Mortgage Lending Surged 38% in 2012 on Refinance Strength

Posted on September 18th, 2013

Last year was a great year to be a loan originator. Next year probably not so much. This year, we’ll see.

In 2012, residential mortgage lending increased by an impressive 38%, compared to volume seen a year earlier, according to Home Mortgage Disclosure Act (HMDA) data released today by the FFIEC.

The agency said it compiled data on 15.3 million home loan applications during the year, of which 9.8 million resulted in loan originations (funded).

That’s an additional 2.7 million closed loans compared to figures in 2011.

The increase was driven by refinance loans, which experienced a 54% increase from a year earlier as mortgage rates flirted with record lows.

Home purchases were no slouch either, chalking a 13% year-over-year gain from 2011 as buyers cautiously fell back in love with real estate again.

Of course, not all types of lending experienced gains in 2012. The popularity of FHA loans continued to decline, with the gov loans snagging a 27% share of first-lien home purchase loans, down from 31% a year earlier.

The market share of FHA loans will probably continue to fall thanks to higher mortgage insurance premiums and insurance that stays in force for the life of the loan.

At the same time, the number of VA loans reported increased 11% from 2011, though their market share held steady at roughly eight percent.

85% of Those Who Refinanced Went the Conventional Route

While government loans continue to play a significant role in the home purchase market, it is conventional loans that continue to dominate the refinance market.

During the year, conventional loans accounted for 85% of all refinances, while FHA and VA loans held much smaller shares, at nine and six percent, respectively.

Still, conventional refis only increased about 51% from 2011 to 2012, while refis backed by the FHA or VA jumped 78% and 90%, respectively.

My guess is that the bulk of the FHA’s share came via its streamline refinance program, which has very few requirements for approval, allowing even those who are underwater to refinance.

CFPB Launches HMDA Data Tools

loan purpose

Number of applications & originations by loan purpose.

loan type

Number of originations by loan type.

The CFPB also released their own HMDA data today, with their focus on first-lien, owner-occupied one-to-four unit family and manufactured homes.

The newish agency noted that the surge in home loan refinance activity varied greatly by region.  For example, in Cincinnati, Ohio, refinance originations were up 47%, while Las Vegas saw a ridiculous 205% increase.

That variance is perhaps attributable to the number of HARP loans processed in Sin City as homeowners who were previously handcuffed by negative equity found a way out through the program.

The agency also revealed that VA lending was huge in metropolitan areas like Gulfport, Mississippi, where 21% of loans were VA, and Fairbanks, Alaska, where 29% of loans had a VA guarantee.

These regions of the country are dominated by military families that can take advantage of the generous lending policies offered by the VA.

In all, there were roughly 18.7 million HMDA records collected from 7,400 financial institutions last year.

Back in 2006, when the housing market was humming, data was gathered from over 8,900 banks, credit unions, and mortgage companies.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.com

IT Jobs; VOE, CRM, Non-QM Products; Conventional Conforming News; CPI: No Inflation Worries

IT Jobs; VOE, CRM, Non-QM Products; Conventional Conforming News; CPI: No Inflation Worries

Here we are in the seemingly 58th week of 2020. What’s new? The podcast of today’s commentary features thoughts from the Millennial host on how lenders can address that market, and it can be heard via Apple, Spotify, or Google: subscribe and download. In terms of news, the FHFA extended forbearance protection past March. (More below on that.) And rating agency Moody’s view is that the CFPB’s recent changes to the QM rules would “allow lenders to qualify more types of loans as QM, resulting in a non-QM market with loans of lower credit quality, since most of today’s higher-quality non-QM loans would qualify as QM under the new rules, making future non-QM more synonymous with non-prime… the rule, if implemented could incentivize some lenders to price riskier loans lower than their true risk in an effort to fall within the new QM rule’s APR threshold. QM status conveys potential benefits to lenders and securitization issuers, such as protection against legal challenges and exemption from securitization risk retention.” More on this below as well, remember, the mandatory compliance date for the revised general QM and seasoned QM definitions is July 1.

