U.S. shopping mall vacancies hit eight-year high. MGM agreed to pay up to $800M to settle the Las Vegas shooting lawsuits. HP will cut up to 9,000 jobs in a bid to reduce costs. First American Chief Economist Mark Fleming observed, “…we are in an unprecedented homebody era as many existing homeowners continue to feel rate-locked into their homes and seniors continue to age in place. Looking ahead, more than half of all existing homes are owned by baby boomers and the silent generation and they will eventually age out of homeownership. But right now, housing supply remains tight (you can’t buy what’s not sale) and market potential is lower because of it.” Falling yields on U.S. Treasury securities and German bunds, fueled by strong appetite for haven investments, suggest the global economy is in trouble and inflation is set to remain low. Why should a residential MLO care? Because successful loan officers (who have become financial advisors to their clients) need to know a lot about trends in residential, commercial, even legal news. Darned hard to do, but your clients want it.
Employment
St. Louis-based USA Mortgage, 100% employee-owned and Missouri’s largest home lender since 2014, has a new president, long-time senior exec Linda Pring. She accepts the reins from Doug Schukar, who remains on board as chairman and CEO. Dynamic growth continues to drive USA, on pace to top $2 billion in annual volume for the first time in its history, as it aspires to augment recent openings in Dallas, Phoenix, San Diego and Seattle with 10 new offices by year-end. USA attributes its success to cutting-edge marketing and technology, a robust benefits package, a large portfolio of loan products, and a unique company culture. With 600-plus employees, the nation’s 103rd largest lender (Source: CoreLogic, Inc.) currently flags 58 locations in 17 states. Advancement opportunities for the entrepreneurial minded abound, says Ron Mueller, newly promoted EVP. Contact Ron to learn more.
Lender products & services
Citibank, N.A., continues to grow its Correspondent Channel with the rollout of new loan programs and delivery executions. Be sure to inquire about Citi’s Bid Tape/AOT execution, which allows sellers to continue tapping into the pricing granularity of the traditional bid tape process while also leveraging the economic and operational efficiencies of Assignment of Trade. Learn more about this program, and schedule a time to discuss further, at the MBA Conference in Austin, TX. Contact Citi’s National Client Service team for more information at 1-800-967-2205. For new seller consideration, complete the Prospective Mortgage Correspondent Questionnaire.
“Exciting things are happening at NewRez! With the acquisition of Ditech into the NewRez family of companies now complete, we combine the expertise and capabilities of the organizations to bring more than ever to our clients. NewRez Correspondent’s national team remains focused on GSE and government business, now under the leadership of John Davis. Lisa Schreiber is leading the growth of a new, national NewRez Non-QM team, delivering more product choices and technology solutions. We look forward to seeing you at the MBA to share more about how we can support your success – find us in the Capital Ballroom at the Omni Austin Hotel Downtown. To make an appointment in advance, contact mba2019@newrez.com.”
AmeriHome has big news for October! AmeriHome is expanding its Non-Agency product offerings with the launch of a Non-QM program as well as the enhancement of its Core Jumbo program. In addition, AmeriHome is rolling out a brand-new Best Efforts Rate Sheet that closely replicates bulk-level execution, includes pay-ups for specific loan characteristics and consolidated LLPA grids that provide more clarity and pricing granularity. AmeriHome’s Non-QM offering (Income Flex) features loan amounts to $2,000,000 with full doc, 12/24-month bank statement and 1 year tax return (self-employed) options, primary residences, second homes and investment properties. Their Core Jumbo program has been expanded to allow for 90% LTV/CLTVs to $2,000,000 with no MI required! Visit correspondent.amerihome.com to find out more, or reach out to your AmeriHome Sales Representative directly.
Join National Mortgage Professional Magazine for another Unit Busters webinar, “How to Change Your Conversations to Boost Performance, Confidence and Closes,” being held on Tuesday, October 8th at 2 pm ET / 11 am PT. Learn what Artificial Intelligence taught us after listening to millions of calls to and from mortgage companies. Data such as call fail points, what a caller is saying during a call, the intent of the caller, the skill set of the associate, and ultimately the outcome of the interaction are measured to provide a holistic view of the customer experience within financial organizations. The highest performing bankers seem to have one thing in common, they act on data from their phone calls and use that data to improve the quality of their callers’ experiences. As a bonus for attending the webinar, participants will receive a mortgage phone performance self-assessment guide to self-evaluate calls and build better caller experiences. You can register here.
