Aug. 3: Vendor news; suggestion on Fannie pricing; thoughts on the jobs data & mortgage rates
Sometimes I am a little creaky when I roll out of bed at 4AM six days a week. But no, I am not old enough to have been at any of the grand openings of the oldest restaurants in each state, something that is kind of fun to take a look at during summer vacation season when you’re taking the family around the states in your station wagon. I doubt if many of them have a logo; their marketing consists of their longevity and reputation. Monday, I head to Orange County for the California Association of Mortgage Professionals event. Topics include the economy, compliance, recent regulatory changes, and… marketing. Carolyn Davidson, a graphic design student, created the Nike logo in 1971 for $35. BP spent $211 million on its logo! Borrowers and clients will follow you based on your service, product, and price, regardless of whether you have a logo or not. Friday’s podcast, found here, had an interview with Zilker Media’s Nichole Williamson on developing branding and marketing for financial companies & individuals to bring their communications into the modern landscape. It is worth a listen.
What’s up with the job’s data?
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If you want low rates, you have to deal with a slowing economy. It’s really, really hard to have everyone working and low mortgage rates. So, the Friday jobs data was of great interest.
MBA SVP and Chief Economist Mike Fratantoni’s reaction to the report on employment conditions in July? “The job market definitively slowed in July. Nonfarm payroll growth at 114,000 was well below the 12-month average of 215,000, while the unemployment rate moved up to 4.3%, and wage growth slowed to 3.6%. This slowing is consistent with trends in other data including the slower hiring rate, increases in initial claims for unemployment insurance, signs of contraction in the manufacturing sector, and some signs of stress for households. Additionally, payroll growth for the prior two months was revised down by a cumulative 29,000 jobs.
“Job growth was weak across the board, with small gains or losses across the economy. Not only did the headline unemployment rate increase, but the broader U-6 measure showed an even bigger increase, highlighting that more people are struggling in this job market.
“Construction employment showed a small gain, as builders continue to work to add to housing supply given the ongoing shortage.
“The Federal Reserve kept the federal funds target unchanged at its July meeting but hinted at a cut in September. The weakness in this report, including the slower rate of wage growth and the higher unemployment rate, certainly support such a cut, but the next inflation report needs to confirm that price growth is also slowing.
“The market is moving ahead of the Fed, bringing down longer-term rates including those for mortgages, which should lead to both more home purchases and a pickup in refinance activity.”
NAR Chief Economist Lawrence Yun had a slightly different take. “Mortgage rates are plunging on the news of weak job growth and rising unemployment. The 4.3% unemployment rate is the highest since coming out of the COVID lockdown and higher than the 3.5% unemployment rate right before the COVID-19 arrival. The hourly wage gain of 3.2% is the weakest in three years. The Fed was late moving away from the restrictive monetary policy stance when early signs of a softening economy were visible. Soft manufacturing survey data, falls in construction activity, and damaging financing costs for small businesses clearly hint at a cooling economy and further cooling in inflation.
“The Fed may make a deeper cut of 50 basis points in September. The 30-year fixed mortgage rate looks to fall to 6.5% or even lower in the upcoming weeks. That is what the 10-year bond yield suggests, which plunged to 3.8% this morning, compared to 4.8% a few months ago. The 100-basis-point change in mortgage rates generally means around a $300 lower payment on a typical mortgage. Homebuyers who were priced out a few months ago should re-check whether they can enter the homebuying market if they have secure jobs.”
The expenses of selling loans to Fannie & Freddie
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Friday’s Commentary stated, “…Questions should be addressed to your Agency rep, but some lenders may have received something like, ‘Due to continued pressure on our return, Fannie Mae increased guarantees by 1bp across products.’ It is rumored that lenders, and therefore their clients, may also see a deterioration of 5bps in adjustments on Fannie’s ‘pricing waterfall’ excluding Housing Goals and NOO segments.”
It prompted one capital markets head from the Central Region to pen, “This shouldn’t be a surprise at all. Fannie’s big push to housing goals AND specified pricing tiers always meant loans outside of those tiers were going to suffer in pricing. If you happen to fall out of one of those tiers? Oops, so sorry. Logging in, I showed spec pricing (specified pools) for a 30-year fixed for Homeready, Mission Score 3, Mission Score 2, Max loan amount tiers starting at $275k, in $25,000 increments all the way down to $85k, High Balance, Second Home, New York, Investment Property, and credit score less than 700. It’s obvious where Fannie wants the loans and where it doesn’t, and that’s not even counting the logic we don’t see behind the scenes on what receives an AUS approval.
“Add to this the so called ‘beta’ or ‘test’ programs that only are given to the big players (such as Homeready First), leaving everyone else shut out when it’s possible that these small to mid-sized players can actually help achieve the intended goals of these programs. Those companies would love to be able to offer borrowers $5,000 in assistance, but we can’t because… Why not?