Lender and Broker Services and Products

As the rush of mortgages and refis continues to flood the industry, it’s no secret that everyone’s feeling the deluge and leaving valuable loans on the table. At Truework, we know you’re feeling overwhelmed. Here are three things you can do to stop leaving valuable loans on the table, and take advantage of the market so you can come out on top. Truework is a US-based company with an expansive and ever-growing network and a dedicated team of mortgage professionals that are committed to tackling and completing any and all VOE/VOI requests. Additionally, we are the market leader for coverage for small and mid-sized companies. Start a verification on Truework now. Furthermore, with Truework, you can reverify employment for any request within 90 days of the original, receive up-to-date statuses on all verification reports, and get fast turnaround times. And for a limited time, Rob Chrisman readers get 6 free Verifications ($240 value). Let us do the heavy lifting so you can focus on what matters. Reach out to Zackary Green now for questions and to claim this offer.

Attention ClosingCorp and Reggora customers! If you use either of these platforms, you can now order appraisals and check the status of reports directly from within these systems – no need for yet another login. Triserv is fully integrated with both ClosingCorp and Reggora, as well as many other LOS and other technology providers. Triserv is a 50-state AMC that has client-specific, dedicated teams on both coasts offering high-touch, personalized service. To find out more, contact Triserv Appraisal Management Solutions.

Mortgage demand among self-employed and credit-challenged borrowers is still growing, according to Verus Mortgage Capital, the industry’s largest purchaser of Non-QM loan products. Largely ignored by lenders since COVID struck, the consumers demand has not changed. Fortunately, Non-QM guidelines are back to pre-COVID levels and some pricing is actually better, attracting more originators to this business. It’s time to help borrowers who don’t fit into the GSE credit box and who need the flexibility offered by the leading Non-QM investor. For more information about adding Non-QM products to your menu contact Jeff Schaefer, EVP of Correspondent Sales (202-534-1821).

One month into 2021 and Stearns Wholesale is already kicking the new year into high gear with exciting new tech developments! This week, Stearns has reduced its minimum lock duration from 60 to 45 days, reduced the minimum credit score to 620 now allowing up to 90% LTV on its Accelerator program, and removed the COVID cash out adjustment of .375. Stearns has also enhanced its Jumbo Loan Guidelines, which now allows 2nd homes, a max loan amount of $2 million and a minimum credit score down to 700. If you want to learn more about these exciting new product updates or partner with Stearns, click here to be contacted.

It’s a well-known fact that 2020 was a banner year for the mortgage industry. As you look over your 2020 numbers, ask yourself, “is this the best we could have done?” If you’re not working with Sales Boomerang to maximize borrower retention, the answer to that question is, “Nope. You definitely could have done better.” Sales Boomerang notifies lenders when someone in their database is ready for a loan. And the numbers speak for themselves: up to 65% borrower retention and 20-40% average lift to loan volume, all for around $299 per acquired loan — an average 20x ROI. Want more proof? With a loan loss report, Sales Boomerang can show you which competitor took your deal, the loan amount, type of loan, the term and much more. Request yours from Sales Boomerang today to learn how you can keep more of your borrowers.

As industry experts, TMS anticipates 2021 should see a steady rise in mortgage rates, and consequently, the refi faucet slowly turning off (eventually). The purchase market will once again be lenders’ bread and butter, although with slightly modified, post-COVID conditions. TMS CAREspondent has compiled some great tips in its new blog to help lenders prepare for this impending shift. Partner with TMS today.

While there’s no crystal ball capable of showing the industry’s future, MBA Chief Economist Dr. Mike Fratantoni is the next best thing. Join LBA Ware for the first of its quarterly webinar series More Insights, Better Decisions: Michael Fratantoni’s 2021 Mortgage Industry Outlook for a data-packed discussion on the state of the mortgage industry. Drawing on the latest stats, Mike will help you take a data-driven approach to your business decisions this year. Register for the free webinar, which takes place tomorrow, Thursday, February 11, from 1-2 pm ET.

