HELOC, Affordable Housing, Servicing, QC, MSR Valuation Products; New Appraiser Education Standards?

There’s a lot going on, and not only jawboning about a potential Fed rate increase next week. We have the smoke drifting down from Canada and slowing or stopping flights in the Northeast. The Wall Street Journal reports that China and Cuba have signed an agreement for a Chinese eavesdropping station in Cuba. For rate watchers, Trepp has come out with a report showing interest rates sensitivity with commercial loans, cousin to our residential loans and their sensitivity to refinancing given interest rates. Yes, interest rates impact everything to do with borrowing and lending. New data revealed real estate investors purchased 48.6% fewer homes in Q1 of 2023 than they did a year earlier, according to the latest market report from Redfin. That’s the largest annual decline on record and outpaced the 41 percent drop in overall home purchases in the 40 major metros analyzed. Investor purchases fell 16 percent on a quarter-over-quarter basis, comparable with the 15 percent quarterly drop in overall home purchases. (Today’s podcast can be found here and this week’s is sponsored by Built Technologies. Join Built Technologies on June 20th at 12 PM CST for an exclusive webinar that will dive into proactive portfolio monitoring as Built’s experts share best practices for achieving greater visibility into your construction portfolio. Today’s has an interview with Ally Home’s Glenn Brunker on what sort of housing market correction we should expect to see and how originators are winning business.)

Broker and Lender Services and Software

I was driving into New York City once and waited for an hour just to get into the Lincoln Tunnel. But once inside, traffic started cruising: it was a bottleneck at the EZ Pass booth that caused the backups. This “toll gate” slowdown is a problem lenders using queue-based workflows know all too well. That’s why Black Knight offers automated, task-based workflows to accelerate the loan process, help decrease turn times, and handle stare-and-compare tasks so loan officers can focus on borrowers. Read Black Knight’s blog post to learn how mortgage automation can help you break up the bottlenecks of “toll gated” workflows, and discover what can happen when Empower, Black Knight’s LOS, helps you put your loans in the fast lane.

Do you have a servicing portfolio? Do you understand how it is being valued? With the decline in overall production, the MSR asset has become more critical than ever and effectively managing that asset demands ongoing oversight. MCT offers portfolio valuations that are accurate and easy to understand, with built-in safeguards focused on client and borrower data security. MCT’s fair value analysis and reports are customized to support servicer’s internal requirements and objectives. Their extensive number of clients and MSR market knowledge keep your valuations timely, accurate, and reliable. Schedule a phone call with the MCT MSR experts to discuss a customized approach for valuing your MSR portfolio.

Notable PropTech updates from Blue Water Financial Technologies. Blue Water Financial Technologies Services, LLC is pleased to announce the CERTIFICATION and INSURANCE of its mortgage asset SuperTransfer™ solution, a fully automated Smart QC product, by certain underwriters at Lloyds of London1. This bespoke policy covers losses in the event of material errors resulting in a breach of a representation or warranty for mortgage assets, including but not limited to individual mortgages and/or mortgage servicing rights (“MSR”). More specifically, this insurance is provided to Blue Water Financial Technologies Services, LLC (“Blue Water”), as an add-on to Blue Water’s existing all-digital pre-close, pricing, trading, transfer, and quality control services. With investor buyback demands increasing, Blue Water’s clients will benefit from this additional protection that supports the SuperTransfer™ operations. Blue Water’s end-to- end whole-loan and MSR acquisition platform – Correspondent as a Service (CaaS) enables Buyers/Investors to publish pricing and accept commitments from Sellers for those expanding into additional channels or increase the efficiency and reduce costs of an existing channel.

“Sagent’s next Powerhouse Partner Award winner is… SVP, Chief of Staff, Tech and Engineering, Priya Seenath! Priya embodies our core values to the fullest as she relentlessly powers our team (and the industry) to continue innovating as we embark on our future-of-servicing journey, providing relevant insight and guidance while reliably supporting our customers, partners, regulators, and investors. She gets the details and genuinely loves educating and collaborating with the team and customers. Being an innovative leader that powers America’s $14T servicing sector requires deep mortgage expertise combined with serious tech skills, and Priya definitely holds true to both. She has been a huge power boost to the team, bringing strengths like execution, continuous process improvement, efficiency, cost savings, and quality control. She continues to change the status quo, ensuring her team stays relevant in the industry. Read more about Priya’s profound impact at Sagent here.