It would be really nice to get some more clarity/transparency from the Agencies. I’m all for pushing the housing goals, but keep it an even playing field, and just let everyone know the deal.”
Vendor morsels
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You’d be hard pressed to find a lender that doesn’t rely on some outside third-party provider for services somewhere along the lending chain. Some would say it’s impossible. Who’s doing what out there?
Fair Lending is top of mind for regulators and auditors, especially among the rules regarding Limited English Proficiency, increase use of Artificial Intelligence (AI), and rising concerns with Loan Servicing and Debt Collections. Make it easy for yourself and read MQMR’s new whitepaper, “You’ve Got the Trust. Now It’s Time to Verify.” to learn the first 5 Steps for ensuring Fair Lending compliance.
LenderLogix, a leading provider of mortgage point-of-sale and automation software for banks, credit unions, independent mortgage banks, and brokers announced the latest release of the Homebuyer Intelligence Report, a quarterly summary of insights into borrower behavior during the home buying process based on data collected by the LenderLogix suite of tools. The latest report covers data collected during the pre-approval and borrower application process during the second quarter (Q2) of 2024. Data from LenderLogix Homebuyer Intelligence Report is available to the industry free of charge.
Lender Price announced the launch of its groundbreaking new product, Bulk Price API designed to help lenders and servicers reprice their portfolio on a daily, weekly, or monthly basis to let them know which customers would be eligible for a refinance or potentially a HELOC. Reach out to learn how Bulk Price API can drive additional volume, personalization, and potential savings in this market.
Halcyon, the innovative leader in digital IRS integrated income verification solutions, and CoreLogic®, a global property information, analytics, and data-enabled solutions provider, announced a new collaborative alliance. This integration aims to revolutionize the income verification process in the lending and mortgage industry, offering unparalleled efficiency, accuracy, and compliance. Halcyon’s Tax Wallet is a cutting-edge solution designed to streamline the IRS income verification process, providing faster, better, and more cost-effective services. Recognized for its exceptional performance, Tax Wallet has received representation and warranty approval from both Freddie Mac and acceptance from Fannie Mae’s Digital Underwriter, making it a trusted tool for banks, credit unions and mortgage bankers nationwide.
Informative Research, a leading technology platform delivering data-driven solutions to the lending community announced the expansion of its verification platform through the integration of additional Equifax solutions that leverage The Work Number®, the industry-leading commercial source of consolidated income and employment information. With this enhancement, Informative Research provides its customers with extensive options for receiving specific records from The Work Number that help meet their needs at each step of the mortgage process. The release will include every solution Equifax makes available to mortgage resellers via API. Lenders will have more choice in how they configure their verification strategies. View the newly added solutions from Equifax.
FICO and FINRA Foundation set out support the great men and women who serve our country and together, they have brought financial education resources to United States’ active-duty service members and their spouses by providing military financial educators and counselors for the Department of Defense and Coast Guard Personal Financial Management Programs. You can find more information about the partnership, the impact it has had over the past 14 years, and how active-duty service members and their spouses can access various resources provided by FICO and FINRA Foundation.
Down Payment Resource’s Q2 2024 Homeownership Program Index (HPI) saw the number of national homebuyer assistance programs climb to a record-high 2,415. The increase in program count was fueled, in part, by state housing finance agencies (HFAs) drawing on federal funds from the Department of Health and Human Services as well as on dollars authorized by the American Rescue Plan Act, which must be allocated by the end of 2024 or returned to the Treasury. Several of the new programs target first-generation homebuyers, whose families are less likely to be able to provide financial assistance for a down payment or other up-front homebuying costs. For more data, details and infographics, read the full news release.
The 2024 U.S. Mortgage Servicer Satisfaction Study from J.D. Power measures customer satisfaction with the mortgage servicing experience in six factors. The latest results highlight a mixed bag for mortgage servicers. The data show escrow costs are rising, and borrowers need guidance. Beyond that, controlling costs is still a challenge for servicers, even with self-service. In other words, there are signs of big potential challenges for servicers in the future. Read the press release for more information.
The Community Home Lenders of America (CHLA) released a statement in response to approval of the Fiscal Year 2025 appropriations bill for HUD which increased funding for administrative expenses of Ginnie Mae from $54 million to $67 million. CHLA has taken the lead on this issue – starting with the May 15th release of CHLA’s Ginnie Mae Modernization Plan which called for the $13 million funding increase the Senate Appropriations Committee approved yesterday. Federal bank regulatory agencies are seeking comments on interagency efforts to reduce regulatory burden. View Joint Press Release issued by the Board of Governors of the Federal Reserve System for more information.
Here’s an easy and very entertaining way to think & talk about the debt limit and the current US Government: http://www.youtube.com/watch?v=Li0no7O9zmE. (The video is 3 minutes, but you’ll see the point after 45 seconds.)
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