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Sales, Vendor, Non-QM Products; Agency Updates: Fannie Pricing Change?

September 23, 2019
by admin

Call it a comfortable barge or a luxury water house, thanks to Rudy D. for sending along this story about a $5.5 million floating home in Florida. Good luck for appraisers trying to find comps. Speaking of trying to find something, how about Google being able to track your every step? Great for finding missing people, not great for people saying they live in Florida and they really don’t. It appears that if you have Google Maps on your phone, and have location history on, Google can produce a history of exactly where your phone has been and when. (One has to chuckle when Google tells the user that the owner can turn it “off.” Right.) Lastly, since I’ve gone way off the mortgage path to start the week, how about this dynamic map (thanks to Jeremy P.) that shows who owns the most land in America: The 100 largest private landowners in the U.S. own 40 million acres, which equals Florida. Maine and New Mexico have big swaths of private land.


Lender Products and Services

Nations Direct Mortgage has already surpassed last month’s record-breaking Non-QM production including their recently released prime product line up. “I couldn’t be happier with the dramatic increase in our volume and I’m even more excited about our recently released enhanced products. Our Jumbo alternative product along with our simplified 12 month bank statement product has generated tremendous buzz in the broker community,” says Director of Lending, Martin Warren. “Our expansive proprietary products, coupled with our DirectQual AUS and dedicated Non-QM Help Team, have solidified NDM as a Non-QM leader by providing industry-leading support to our brokers.” Join Nations Direct for a quick 30-minute webinar showcasing their new Non-QM products as well as a demo of their AUS, DirectQual. Click here to register for Wednesday, 9/25.

Faced with continuous changes in the industry and adopting to their borrowers’ needs, NTFN needed a comprehensive vendor oversight solution to track their 400-plus vendors. With Vendorly, they were able to help solve their vendor management challenges while continuing to deliver first-class service. Learn how with Vendorly can help you realize significant cost savings with our NTFN case study. Contact Steve Greenfield, CMB®, CTPRP at MBA’s Regulatory Compliance Conference to find out how we can help with your TPRM needs.

What are you missing by not turning on Sales Boomerang? Lenders using Sales Boomerang have seen $2.2B in originations in just 8 months! $336 in originations in August alone. Over 100,000 notifications have been delivered to their 62 active lenders in the past 30 days and they have 18 contracts out for signatures. You’ve seen Sales Boomerang on the cover of Banking CIO Magazine this month as the Top Tech Company in 2019 and 10 of the top 16 lenders in the country are either clients already, on boarding or have a contract out. So the only thing you are missing by not working with Sales Boomerang is billions in repeat business, being on the cutting edge of technology and preventing your competitors from stealing your customers. Take the first step and schedule a demo!#noborrowerleftbehind


Freddie/Fannie News

king a 5-30 basis point change last Wednesday morning. One person wrote, “We saw FNMA hit pricing 25-35 bps across the board based on margin management directed from regulator.” This was, of course, reflected in rate sheets. And, as always, ask your Fannie or Freddie rep for details about any pricing questions. But…

Remember that F&F’s overseer, the FHFA, sets guarantee fees which are north of 50 basis points. (As an aside, jumbo loans don’t have Gfees, so have a price advantage in that category.) Prior to the advent of the Uniform Mortgage Backed Security (UMBS), Freddie securities were trading at a discount to FNMA MBS and Freddie was competing by having coupon-level GFee subsidies for their issuers to make up the MBS/Gold PC swap gap. This also became embedded in Freddie’s cash pricing as well. As we neared the rollout of UMBS, despite Freddie securities (Gold PCs) started trading back up near FNMA levels, Freddie kept those subsidies in place, using them to improve pricing and grab market share from FNMA. It worked and their share increased.

