Certain parts of the economy are experiencing inflation, others not. Lower interest rates would certainly help families racking up expensive (25-30 percent) credit card debt. Are you willing to go into debt for a summer vacation? You aren’t alone: more than a third would, according to this poll. (Who answers these poll questions, anyway?) If you were in prison, how much would you pay for a phone call? Many of my relatives are excited that the FCC has voted to lower price caps on prison phone calls. (I know… you always wondered about these things but were afraid to ask.) Under the new rules, a 15-minute phone call will drop from $11.35 in large jails to just $0.90, and a similar call in a small jail will drop from $12.10 to $1.35, effective January 2025. This is a huge deal for the families of incarcerated people, with one nonprofit estimating that in the aggregate families will save at least $500 million annually that would otherwise go to a prison contractor. For the first time, video call rate caps have been adopted as well, capping the price of a video call at $0.11 to $0.25 per minute, depending on the facility. The eight companies that are responsible for 96 percent of the average jail and prison population’s phone service will still be able to make a profit with the rate cap, per the FCC.
Saturday Spotlight: Prudent AI
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“Get instant income certainty with fraud protection.”
In 3-5 sentences, describe your company (when was it founded and why, what it does, where, recent growth and plans for near-term future growth).
Prudent AI is the default income intelligence platform powering the top non-QM lenders, including Angel Oak, Newfi, Change Lending, Kind Lending, Logan finance and several others. Our intuitive UI and cutting-edge AI enables lenders to pre-qualify borrowers with a single click while providing day-one income certainty and proactive fraud screening.
Trusted by over 50 percent of the non-QM market, Prudent AI empowers lenders to double their loan volume, save 4 hours per application, and keep their operating costs in check as they scale.
Founded in July 2020, our mission is to revolutionize lending by equipping teams with tools that offer them unparalleled speed, accuracy, and confidence in their decision-making.
Looking ahead, Prudent AI is poised for explosive growth as we continue to transform the lending landscape. Our roadmap includes aggressive expansion into new market segments, strategic partnerships with industry giants, and the development of groundbreaking AI solutions that will redefine the way lenders operate. With our unrivalled technology and deep industry expertise, Prudent AI is not just shaping the future of lending – we are creating it.
What does your company do to help elevate your employees’ growth? Describe any mentoring programs, outside classes or training, in-house training. How does the company help people develop?
At Prudent AI, we prioritize the growth and development of our employees. We offer a dedicated budget for learning and development, allowing our team members to enroll in courses and training programs that align with their professional goals.
Additionally, we foster a culture of knowledge sharing through regular internal sessions. We also encourage innovation by providing our employees with the time and resources they need to work on new ideas.
We believe that we can achieve more when we trust each other, and we are committed to creating a high-trust environment for everyone on our team.
Tell us how your company maintains its culture in a work-from-home environment, or how you plan on bringing employees back into the office, if applicable.
At Prudent AI, we have adopted a flexible working model that balances the benefits of remote work with the collaborative spirit of in-person interactions. Our team members work from home three days a week and spend two days in the office. To further strengthen our company culture and promote cross-functional collaboration, we organize regular team dinners and off-site events that bring together teams from multiple locations.
Things you are most proud of that don’t have to do with sales.
At Prudent AI, we take immense pride in our technology, which has been developed with a deep understanding of our customers’ needs. By working closely with lenders from the very beginning, we have built a platform that is intuitive, user-friendly, and incredibly fast. Our customers have become ardent fans of our app, appreciating its ease of use and the speed at which it delivers results.
(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)
What is our MBA up to?
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First off, if you’re not a member of the MAA, at zero cost to you, you should be. Sign up… there is strength in numbers!
Editor’s note: with the presidential campaign sucking up all the air for the next three months, as well as the last several, the chances of anything too interesting happening in Congress or the Administration are low. Some would say negligible. But that doesn’t stop the Mortgage Bankers Association from trying to implement change. The notes below are taken directly, and unabashedly, from the MBA’s latest Advocacy Update produced like clockwork by Pete Mills and Bill Killmer.
The Federal Reserve, the Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), and the Office of the Comptroller Currency (OCC) issued final guidance on reconsiderations of value (ROV) for residential real estate valuations.
The guidance outlines risks associated with deficient valuations and explains how lenders can incorporate ROV processes into their risk management practices. It includes examples for lenders on policies and procedures to identify, address, and mitigate risks, including discrimination in real estate valuations. This guidance follows a letter from the MBA to the Federal Housing Finance Agency (FHFA) and HUD requesting a six-month delay in implementing their revised ROV policies, which were announced in May 2024.
This additional guidance helps lenders further manage the risks of inaccurate valuations that could lead to overvaluing or undervaluing borrowers’ homes.