“When people and robotic processes work together, loans get completed faster, error free.” If Elon Musk chose the mortgage industry, that’s how he’d do it. It’s how modern assembly lines achieve maximum efficiency. Yet many loan teams still handle loan files the old-fashioned way with tedious data entry, error-prone, time-consuming communications, and no way to get visibility into what may be at risk of missing critical deadlines. Now imagine an online, ultra-productive, “loan assembly line” that coordinates every step for every loan, actively prioritizes everyone’s tasks and eliminates tedious, routine work in your CRM+POS+LOS. That’s what TeamworkIQ does for $24/user/mo. It makes sure things get done right and get done on time while tracking each loan’s details, documents, deadlines and turn times. Loans get done faster and error free. What if you could 4x your efficiency in under 30 days? See how American Pacific Mortgage did and test-drive TeamworkIQ for free.

Leverage your existing technology ecosystem… it’s paid for!  Service 1st is integrated with multiple LOS and point of sale systems for TRV, SSV, VOE and credit reporting, with more added each year. Keep your team safely engaged and instantly cascade through S1 solutions within your IT environment. Additionally, many originators and lenders experienced significant VOE and credit reporting cost increases as we entered 2021. Have you contacted S1? S1 creates significant value via loan manufacturing efficiencies: Results (verifications and tradeline updates delivered 50% faster than industry benchmarks) without the hefty price tag. No signup fees or minimums.  Get started today with a no obligation price proposal at srv1st.com.

There’s still time to register for XINNIX’s upcoming quarterly Leadership Lessons Webinar: “Beyond the Daily Commentary 2021: A Live Q&A with Rob Chrisman” happening today at 1 PM ET. XINNIX Founder & CEO, Casey Cunningham, will be hosting this live Q&A session likely on topics focusing on exactly what is important to you. Reserve your seat today!

FHFA, Freddie, Fannie News Impacting Borrowers Everywhere

Huh? Freddie and Fannie operated like utilities? Let’s see how that is working out for PG&E and California. Seriously, what if the Administration left the two of them under conservatorship? It would certainly leave industry pundits less to talk about, right?

The Federal Housing Finance Agency (FHFA) extended the forbearance period to 15 months for GSE borrowers. This is an additional three months beyond the previous 12-month limit. Black Knight had reported that nearly 25% of all (not just GSE) active forbearance plans were scheduled to reach their 12-month expiration in March, and another nearly 15% in April. This extension should provide support for troubled borrowers through the difficult winter and early spring months. We view this announcement positively for mortgage credit broadly. In our coverage universe this primarily benefits mortgage insurers and mortgage REITs.

Fannie Mae issued Selling Guide Announcement SEL-2021-01 which includes update information on the verification requirements related to seasonal and secondary income, the seller/servicer post-purchase adjustment (PPA) process to require the use of the PPA form, and the removal of references to lenders authorizing release of MI data.

A recent Compliance Update from First American Docutech discussed Freddie Mac’s announcements in Bulletin 2021-4  regarding CMT-indexed ARM, IRS Form 4506-C, and

authorized change for the uniform Oklahoma Mortgage (Form 3037). And Fannie Mae is retiring CMT Arm Products per FNMA LL-2021-05; more information in Compliance News.

loanDepot’s Weekly Announcement includes the Fannie Mae Appraisal Risk Management Policy Reminders and Resources and updates on FHA Loan Limits 2021. loanDepot has new programs available, smart Term Conforming and High Balance. Information on these programs and updates to its Conventional Lending Guide are discussed in this Announcement.

PRMG announced the expiration of QM Points and Fees Cure Provision on covered transactions with consummation dates after January 10. Impacted loan programs include Conventional (Fannie Mae and Freddie Mac), FHA and USDA. Lenders or assignees will no longer be allowed the option to cure the transaction and bring it into QM compliance when the total points and fees exceed the applicable limits.

