Skip to content

LO Training and Conferences; Teams With Different Comp Plans?

July 18,2018
by admin

“Rob, are you hearing, now that the CFPB is perceived to have lost its teeth, that some lenders are providing their loan officers two different rate sheets?” Unfortunately, yes, I am hearing that, but hopefully it is an untrue rumor. It would certainly fly in the face of fair lending and would give another black eye to our industry. See note below from The Knowledge Coop’s Ken Perry regarding compliance issues on this. (By the way, the Bureau of Consumer Financial Protection has announced the appointment of Paul Watkins to lead the Bureau’s new Office of Innovation, and a confirmation hearing for Kathy Kraninger, President Trump’s pick to lead the CFPB, is scheduled today before the Senate Banking Committee.)

Upcoming Events and Training

Now is the perfect time to learn how HomeReady® mortgage can help more of your low- to moderate-income borrowers become homeowners with as little as 3% down. Join Fannie Mae on July 19th at 2PM ET for a live webinar geared toward loan officers (but open to all lenders and housing professionals). Learn how HomeReady features can help you serve more borrowers and close more loans with plenty of time to answer your questions.

Join CAMP Silicon Valley Chapter for its 2018 Installation Board Lunch, July 20th at Morton’s Steak House in San Jose. Lunch begins 11:30.

On July 24th at 9AM PT, join MWF for its webinar “Advantages of Using High Balance Loans in Today’s Marketplace” presented by Dale Delliquadri and Paul Isola.

On Monday, July 30th in Boston, the day before the AARMR Conference at the Park Plaza; join MCPAOA for its second annual workshop.

The Lenders One 2018 Summer Conference will be in Salt Lake City, Utah, August 5-8, at The Grand America. Attendees will be able to select from 16 curated education sessions led by industry experts. Topics include: improving margins, generating business through MarTech, rethinking your compliance strategy and five Secondary Market panels.

The National MI trainings for the month of August feature three webinars. 1) August 8th, Freddie Mac’s Underwriting Income & Employment, 10 AM PST 2) August 9th, Advanced Self-Employed Borrower training 10 AM PST and 3) August 16th, Next Generation Marketing & Sales, 12:00 PM PST.

FHA is providing a free on-site training: FHA Credit Underwriting in Atlanta on August 14th. And FHA’s free, on site FHA Condominium Training in Atlanta on August 15th as well as a review of requirements for underwriting Standard 203(k) and Limited 203(k) products and related procedures.

The Mortgage Collaborative will be holding its 2018 Summer Conference at the fabulous Four Seasons Hotel in Chicago, IL from Sunday, August 19th through Tuesday, August 21st. That is also the weekend of the Chicago Air & Water Show, America’s largest air show. TMC has done something pretty neat with their conferences, they allow their lender members to dictate the content, format, and agenda of their events. The result? A myriad of lender-led, discussion-based breakout sessions each day on (very specific) topics and issues viewed as the most pertinent by their national network of lenders. Pretty cool events if you’ve never been. For more details, visit TMC or contact TMC COO Rich Swerbinsky.

It’s time to register for the 2018 MMLA Annual Lending Conference, August 15th–16th,

“Rolling with the Changes.” There will be nationally recognized industry and motivational speakers. A full schedule of golf, educational sessions, social receptions and indulgent dinners. Also, there is built-in time to make those important business connections, free time to catch up on work…or just relax at the resort.

On September 13th, OMBA is hosting its first annual Loan Production Conference. Trainings include growing your business utilizing LinkedIn, staying compliant using Social Media and Turn Up the Volume with a 3-hour sales training experience.

The Northeast Conference of Mortgage Brokers and Professionals is coming up September 23rd-25th in Atlantic City. This years’ conference highlights topics such as the impact of recent court decisions and CFPB enforcement actions on mortgage servicing agreements, wire fraud and how to avoid it, and the current structure of and future planning for the CFPB.


LO’s have two rates sheets? Ken Perry with The Knowledge Coop sends, “In this incredibly competitive market we are seeing companies sharpen their pencils and unfortunately they are factoring in the decreased risk of BCFP (CFPB) enforcement and stretching their comp plans in dangerous ways. What people need to remember is that liability for illegal comp plans lies on the head of both the loan officer and the company. One example of risk we are seeing is when the company allows 2 different pay plans using teams. If a borrower doesn’t like the rate, the loan originator can refer the deal to somebody on a lower comp plan to fund in their name. The LO still gets the whole payment. So, the rate is tied directly to the comp plan and it is changing based on loan terms. It’s exactly what the CFPB wrote about in the comp rule. It will take a state to enforce this as the bureau has backed off so much, but I do expect to see something on this in the future.”

Capital Markets

Rates, up a little, down a little – not much moving them. Lenders are out there working on succeeding in their business models rather than reacting to rates moving. Yesterday U.S. Treasuries, and MBS prices, ended on a modestly lower note and the 10-year closed yielding 2.87%. The slope of the yield curve steepened a touch, as the 2s10s spread widened by a basis point to 26 bps while the 2s30s spread ended the day two basis points wider at 38 bps. But does the slope of the yield curve matter any longer?

We had disappointing Housing Starts and Building Permits numbers – unfortunately at a time when each should show strength. More talk of the difficulty builders have finding labor, as well as the constraints they are facing with higher land, labor, and material costs. Yet the Federal Reserve’s Beige Book for June noted that contacts in ten out of twelve districts reporting moderate or modest growth.