Broker and Correspondent Loan Programs

“Does your client find themselves with Cash-Out, Home Improvement, or Liquidity needs? That’s where Symmetry’s Stand-Alone HELOC comes in! Our HELOCs are designed specifically for Symmetry’s loan originator partners who want to retain their borrower relationships. All workflow and borrower contact stays in your control. At Symmetry Lending, we’re helping you retain clients for life. Call your local HELOC hero today! Find them here.”

Are you looking for new ways to engage realtors and expand your purchase market opportunities? The introduction of ONE+ by Rocket Mortgage is providing Rocket Pro TPO partners an incredible opportunity for the purchase season. With this product, eligible clients provide 1 percent towards the down payment and the other 2 percent down payment requirement is covered… Plus, clients are not responsible for paying the mortgage insurance! Disclosure specifics are here. Interested in learning more about a Broker or Non-Delegated Correspondent partnership? Contact Rocket Pro TPO to learn more.

Did you miss Planet’s Correspondent sales team at MBA Secondary? It’s not too late to join forces with the lender ranked #2 correspondent lender, #2 government correspondent lender, and #5 conventional correspondent lender by Refinitiv. We earned those numbers with top-notch service and great technology, plus an incredible array of products: government, conventional, renovation, manufactured homes, buydown loans, and more. Get in touch with your Regional Sales Manager or SVP Correspondent Sales Jim Loving (414-270-0027) to learn more about our delivery options, coast-to-coast coverage, and competitive pricing. Put Planet to work for you!

“Citizens Wholesale Lending continues to support affordable housing initiatives across the industry. Through CRA (Community Reinvestment Act) credits, HomeReady, Home Possible or First Time Home Buyer offerings that allow you to waive certain Loan Level Pricing adjustments, your Citizens AE is here to help you find solutions for your borrowers. With the recently announced FNMA/FHLMC Area Median Income (AMI) changes for 2023, you have more opportunity to qualify borrowers who may be eligible for affordable offerings. Helping you navigate through all the lending options is our calling so let us help you find solutions as your partner. We have no plans to slow down and want to be the one partner you can depend on in any market. Reach out to your Citizens AE or email us to learn about how one of the largest banks in mortgage is leading the way.”

Appraisal and Valuation

“Reduce appraisal bias, and your risk, with Appraisal ScorecardX from Xactus! Appraisal ScorecardX is incorporated into Xactus’ Appraisal FirewallX appraisal management technology and uses it to conduct automated appraisal reviews that catch issues with appraisal completeness and assure compliance. Appraisal ScorecardX features an Indicative Words tool that allows review teams to customize their own list of words which may infer there was some sort of bias that may have altered the perceived property value. It also identifies key terms your organization, underwriters and/or investors require in the appraisal report. The goal is to advance the modern mortgage by helping all borrowers receive a fair and impartial appraisal, and Appraisal ScorecardX can do just that! It’s just another way Xactus is innovating to serve and serving to innovate. See for yourself how this powerful data solution can improve your appraisal process. Email us to schedule a demo.”

A few years ago appraisers, and lenders, were “drinking from a firehose.” No longer, and in fact the appraisal side of the business is losing people. The U.S. Bureau of Labor Statistics gives us some numbers about appraisers.

The Biden Administration just revealed a new two-pronged plan to help bring more equality to the home appraisal process. First, the White House wants to establish a rule to include “nondiscrimination quality control standard” in algorithms used in the appraisal process. Second, it wants to lower the educational standards required to become an appraiser, which is statistically one of the least diverse career paths.

On June 1, the Consumer Financial Protection Bureau, along with five other agencies, invited comment on a proposed rule to implement the quality control standards mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act for the use of automated valuation models by mortgage originators and secondary market issuers in determining the collateral worth of a mortgage secured by a consumer’s principal dwelling. The focus is on homeowners who may be concerned about a technology model alone determining the value of their house.