Plaza Home Mortgage offers Fannie Mae HomeStyle® and Freddie Mac CHOICERenovation® loan programs. Download Plaza’s flyer for more information. In alignment with Freddie Mac Bulletin 2020-45, Plaza has updated the Home Possible® program guidelines, effective for all loans purchased on or after March 1, 2021. Specifically, this update reduces the maximum LTV from 95% to 85% for certain Home Possible Mortgages secured by 2-4-unit properties.

COVID tolerances have been extended on Flagstar Bank Conventional Products. Read Memo 21011 for details.

MQMR addressed how internal audit policies and procedures can meet federal and agency requirements. It discussed Fannie Mae’s release of several checklists as part of their Seller/Servicer Risk Self-Assessments, including the Internal Audit checklist. Internal audits are an important risk mitigation tool that uncover operational inefficiencies and potential areas of risk within a lender’s organization. For that reason, it is important for sellers/servicers to know that their Internal Audit policies and procedures satisfy federal and agency requirements and are effective for identifying risk. The article provides a list of requirements for an internal audit self-assessment checklist.

MQMR also spoke to the best practice of requiring outsourced service providers, such as contract underwriters and processors, to be checked against exclusionary lists. While the practice may not always be feasible to do, particularly if the lender is not made aware of the individual contract underwriter’s/processor’s name by the third party service provider that employs them, the article provided a summary of Agency guidelines on this issue from Fannie Mae Selling Guide Chapter A3-3, HUD Handbook 4000.1, Chapter II, A, 1, iii, and Freddie Mac Seller/Servicer Guide Chapter 3101.

Capital Markets

Our economy is driven by jobs and housing, and it is worthwhile to take another look at the employment numbers last week to keep things in perspective. After falling 227,000 in December, nonfarm payrolls increased a mere 49,000 in January disappointing many analysts who were expecting a more robust number. But thanks in part to a drop in the labor force, the unemployment rate fell from 6.7 to 6.3 percent. The U-6 unemployment rate, which includes those marginally attached to the labor force as well as those who are working part-time but prefer to be working full-time, declined. And initial claims for unemployment have been slowly declining and February’s outlook remains positive. Claims are still well above pre-recession levels and still largely affecting those in their prime working years. On top of that, U.S. manufacturing continues to improve according to the latest ISM Manufacturing Index. Inflation? Commodity prices rose nearly across the board for the month. Services also continued to expand but arts/entertainment/recreation, education services, and retail trade continue to struggle in the face of the ongoing pandemic.

Looking at rates Tuesday, Treasuries yields rose marginally across longer durations and the MBS basis ended Tuesday tighter, particularly on higher coupons as investors weighed the latest on stimulus, earnings, and vaccination efforts, trying to determine whether letting the economy run hot will spark destabilizing inflation. The day’s $58 billion 3-year note auction was met with solid demand ahead of today’s $41 billion 10-year Treasury note auction results.

Today’s economic calendar is already underway. Mortgage applications decreased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 5. 30-year mortgage rates remained near their cycles lows during the reporting period (2 7/8). We’ve also had January Consumer Price Index (+.3 percent, as forecast, much of the gain due to gasoline, the core rate was unchanged). Coming up are December wholesale inventories and sales, remarks from Fed Chairman Powell on the “State of the US Labor Market” before the Economics Club of New York, and the January budget deficit from the Congressional Budget Office. Today’s Desk purchase schedule is the largest of the week at $8.8 billion over three operations, including over $7.3 billion in UMBS30s. We begin the day with Agency MBS prices unchanged and the 10-year yielding 1.15 after closing yesterday at 1.16 percent after the CPI data reminded us that inflation is currently not an issue.