This morning we’ve had weekly jobless claims (-8k to 207k, lowest since

Lender Products

Mr. Cooper Correspondent is excited to announce the addition of Manufactured Home Loans to its product offering. This is an additional solution for lenders working with borrowers needing home financing options beyond traditional single-family dwellings. The product is Conventional and FHA eligible. “Aligned with our product roadmap, Mr. Cooper is in development of Temporary Buydowns, E-Notes, FHLMC HomeOne and Renovation Loans.We’re also pleased to announce Jennifer Verrilli, a seasoned mortgage industry executive, has joined Mr. Cooper Correspondent as VP of Underwriting and Credit Risk. Her immediate focus is the evaluation and implementation of new product initiatives, as well as continuing our emphasis on enhancing efficiencies. Mr. Cooper is a premier Correspondent and Co-Issue investor and the largest non-bank servicer with a servicing portfolio exceeding $500B.”

New Penn Financial’s Dream Big Jumbo loan provides “unparalleled jumbo financing so more families can secure their dream home. With generous criteria and expanded guidelines, the Dream Big Jumbo suite of 20, 25, and 30-year fixed rate mortgages offers quality borrowers up to $3 Million or financing up to 90% LTV. FICO 680+. The $750k cash out option really will allow your borrowers to fulfill their biggest DREAMS! Call your rep for more information or go to”

Employment and Promotions

The RuraLiving team at Compeer Financial is pleased to announce the promotion of Jessica Sacre to Relationship Manager of the Midwest, and the addition of rural lending veteran Doug Gibney as the East Coast RM. “Jessica and Doug join West Coast RM Matt Feigner as we continue to champion rural home lending. Are your clients dreaming of living the country life to enjoy nature or to own an income producing hobby farm? Contact Compeer today.”

Planet Home Lending, LLC has an opening in its Correspondent Division. “We are looking for a Regional Sales Manager for the Northwest Region which includes northern California, Washington, Oregon, Idaho, Montana, Wyoming, and Alaska. Eligible candidates must reside in the region. Responsibilities will include maintaining, and growing Planet’s current customer base along with establishing new customer relationships to assist in Planet’s continued growth in the region.” If interested, please forward your resume to Eli Bennett.

Mortgages are moving digital and competitors are clamoring to keep-up. Houston-based Cornerstone Home Lending’s in-house Technology Innovation Team identified the digital need years ago, and now celebrates the 4th anniversary of rolling-out its proprietary LoanFly technology that leverages digital technology for anytime mobile access, improved Loan Officer efficiencies and better service. Cornerstone Loan Originators use their mobile devices on-the-go to pre-qualify borrowers, submit documents, check loan status, access their data bases, and get the information they need instantly in real time to close loans quickly, on-time, all the time. Innovative technology is one of the reasons that Cornerstone Loan Officers rank so high in Funded Loans per Loan Officer, averaging 8.2 funded units per Loan Officer in May 2018! Contact Tom Lott for more information.

Looking for a Great Place to Work? Find it at Evergreen Home Loans. The company continues its focus on being the best place to work in the industry. It was named the #1 BEST Place to work in Financial Services and Insurance and a top Best Workplace for Millennials by Fortune and Great Places to Work®. It was also recognized for the fifth straight year as one of the 100 Best Companies to Work For in Washington state by Seattle Business Magazine. Evergreen is passionate about their culture and to them, it’s more than just talk to get you in the door. Surveys show that their associates believe in the culture of Evergreen and are a central part of shaping who they are as an organization. Evergreen is hiring loan officers and candidates can learn more about the Evergreen culture here and find the latest job openings on the Careers page.

InterLinc Mortgage Services announced that Gene F. Thompson III, who has served as President since 2010, is now the Chief Operating Officer (COO). A 20-year veteran of the mortgage lending industry, Gene has been with InterLinc since 2007, where he has served as both Executive VP and President.

Velocity Mortgage Capital, a nationwide, direct portfolio lender that provides investment property loans for residential 1-4, multi-family, mixed-use and small balance commercial properties, has hired marketing veteran Michael Oddi as its Chief Marketing Officer.

MBS Day Ahead: What Happens If Bonds Break This Ceiling? (Philosophical Discussion on Technicals)

July 18,2018
by admin

This primer (and this one, and this one) will be useful for digesting the following, if you haven’t read it before.

For those paying any sort of attention to trading levels in bond markets over the past few weeks, it’s hard to miss the super narrow range between 2.825 and 2.885 in 10yr yields. That’s been perfectly intact since June 27th, and was broken for the first time in today’s overnight session.

2018-7-19 open

In the chart above, there are plenty of causes for concern in terms of the technical implications of recent moves:

  1. Mid-Bollinger (middle yellow line) is broken
  2. 2.885% was broken overnight
  3. short-term momentum hasn’t been oversold enough (above upper blue line) to imply support
  4. longer-term momentum has plenty of room to run (empty space between current levels and oversold)

But rather than serve as the starting gun for an acceleration in selling, the overnight break above 2.885 has been just like any other random bit of moderate weakness. In fact, even after breaking above 2.885% again in the opening hour, yields are back down into the 2.87’s yet again.

