Oct. 12: Secondary deals (deep dive on manufactured home security); Saturday Spotlight: TransUnion; joke for retired folks

Hey, I know a nice house when I see one. Or do I? If you have the time, here’s a video of some very unusual places that may not be to everyone’s liking. Certainly, appraising any of them would be a challenge. Another challenge is making sure that the seller of the property can actually, legally, sell the property. Sure enough, the FBI is now warning buyers about scammers who impersonate landowners in order to sell parcels they do not own. (There is an internet cybercrime site that LOs should be aware of.) While we’re on scams, financial or otherwise, are you a fan of 23andMe? Did you send them your DNA? Well, watch out: someone may now have it that you didn’t intend to. And in this era “you gotta be careful out there,” the odds are very good that you’ll find yourself receiving emails from something or someone from out of the blue. Somehow, I ended up on the email distribution list for “The Epoch Times,” a far-right international media company affiliated with the Falun Gong new religious movement. (I don’t mind news from either side, but it would be nice to voluntarily sign up for things first.) I also ended up on the distribution list of The Daily Beast… a "high-end tabloid." Go figure.

Saturday Spotlight: TransUnion.com

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 “Build trust and engage with your consumers more confidently.”

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).

Established in 1968 as a railroad leasing company based out of Chicago, decades of investments in technology, strategic growth and acquisitions, and ongoing expansions into new areas like fraud, marketing, and customer-driven analytics, have drastically broadened our capabilities and transformed us into the leading credit reporting agency you know today.

TransUnion offers thousands of B2B solutions designed to address the unique needs of businesses across multiple industries. Mortgage lenders choose TransUnion for our identity-focused, data-driven mortgage insights and solutions, enabling them to achieve more desirable lending outcomes in a volatile housing market.

Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why.

We strongly encourage our associates to volunteer their time and give back to the communities where we operate, providing paid time off to those who participate (in 2023, employees recorded 6,675 volunteer hours). In addition, TransUnion has an established corporate giving program through which we donated nearly $4M in 2023 to community organizations focused on the advancement of economic inclusion, education, racial equity and others — on top of matching $525K in associate donations to eligible non-profits.

 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?

Our ongoing aim is to build a culture where everyone feels they’re in the right place and empowered to succeed. This includes offering tuition reimbursement, enterprise inclusion programs, and promoting participation in business resource groups. Our internal learning hub connects associates with a variety of educational programs and opportunities, in addition to offering career coaching, self-service mentoring guides and development resources.

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.

TransUnion operates as a hybrid-first workplace, and we regularly run (and action inputs from) company-wide surveys that encourage employee feedback. In the most recent survey, 86% of respondents reported being satisfied with the flexibility TransUnion offers.

Things you are most proud of that don’t have to do with sales:

TransUnion’s commitment to expanding financial inclusion is a big reason many of us are proud to work here. Our partnerships with credit unions like VyStar and non-profits like HomeFree-USA help further our goal of expanding mortgage access and education to underserved consumers. For instance, we provide credit education tools (such as our CreditViewTM Dashboard) to HomeFree-USA which aims to help people of color on their homebuying journeys. And collaborations with organizations like FinLocker and MoCaFi support efforts to empower Black Americans building credit and wealth through homeownership.

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

We always aim to meet our customers where they are, and in a mortgage market that remains tumultuous and unpredictable, helping lenders meet financial goals is a high priority. One current area of focus is preapprovals. When mortgage lenders determine consumers’ creditworthiness earlier in the approval process, they can more easily ensure their time and resources are being invested for the right buyers. This customer-centric focus plays a large role in why lenders choose TransUnion, and we aim to continue delivering on their high expectations in the years to come.

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

Secondary markets drive primary markets

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If there is no demand for a product that lenders are offering, whether it be in the securities market or someone’s portfolio, there is little reason to offer it. Freddie and Fannie are obviously big players, but let’s see who’s doing what out there.

Late this week Fitch assigned final ratings to Cascade MH Asset Trust 2024-MH1. What the heck is that? These are residential-mortgage-backed notes to be issued by Cascade MH Asset Trust 2024-MH1 (CMHAT 2024-MH1). The rating agencies (remember them from 2008?) give them grades based on the company’s opinion of safety and soundness.

“This is Cascade's fourth transaction (and second rated transaction) backed by loans secured by manufactured homes (MH). While this is the fourth post-crisis MH transaction to be rated by Fitch, it is also the second rated post-crisis MH transaction to consist of new origination MH loans. The collateral pool is backed by 1,020 MH contracts. The pool totals $147.0 million.

