6.21.23 Summer Solstice; Morris, Manning & Martin, LLP’s Bonnie Hochman Rothell on Lender Legal Considerations; Housing Surge

Thanks to today's podcast sponsor, MCT. Over the past 20 years, MCT has evolved from a pipeline hedging services specialist into the industry leader for fully-integrated capital markets software and services. Anchored by their comprehensive platform, MCTlive!, MCT offers the innovative technology and bespoke client support needed to elevate your performance. From MCTlive!, to MSRlive!, to the award-winning Bid Auction Manager (BAM), MCT is consistently first-to-market with new technology. Learn more at mct-trading.com.

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I realize that this is a mortgage commentary, but our business touches many aspects of many lives. Today is the summer solstice, marking the astronomical first day of summer in the Northern Hemisphere. Yes, there is quantitatively less sunlight going forward. While we’re on quantitative things… “Two hearts are better than one… two hearts gonna’ get the job done…” Are you thinking about your heart? Me neither. It just motors along while you’re doing mortgage stuff, beating 32 million times a year, year in and year out, pumping two thousand gallons of blood each day. Up until recently there were only about 2,000-2,500 heart transplants but 2022 set a U.S. record with over 4,000. On average that’s only about 6 per month per state. They’re special. Amy Silverstein was well known about speaking on improving organ donor drug regimens, and the quality of treatment received by those receiving organs. Amy died last month. I hope that she had an impact. Like being a loan officer and prospecting for loans, transplants are a numbers game. The majority of Americans, 95 percent, are in favor of organ donation. But only 58 percent are actually registered. The most commonly transplanted organs are the kidney, liver, heart, lungs, pancreas and intestines. Register today. It won’t hurt a bit. (Today’s podcast can be found here and this week’s is sponsored by MCT and its Hedge Advisory division. Download their recently released whitepaper, Mortgage Pipeline Hedging 101, for more information on hedging in today’s market. Today’s includes an interview with Morris, Manning & Martin, LLP’s Bonnie Hochman Rothell on risks and legal considerations for lenders in a high-rate environment.)

Have a minute for a survey?

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“Calling all loan originators: We want to hear from you! Take the Loan Originators Survey from MGIC and Loan Officer Hub and share your insights on marketing, working with referral partners and consumers, the challenges of this past year, your goals for the future, and more. Learning from your peers is one of the best ways loan officers grow and improve. Complete the survey by June 30 and you’ll be the first to receive the full survey report this fall!

Broker and lender services, products, and software

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This 25,000 sq. ft. Malibu Beach compound is California's most expensive Zillow listing, priced at a cool $195,000,000. Whether you are closing loans on palatial properties or starter homes, Nexus Closing by SimpleNexus, an nCino company, supports a top tier eClosing experience that borrowers and their agents will love. Nexus Closing’s single sign-on convenience makes it easy for borrowers to review and sign documents from anywhere. Also, it provides the flexibility of conducting in-person, hybrid, and full eClosings. Title and settlement partners also love the ease of centralized collaboration that keeps them up to date on closing docs and signing status. Learn how Dan Windell of Thrive Mortgage has been winning with Nexus Closing. Or schedule a demo to see Nexus Closing in action for yourself.

When thinking about effective approaches for succeeding in this market, two ideas come to mind. First, understand prospective homebuyers within the context of their economic uncertainty and get back to the basics of why homeownership still makes sense. Highlight building equity, and consider discussing the framework of creating generational wealth, especially for first-time buyers! Also, underscore the emotional aspects of ownership, like pride, stability, and better family environments. Next, articulate secure tactics to make purchasing more affordable: things like down payment strategies, interest buydowns, and ARMs offering lower payments as the market steadies. (Keep in mind buyer bias against ARMs; counter with education on their contemporary framework). Usherpa, the #1 ranked Mortgage CRM in both customer satisfaction and loyalty, is here to help you through this and every challenge. Download this free, informative PDF for homebuyers.

