Aug. 10: Fannie's digital use survey; vendor news from VOE to QC; secondary deals; Saturday Spotlight: Docutech
Here’s a reminder that people like to have fun, especially with the unexpected. In a reminder that “people need a place to live, not necessarily a place to work,” here’s a riddle. What was valued at $332 million in 2006 but is now valued at $8.5 million? The New York Times reports that the 23-story office building at 135 West 50th Street in Midtown Manhattan sold for $332 million when tenants occupied nearly every floor, offices were in demand, and real estate was booming. Within the last week “it changed hands again for $8.5 million. The staggeringly low sale price of the building (once the headquarters of Sports Illustrated) is the latest and perhaps most surprising sign of how the pandemic has upended the state of office buildings in New York City, home to the largest central business district in the United States. Several large Manhattan office buildings have sold in recent years at steep discounts, some going for less than half of what the previous owners paid. Of course there are better and worse places to work remotely, and some company I’ve never heard of ranked them around the U.S. Supply and demand is the name of the game, and is highlighted in Chris Whalen’s “inside baseball” interview earlier this week on banks, risk, and MBS.
Saturday Spotlight: Docutech
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“Accelerate Closings. Accelerate the Dream. Digitize Lending and Settlement.”
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).
Docutech, a member of the First American family of companies, provides an end-to-end, integrated, digital mortgage experience that enables lenders to accelerate the real estate closing process. The company digitizes and streamlines the generation, delivery, execution, perfection, and clarification of mortgage documents. Docutech sets the standard in providing market-proven technology and unrivaled customer service to the financial industry. Founded in 1991 and acquired by First American in 2020, Docutech has become a technology powerhouse, combining its innovative technology and expertise with the broad solution set and financial strength of First American.
Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why. / 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.
Docutech’s client-centric approach involves supporting the charities that our clients care deeply about. Inspired by efforts across First American, we also support our employees as they give back to the communities where we live and work. Our employees contribute their passion, time and money to dozens of food banks, charity walks, children's causes, animal rescues and more every year.
Docutech employees are deeply ingrained in the mortgage and financial technology industry and play significant roles in numerous industry groups and associations. There are also numerous learning and development opportunities internally, including First American’s Women in Leadership, SPARK, and Emerging Leaders programs. The Women in Leadership and SPARK programs are designed to develop talented women who, through their influence, have a significant impact on our company’s operations and overall success. The company’s Emerging Leader program is a hallmark leadership development initiative within First American, focusing on enhancing the skills of up-and-coming leaders from divisions and regions across the company.
Things you are most proud of that don’t have to do with sales.
Docutech recently introduced an enhancement to our Solex® suite, Solex Vision. Solex Vision’s dashboard provides lenders with enhanced, real-time visibility into their loan disclosure pipeline. Docutech provides loan disclosures in foreign languages where required by applicable state laws and offers the translated versions of the Uniform Instruments from the GSEs to assist borrowers with limited English proficiency.
Docutech invests in ADA compliance, supporting screen readers for color blindness, and implementing responsive design upgrades that optimize viewing on any device, from cell phones and tablets to personal computers.
Is there anything else you’d like to share along these lines?
Docutech plays a leadership role in the eClosing adoption journey and the broader digital transformation taking place across both the real estate and mortgage lending industries. We are driven to simplify the complex needs for our customers and enhance the experience of the consumers they serve through innovative technologies and solutions.
As part of the First American family of companies, Docutech‘s strong culture is rooted in consistently providing the best-in-class products and services that deliver the certainty and trust needed to power seamless real estate transactions for our customers.
For more information, visit the company's website at docutech.com or follow them on LinkedIn.
(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)
Fannie’s survey on digital use
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As part of a recent Fannie Mae special topic analysis, its Economic & Strategic Research (ESR) Group surveyed recent homebuyers (those who purchased a home with a mortgage acquired by Fannie Mae between January 2023 and November 2023) to better understand adoption rates and overall experiences with digital verification technology. Because we conducted a survey on this same topic three years ago, we were also able to look for trends in consumers’ use of technology, including how their preferences have changed. We believe these insights can help the industry further evolve the mortgage origination process to the benefit of all stakeholders, including lenders, service providers, and, of course, consumers. In a new Perspectives blog, Brooke Smith, Senior Manager, Single-Family Digital Solutions, and Li-Ning Huang, Principal, Market Research, discuss the results and the possible implications for the housing market. Consistent with the exponential growth of technology use in our day-to-day lives, the use of personal-touch-only channels (i.e., in-person or by-phone) when obtaining a mortgage has significantly declined. Most recent homebuyers opted for a hybrid approach, leveraging both online channels and personal-touch channels. Overall, recent homebuyers expressed immense interest in having a more or fully digital mortgage process.
Vendor morsels
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Halcyon has officially become an authorized tax transcript report supplier for Fannie Mae’s Desktop Underwriter® (DU®) Validation Service. This integration allows seamless access to tax transcript reports, which are essential for verifying borrower information quickly and accurately. Halcyon is now the only income verification solution with a GSE-accepted 8821 tool. If you haven't already, click here to schedule a demo of our GSE approved tax transcript solution.
Corporate Settlement Solutions (CSS), a full-suite provider of real estate settlement solutions, released results from its mid-year analysis of the types of valuation products that lenders are using to originate home equity loans and found a significant increase in the use of Automated Valuation Models. The CSS Home Equity Valuation Analysis reviews full loan portfolios for 19 lenders within the CSS footprint to track lender preferences for five types of valuation products.