“Distributions of principal and interest (P&I) are based on a traditional senior-subordinate, sequential pay structure. Losses are allocated to the note overcollateralization (OC) amount and excess spread and lastly applied in reverse sequential order beginning with the most subordinated bond. The sequential pay structure locks out principal to the subordinated notes until the most senior notes outstanding are paid in full. The servicer will not be advancing delinquent monthly payments of P&I.

“KEY RATING DRIVERS: Manufactured Housing Collateral (Negative): The transaction is backed by 98.6% new origination manufactured homes (MH) loans, which are seasoned at

approximately six months, as determined by Fitch. Loans backed by chattel properties (secured with the structure only) comprise 71.6% of the pool, and the remaining 28.4% is comprised of land/home MH. Fitch applies a higher probability of default (PD) for chattel homes than for land homes, given that the borrower does not own the land the housing structure sits on. MH loans

typically experience higher default rates and lower recoveries than site-built residential homes.

“Fitch applied a loan-level loss model developed specifically for MH loans based on historical observations of more than one million MH loans originated from 1993 to 2002, with performance tracked through 2018. The key PD drivers in Fitch's MH modeling include the original combined loan-to-value (CLTV), credit score, MH type (chattel vs. land home), pay history, loan purpose,

property type (single vs. multi-wide), loan term and the representation and warranty framework.

“The primary loss severity (LS) considerations are the loan balance, years since manufacturing was completed and the property type. Relative to standard RMBS pools, certain PD and LS variables such as sustainable LTV (sLTV), documentation scoring, originator and servicer adjustments, number of borrowers, liquid reserves, origination channel, occupancy, debt-to-income (DTI), property value ratio (PVR), and qualified-mortgage (QM) status are not applicable for pools backed by MH collateral.

“MH Credit Attributes (Negative): All loans in the pool are fixed rate, and the borrowers in the pool have a weighted average (WA) model FICO of 685 and a CLTV of 94.4%. Double or multi-wide MH units comprise 77.7% of the pool, while 98.5% of the MH units were built within the last four years. Double or multi-wide MH properties are viewed by Fitch as a more favorable PD variable. In addition, Fitch views newer manufactured years as more favorable. Some 97.5% of loans are now current based on the OTS methodology over the past two years, while 2.3% have experienced a delinquency within the past 24 months and 0.2% are currently delinquent.”

As one might expect, there is a large number of disclaimers; anyone investing should always read the fine print!

Fitch Ratings has assigned final ratings to Angel Oak Mortgage Trust 2024-9 (AOMT 2024-9), with various long-term ratings ranging from A-1 to B-3, all with a stable outlook. The RMBS issued by AOMT 2024-9 is supported by 711 loans totaling $345.90 million, with a mix of loans originated by Angel Oak Mortgage Solutions LLC, Angel Oak Home Loans LLC, and third-party originators. 57.1 percent of the loans are non-qualified mortgage (non-QM) loans, and 42.9 percent are exempted from the Ability-to-Repay (ATR) Rule. The pool includes a combination of fixed-rate and adjustable-rate loans, with varying credit profiles and loan characteristics. Fitch's analysis highlights elevated home prices, housing affordability challenges, and a relatively strong credit profile of the borrowers. Overall, the transaction represents Fitch's assessment of the credit quality and risk profile of AOMT 2024-9.

Fitch Ratings assigned final ratings to the residential mortgage-backed notes issued by PRPM 2024-NQM3 Trust (PRPM 2024-NQM3) on September 25, 2024. The certificates are backed by 624 loans totaling $269.0 million, with LoanStream Mortgage, Vontive Inc., and The Federal Savings Bank being the main originators. Fay Servicing, LLC will service the majority of the loans while Shellpoint Mortgage Servicing LLC will handle the rest. Fitch confirmed the ratings after the issuer provided a subsequent structure with adjusted coupons. The pool consists of both fixed- and adjustable-rate loans with strong borrower credit profiles, including a high FICO score and moderate leverage. The loans were all current as of August 31, 2024, but some were underwritten with non-full documentation, leading to an increased probability of default on those loans according to Fitch's assessment.

