Mar. 15: Thoughts on mortgage banking; vendor news; secondary deals; Saturday Spotlight: TRAiNED, Inc., AI mortgage manufacturing

Here we are at the Ides of March, and we’ve recently been reminded that volatility is not the friend of anyone in a mortgage company’s capital markets team. Earlier this week a panel addressed current market conditions, and why we’re seeing the interest rate moves we’re seeing. Economic conditions, supply and demand, and inflation all impact rates, as well as deficits, the reduction of which is the focus of the current cost cutting. I have lost track of which government entity is laying off who, or which judge is saying what. I do know, however, that I can buy a 73-cent stamp, put it on an envelope in Key West or San Diego, and it will be delivered straight to someone’s home address in Bangor or Anchorage. What a great system! We’ll see if it survives, and indeed the headlines this week have been about eliminating 10,000 postal employees. Be sure to leave my zip codes alone! Totally skipping mortgage banking for the remainder of this paragraph, the first official postal zones were set up in 1943 in larger U.S. cities. Those two-digit codes evolved into the five-digit ZIP codes in 1963 we know today. The first digit represents a broad geographical area, from 0 in the Northeast to 9 in the West; the following two digits designate the code of a central post office facility in that region; and the last two digits represent small post offices or postal zones. In 1983, the ZIP+4 code came along to further increase the precision of mail sorting by adding a hyphen and four more numbers to the five-digit ZIP code. These additional numbers serve to identify specific delivery routes that can represent houses on one side of a street or even a particular building that receives a lot of mail. But who the heck remembers those extra digits?

Saturday Spotlight: TRAiNED, Inc.

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“Unlock Significant Cost Reduction with AI Mortgage Manufacturing”

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).

TRAiNED was founded in late 2021 by Jonathan Freed to develop AI-driven mortgage manufacturing. The goal: reduce closing times, reduce human error, and most of all, cut operational costs. Using actionable LLM’s applied to machine learning workflows, TRAiNED offers the benefits of AI with little business upheaval. TRAiNED plugs into your existing LOS. No change in work process, no new system to learn for your team.

Asked why he founded TRAiNED, Jonathan Freed explained, “With my background in process-re-engineering, and through many years of running a mortgage company, I remained amazed at the very cumbersome, lengthy, and unnecessarily complex processes in making a loan. There just had to be a better way. Once I departed the mortgage company, this became my holy grail. Our AI-driven solution is a first step to smoothening that process. Most importantly, it delivers immediate savings to our customers!”

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?

TRAiNED has pioneered the human-in-the-loop concept for Mortgage manufacturing AI. Our team of AI technicians quarterbacks the AI process, handling rejected documents, as well as ‘training’ the AI platform. This enables us to handle the extremely wide variety of documents and formats, while providing service levels much quicker than all human processing by the mortgage originator can deliver.

Since early 2024, Jonathan has been joined by Mark Cunningham (CEO) and Arend de Jong (CFO), both formerly of the Sales Boomerang leadership team, bringing experience with scaling a FinTech company. This allows Jonathan to continue to focus on further solution-driving, so that TRAiNED remains at the coalface of AI-innovation in mortgage manufacturing. Together with the TRAiNED team, the three intend to grow TRAiNED to become the standard in the industry when it comes to AI in mortgage manufacturing.

To support its ongoing growth. TRAiNED has launched a crowdfunding investment campaign. Through Startengine.com.

Fun fact about your company.

Almost our entire team of AI technicians is formed by neuro-diverse team-members, thereby also offering career opportunities to the local community in Pittsburgh. This group has specific talents that work very well with the AI Technician role, and we are proud to be supporting the neuro diverse community this way. 

Is there anything else you’d like to share along these lines?

In the summer of 2024, TRAiNED started commercializing its product. Today, TRAiNED serves over 15 customers with its solution, providing a 10X ROI on investment. And we are on a steep growth trajectory: the goal is to serve 50 customers by the end of 2025.

(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.) 