So what’s the point of following technical levels if “nothing happens” when important technical developments occur?

Several thoughts there:

First of all, no market approach will ever accurately predict the future. Take the highest probability approach of a simple “if/then” statement applied to data and bonds, for example. There have been times where we can say “if NFP comes in much higher/lower than expected, bonds should sell/rally accordingly.” In fact, for a stretch of many years, such a statement was a given, but we’ve since seen it go out the window for various reasons.

In contrast, technical analysis is far less reliable. It always has been. To say that big things will happen if yields break over 2.885 is folly. To say recent movement suggests breaking above 2.885% is more important than any other random move higher is more in line with how technical analysis is implied.

So why aren’t we skyrocketing higher after breaking 2.885%

Ahhhh! Now we come to the wonderfully frustrating fudge factor surrounding technical analysis. While we may be watching day to day market movements under a microscope, the market isn’t always trading with a microscope. In my experience (which includes paying way too much attention to nitty gritty technical levels and observing how reality chooses to unfold), “important ceilings” oftentimes take the shape of a general zone of yields or prices. One day it might be 2.885. Another, it might be 2.889, and so on. It’s only when we take a step back we see that bonds have been orbiting the high 2.8% range and the circumference of that orbit is less consequential than the central point of gravity.

And much like a planet that could theoretically escape its orbit around a central point of gravity, it would take more than just a small change in the circumference of its orbit to cause much concern.

This dovetails into my final point: technical breaks are rarely a major event in moment-to-moment trading. Granted, we can often see big buying or selling motivated by the break of intraday levels, but those levels are rarely the exact same ones everyone else is watching. For example, if we’re all looking at 2.885, some accounts may have had selling triggers set at 2.87 (actually, probably true in the case of some selling yesterday afternoon). Other accounts may be waiting for something slightly higher than 2.885 to use as a BUYING trigger (yeah, that can happen too, and it may be happening this morning)!

Rather, we’d need to move above 2.885 with a certain combination of distance and time in order to consider the ceiling broken. There’s always a certain amount of magic involved in determining that amount of distance and time, but markets know it when they see it, and you’ll know it if they do. I know, you’d like me to give you some general ballpark though. In that case, I’d say we typically like to see a ceiling broken by more than 2bps (i.e. 2.905%+ for a technical of 2.885%), for that break to be intact by the 3pm CME close, and for it to remain intact throughout the following trading session.

With all of the above in mind, we can easily reconcile the absence of a massive selling spree this morning. The “fun” part about following financial markets, however, is that we can’t easily rule out that it could always be right around the corner. That said, a big buying spree is always in the cards too–especially if everyone else is seeing a selling spree as being more likely.

FHFA Ruled Unconstitutional, but Net Sweep Prevails

July 18,2018
by admin

Yet another federal court has rebuffed shareholders hoping to recover some value from their investments in the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. A three-judge panel for the Fifth Circuit (Texas) Court of Appeals refused to stop the practice of net worth sweeps required of the GSEs, but, the plaintiffs, whether their intention or not, did succeed in getting the structure of the Federal Housing Finance Agency (FHFA) ruled unconstitutional.

FHFA v Collins was an appeal of a suit filed by GSE stockholders J. Patrick Collins, Marcus J. Liotta, and William M. Hitchcock in October 2016. It was the latest in a long stream of lawsuits against the government regarding its 2008 seizure of the GSEs. The original suit named FHFA and its current director Melvin H. Watt and the U.S. Department of the Treasury and then Secretary Jacob J. Lew as defendants.

The suit charges that the GSEs were involuntarily and unnecessarily placed in conservatorship at the beginning of the financial crisis. It alleges that, in 2012 as the GSEs were becoming profitable, the FHFA director at the time overstepped his authority by agreeing to revise the original agreement between the GSEs and Treasury. That revision changed the dividend agreed to by the GSEs in exchange for access to a line of credit from the Treasury to a net sweep of all GSE net worth into the Treasury every quarter in perpetuity. Plaintiffs allege that the change was designed to ensure the companies would never be able to emerge from conservatorship, and that the government now relies on the sweep as a major source of revenue.

The Court issued a bit of a split decision, ruling against plaintiffs on the net worth issue and in their favor on the constitutional claim. The ruling said that Congress can create an independent agency as needed, but that it cannot be insulated from meaningful oversight by the executive branch. Thus FHFA, with a sole director who can only be removed from the position for cause during his or her term, is structured in violation of the constitution. However, despite the illegality of the agency’s structure, the lower court’s decision to allow the net sweep to continue was permitted to stand.

The ruling not only is another blow to GSE shareholders who have brought multiple suits, it also could have implications for the Consumer Financial Protection Bureau (CFPB). Like FHFA, CFPB was established by the Housing and Economic Recovery Act of 2008 (HERA)in response to the financial crisis, has a single director, and that director is somewhat protected from executive oversight by a set term. CFPB is also the subject of suits challenging its legality on those points.

Millennial Homeownership Headwinds Worrisome for Future

July 18,2018
by admin

It is the largest generation in U.S. history and Millennials may also set a record as the one whose behaviors have been most heavily researched. Despite the hours of study and pails of ink, the direction the generation’s members will ultimately take in their lives still has the nation a bit flummoxed. This may especially be true of their decisions about shelter.