 

Employment

“OpenClose continues to experience record setting growth while bank, credit union, and mortgage lender demand for our award-winning digital lending ecosystem is booming. This success makes available exciting opportunities for experienced mortgage banking and innovative software professionals to join the OpenClose family. We are seeking qualified and energetic professionals to join our implementation team as a Mortgage Software Implementation Specialist. The specialist will be responsible for the implementation of new customers and work with existing customers providing business + channel + user analysis, workflow evaluation, application setup and optimization of installations of our Web-based, enterprise-level mortgage software platform. Notable is that OpenClose is a 100% browser-based platform and can largely be implemented remotely. Minimal travel, if any, is involved in this position. Come see why OpenClose has received the Top Mortgage Employer award four years running. This and other opportunities can be accessed at Join the OpenClose Family!”

STRATMOR Group is anticipating a significant uptick in Merger and Acquisition activity in 2021. As a follow up to its recent open-position post, STRATMOR is seeking a professional with at least two years of hands-on M&A or Private Equity experience. This is a junior level position that will benefit from STRATMOR’s extensive experience in this industry. Employees of STRATMOR enjoy working at a company that has successfully managed remote work for decades and continues to grow in importance in the market. Specifically, this new hire will assist the STRATMOR team with tracking the M&A deal pipeline, generating interest with new M&A candidates, and creating Confidential Information Memorandums (CIMs), and financial models. If you are looking for an exciting new position with a highly respected mortgage consulting firm, then drop STRATMOR a note.

 

Source: mortgagenewsdaily.com

A purchase mortgage is an opportunity, not an obstacle

Change is coming.

Very recently, the U.S. 10-year Treasury yield touched 1.187%. In spite of a great, albeit volatile, year for many investors, there are plenty of indicators suggesting inflation will make some kind of return later this year. We have a new administration, which may have a very different approach to the market than we’ve seen for the past four years. And yet, the mortgage and housing industry is still feeling the positive effects of a historically profitable 2020.

It won’t last forever. Nor will historically low interest rates.

It feels like we’ve been experiencing a refinance wave for 20 years. Thanks in no small part to Federal Reserve policies leading to unbelievably low interest rates, originating refinance mortgages has become one of the easiest and most profitable ways to mortgage lending success. Many of our industry’s newer or youngest professionals can’t even remember what a true default cycle or purchase cycle looked like. And when, for just a moment, we anticipated the rise of a purchase cycle around 2018, it was almost as if the sky were falling.

Once upon a time, ours was an industry that could thrive through multiple cycles. We simply anticipated them and prepared. But now, I’m seeing and hearing too many who believe that the inevitable end of the refinance surge will mean difficult times.

Challenging? Yes. But the opportunity for profitability and success would remain. I’d argue, in fact, that a purchase market is an excellent way for the best-prepared lenders to differentiate from the competition and grow market share. Some of us seem to have forgotten that.

It’s time for those who truly fear the cyclical nature of our industry to toughen up. A purchase market means opportunity, but only if you’re willing to put the work into it. We have become an industry that’s far too dependent on federal interest rates. And why not? Every time we think this cycle has run its course, yet another spark comes along to prod even another round of refinancing. It’s not sustainable, but that doesn’t mean the mortgage industry should fall on hard times when it does end.

An impending purchase mortgage market is not the ominous sign some make it out to be. It’s simply a signal to shift gears. Is a purchase mortgage as profitable as a refinance? Of course not. Can a smart business do exceedingly well in such a market? Of course. Remember, we saw interest rates around 16 percent in 1981. And yet, the best prepared lenders still sold mortgages. They even made a profit. And their weaker competitors disappeared.

Part of the challenge may be that we’ve grown to overvalue “process.” One could argue about how well the mortgage industry has done to streamline our process, but the fact remains that a refinance mortgage is more process-oriented than the traditional purchase mortgage. It’s less messy. There are fewer actors. Fewer variables. The borrower is far less emotional. There are far fewer surprises or unexpected occurrences impacting the transaction — like a lower-than-anticipated appraisal or a bad home inspection. It’s easier to predict and cheaper to produce. What originator wouldn’t love that?