Fannie isn’t in business for its health, nor to lose a lot of market share to Freddie. As always, ask your Agency rep, but Fannie supposedly got around the FHFA GFee floor with its own coupon-level subsidies, driving subsidy-adjusted base GFees (not the ones you see reported, which include the converted effect of the LLPA charges, but core GFees) down into the high 30s for a number of sellers. And both F&F, when the market began rallying this year and coupon compression became very significant, left their buyup and buydown grids (including the dynamic internal ones used to calculate cash pricing) at the wider levels. This caused best ex in securitization to favor buyups substantially, where in most coupons the optimal execution became note rates of .750% to the UMBS maximum of 1.125% over the coupon rate, and further stretched their ability to compete (improved their pricing) while still technically being in compliance with the FHFA-dictated G-Fee floors.

It is rumored that the FHFA saw through this artificial manipulation to get around the G-Fees we set, and requested that F&F eliminate the subsidies and have grid ratios move in line with how the MBS market is valuing the interest only (IO) piece/strip.

If this is true, it should be of no surprise if Freddie Mac moves as well. If these are simply profitability/capitalization retention moves, driven by the recent administration proposal, we should expect more in the future. This is no doubt risk to hedging. From a correspondent aggregator’s perspective, it’s an indictment of the viability of the best-efforts (BE) channel, especially given the extremely thin margins that currently exist, and one would expect BE to Mandatory channel spreads to substantially increase in the event that this risk was to persist. Since both core implied G-Fees and buyup ratios clearly moved, and it’s known that at least the former was being actively subsidized, capital markets folks are drawing their own conclusions.

There are a thousand and one opinions about the GSE’s future. Ex-MBA President Dave Stevens’ most recent blog discusses how “recklessness, or simply moving too quickly, is a risk.”

In recent Fannie MaeFAQ of the week” postings, the GSA covered its internal audit requirements, FHA Notice of Material Event – Net Worth and Operating Losses, FNMA Selling Guide Updates for Title Insurer Requirements, and California Consumer Privacy Act.

What is Fannie Mae’s internal audit requirements? The answer is noted in Fannie Mae’s Selling Guide A1-1-01: Application and Approval of Lender, Fannie Mae requires lenders to have “internal audit and management controls to evaluate and monitor the overall quality of its loan production and/or servicing.” Fannie Mae’s Beyond the Guide, outlines key elements of an appropriate internal audit program.

The Fannie MaeServicing Guide 2019-06 update changes maximum allowable foreclosure and bankruptcy attorney fees, implements revised maximum servicing fees for Uniform Mortgage-Backed Securities (UMBS), simplifies bankruptcy notification, and updates document custodian timing requirements.

Freddie Mac’s AIM now includes AIM for Direct Deposit with Paystub which leverages data from Finicity’s Verification of Income and Employment (VOIE) solution in limited release. AIM continues to evolve, creating a speedier process with a responsible and reliable income assessment tool that helps lenders and their borrowers reduce their documentation burden during loan origination. “The addition of VOIE to AIM augments direct deposit information with paystub data and delivers automation that makes the origination process easier, faster and less costly for lenders and borrowers,” said David Fulford, Vice President of Loan Advisor Strategy and Integration at Freddie Mac.


Capital Markets

U.S. Treasuries rallied to close the week, including the 10-year yield closing -2 bps to 1.77 percent, helped along by some renewed trade tensions after it was reported the Chinese delegation canceled a farm visit to Montana and said it would return home sooner than expected. President Trump had said earlier in the day that agricultural purchases would not be enough to reach a trade deal with China, and he wants a complete deal. He added that he doesn’t need to get a deal done before the election. Those pieces of news came after the U.S. Trade Representative office granted tariff exemption for 437 types of products imported from China.

We shouldn’t be so quick to move past all the Central Bank news from last week (though there is more this week, with central bank decisions from RBNZ and Mexico, and minutes from the latest BoJ meeting). Fed officials are still sharply divided on how much the rate cut was needed, considering that the U.S. economy is still pretty robust: unemployment is low, people are spending, and wages are on the rise. On the flip side, more hawkish economists (and President Trump) want the Fed to cut rates more drastically to head off a potential recession. And the threat of said recession is up for debate. St. Louis Fed President attributed his dissent at September FOMC meeting in part to concerns about elevated trade uncertainty, signs pointing to weaker short-term U.S. growth, and inflation running below Fed’s 2 percent target. Boston Fed President Rosengren said his dissent was based on belief stimulus risks inflating risky asset prices, and reiterated additional stimulus was not needed Vice Chair Clarida said the Fed will act as appropriate to sustain expansion.