The Urban Institute (UI) just completed another large study on young adults born between 1981 and 1997. That, compared to earlier generations, they are more tech-savvy, racially and ethnically diverse, better educated, and marry later in life, explains some but not all of their performance to date as homeowners. The UI team* finds that the 37 percent rate of homeownership within the generation in 2015 was lower than both of the preceding generations, (Gen X and Baby boomers) at the same age, 45.4 and 45.0 percent respectively.

UI put some numbers to the demographic and social differences displayed by the generation. First, being married increases the probability of owning a home by 18 percentage points after accounting for other factors. If the marriage rate among that age group in 2015 had bbeen the same as in 1990, Millennial homeownership would be about 5 points higher.

The generations greater racial diversity also takes a toll on homeownership statistics. Non-Hispanic white households have higher homeownership rates than all other racial groups, so the increasing diversity of millennials pulls those numbers lower. The same racial composition among Millennials as existed for that age group in 1990 would indicate a homeownership rate 2.6 points higher than currently exists .

Along with delaying marriage, Millennials have also put off child bearing. Having a child increases the probability of owning a home by 6.2 percentage points among those who are married.

Yet the researchers also found that even among white households that are married, with children, and even with substantial income, the homeownership rate is 2 to 3 percentage points lower than earlier generations. Obviously other factors are at play, some of them defined as attitudinal.

The preference of educated Millennials to move to more expensive urban centers has contributed to their lower homeownership rate. In high-cost cities the housing supply is inelastic and within large metro areas, Young adults additionally migrate to the counties with a more urban environment where prices have increased more than in surrounding areas. This shift in preference was mostly observed among those who are higher educated. The supply of affordable housing has declined overall during the last decade, but this is especially true in areas where Millennials prefer to live.

Another factor is rent; a 1 percent increase in a household’s rent-to-income ratio decreases the likelihood of homeownership by 0.07 percentage points.

Obtaining a mortgage has become more challenging over the last ten years. The process is unwieldy, and underwriting has not adapted to the unstable and non-traditional labor market and tightening credit standards.

Higher education is a two-edged sword. While it has only a minor impact on the homeownership rate, a 1 percent increase in education loan debt decreases the likelihood of owning a home by 0.15 percentage points.

A child’s likelihood of being a homeowner increases by 9 percentage points if his or her parents are homeowners, and a 1 percent increase in parental wealth increases a child’s likelihood of being a homeowner by .016 percentage points.

Various combinations of these factors are worrisome for the future. UI says, even though they found little impact from education on the homeownership rate, the gap in rates between the more educated and less-educated population has grown significantly compared to previous generations. It increased from 3.3 to 9.7 percentage points between 1990 and 2015. Less educated millennials could be falling behind in homeownership because of their unstable incomes and rising rents.

Left unchecked, current trends will result in even greater wealth disparities among white, black and Hispanic millennials. While millennial homeownership has dropped for all race and ethnic groups since 2005, the black homeownership rate has been continuously lower and has dropped further than the other groups since 2000. As minorities are less likely to own homes and share in that type of wealth creation, intergenerational transfer of homeownership further explains the persistent racial and ethnic disparities in homeownership.

The UI team concludes with several policy recommendations to support Millennial homeownership. The first is to enhance homeowner education and awareness. Studies indicate that households with higher financial literacy have both higher income and homeownership rates. Enhancing financial knowledge could also help bridge the gaps between racial and ethic groups and educational levels. Among the suggestions are to provide fun and easy games and training courses online and initiating well designed financial literacy courses in high school and college. Those courses might also inoculate young adults against some of the pitfalls of student loan debt.

Millennials cite downpayments as a barrier to homeownership and seem unaware both of low down payment programs offered by most lenders and of the availability of downpayment assistance. This information should be part of financial literacy programs as a long-term solution, but Millennials could be helped more immediately by greater availability of and incentives for homebuyer education.

The mortgage process should be made more accessible. A first step would be streamlining the application process. UI says the average application contains more than 800 pages of material and the process is ripe for the rise of fintech lenders who can process applications 20 percent faster than traditional lenders and with no apparent increase in defaults. However, first-time buyers, despite their tech savvy, use available fintech resources for mortgage applications less than older groups, partly because they lack the necessary financial and lending knowledge.

The government could play a role here as FHA is a predominant source of financing for first-time homebuyers, but its archaic systems make it difficult to streamline this part of the process. Giving the FHA more funding for systems upgrades to improve and streamline its mortgage origination process would help.

Another policy recommendation is to improve underwriting, finding better ways to capture creditworthiness. Small changes such as including rent, cell phone, and cable bills in credit scoring and finding ways to include non-traditional source of income need to be institutionalized.

The report also recommends policies to increase the supply of new houses while constraining the cost to build them. Purchasing and developing land is a major contribution to building costs and land-use and zoning regulations play a role. Regulations cost builders more in fees and time to obtain approvals and as housing becomes more unaffordable in areas with restrictive zoning and land use regulations, federal aid for housing subsidies dry up.

Because zoning and land-use regulations are local, it is difficult to execute a national policy to alleviate excessive ones and their local nature makes it unattractive for local governments to change unless they are sure their neighbors will do the same. States could provide financial incentives to cities that limit or reduce regulation, such as reallocating housing subsidy dollars. Some states have adopted laws allowing them to override some local restrictions.

