND down payment assistance. CNC also provides improved pricing for loans with a repayable second lien and credit score of 680 or above. Don’t miss out on this opportunity to enhance your services and increase your volume. Contact CNC’s Correspondent Division for a delegated solution or the Wholesale Division for a broker alternative.

Frequent breaches and new reporting requirements within our industry emphasize an undeniable truth: robust cybersecurity defenses are not merely an option; they are an imperative. A breach can mean the difference between a thriving business and a devastating collapse. There is expansive risk to mortgage companies in today's climate; lenders are not just guarding data, you’re safeguarding trust and the livelihoods of your employees, counterparties, and borrowers. It’s a responsibility to take seriously, and it’s time to strengthen your cybersecurity posture. Richey May’s cybersecurity team is here to help: check out its post detailing the often-overlooked risks in the industry and contact Spencer Smoot for more information.

Discover why savvy investors turn to Planet for Single-Family Rental (SFR) portfolio management and sub-servicing. In a podcast from IMN, Jim DePalma delves into Planet’s exceptional value proposition: High-touch customer service, specialized asset managers, economical pricing, and advanced commercial loan technology. Learn best practices for selecting an SFR servicer and understanding key metrics driving optimal portfolio performance. Elevate your investments with the knowledge and support only Planet can provide.

Correspondent and wholesale products

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Brokers! In celebration of National Mortgage Brokers Day, Orion Lending is waiving underwriting fees on all loans uploaded today only, Thursday, July 18th. Orion is dedicated to helping you serve more borrowers with our full suite of competitively priced Agency, Non-QM, DSCR, Jumbo programs, and of course our proprietary Boost Down Payment Assistance (DPA) product, which includes 3.5 or 5% Repayable Second and 3.5% Forgivable Second… All programs are underwritten in-house! Additionally, Orion Brokers can now have unique Lender Paid Comp plans (LPC) in each state they are licensed! Keep in mind, new Brokers can get Express Approved by clicking here and start submitting loans as soon as the end of the day! Additionally, Orion Lending is offering a 30 BPS Summer New Broker Price Special on Titan Flex, COIN DSCR and COIN Fuel DSCR! With a broad range of new products and more on the horizon plus our 48-Hour SLA’s on select Purchases, now is the time to hyper speed your business with Orion!

“Newrez Correspondent is pleased to announce that for the second consecutive year, Newrez has garnered all four of the company’s eligible Military Friendly® awards. We are the only mortgage lender and servicer to secure all four awards this year. ‘Our commitment to the military community is deeply ingrained in our company's culture, and we are honored to receive recognition across all four Military Friendly® categories,’ said Baron Silverstein, president of Newrez. ‘We deeply appreciate the sacrifices made by our service members and their families. It’s an honor to know we are and will continue to lead the pack in our workplace and our communities.’ In addition, Newrez Correspondent would like to thank the more than 1000 lenders that are currently approved where more than 80% are active on a monthly basis. This is a testament that our lenders know we are a Trusted and Valued Partner. Contact us here to learn more.”

Spring EQ Wholesale recently launched its new & unique product (the FIXLINE), and demand has been huge! The FIXLINE is a fixed-rate HELOC, giving borrowers the flexibility of a line of credit with the stability of a fixed-rate loan. Product highlights include a fixed interest rate for the life of the loan, the ability to pay the loan up & down like a line of credit, a lower qualifying payment, and availability in Texas. In other news, Spring EQ is excited to announce a recent promotion and leadership additions. John Davis has been promoted to Vice President of Correspondent Sales. Marcy McKinnon and Jason Bailey have joined the team as Regional Vice Presidents of Sales in the Wholesale division. Interested in a wholesale partnership? Click here. Interested in a correspondent partnership? Click here. Second mortgages are Spring EQ’s specialty, so think of it first for all your seconds!

STRATMOR customer experience tip

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How is this mortgage downturn different (and more dangerous) than those of the past? According to STRATMOR Customer Experience Director Mike Seminari, “The “higher for longer” rates we keep hearing about simply have not been high enough for long enough, which means that as refinances resurface, volume will likely creep up as opposed to bounce up. Meanwhile, loan officers will continue to battle it out to win each deal (often going up against savvy correspondent teams), which means getting the customer experience perfect the first time around has never been more important.”

Check out STRATMOR’s recent CX Tip, “Shark Proof Your Business for The Next Refi Wave,” for practical tips on how to build meaningful relationships that increase loyalty to catch success when rates start to come down.