FICO is partnering with the National Association of Minority Mortgage Bankers of America (NAMMBA) helping educate and train mortgage professionals on financial wellness and how to support their communities from a social impact lending perspective. The new collaboration is expected to incentivize more lenders to obtain NAMMBA’s Certified Community Lender (CCL®) certification. FICO will be providing its Score A Better Future™ credit education curriculum for all participants pursuing the CCL certification. It will also offer resources that can be used by mortgage professionals to better understand credit and how their clients can be best prepared and positioned to purchase a home. To learn more, view the press release.
LenderLogix, a leading provider of mortgage point-of-sale and automation software for banks, credit unions, independent mortgage banks, and brokers announced its integration with automated employment and income technology provider Truv. Through the integration, lenders can now access Truv’s consumer-permissioned data platform through LenderLogix’s point-of-sale (POS) LiteSpeed to obtain direct-to-source income and employment verification for mortgage applicants.
ACES Quality Management® (ACES), the leading provider of enterprise quality management and control software for the financial services industry, announced the release of its Deposit Accounts Audit Pack which includes custom data fields, ACES Managed Questionnaires (AMQs) and three new custom reports in Business Objects. Using ACES’ Flexible Audit Technology, all features can be customized to meet a financial institution’s needs and workflows. The pre-configured audit pack is designed to assist financial institutions with meeting the deposit account monitoring requirements from the Federal Deposit Insurance Corporation (FDIC) and other prudential regulators.
Secondary market soundbites
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If there is no demand for a product that is produced, why produce it? For mortgages, activity in the secondary markets or portfolios helps determine rates and whether the product is even offered to borrowers.
Fannie Mae priced its fourth Multifamily Connecticut Avenue Securities (MCAS) transaction, MCAS Series 2024-01, a $250 million note offering. MCAS is Fannie Mae’s issuance program designed to share credit risk on its multifamily conventional guaranty book of business. The reference pool for MCAS Series 2024-01 consists of 147 multifamily mortgage loans with an outstanding unpaid principal balance of approximately $8.6 billion. The reference pool includes multifamily loans underwritten according to Fannie Mae’s standards and acquired by Fannie Mae from January 1, 2023, through December 31, 2023. The loans included in this transaction are fixed-rate multifamily mortgages with terms less than or equal to 10 years and with unpaid principal balances greater than $35 million, in addition to other select eligibility requirements. To support their credit risk transfer capabilities, Fannie publishes the Multifamily Loan Performance Data on Data Dynamics®, which presents loan-level credit performance data on more than 20 years of Fannie Mae multifamily production. The amount of periodic principal and ultimate principal paid by Fannie Mae is determined by the performance of a large and diverse reference pool. For more information on individual MCAS transactions, visit Fannie’s credit risk transfer webpage.
Fitch Ratings expects to rate the residential mortgage-backed notes issued by RCKT Mortgage Trust 2024-CES5. The notes are supported by 5,909 closed-end second lien loans with a total balance of approximately $479 million as of the cutoff date. Loss allocations are based on a traditional senior-subordinate, sequential structure in which excess cash flow can be used to repay losses or net weighted average coupon (WAC). Positive key rating drivers include: the borrowers have a strong credit profile consisting of a weighted average (WA) Fitch model FICO score of 738, a 38.7 percent debt-to-income ratio (DTI), and moderate leverage, with a sustainable loan-to-value ratio (sLTV) of 77.5 percent.
Of the pool, 99.6 percent consists of loans where the borrower maintains a primary residence and 0.4 percent represents investor properties or second homes, while 93.4 percent of loans were originated through a retail channel. Principal is used to pay down the bonds sequentially and losses are allocated reverse sequentially. Monthly excess cash flow is derived from remaining amounts after allocation of the interest and principal priority of payments. These amounts will be applied as principal, first to repay any current and previously allocated cumulative applied realized loss amounts and then to repay any potential net WAC shortfalls. The Asset Manager has the ability, but not the obligation, to instruct the servicer to write off the balance of a loan at 180 days delinquent based on the Mortgage Bankers Association delinquency method.
To the extent the servicer expects a meaningful recovery in any liquidation scenario, the Asset Manager noteholder may direct the servicer to continue to monitor the loan and not charge it off. Negative key rating drivers include: the home price values of this pool as 11.6 above a long-term sustainable level (versus 11.1 percent on a national level as of 4Q23, remained unchanged since last quarter). Housing affordability is at its worst levels in decades, driven by both high interest rates and elevated home prices. Home prices have increased 5.5 percent year-over-year nationally as of February 2024, notwithstanding modest regional declines, but are still being supported by limited inventory. Additionally, the entirety of the collateral pool comprises closed-end second-lien loans originated by Rocket Mortgage.
Fitch assumed no recovery and a 100 percent LS based on the historical behavior of second-lien loans in economic stress scenarios. Fitch assumes second-lien loans default at a rate comparable to first-lien loans; after controlling for credit attributes, no additional penalty was applied to Fitch's probability of default (PD) assumption. While Fitch has previously analyzed CES transactions using an interest rate cut, this stress is not being applied for this transaction. Given the lack of evidence of interest rate modifications being used as a loss mitigation tactic, the application of the stress was overly punitive. If this re-emerges as a common form of loss mitigation or if certain structures are overly dependent on excess interest, Fitch may apply additional sensitivities to test the structure.
Here’s a short video example of why you don’t want a magician for a doctor.
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