* Jung Hyun Choi, Jun Zhu, Laurie Goodman, Bhargavi Ganesh and Sarah Strochak

Mortgage Rates Flat Again, Despite Modest Market Weakness

July 18,2018
by admin

Mortgage rates were flat again today, further prolonging a trend that’s been in place for weeks. During that time, we’ve seen modest ups and downs, but no significant changes. To put the narrowness of the range in context, the “ups and downs” are only seen in the upfront costs associated with any given mortgage rate. Rates themselves haven’t changed for the average loan scenario.

Today’s absence of change belies market movement to some extent. The bonds that underlie mortgage rates weakened enough through the course of the day that mortgage lenders were nearly justified in a mid-day rate sheet adjustment (for the worse). When this happens (i.e. when bonds weaken, but not quite by enough to prompt mid-day changes), the implication is that tomorrow starts out at a slight disadvantage. In other words, if bond markets simply hold steady overnight, borrowing costs could edge higher.

Today’s Most Prevalent Rates

  • 30YR FIXED – 4.625-4.75
  • FHA/VA – 4.25-4.5%
  • 15 YEAR FIXED – 4.125%
  • 5 YEAR ARMS – 3.75-4.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates moved higher in a serious way due to several big-picture headwinds, including: the Fed’s rate hike outlook (and general policy tightening), the increased amount of Treasury issuance to pay for the tax bill (higher bond issuance = higher rates), and the possibility that fiscal stimulus results in higher growth/inflation.

  • Despite those headwinds, the upward momentum in rates has cooled off heading into the summer months. This could merely be the eye of the storm, or it could end up being the moment where markets began to doubt that prevailing trends would continue.

  • It makes sense to remain defensive (i.e. generally more lock-biased) because the headwinds mentioned above won’t die down quickly. Temporary corrections can be explained away, but it will take a big change in economic fundamentals or geopolitical risk for the big picture to change. While that doesn’t necessarily mean rates have to skyrocket, there’s a good chance it means rates will struggle to move much lower than early 2018 lows until more convincing motivation shows up.
  • Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are “effective rates” that take day-to-day changes in upfront costs into consideration.

MBS RECAP: Bonds Back at Range Boundary

July 18,2018
by admin

After holding the same sideways range since June 27th, 10yr Treasury yields finally knocked on the 2.88+ ceiling for the 2nd time (the previous attempt being July 3rd). But that’s about as exciting as I can make today sound. The overall move higher in yields was less than 2bps, and volume was exceptionally low.

If anything, the challenge of the range ceiling (failed challenge, really) was the product of serendipitous afternoon tradeflows amid highly illiquidtrading conditions. Today’s economic data and Fed Chair testimony did little, if anything, to motivate trade.

Whereas the afternoon was an illiquid desert for bonds, the morning hours were only slightly better. Still, the morning at least had a clear source of inspiration in the form of European bond market movement. Treasuries and German Bunds (the European 10yr benchmark) were joined at the hip for the most active hours of the day. It wasn’t until Europe closed that things really started to slide domestically.

Mortgage Applications: Decline in Purchases Offset by Refinance Gains.

July 17,2018
by admin

Refinancing made a tiny bit of a comeback during the week ended July 13. Both the Refinancing Index, a component of the Mortgage Bankers Associations (MBAs) Market Composite Index, and the share of applications that were for refinancing regained some ground after retreating during the previous three weeks.

The overall Composite Index, a measure of mortgage volume, declined by 2.5 percent on a seasonally adjusted basis, giving back all of its gains from the prior week. On an unadjusted basis the index was up 22 percent from the week ended July 6 due to the adjustments made by MBA to account for the Independence Day holiday.

The Refinance Index increased 2 percent from the previous week and 36.5 percent of applications received were for refinancing. The prior week refinancing had a 34.8 percent share.

The seasonally adjusted Purchase Index declined by 5 percent week-over-week. The unadjusted Purchase Index increased 19 percent, again because of holiday related adjustments, and was 1 percent higher than the same week one year ago.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

Applications for FHA backed mortgages accounted for 10.6 percent of the total compared to 10.0 percent the previous week. The VA share declined by more than a point to 10.2 percent and USDA activity ticked down from 0.8 percent to 0.7 percent.

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at or below the conforming limit of $453,100 increased to 4.77 percent from 4.76 percent. Points rose to 0.46 from 0.43 and the effective rate was also higher.

The rate for jumbo 30-year FRM, loans with balances greater than $453,100, declined to 4.66 percent from 4.68 percent. The effective rate still increased as points rose to 0.30 from 0.24.

Thirty-year FRM backed by the FHA had an average rate of 4.78 percent with 0.69 points. The previous week the rate was 4.80 percent with 0.75 point. The effective rate was also lower than the prior week.

The average contract interest rate for 15-year FRM increased to 4.22 percent from 4.18 percent, and points rose 0.46 from 0.42. The effective rate increased from last week.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) ticked down 1 basis point to 4.12 percent. Points increased to 0.39 from 0.36 leaving the effective rate unchanged. Applications for ARMs decreased to 6.1 percent of those received from 6.3 percent the previous week.

MBA’s Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage applications. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.