“Chenoa Fund: Thumbs Up from Lenders, Part One: Earlier this year, we surveyed 735 lenders about our program. The goal: to find out what we’re doing right and what we can do better. To say we’ve been touched by the results would be a major understatement. The most heartening finding? Three out of four lenders said their customers could not have purchased homes without our DPA help. Here’s how two lenders summed it up: ‘Most of the people I have been able to help with the Chenoa program are minority buyers who don’t have a family member who can gift them funds for a down payment. This program has been a huge blessing.’ And this: ‘There are many good people [who] … pay their bills on time but just have a hard time setting aside savings … These people deserve a chance too.’ We couldn’t agree more.”
Freddie Mac Single-Family is ALL FOR reducing barriers and raising hope. Freddie Mac is expanding the thinking around affordable lending and inspiring others to do the same. With All For HomeSM, we’re leading the way through providing insights, education, mortgage products and business solutions that address the needs of today’s borrower and of The Borrower of the FutureSM. Rising home prices and interest rates, coupled with a lack of entry-level inventory, are increasing affordability challenges. Demographic and cultural shifts, migrations from rural to urban, first-time homebuyers with thin-credit files and complex processes pose additional barriers to achieving the American dream. It takes collaboration and partnership to innovate solutions that make a positive impact. Learn more about All For Home, discover key insights to inform your business and take advantage of solutions and tools that will enable your borrowers to make Home Possible®. All in. All of us. All For Home.
Now that the fall conference season is upon us, many lenders are going to be seeking out the technologies they need to finally reach the digital mortgage. But according to a new white paper from Fiserv, few will be looking in the right direction. While there are certainly a lot of vendors eager to help lenders solve their digital lending problems, the usual solutions won’t be much help. Why is Fiserv so sure today’s technology point solutions won’t solve the digital lending problem? “Two metrics tell us all we need to know. Lenders are now paying nearly $9,000 to originate a mortgage and their profitability is at an all-time low.” They have a point. Find out more by downloading the new white paper today.
What would it mean for your mortgage business if you could count on 2-day appraisal delivery as the norm? Anow is ready to show you. The Canada-based company makes lenders’ appraisal delays go away with technologies that simplify appraisal ordering and speed appraisal delivery. Anow debuted its latest breakthrough, Anow NEXUS, at the recent Digital Mortgage conference in Las Vegas. In just 2 days (and as little as 24 hours in certain markets), the Anow NEXUS multi-appraiser collaborative report builder delivers rich appraisal reports in the lender’s preferred format, including MISMO XML and JSON, for easy ingestion by risk management systems. Anow easily integrates into existing systems or AMCs to automate the entire appraisal process from schedule to delivery — so you can lock loans faster. If you’re looking for a better approach to appraisals, request a demo of Anow NEXUS.
Capital markets
I am often asked by MLOs about bid tapes… why they exist/what they’re used for/ what they include/ and why accurate loan-level data is important? For those who don’t know, sellers will send out a “bid tape” to their investors with a list of loans they are looking to sell and all relevant data points for pricing, with the investor returns a price, or a “bid.” This is often done in “bulk,” where the seller submits a list of loans to be priced, or can be done one loan at a time, called a single-loan mandatory. The seller receives a price for each loan they wish to sell and can accept the price, or not, on a loan-by-loan basis. Negotiated pricing is determined based on loan attributes such as FICO, Occupancy, LTV, etc., which makes the importance of accurate data paramount.
Sellers will often use the published best-efforts pricing as a guide in determining expected mandatory pricing, though investors are able to bid on loans using real-time pricing up until when the seller asks that bids are due. A seller can either sell the loans to the highest investor on a loan-by-loan basis, or sell the whole pool of loans together to the highest bidder. Once the prices are accepted, all loans agreed to be sold are committed and the seller is required to deliver them.
The bid-tape process enables sellers to achieve the best secondary marketing execution for their loans since many players in the mortgage space have adopted the bid-tape process, increasing investor competition. Due to the granularity of pricing and importance to profitability, sellers have become better at providing relevant and accurate data points while investors have become better at assimilating all these data points into sharper pricing, allowing bid tapes to now dominate other loan sale delivery methods.