Under the proposal, the agencies would require institutions that engage in certain credit decisions or securitization determinations to adopt policies, practices, procedures, and control systems to ensure that AVMs used in these transactions to determine the value of mortgage collateral adhere to quality control standards.

Additionally, they must be designed to ensure a high level of confidence in the estimates produced by AVMs; protect against the manipulation of data; seek to avoid conflicts of interest; require random sample testing and reviews; and comply with applicable nondiscrimination laws.

Under the proposed rule, an AVM would be defined as “any computerized model used by mortgage originators and secondary market issuers to determine the value of a consumer’s principal dwelling collateralizing a mortgage.” The proposed rule would apply regardless of whether the credit was for consumer purposes or for business purposes.

Ballard Spahr did a fine, comprehensive write up of the whole situation.

Of course, investors are tuned in to appraisal news, especially from investors. For example, Pennymac Correspondent Group sent 23-41: Freddie Mac Bulletin 2023-9 Property Appraisals and Condominium Project Updates.

PRMG TPO Resource Center Updates 23-06 includes information related to Appraisal Guidelines, PRMG Policies, Procedures and Information, Training/Instructional Material and General forms. Additionally, updates on Product Forms and Information on Jumbo and Second Mortgage, Non-QM Product and Quality Control Information.

FHA representatives from the Denver Homeownership Center will conduct a Free, In-Person FHA Appraisal Training in Salt Lake City, June 14 2023 | 8:30 AM to 4:30 PM (Mountain). Training will cover FHA appraisal requirements, including FHA appraisal protocol and updates to FHA appraisal policy as outlined in FHA’s Single Family Housing Policy Handbook 4000.1. This training will also take an in-depth look at a variety of appraisal-related topics including property acceptability criteria; minimum property requirements; property defects; appraiser responsibilities and requirements; and, much more.

Register for California MBA’s DE&I Committee’s Appraisal Bias & Fair Lending discussions, June 20th at 11 AM PST. Panel of experts will provide valuable insight into the latest industry trends and provide strategies to help lenders combat appraisal bias.

Capital Markets

Mortgage rates treaded water to kick off trading yesterday ahead of next week’s Federal Open Market Committee meeting, but subsequently rose after a surprise 25 basis points hike by the Bank of Canada. The Canadian central bank’s raise after two consecutive pauses spooked U.S. money markets for a potentially similar path by the Fed at its meeting next week.

Rate movement right now is all about markets re-re-re figuring out the Fed. Traders have gotten way ahead of the Fed three times since last July and have paid dearly for each of those false starts in the form of painful bear flattening and sloppy pricing liquidity. Current futures pricing implies a nearly four-out-of-five chance that the Fed will hold rates firm at the current 5.00-5.25 percent level next week. For perspective, one month ago, 75 basis points of cuts were priced in as the highest probability. When, and how, central banks will declare some measure of victory over price surges and stop, or even reverse, more than a year of tightening will play a big role in volumes for the remainder of 2023.

It’s another light scheduled news day. Today’s calendar is under way with weekly jobless claims (261k, +28k; continuing claims at 1.757 million). Later today brings wholesale inventories and sales, Treasury announcing the details of the mini-Refunding consisting of $40 billion new 3-year notes, $32 billion reopened 10-year notes, and $18 billion 30-year bonds, and Freddie Mac’s latest Primary Mortgage Markets Survey. We begin the day with Agency MBS prices roughly unchanged from Wednesday night and the 10-year yielding 3.77 after closing yesterday at 3.78 percent; the 2-year’s yielding 4.50.

Employment

A Nationally recognized Mortgage Lender is in search of a National Underwriting Manager with 10+ years of relevant experience who can manage a team of specialized underwriting functions to support profitable growth and consistent execution. The perfect candidate is someone who will help grow a positive culture through leadership in the organization’s underwriting department. If interested, please send your confidential resume to Chrisman LLC’s Anjelica Nixt for forwarding and specify this opportunity.

Sovereign Lending Group, LLC is expanding its team of consumer direct loan officers at Fashion Island in Newport Beach, CA. This is a great opportunity for those interested in joining a company that provides superior marketing and a diverse suite of products, committed to adding value for its loan officers and creative borrower solutions. If you’re interested in joining SLG’s team, be sure to contact Matthew Cataño today (949-736-9148).