Pricing, Efficiency, and Operations Products; California DRE Changes

July 17,2018
by admin

“Your loan officer should be given the opportunity to succeed elsewhere.” Ever heard a CEO recommend that to a branch manager regarding a poorly performing LO? Here in San Francisco, at the Western Secondary Conference, the talk is focused on secondary marketing and Fannie’s lower estimate of 2018’s volumes ($1.69 trillion). But LO performance and compensation creep into the conversation any time you have owners and CEOs in one room. Recently I wrote, “No one wants to be ‘the first penguin in the water’ when it comes to making LO compensation changes. But done the right way, these changes can have a very positive impact on an independent’s bottom line and chances of survival.” Lenders are heading toward taking LO comp monies and putting them toward better leads, better back office services, and better pricing. 80 basis points on something is better than 140 basis points on nothing, right?

State (California), Legal and Compliance

Here’s a story worth some attention about bankers calling for TRID revisions for single family construction loans. (Good in theory, but critics will say, “Just what we need: lenders who can ill afford it spending huge sums to have different compliance procedures and policies based on property.”)

Since California accounts for nearly ¼ of residential origination volume, it’s good to know what’s happening there.

From California Josh Rosenthal with Medlin & Hargrave writes, “I wanted to let you know, that as of July 9, 2018, the commissioner of the (now) Department of Real Estate is no longer Wayne Bell. As of July 16, 2018, there still has been no official announcement. The new acting commissioner will be the Chief Deputy Commissioner, Daniel Sandri. There is conjecture that this leadership change is in some way connected to the reorganization of the agency from the Bureau of Real Estate, a bureau within the California Department of Consumer Affairs, back to the California Department of Real Estate, an independent agency. We are happy to talk to your readers about licensing issues and if this shakeup could affect enforcement and discipline.”

A symposium in Los Angeles is one of several planned to discuss how to increase the supply of affordable housing in California, and nationwide. Co-hosted by Fannie Mae and the UCLA Ziman Center for Real Estate, information on the discussion is available here.

Capital Markets

Long-term rates are a product of supply and demand, as are housing prices. Thousands of single family homes have been removed from the first-time home buyer market by being purchased by large firms – such is life. The REO-to-Rental Trade was a big winner over the past several years as hedge funds and pension funds bought foreclosed properties for pennies on the dollar, fixed them up and rented them out, earning high single digit returns. As home prices rise, you would think these people will start ringing the register. Turns out they are doubling down. Professional investors are buying up homes in urban areas with good schools. This is making things even tougher for the first-time homebuyer who is struggling to find a starter home. As Brent Nyitray points out, “That said, it isn’t a ridiculous number – last year major investors bought 29,000 homes, which is a drop in the bucket compared to total existing home sales of 5.45 million.”

Looking at the bond market, rates were unchanged yesterday as Fed Chairman Jay Powell delivered the semiannual testimony on monetary policy to the Senate Committee on Banking, Housing, and Urban Affairs, without surprise. Chair Powell, who faces the House Financial Service Committee today, shared an optimistic view of the U.S. economy, making the case for continued gradual hikes to the federal funds rate range. The capacity utilization rate ticked up to 78.0% in June from a downwardly revised 77.7% in May, narrowly missing expectations. Manufacturing output bounced back sharply, reflecting good underlying demand, after a low May reading.

Today’s economic calendar started with MBA mortgage applications for the week ending July 13: -2.5% with refis accounting for a little over 1/3 of all applications. We’ve also had June Housing Starts (-12.3%, worse than expected) and Building Permits (-2.2%). Fed Chair Powell returns for another go-around on the Hill at 10AM when he testifies before the House Financial Services Committee. Finally, the Fed will release the latest Beige Book at 2PM ET. Today’s earnings releases include updates from US Bancorp and Morgan Stanley before the open with Dow components IBM and American Express scheduled to report after the close. The day begins, surprise, with rates little changes from where they’ve been for weeks: the 10-year is yielding 2.85% and agency MBS prices are up a couple ticks versus last night’s close.

Lender Products

Adam Mason, Executive Vice President, COO at Gershman Mortgage (St. Louis, MO) notes, “We were fortunate to have the foresight to utilize the services of DocProbe in advance of the current margin compression the industry is experiencing. DocProbe allowed us to move our Trailing Docs function to a variable cost model while adding operational efficiency. This move allows us to focus on building our business and cut operational costs. Our dedicated DocProbe account rep knows our business and ensures that all documents are error free and sent to the investors in time. Great company, great service, great team.” Here at the Western Secondary the last few days, we heard much about cost cutting by moving to a variable cost model. Find out why correspondents and investors are working with DocProbe, specifically in today’s climate, to cut costs and work with a partner who understands the business. To learn more, reach out to Nick Erlanger or Steve Rimmer.

My cat Myrtle is quite prolific on social media these days. Most lenders are allowing loan officers to use Facebook and LinkedIn to promote their services. How is your company monitoring those posts to ensure compliance with your own company policies? It’s been a challenge. Until now. SocialMonitor is now live in beta testing. SocialSurvey partners may monitor all connected social media feeds in their account. This simple & smart monitoring platform works like an inbox. It can focus on specific keywords in posts. Since LO users have already connected SocialSurvey to their social networks for reviews sharing, launching the product takes only minutes. It was designed by SocialSurvey customers and is available to partners now! Click to read the full article.