Your company has collected enough customer and contact data from across your tech stack to shut down a server farm. Now what? Data by itself isn’t that useful. It needs to be organized, categorized, and analyzed before it can truly be utilized. Otherwise, you’re just relying on instincts and blind luck to generate leads and drive growth. Total Expert Customer Intelligence aggregates all that data you’ve collected and constantly monitors it for key behaviors to identify and surface the most promising opportunities. Now, you can spend less time digging through your database and more time engaging customers about their financial needs and goals. Learn how Prosperity Home Loans uncovered 2,000+ new opportunities within their existing database using Total Expert Customer Intelligence.

As lenders adapt to volatile mortgage rates, many are stopping to reconsider their servicing strategy. Do inconsistent mortgage origination volumes have you questioning what makes more sense: retaining servicing or selling servicing released? Seth Sprague, CMB, Richey May’s Director of Mortgage Banking Consulting Services (aka, resident servicing expert), outlines the 13 key trends and strategies in servicing including recommendations on how to make the right decisions for your business. Want more help defining the optimal strategy? You know where to find us.

NEW EBOOK: How to fill your pipeline with referral business, even in today’s tight market. Right now, a steady stream of referrals means the difference between maintaining a pipeline and scrounging for leads. And real estate agents still hold the keys to the referral kingdom. To create this eBook, Maxwell interviewed agents and broker-owners across the country. The result is firsthand advice to help you better network to create a strong funnel of referral leads. Download your free copy to learn the 4 qualities real estate agents value in their lending partners, agent networking dos and don'ts, 5 ways to become a go-to lender for real estate agents, and more. Click here to download “Winning Agent Business: The Lender's Guide to a Strong Referral Network.” 

You know the headaches that come with your tech: you have too many screens to navigate, too many emails from too many departments, that file from three weeks ago just went missing, and your computer has slowed to a crawl… again. But ask yourself: are these normal hiccups, or is aging and outdated technology struggling to keep pace with your business? Shop-worn tech isn’t just an annoyance. It puts you at a competitive disadvantage in a market that leaves little room for lagging behind. Read Black Knight’s blog “Spotting Signs of Wear,” and see why so many decision-makers recommend investing in your technology now – even (and especially) in a downturn market.

FHA, VA, HUD, Ginnie, and USDA program news

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Although conventional conforming loans continue to represent the lion’s share of our biz, “government” product volume is somewhat steady, and substantive. Last week, the FHA share of total applications was 13.3 percent, the VA share of total applications was 11.9 percent, and the USDA share of total applications was 0.4 percent. And so, the changes that HUD and other government loan programs make are followed by lenders who originate that product. And the FHA has more than a dozen measures planned for proposal and final action, according to the Department of Housing and Urban Development’s spring agenda.

The result of audits was released last week by the Office of Inspector General for the U.S. Department of Housing and Urban Development. OIG looked at how mortgage servicers handled loss-mitigation aid during the pandemic, and it was not good: they failed to help two-thirds of distressed borrowers.

Bob Broeksmit, CMB, President and CEO of the Mortgage Bankers Association (MBA), issued the following statement in response to the news. “The report from the OIG confirms what we all know: the COVID-19 pandemic presented unprecedented challenges to homeowners, servicers, and the federal agencies like HUD that administer loan guarantee programs. Since the pandemic began in March 2020, mortgage servicers provided payment relief to nearly 8 million borrowers via forbearance. Today, only approximately 255,000 borrowers remain in forbearance, and delinquency rates are near historic lows.

“The OIG’s report details the difficulties that HUD faced in effectively communicating extensive and rapidly changing COVID-related loss mitigation program requirements. These difficulties are understandable in light of the challenges faced by both HUD and servicers in an unprecedented and rapidly changing environment. Those difficulties increased the challenges that servicers faced in implementing these new and evolving programs for a never-before-seen volume of borrowers.”