Mortgage banking: anything but get rich quick, but still…

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I received this note from a veteran industry observer about what they think about mortgage banking given the recent Guild Mortgage earnings numbers. The company had originations of $24 billion in 2024 with net revenue of $1.0 billion. Guild has great franchise value but if you exclude their servicing income and write up of their MSRs (which were written down in 2023), it was close to break even for 2024.

“Residential lending has made a small number of people billionaires. And another set worth hundreds of millions. It’s a great life-stye industry where a person can open a shop, maybe stay a broker, or maybe graduate into having a warehouse line, become a local shop and make good money, and make huge money in 2020-type years. Some owners don’t build anything of value that they could sell, but maybe they increase their net worth up to $5-10 million and live a great lifestyle.

“Mortgage banking can make a lot of people rich who aren’t directly in the loan origination business. Consultants, publishers, vendors in technology, M&A deal makers, investment bankers, rating agencies… the list goes on and on. Add to that list the many, many loan officers with net worths well over $1 million, and in some cases more than $10 million.

“Yes, it’s hard to make money investing in mortgage companies, and yes, we can criticize Guild, but there’s a lot of money to be made in various aspects of the industry, and everyone reading this knows this from personal experience.”

Meanwhile, on the supply side of things, lenders have noted that the existing home inventory problem is easing, per data from Realtor.com. The number of for-sale homes increased 28 percent compared to a year ago, while list prices are down 0.2%. Much of this is due to product mix: there are a lot more smaller homes on the market. On a price per square foot basis, listing prices are up by about 1 percent.

Call them vendors or third-party providers…

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What lender could originate home loans without third-party providers? Let’s see who’s doing what out there, in no particular order.

This month marks the 14th anniversary of Secure Insight, which was founded over a decade ago by former mortgage and title industry professional seeking a better way to manage mortgage settlement risk and wire fraud. According to Secure Insight VP of Business Development, Amanda Padd, to date the company has "vetted approximately 92,000 attorneys, title agents, and escrow officers in all 50 states, plus Puerto Rico and the US Virgin Islands." In addition, its platform, which is used by lenders to evaluate the risk of settlement and wire fraud, "has successfully supervised more than 25 million residential closings with zero wire fraud losses." The company recently enhanced its product offerings by launching TruePay, a wire and mortgage payoff validation tool for attorneys and title agents without contracts or minimums. According to Ms. Padd, "to date TruePay has over 650 users and several collaborations with title insurers and is also finalizing an integration with a major data provider to offer consumer and business identity verification through the same platform to be launched in the second quarter."

MISMO® announced the publication of the SMART Doc® V3 Sample Package. This resource is part of MISMO’s larger effort to modernize the industry’s data exchange methods by facilitating the broad adoption of SMART Docs® beyond the eNote. “This new resource represents an important step toward perfecting data security and reliability for the various parties across the industry,” said MISMO Acting President Rick Hill. The SMART Doc® V3 Verifiable Profile specification allows document data to travel with the PDF and to be automatically verified with the document image, providing assurance that loan documents and associated data are consistent, reliable, and unaltered.

Detailed in this press release, mortgage point-of-sale (POS) provider Cloudvirga announced its Cloudvirga’s Horizon Retail POS integration using Encompass Partner Connect, the latest API framework for mortgage technology from Intercontinental Exchange (ICE). This modern framework enables industry participants to integrate to ICE solutions and provide their services to loan originators and servicers through secure API-enabled technology.

LendingPad, the award-winning cloud-native loan origination system (LOS), enhanced its pricing automation through strategic integration with Polly, the innovative leader in providing enterprise technology and artificial intelligence solutions for mortgage capital markets. This collaboration empowers mortgage professionals to access Polly's next-generation product, pricing, and eligibility (PPE) engine directly within LendingPad's intuitive platform, streamlining the entire pricing and lock process. Read the Press Release for full details.