New technology and digital mortgage services have flooded the industry recently, and for good reason. For years, many mortgage lenders have procrastinated adopting digital technology to improve efficiency in their operations, making it harder to attract and satisfy new customers. Late-bloomers are finally coming around, though, as we are seeing more and more lending teams actively researching and purchasing technology solutions to help their business. With this, it’s hard to know the right questions to ask to help you find the right technology vendor. A newly released eBook – “Digital Mortgage Buyer’s Guide” – shines light on this process, touching on questions to ask and areas to focus on for those considering adopting new digital mortgage technology in their business. An exclusive to Rob Chrisman subscribers today (and a must-read for all lending professionals), Download your complimentary copy here.

Floify, the mortgage industry’s #1 point-of-sale solution, understands the need for LOs to have an efficient way to consolidate borrower documentation, without the stress of moving from application to application to collect files. With their comprehensive, end-to-end mortgage automation platform, Floify has been helping LOs save time and money by allowing them to eliminate the need for third-party document storage services like Dropbox or Google Drive, by safely housing an unlimited number of your borrowers’ files within the fully-encrypted Floify platform. Floify even auto-converts mobile photos to PDFs upon upload, which means you can seamlessly deploy to your LOS in the blink of an eye. When you implement Floify into your mortgage operation, you can focus on generating new business and keeping clients engaged, while letting their robust point-of-sale solution handle the heavy lifting. To experience to power of Floify’s document management system, request a live demo today.

Does your pricing seem a little bit too high? Are you losing deals over rates? Is your ability to earn money limited by your company’s high pricing? If you answered yes to any of these, chances are your company has too much padding or extra margin built into their rates, costing you money, deals, and possibly even referral relationships! Even worse, some companies build even more padding into your rates when their business slows down to keep their ‘high-profit appetite’ fed. Now there’s a way to see ‘behind the curtain’ to make sure you’re getting the best deal possible. Check out this “Pricing Lie Detector” -a free tool that shows you in 10 seconds how much money you may be leaving on the table due to over-inflated rate sheets from your company.


Level One Bank, a community bank headquartered in SE Michigan, remains committed to the growth of its Mortgage Division. After nearly doubling the size of the Mortgage Sales and Operations team in 2018, “Level One Bank is looking to add experienced producing teams or high producing individuals to join our family of mortgage professionals. We have a collaborative culture providing access to all decision makers including management, processing, and underwriting. In addition to our full suite of conventional/government loans, we offer great portfolio products like construction, physician, and jumbo loans. The Mortgage team has the support of our marketing department, executive team and Board of Directors. Contact us today to learn more about the career opportunities at Level One Bank.”

Wintrust Mortgage is growing its correspondent lending division by adding two experienced Account Representatives to help cover the country. Sam Alecci has been brought on to develop the Northeast region (NJ, NY, PA and CT) and Marisa Murphy will help spearhead the West (UT, CO, WY and NM). If you are interested in working with a first-class organization that treats their customers like family while offering a diverse menu of loan products, give Julie Janssen, Wintrust Mortgage’s Correspondent Account Manager, a call at 847.939.9390. She will be happy to make sure you get the attention you deserve! And, if you are a Retail group looking for a new home with a bank-owned mortgage company, contact Bob Shield, EVP of National Sales (847.939.9361) for a confidential discussion.

Strong History. Bold Future. Stearns Lending, LLC, has entered into an agreement to acquire an equity interest in Certainty Home Loans, LLC, as part of the Stearns Preferred Partnership Program. This move will broaden Stearns market presence and geographical footprint resulting in accelerated growth in the Stearns retail channel. “These types of partnerships bring together complementary businesses with similar cultures, values and a joint commitment to delivering exceptional service,” said Stearns CEO David Schneider. Combining Stearns industry leading technology, direct access to capital market expertise, and operational excellence with Certainty’s retail platform will result in a partnership beneficial to both companies. This structure leverages the experience Stearns has with its current Joint Venture business model which currently operates under ten different brands nationwide. As many struggle to adapt to the changing market, Stearns is taking bold steps to build a stronger business model in the industry. Don’t just watch us,join us.

GSF Mortgage announced the immediate expansion of its Conventional Single Close Construction product: primary and second homes, one unit, 95% LTV, 680 FICO, 45% DTI. This product does not require requalification of the borrower at conclusion of the build. No interest paid during the construction phases and it is a true one time close. For Retail Branch Opportunities please reach out to Chad Jampedro. Correspondent Lender Opportunities please reach out Bruce Olster.

MorVest Capital has a new EVP for expansion of liquidity and MSR advisory services: Ruth Lee. MorVest Capital is a financial services advisory firm specializing in liquidity and capital solutions for mortgage bankers, including MSR accumulation, valuation, finance and brokerage. “As our clients experience more liquidity challenges, we bring trusted, seasoned experience to bear in managing either the leverage or disposition of their MSR assets.”

MBS Day Ahead: Bonds Increasingly Threatened by Momentum Shift; Powell Part 2

July 17,2018
by admin

Fed Chair Powell will deliver round 2 of his congressional testimony today, this time at the House FSOC (yesterday was with the Senate Banking Committee). There’s no reason to expect today’s House session to be any more of a market mover than yesterday’s Senate version. In fact, the 2nd day of testimony almost always tends to be ignored relative to the 1st day, though there are a few exceptions.