FHA announced that its FHA Catalyst Claims Module is being updated to further align module functionality with FHA’s claim certification requirements published in Single Family Housing Policy Handbook 4000.1, IV.A.1., Claim Submission Process. On July 14, 2023, the FHA Catalyst Claims Module will be updated to reinforce user profile accuracy and to be consistent with FHA policy that only mortgagee employees may certify claim submissions.

FHA is taking new steps to remove an important barrier to homeownership for those who have limited English proficiency. FHA just announced the availability of multilingual educational materials on its new Language Access Resources web page.

Ginnie Mae announced in All Participants Memorandum (APM) 23-09​ that it is extending the use of electronic signatures in conjunction with Remote Online Notarization (RON) to include power of attorney (POA) mortgage documents.

(Recall that in December Ginnie Mae announced new loan limits for 2023 for single-family forward mortgages eligible for pooling in its mortgage-backed securities programs. Loan limits for most of the country increased this year due to house price appreciation during the first half of 2022, which is factored into the statutorily mandated calculations that determine the limits each year. One-unit properties in the contiguous 48 States, District of Columbia, American Samoa, and Puerto Rico will have a loan limit of $726,200 while one-unit properties in Alaska, Hawaii, Guam, and the U.S. Virgin Islands have a loan limit of $1,089,300.

Ginnie Mae has added "Ginnie Mae Mortgage-Backed Securities Portfolio Reaches $2.404 Trillion in May ".

USDA Rural Development SFHD posted a new bulletin updating exhibits in RD Instructions 1944-N, Housing Preservation Grants.

PennyMac issued a reminder to correspondents with Announcement 23-40 of the USDA Guaranteed Rural Housing Loan Program annual income eligibility requirements, specifically as it pertains to asset review requirements.

Help your low to moderate-income borrowers, who are looking to purchase a single-family home, with Hometown Equity Mortgage new CalHFA Down Payment Assistance Program which provides low interest home financing, down payments and closing cost assistance for homebuyers in California.

Capital markets: MBA application data reminds us of refi percent

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Federal Reserve Chair Jerome Powell will have an opportunity this week to clarify what many found a confusing message on the path of interest rates, with the added task of assuring Democrats and Republicans the economy is on track. Who the heck would want that job?

Rates dropped to open the holiday-shortened week despite a report that residential construction is gaining momentum. Housing starts rose 5.2 percent above April to a 1.63 million annualized figure in May, which exceeded expectations. The number is still down 12.7 percent from May 2022 and total starts are down 15.5 percent on a year-to-date basis. Continued growth in new home construction is consistent with improving home builder sentiment and ongoing lack of existing homes for sale. Building Permits rose to 1.49 million.

This morning the industry learned that mortgage applications increased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 16, 2023. It’s nice to see an increase, albeit small, and not another decline. “The refinance share of mortgage activity decreased to 26.9 percent of total applications from 27.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3 percent of total applications. The FHA share of total applications increased to 13.3 percent from 13.0 percent the week prior. The VA share of total applications decreased to 11.9 percent from 12.6 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.”

The rest of the week won't have much in the way of market-moving data, but we will have plenty of Fed speak, including Fed Chair Powell heading to Capitol Hill for his semiannual testimony today and tomorrow. Markets will also receive remarks from Chicago President Goolsbee and Cleveland President Mester. Today’s data, besides the MBA’s application data, only has supply and demand monitoring with a Treasury auction of $12 billion reopened 20-year bonds. We begin the day with Agency MBS prices roughly unchanged from Tuesday afternoon, the 10-year yielding 3.75 after closing yesterday at 3.73 percent, and the 2-year is at 4.71.

Leading up to the local election, two opposing candidates for county office happened to be sitting next to each other in the local diner.

One turned to the other and said, "You know why I'm going to win this election? Because of my 'personal touch.' For example, I always tip waitresses really well and then ask them to vote for me."

"Oh, really?" replied the other. "I always tip a nickel and ask them to vote for you."

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. STRATMOR’s current blog is titled, “Compensation: Ever Changing.”  The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2023 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)