TransUnion announced an advancement of its partnership with Truework, a leading income and employment verification provider. The collaboration will now allow mortgage lenders more encompassing and reliable access to the verification of income and employment (VOI/E) information they need to accelerate underwriting while minimizing costs. TruVision™ Income and Employment Verification (Powered by Truework) enables a comprehensive income and employment verification waterfall now available via the TransUnion API. This follows the recent launch of a similar TransUnion solution, also powered by Truework, for purposes of rental screening and builds upon the existing availability of the solution for auto lending. TransUnion is conducting a phased roll out of the new solution which will include integrations with loan origination systems, point of sale systems and GSE certifications. Those mortgage and home equity lenders interested in piloting the solution are encouraged to reach out via tu_mortgage@transunion.com to join its early adopter program. 

Vice Capital Markets, a leading mortgage hedge advisory firm for independent lenders, banks, and credit unions, announced it is the first to integrate Fannie Mae’s new Loan Pricing application programming interface (API) into its trading portal. The API consolidates multiple APIs into one, simplifying the loan pricing process and enhancing pricing and commitments. The new Loan Pricing API delivers a comprehensive set of pricing options directly from Fannie Mae for loans, including base prices, service release premiums and national loan-level pricing adjustments (LLPAs), along with any internal pricing adjusters. Additionally, users can leverage the API to access best execution information seamlessly.

Secondary deals drive rates in the primary markets

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Freddie Mac priced its first Seasoned Credit Risk Transfer Trust (SCRT) offering of 2025, a $759 million securitization of seasoned re-performing loans (RPLs), including $727 million in guaranteed senior certificates and $32 million in non-guaranteed mezzanine and subordinate certificates. Expected to settle on March 11, 2025, the transaction helps Freddie Mac reduce less-liquid assets and transfer credit and market risk. The 4,678-loan pool consists of fixed-, step-, and adjustable-rate RPLs, some modified to prevent foreclosure. Select Portfolio Servicing, Inc. will manage the loans with a focus on borrower retention and neighborhood stability. Citigroup Global Markets Inc. and BofA Securities, Inc. led the transaction, with additional support from multiple co-managers. More details can be found at Freddie Mac Seasoned Loan Offerings.

Freddie Mac announced the sale of approximately $290 million in non-performing loans (NPLs) through an auction aimed at reducing less-liquid assets in its mortgage-related investments portfolio. These seasoned, delinquent residential first-lien loans are currently serviced by Select Portfolio Servicing Inc., Newrez LLC (Shellpoint Mortgage Servicing), and Nationstar Mortgage LLC (Rushmore Servicing). The loans are being offered in four pools—three Standard Pool Offerings (SPO) and one Extended Timeline Pool Offering (EXPO), the latter designed to encourage participation from smaller investors, non-profits, and Minority, Women, Disabled, LGBTQ+, Veteran, or Service-Disabled Veteran-Owned Businesses (MWDOBs). Qualified bidders must submit bids by March 27, 2025, for SPO pools and April 10, 2025, for the EXPO pool, with selection based on bid economics and Freddie Mac’s internal reserve levels. BofA Securities, Inc. and First Financial Network, Inc., a woman-owned business, are advising on the transaction. Since 2011, Freddie Mac has sold $10.4 billion in NPLs and securitized $79.6 billion in re-performing loans (RPLs) through various structured transactions, all aimed at improving borrower outcomes and community stability. More details can be found at Freddie Mac’s seasoned loan offerings.

Freddie Mac announced on March 6 it will offer approximately $120 million in non-performing loans (NPL) for sale via auction. The NPLs being offered consist of seasoned, deeply delinquent residential first lien whole loans held in Freddie Mac’s mortgage-related investments portfolio. The NPLs are currently serviced by Specialized Loan Servicing LLC or NewRez LLC, d/b/a Shellpoint Mortgage Servicing. The NPLs are being marketed via two pools: a Standard Pool Offering (SPO) and an Extended Timeline Pool Offering (EXPO), which targets participation by smaller investors, including non-profits and Minority, Women, Disabled, LGBTQ+, Veteran or Service-Disabled Veteran-Owned Businesses (MWDOBs). Bids are due from qualified bidders by April 4, 2024 for the SPO pool, and April 25, 2024 for the EXPO pool. All eligible bidders, including private investors, MWDOBs, non-profits and neighborhood advocacy organizations are encouraged to bid. To participate, all potential bidders must be approved by Freddie Mac and successfully complete a qualification package to access the secure data room containing information about the NPLs and to bid on the NPL pool(s). The bids are to be made on an all-or-none basis for any pool. The winning bidder for each pool will be determined on the basis of the economics of the bids, subject to meeting Freddie Mac’s internal reserve levels, at Freddie Mac’s sole discretion.