As we sailed through the end of the third quarter, economic data continues to point towards moderate GDP growth, albeit at a lower rate than the previous two quarters. Nominal person income increased 0.4 percent in August after rising just 0.1 percent in July. Personal consumption, excluding food and energy, was up 0.1 percent in August and 1.8 percent over the previous twelve months. As consumption moderated this quarter personal savings rose, increasing to 8.1 percent in August. New orders for durable goods edged up by 0.2 percent, however they remain down 0.4 percent over the last year. Unemployment remains low and new claims for unemployment insurance were at 213,000 for the week ending September 21st. New home sales surged 7.1 percent in August to an annual rate of 713,000 and the supply fell to 5.5 months’ worth. Over the previous year, new home sales are up 18 percent and sales prices were higher 2.2 percent. With the uptick in rates, mortgage applications were down 10.1 percent for the week ending September 20th as refinance apps fell 15.2 percent. Finally, as the GM strike continues, we will wait to see what effects, if any, from supplier layoffs and lost sales near GM facilities have in the upcoming data.
The FOMC cut rates 25 bps at their most recent meeting, and there are some indications that it is prepared to do more. That said, not all committee members are on board with further easing. Incoming data will determine what the Fed does next, so is further easing on the way? The language characterizing the current state of the economy was generally upbeat in the latest statement, and it stated that “sustained expansion of economic activity” is likely. However, the FOMC noted that “uncertainties about this outlook remain.” It would seem that the FOMC is prepared to ease further, if appropriate, in coming months. For starters, the committee noted again that it “will act as appropriate to sustain the expansion.” More importantly, the dots in the so-called “dot plot” shifted down relative to June, showing the anonymous expectations of each. committee member regarding the appropriate level of the fed funds rate in the future. This means that a significant number of committee members, albeit not a majority, favor further easing this year. The committee also reduced the rate that it pays on the excess reserves that banks hold at the Fed (“IOER”), which should help move the fed funds rate back into the target range as the Fed has had some difficulty controlling short-term rates lately. What does all this mean? The FOMC will likely cut its target range 25 bps in Q4 2019 and another 25 bps in Q1 2020 despite a good outlook for expansion, as the uncertainties raised by the trade war continue to cloud the outlook.
U.S. Treasuries had a solid day in response to the weaker-than-expected ISM non-Manufacturing Index for September (its lowest level in over three years). There are more concerns about the manufacturing recession, and the trade uncertainty, spilling over to the U.S. consumer. It has become a near-certainty that the Fed will ease at the October FOMC meeting. There was the usual spate of news from Japan (its economy slowing further and buying its own bonds), the White House (Trump calling on Ukraine and China to investigate Joe Biden), India (lowering rates), the U.K. (Brexit blah blah blah), Germany (economy slowing), and the United States (Institute of Supply Management numbers showing slowdown in non-manufacturing growth, and Factory Orders showing a slight decline for August).
One interesting thing in mortgage-land: 2.50% mortgage securities ended the day above par (100). That doesn’t mean that 3% 30-year mortgages are par, given the value of servicing, loan level price adjustments, profit margins, risk premiums, and so on, but it is worth noting.
This morning we’ve already had labor numbers for September in the form of Nonfarm Payrolls (expected +175k, it was only +136k but with a back-month revision higher), the Unemployment Rate (expected 3.6%, it was 3.5%), average hourly earnings (forecast to increase, they were unchanged), and the trade balance for August ($54.9 billion). Ahead are lots of Fed speakers on various podiums: Boston’s Rosengren, Atlanta’s Bostic, Minneapolis’ Kashkari, Fed Chair Powell, Governor Brainard, and Governor Quarles. In the early going the U.S. 10-year T-note, which closed at 1.53%, is yielding 1.54% and agency MBS prices are worse .125.
A young man walked into an insurance office to purchase coverage for his new motorcycle, filled out the long questionnaire.
Only one question confused him. “Do you have a lien holder on the vehicle?”
“I’ve got a kickstand,” the prospect replied. “Is that the same thing?”
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, “How Productive is Your Origination Team?” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.
Rob
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job 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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