Trigger lead legislation

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Though it is hard to pass legislation in an election year, potential borrowers being hounded by a multitude of lenders after their credit is run my have some hope. MBA’s grassroots lobbying network, the Mortgage Action Alliance (MAA), issued a Call to Action that encourages members to contact their Senators to stress the importance of advancing Senate Amendment 2358 that would add the MBA-supported trigger leads bill, the Homebuyers Privacy Protection Act of 2024, to the Fiscal Year 2025 National Defense Authorization Act (NDAA).

This bipartisan amendment would, if passed, improve the homebuying process by curtailing the abusive use of mortgage credit “trigger leads.” Since last year, MBA members have worked to build bipartisan momentum in Congress for legislation to curb the abusive use of trigger leads. A vote in the Senate to add the Homebuyers Privacy Protection Act to this year's NDAA would be a critical step towards curtailing the practice of firms seeking to confuse mortgage applicants by inundating them with phone calls, texts, or direct mail solicitations.

MBA and its coalition partners are working with the lead Senate bill (S. 3502) sponsors and key committee leaders to advance this proposal when the Senate debates the NDAA and votes on amendments later this month. MBA urges people to contact your Senators and urge them to cosponsor S. 3502 (if they have not already) and, in turn, vote for the Hagerty/Reed amendment to the NDAA when it's considered!

Capital markets: disappointing housing figures

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MCT has just released its latest whitepaper, Mortgage Pipeline Hedging 201, building on the foundation of their first whitepaper in the series, Mortgage Pipeline Hedging 101. The latest whitepaper, authored by Cody Echols, Sr. Capital Markets Technology Advisor at MCT, delves deeper into best practices that enhance mortgage lender profitability, efficiency, and execution related to pipeline hedging. The whitepaper also reviews various hedging instruments, baseline inputs used in mortgage pipeline hedging, and recent industry advancements that have reshaped the hedging landscape. If you’re interested in learning more advanced hedging concepts that review how to calculate durations factors, duration adjusted coverage, and coverage percentage, download the Mortgage Pipeline Hedging 201 whitepaper today.

The main economic releases yesterday, as far as those in the mortgage industry were concerned, were housing starts and building permits. Housing starts rose 3 percent month-over-month to 1.35 million in June, while building permits also rose 3 percent to 1.49 million. Starts were down 4 percent on a year-over-year basis and permits were down 3 percent on a year-over-year basis. Though the headline figure exceeded expectations, single-family starts declined. Multi-family starts, which are highly volatile, were up big, reversing a recent trend. Builders appear to be scaling back production as headwinds created by restrictive monetary policy (read: high interest rates) become more intense. Demand appears to be waning as a result of elevated mortgage rates, increased existing inventory, and cooling labor market conditions. Rate cuts should eventually help builder activity, but the recent drop in single-family permits suggests residential construction will continue to lose momentum over the next several months.

The Federal Reserve is getting “closer” to cutting rates, but needs more evidence prices are on a downward path. The Fed's Beige Book for July described overall economic activity during the last reporting cycle as growing at a slight to modest pace heading into the third quarter, with some signs of cooling inflation. Seven Districts reported growth while five saw flat or declining activity. Wages grew at a modest to moderate pace while prices rose modestly. There was little change in household spending while auto sales varied across different Districts. Travel and tourism grew as expected while manufacturing activity varied.

This morning, the ECB was out with its latest monetary policy decision, holding rates steady at 4.25 percent following the 25 basis point cut last month, and offered no forward guidance about a September cut. Kicking off the U.S. calendar were weekly jobless claims (initial up to 243k, continued at 1.867 million). Other economic releases today include Philadelphia Fed manufacturing (which beat expectations), Treasury announcing the auction sizes for month-end supply (consisting of 2-, 5- and 7-year notes and 2-year FRNs) before auctioning $19 billion 10-year TIPS in the afternoon, Freddie Mac’s latest Primary Mortgage Market Survey, and remarks from several Fed speakers. Despite more bank demand returning to Agency MBS over the last six months, we begin Thursday with Agency MBS prices slightly worse from yesterday's close and the 10-year yielding 4.16 after closing yesterday at 4.15 percent; the 2-year is at 4.43 percent.

Two middle-aged women are arguing over the last seat on a bus. It gets really heated and they’re about to come to blows. The driver stops the bus and says “hey, you two, stop fighting! Give the seat to the oldest one. Show some respect for our elders.” The women look at each other. The seat still remains empty.

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current STRATMOR blog is titled, “What Happened to that Mortgage?” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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