Perhaps more interesting for bonds right now is the fact that momentum is at risk of shifting negatively in the event of any additional weakness. As seen in the following chart, yields have backed up to their middle bollinger band (a technical study with a 21-day moving average as the middle line with outer lines that are 2 standard deviations higher and lower). Breaking above the middle line is a negative technical cue, all other things being equal, but the 2.885% ceiling is just as important.

2018-7-18 open2

To a greater extent than normal, we’re keeping an eye out for any strong suggestions from stocks. As the lower section of the following chart shows, bonds have done a good job resisting a move higher in stocks so far in July. But as the upper section shows, correlation is running fairly high at times. It wouldn’t take much of a push to sour the technicals for bonds, so it makes sense to stay alert to the possibility (even though early July shows the correlation can break down abruptly).

2018-7-18 open

Housing Permits Soften, Starts Plummet

July 17,2018
by admin

All three measures of residential construction activity performed poorly in June, and the two most closely watched numbers, construction permits and housing starts, fell short of their June 2017 numbers. Despite the monthly and year-over-year declines, the U.S. Census Bureau and the Department of Housing and Urban Development report that activity in the first half of 2018 is still ahead of the same period last year.

The worst numbers were for privately authorized housing starts. They failed to hold on to their gain in May, dropping 12.3 percent to 1,173,000 units. May’s estimate of 1,337,000 units was revised down from the original 1,350,000. The June estimate fell below the June 2017 pace by 4.2 percent.

The results didn’t come close to meeting expectations. Analysts polled by Econoday had projected some softening from the May number, a 5.0 percent month-over-month increase as originally reported. Still they were looking for starts in the range of 1,285,000 to 1,350,000 units. Their consensus was 1,320,000.

Single-family starts were down 9.1 percent from May and off 0.2 percent from the June 2017 number. The June estimate was 858,000 units compared to 944,000 in May, the latter an upward revision from 936,000. Multifamily starts dropped by 20.2 percent to a rate of 304,000 units, 15.3 percent lower than the same period in 2017.

On an unadjusted basis there were 111,500 starts in June, 83,800 of them single family. The corresponding numbers in May were 123,800 and 89,000. For the year-to-date (YTD), starts, at 641,300, are still outpacing 2017 (594,700) by 7.8 percent. Single-family starts have improved by 8.1 percent, from 419,000 to 452,700.

Construction permits were authorized in June at a seasonally adjusted annual rate of 1,273,000, down 2.2 percent from the May rate of 1,301,000. This is 3.0 percent lower than the permitting pace in June 2017.

Analysts were expecting permits to increase from May, looking for results over a range of 1,300,000 to 1,360,000. Their consensus was 1,328,000 units.

Single family authorizations were up, rising 0.8 percent to an annually adjusted 850,000 units compared to 843,000 (revised from 844,000) in May and were 4.6 percent above the year-earlier rate. Multi-family permits fell by 8.7 percent to 387,000 and are 16.2 percent behind the June 2017 pace.

On an unadjusted basis there were 119,800 permits issued in June compared to 125,000 in May. Single family permits were down from May’s 84,000 to 81,300.

For the YTD through the end of June the report estimates there have been 670,800 permits issued, 444,700 of them for single family homes. These numbers outpace those for the first six months of 2017 by 5.7 percent and 6.6 percent respectively.

Housing completions held their ground, remaining at a rate of 1,261,000 units. The previous May estimate was revised down to that number from 1,291,000. Completions in June were 2.2 percent higher than a year earlier. Single-family completions were estimated at a rate of 862,000, down 2.3 percent for the month but ahead of last year by 5.3 percent. Multifamily completions rose 7.1 percent to 393,000 but are 2.7 percent lower than the prior June.

Completions in June numbered 113,500 on an unadjusted basis compared to 105,800 in May. There were 75,800 single family completions compared to 74,400 a month earlier. Completions in 2018 through June are 8.3 percent higher than the same period in 2017, 581,600 versus 537,000, and those for single-family units are up 8.4 percent.

At the end of the reporting period there were 1,121,000 homes nationwide in some phase of construction. Single-family units accounted for 515,000 of those underway. There were also 160,000 permits that had been issued but for which construction had not yet begun.

Permitting was down in the Northeast region by 16.4 percent compared to May but remained 6.7 percent ahead of the June 2017 rate. Starts also retreated, down 6.8 percent from May and are now off from a year earlier by 40.0 percent. Completions rose by 6.5 percent but still lag the corresponding 2017 number by 26.9 percent

In the Midwest permits were 18.7 percent fewer than the rate in May and down 19.8 percent from the previous June. Starts plummeted by 35.8 percent in a month and are 23.5 percent below the prior June. There were 3.5 percent fewer completions than a month earlier, and the rate is down 24.2 percent year-over-year.

The South saw an increase of 6.2 percent in authorizations, but they remain 3.3 percent ahead of last year. Starts were down 9.1 percent for the month but still up 13.4 percent on an annual basis. Completions fell 9.6 percent but are 13.0 percent higher than last year.

Permits were issued at a rate 1.8 percent lower than the prior month in the West, and 7.1 percent behind June 2017. Construction starts fell 3.0 percent and 3.3 percent from the two earlier periods. Houses were brought on line at a rate 21.1 percent higher than in May and 13.5 percent above the previous June.