That doesn’t mean, however, that we should be battening down the hatches when purchase mortgage volume rises. Even though the mortgage world is (rightfully) working toward a better production process with the use of technology and automation, this will always be a people-focused transaction, especially on the residential side. It costs more to ramp up staff and marketing. That’s simply an investment. We can also use emerging technologies to ease the cost and shorten the time it takes to make that transition. Just because it’s less predictable to get out into the marketplace with real estate brokerages and borrowers doesn’t mean it’s not worth it. Good businesses take qualified risks. Sure, it’s a little messier when we have to juggle vendors and partners; communicate with them and collaborate on the closing. Yet, at the heart of it, that’s really what mortgage lending is all about, isn’t it?

It’s time for us to stop treating the purchase mortgage as some kind of market impediment or red flag for our forecasts. It’s not time to cut costs, hunker down and wait for the next refinance cycle. The great lenders will have long since passed you by. Instead, let’s get back to our industry’s basic purpose and prepare to meet that challenge. There’s still a lot of success to be had, and a lot of people to put into homes.

Source: nationalmortgagenews.com

Ask The Expert: More Thoughts On Refocusing on Purchases

In my last column, Cheryl from Florida asked about refocusing on purchases in 2021. Here are some additional insights.

Dave Hershman

As a reminder, here is Cheryl’s question: “I read the forecast by the MBA which says there will be less refinances [in 2021]. I have been doing mostly refinances and I have no idea how to get back to focusing on purchases. What do you recommend?”

In my last column, I wrote about the importance of diversification in any market. There will be refinances in 2021 and every year, though the balance will change from year-to-year.

Going back to focusing on the purchase market, the next question is: are you rekindling agent relationships you have neglected or expanding by developing new relationships? Again, in this regard I am going to recommend diversification. That means that you need to work in both directions.

If you have ignored your agents during the refinance boom, I will quote Martin Luther King, Jr.: “The time is always right to do what is right.”

You may feel uncomfortable calling someone you have not called in 18 months, but you must do so anyway. However, doing what is right is not calling and asking for their business–“Hey, I know we have not talked in 18 months, but do you have any deals for me?”

But, it is always the right time to call and get caught up. Reestablish the relationship first. Find out how they are doing and what their challenges are. That conversation may lead to business or it may build a foundation for the future.

Regarding meeting new agents, this is where you leverage your sphere. Everyone you know also knows a real estate agent or two. Your neighbors, your family, the professionals you use and more. You should not be cold calling agents if your next-door neighbor knows an agent and can introduce you. You have a sphere. Leverage that sphere. This is networking at its highest level.

Moving to the last point, establishing agent relationships is not enough, you must have a value proposition. And to get to that we must first define the term value. In order to be labeled valuable, your offering must be different.

If you are offering the same things your competition is offering, then there is no inherent value. Think of a rare coin. The value is in the rarity. If a million of the same coins were discovered tomorrow, the value of that coin will fall. If your offer is great rates, service or products, the offering will not be different. How many loan officers approach an agent and say “use me, but keep in mind I deliver lousy service?”

Secondly, value must be in line with the interests or goals of your target. It can’t be what you are interested in. For example, your clients are not interested in mortgages. They are interested in real estate. No one gets up in the morning on Saturday and says to their spouse “let’s go look at mortgages today.”

And your agents are not interested in loans either. They are interested in bringing in more business. Just like you. It is all about increasing their income.

How might you help your agents increase their income? There are a multitude of ways and, in a future article, I will give an example that illustrates a common loan officer offering and making it unique, as well as being more on target with regard what your agents are really interested in.

Dave Hershman is Senior VP of Sales of Weichert Financial and the top author in the mortgage industry. Dave has published seven books, as well as hundreds of articles and is the founder of the OriginationPro Marketing System and Mortgage School – the online choice for expert mortgage learning and marketing content. His site is www.OriginationPro.com and he can be reached at dave@hershmangroup.com.

Source: themortgageleader.com