The House Financial Services Subcommittee on Housing and Insurance held a hearing to address critical issues impacting housing affordability and development. Republicans denounced regulatory barriers, including environmental rules, as significant impediments that unduly hinder housing supply. Democrats emphasized the benefits of energy efficiency regulations while also emphasizing their concerns regarding rising property insurance costs.
The hearing underscored the need for reforms to facilitate affordable housing solutions amid rising costs and regulatory complexities. Balancing energy efficiency mandates with affordability challenges remains a pivotal element of sustainable housing development. Read the MBA-signed coalition letter supporting the bipartisan bill.
The House Financial Services Committee held a hearing entitled, “AI Innovation Explored: Insights into AI Applications in Financial Services and Housing.” The hearing follows the Committee’s recent publication of its bipartisan staff report on artificial intelligence (AI). Republican lawmakers argued that the existing laws and regulations governing the financial services sector are already sufficient to oversee new AI technologies, particularly due to the third-party vendor requirements for financial institutions. See a full summary of the hearing here, and watch a livestream of the full hearing here.
Many Democrats raised concerns about the potential for discrimination perpetuated by AI tools, especially discrimination in the housing and rental sectors due to third party tenant screening, automated valuation models (AVM), and automated mortgage underwriting. A few Democrats also called for legislative action to address algorithmic discrimination.
There was also extensive discussion of industry standards to maintain the safety and fairness of AI models, such as utilizing quality datasets, maintaining transparency, mandating human involvement, and testing models. A few lawmakers and witnesses also explored the possibility of congressional action to implement a single uniform digital identification standard to address the fraud risks posed by AI, such as “deep fakes” and synthetic identities. Some members agreed on the need to pass bipartisan legislation to study and combat “deep fakes.”
For more information, please contact Rachel Kelley at (202) 557-2816 or Madisyn Rhone at (202) 557-2741.
The House Committee on Administration held a hearing to examine the future of congressional policymaking following the Supreme Court’s recent ruling in Loper Bright Enterprises v. Raimondo, which overturned a previous Court decision compelling courts to defer to federal agencies for their reasonable interpretations of ambiguous statutory text, commonly referred to as “Chevron deference.” Read a hearing summary here or watch a livestream of it here.
Given that the Loper Bright ruling will have sweeping implications for future rulemaking processes (see MBA’s summary of the decision’s implications here), members of the Committee questioned witnesses on possible solutions to expand Congress’ regulatory authority and the level of precision needed to craft meaningful legislation in the post-Chevron era. Democrats and Republicans strongly disagreed about the impact of the Supreme Court’s ruling in this case. While GOP lawmakers on the panel felt the decision will re-establish Congress’s primary role in the statutory construction of new law, and subsequent regulation, Democrats countered that it will instead unintentionally decrease the power of the Legislative Branch by empowering courts at the expense of Congress.
Witnesses fielded questions from lawmakers on both sides of the aisle as to whether Congress should take action in the aftermath of the decision by: (1) establishing a dedicated regulatory authority function within Congress that would involve hiring additional staff with the necessary subject-matter expertise; and/or (2) enhancing bill drafting techniques to ensure clarity in statutory texts.
For more information, please contact Justin Wiseman at (202) 557-2854, Rachel Kelley at (202) 557-2816, or Madisyn Rhone at (202) 557-2741.
Fannie forecast
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Fannie Mae’s latest housing forecast sees the 30-year fixed rate mortgage ending the year at 6.7%, and gradually falling to 6.2% by the end of 2025. Home price appreciation is expected to remain in the 6% range before falling into the 3% range in 2025. The team at Fannie expects to see 25 basis points in rate cuts this year and another 75 bp in 2025. The core PCE inflation rate is expected to fall to 2.7% this year and 2.3% next year.
What are folks “in the trenches” saying refi volume? “I think it’s a gradual decline down. If you look at originations post COVID, rates jumped up and the industry ran through loans with a 5% handle. In terms of refi opportunity, it’s really in the 6% to 7% range where you see a lot, and even north of 7%. It’s going to be a slow grind down without some sudden, company-saving influx of refi business. I think when rates get to 6.5%, that’s where it really picks up steam.
“At 6%, you’re in a really robust refi market because it’s not just the existing first liens that are in the money. You could have loans that are 4% and 5%, taking out debt consolidation, cash refinance to either pay off existing HELOCs or closed-end seconds or other forms of debt. In my opinion, it’s really a function of what’s behind the first lien that helps drive the “refinanceability.” Right now, the yield on the 10-year is still well above 4 percent, but I continue to believe that when the 10-year hits around 3.75%, and mortgages are down 50 basis points, that it really is the signal of a true new market or new phase of the refinanceability.”
Like a loan officer putting together a loan for a client, some people see things when nothing was there before. Or as illustrated in this short video, definitely fun for kids interested in art to watch.
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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(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 2024 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.)
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