Fannie Mae announced that it has executed a new Credit Insurance Risk Transfer (CIRT) transaction. CIRT 2024-H3 transferred $160.9 million of mortgage credit risk to private insurers and reinsurers. The covered loan pool for CIRT 2024-H3 consists of approximately 19,000 single-family mortgage loans with an outstanding unpaid principal balance (UPB) of approximately $6.4 billion. Additionally, the covered pool collateral has loan-to-value (LTV) ratios of 80.01 percent to 97.00 percent and was acquired between October 2023 and December 2023. The loans included in this transaction are fixed-rate, generally 30-year term, fully amortizing mortgages and were underwritten using rigorous credit standards and enhanced risk controls. With CIRT 2024-H3, which became effective August 1, 2024, Fannie Mae will retain risk for the first 185 basis points of loss on the $6.4 billion covered loan pool. If the $119 million retention layer is exhausted, 25 insurers and reinsurers will cover the next 250 basis points of loss on the pool, up to a maximum coverage of $160.9 million. Since inception to date, Fannie Mae has acquired approximately $27.7 billion of insurance coverage on $928 billion of single-family loans through the CIRT program, measured at the time of issuance for both post-acquisition (bulk) and front-end transactions. As of June 30, 2024, approximately $1.35 trillion in outstanding UPB of loans in our single-family conventional guaranty book of business were included in a reference pool for a credit risk transfer transaction. To promote transparency and to help insurers and reinsurers evaluate the CIRT program, Fannie Mae provides ongoing, robust disclosure data, as well as access to news, resources, and analytics through its credit risk transfer webpages.

Freddie Mac announced it sold via auction 982 deeply delinquent non-performing residential first lien loans (NPLs) from its mortgage-related investments portfolio. The loans, with a balance of approximately $188 million, are currently serviced by Select Portfolio Servicing Inc., NewRez LLC, d/b/a Shellpoint Mortgage Servicing and Nationstar Mortgage LLC, d/b/a Rushmore Servicing. The transaction is expected to settle in November 2024. The loans in the SPO® offering were offered as one pool of mortgage loans. The pool consists of mortgage loans secured by geographically diverse properties. Given the delinquency status of the loans, the borrowers have likely been evaluated previously for loss mitigation, including modification or other alternatives to foreclosure, or are in foreclosure. Mortgages that were previously modified and subsequently became delinquent comprise approximately 57 percent of the aggregate pool balance. Additionally, purchasers are required to honor the terms of existing loss mitigation agreements and solicit distressed borrowers for additional assistance except in limited cases and ensure all pending loss mitigation actions are completed. 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 $10.3 billion of NPLs and securitized approximately $79.3 billion of RPLs consisting of $30.4 billion via fully guaranteed MBS, $36.2 billion via the Seasoned Credit Risk Transfer (SCRT) program, and $12.7 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 here.

“What happens when men retire!” (A note from a friend.)

After I retired, my wife insisted that I accompany her on her trips to Walmart. Unfortunately, like most men, I found shopping boring and preferred to get in and get out. Equally unfortunate, my wife is like most women: she loves to browse. All was well until my dear wife received the following letter from our local Walmart Store:

Dear Mrs. ___

Over the past six months, your husband has caused quite a commotion in our store. We cannot tolerate this behavior and have been forced to ban both of you from the store.

Our complaints against your husband are listed below and are documented by our video surveillance cameras.

1. June 15: He took 24 boxes of condoms and randomly put them in other people's carts when they weren't looking.

2. July 2: Set all the alarm clocks in Housewares to go off at 5-minute intervals.

3. July 7: He made a trail of tomato juice on the floor leading to the women's restroom.

4. July 19: Walked up to an employee and told her in an official voice, 'Code 3 in Housewares. Get on it right away'. This caused the employee to leave her assigned station and receive a reprimand from her supervisor that in turn resulted in a union grievance, causing management to lose time, and costing the company money. We don't have a Code 3.

5. August 4: Went to the Service Desk and tried to put a bag of M&Ms on layaway.

6. August 14: Moved a, 'CAUTION - WET FLOOR' sign to a carpeted area.

7. August 15: Set up a tent in the camping department and told the children shoppers he'd invite them in if they would bring pillows and blankets from the bedding department to which twenty children obliged.

8. August 23: When a clerk asked if they could help him, he began crying and screamed, “Why can't you people just leave me alone?” Paramedics were called.

9. September 4: Looked right into the security camera and used it as a mirror while he picked his nose.

10. September 10: While handling guns in the hunting department, he asked the clerk where the antidepressants were.

11. September 13: Darted around the store suspiciously while loudly humming the “Mission Impossible” theme.

12. September 16: In the auto department, he practiced his, “Madonna Look” using different sizes of funnels.

13. October 1: Hid in a clothing rack of Gardening coats and when people browsed through, yelled “PICK ME! PICK ME!”

14. October 3: When an announcement came over the loudspeaker, he assumed a fetal position and screamed; “OH NO! IT'S THOSE VOICES AGAIN!”

15. October 5: Took a box of condoms to the checkout clerk and asked where is the fitting room?

And last, but not least:

16. October 8: Went into a fitting room, shut the door, waited awhile; then yelled very loudly, “Hey! There's no toilet paper in here.” One of the clerks passed out.

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 blog is titled, “Lenders and Vendors Must Pay to Play.” 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. The views and opinions in this newsletter are mine alone unless otherwise specifically stated herein.)