Speaking of acting as appropriate to sustain expansion, the New York Fed announced that it is going to conduct daily repurchase (repo) operations for an aggregate amount of at least $75 billion each until Thursday, October 10. Additionally, it will offer three 14-day repo operations for an aggregate amount of at least $30 billion each on September 24, September 26, and September 27. The NY Fed will conduct three FedTrade operations in which they will purchase up to $1.589 billion MBS across Classes A, B and C and release a new two-week FedTrade schedule on Friday. And Treasury will auction month-end supply totaling $113 billion in 2-year, 5-year, and 7-year notes and $18 billion 2-year FRN over Tuesday through Thursday.

This week’s U.S. calendar is quite busy, with today being the lightest of the week. The Chicago Fed National Activity Index for August (+.1, slight growth). Later this morning brings Markit manufacturing and service PMIs. There are also three Fed speakers today: New York’s Williams, St. Louis’ Bullard, and San Francisco’s Daly. Economic releases pick back up tomorrow with the FHFA Housing Price Index for July, S&P Case-Shiller Home price Index for July, and Consumer Confidence for September. The midweek session reveals new home sales figures before the Thursday sees Q2 GDP – Third Estimate, Pending Home Sales for August, Advanced International Trade in Goods, Advanced Retail Inventories, and Advanced Wholesale Inventories. The week closes with Personal Income and Spending for August, PCE and Core PCE Price Index for August, Durable Goods Orders for August, and Final University of Michigan Consumer Sentiment for September. The week starts with rates down slightly: the 10-year is yielding 1.70% and Agency MBS prices are better by .125.

Jobs and New Positions

A Dallas, Texas based lender is looking for Inside Loan Officers to work with its Portfolio Clients. This is a six-figure opportunity for self-motivated, service-oriented loan officers to work qualified leads directly from the lender’s servicing portfolio. Candidates should have 2+ years of LO experience, as well as recent call center experience and a valid TX NMLS license. Those with 10 or more state licenses are preferred. Interested applicants can submit resumes confidentially to Chrisman LLC’s Anjelica Nixt for forwarding.

“When you’re breaking records and having historic months like PrimeLending loan officers and branches, you want to shout it from the 40,000 rooftops of our new homeowners. While we’re incredibly proud of our $8 billion funded in retail loans through August and continue to celebrate our hundreds of LOs who have set personal production records this summer, we’re far more than just numbers. We’re about the people behind the numbers. Our dedication to the retail LO is unwavering, which is why the numbers always follow. We’re relentless in our efforts to deliver game-changing tools, technology and support to our team. Our priority is setting our LOs up for success, and that’s why we continue to grow and succeed as an industry powerhouse year after year. If you’re ready to join a company that prioritizes you, PrimeLending is the place to be. Contact Brian Miller to start the conversation.”

“There is a certain energy companies have when they begin to dominate.” Thrive Mortgage is building a major wave of momentum across the country with the addition of another top producing origination team led by Mike Romano, a long-time top producer based in Dayton, OH. “I felt an extraordinary energy when I was vetting my opportunity to join Thrive Mortgage.” stated Romano. “What stood out most was the deliberate focus on perfecting every stage of the loan process to make it as efficient and consumer-friendly as possible. When you can join the best tech with an entire team as passionate about being the best at what they do as I am… it’s powerful!” To find out more about available growth opportunities, visit join.thrivemortgage.com. You can also reach out to Thrive Mortgage directly at Info@ThriveMortgage.com.

PHOENIX has welcomed Doug Mayers as a new SVP of Trading. Mayers brings over 30 years of dedication to the development and execution of liquidity solutions in the secondary market for the mortgage banking industry, and PHOENIX will put his talent to work driving servicing solutions and analytical, advisory, and transactional success with Phoenix clients.

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