Freddie Mac’s seasoned loan offerings focus on reducing less-liquid assets in the company’s mortgage-related investments portfolio in an economically sensible way. This includes sales of NPLs, securitizations of re-performing loans (RPLs) and structured RPL transactions. Since 2011, Freddie Mac has sold $10.2 billion of NPLs and securitized approximately $77.7 billion of RPLs consisting of $30.4 billion via fully guaranteed MBS, $34.9 billion via the Seasoned Credit Risk Transfer (SCRT) program, and $12.4 billion via the Seasoned Loans Structured Transaction (SLST) program. Requirements guiding the servicing of these transactions are focused on improving borrower outcomes and stabilizing communities. Additional information about Freddie Mac’s seasoned loan offerings is available at http://www.freddiemac.com/seasonedloanofferings/. 

Fannie Mae began marketing its most recent sale of reperforming loans as part of the company's ongoing effort to reduce the size of its retained mortgage portfolio. The sale consists of approximately 3,141 loans, having an unpaid principal balance of approximately $559.8 million, and is available for purchase by qualified bidders. Interested bidders can register here. This sale of reperforming loans is being marketed in collaboration with Citigroup Global Markets, Inc. Bids are due on March 26, 2025. Reperforming loans are loans that have been or are currently delinquent but have reperformed for a period of time. The terms of Fannie Mae's reperforming loan sale require the buyer to offer loss mitigation options to any borrower who may re-default within five years following the closing of the reperforming loan sale. All purchasers are required to honor any approved or in-process loss mitigation efforts at the time of sale, including loan modifications. In addition, purchasers must offer delinquent borrowers a waterfall of loss mitigation options, including loan modifications, which may include principal forgiveness, prior to initiating foreclosure on any loan. Interested bidders can register for ongoing announcements, training, and other information here. Fannie Mae will also post information about specific pools available for purchase on that page.

F&F don’t only do single family homes. In 2024, Fannie Mae provided over $55 billion in financing to support the U.S. multifamily market, continuing its crucial role in expanding affordable housing and strengthening underwriting. The company offered significant liquidity across key housing segments, including more than $6.3 billion for Multifamily Affordable Housing and $6.6 billion for Structured Transactions. Fannie Mae also saw a 101 percent year-over-year increase in Green Financing loan production, reaching $15.1 billion. Additionally, it committed $1.2 billion in forward commitments, enabling the development and rehabilitation of affordable housing. Through its investments in Low-Income Housing Tax Credits and other initiatives, Fannie Mae helped create and preserve tens of thousands of affordable rental units. Despite a challenging market, Fannie Mae, with its Delegated Underwriting and Servicing (DUS) lender partners, remained a leading source of multifamily mortgage financing, carrying strong momentum into 2025.

Muldoon lived alone in the Irish countryside with only a pet dog for company.

One day the dog died, and Muldoon went to the parish priest and asked, “Father, me dog is dead. Could ya’ be saying’ a mass for the poor creature?”

Father Patrick replied, “I’m afraid not; we cannot have services for an animal in the church. But there are some Baptists down the lane, and there’s no tellin’ what they believe. Maybe they’ll do something for the creature.”

Muldoon said, “I’ll go right away Father. Do ya’ think $5,000 is enough to donate to them for the service for the beast?”

Father Patrick exclaimed, “Sweet Mary, Mother of Jesus! Why didn’t ya tell me the dog was Catholic?”

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. This month’s piece is titled, “Natural Disasters and Economic Resilience.” 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 2025 Chrisman LLC. All rights reserved. Occasionally 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. The views and opinions in this newsletter are mine alone unless otherwise specifically stated herein.)