Loan origination

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Goldman analysts lowered their 2008 earnings estimate for JP Morgan Chase to $3.30 from $3.44 yesterday after the bank warned investors it could lose $450 million on home equity loans during the first quarter alone, according to a report by Marketwatch.

Last quarter, Chase reported $248 million in write-offs tied to home equity loans, up from $150 million in the third quarter and $51 million in the fourth quarter of 2006.

The net charge-off rate climbed to 1.05 percent in the fourth quarter from 0.65 percent in the third quarter, more than quadrupling the 0.24 percent rate in the fourth quarter of 2006.

Now factor in plummeting home prices and high loan-to-value ratios and you’ve got a huge problem, especially with “walking away” becoming all the rage these days.

Chase attributed the escalating losses to an over-reliance on Fico scores and underlying property values, along with layered risk and direct vs. indirect loan origination channels.

About a month ago, the New York-based bank reduced the maximum loan-to-value on second mortgages via the wholesale channel to 85 percent in many areas, while stamping out loans at or above 100% LTV.

According to a slide from Chase’s Investor Day presentation held on Wednesday, the bank originated $48.3 billion in home equity loans in 2007, a slim decline from the $51.9 billion originated in 2006 given the high-risk environment.

And as of the end of January, Chase still had $15.2 billion in CMBS exposure, $6.3 billion in Alt-A exposure, $2.4 billion in subprime and subprime CDO exposure, and $5.4 billion of CDO warehouse and unsold positions.

Shares of Chase were off $1.52, or 3.58%, to $40.92 in late trading Friday, not far from their 52-week low of $37.66.

Below is the delinquency rate chart for home equity loans in Chase’s portfolio:

(top photo: celinet)

Source: thetruthaboutmortgage.com

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Mortgage fraud prevention company Rapid Reporting said today in a press release that the usage of its income verification product increased by 157 percent between January 2007 and last month as the industry continues to tighten its grip on loose lending practices.

The company noted that the surge in usage comes at a time when loan origination is down, indicating that both mortgage lenders and investors are stepping up efforts to reduce mortgage fraud and make higher quality loans.

“Our clients are using IncomeChek with much higher frequency–we’re definitely seeing higher per-client usage,” states Jay Meadows, CEO for Rapid Reporting. “Some of our clients, including most of our large lenders, have increased their use of IncomeChek almost two-fold.

“It’s not only lenders that are using income verification these days,” added Meadows. “Wall Street, secondary market investors and servicers are looking for explicit reassurance of loan quality as well.”

The IncomeChek program can pull income data directly from the IRS in as little as 24 hours, and for stated income loans it can confirm that tax filings are reported by a self employed individual and provide the social security number of the tax preparer.

Meadows noted that over 60 percent of mortgage fraud involves income or identity misrepresentation, and that law enforcement is becoming progressively more reluctant to take action if lenders fail to take the necessary precautions to protect themselves from fraud.

The FBI doesn’t seem interested in borrower fraud where applicants intend to actually pay the loan, as they’re more focused on fraud for profit schemes that they feel have a more adverse effect on the economy.

“Whether dealing with full doc or stated doc loans, lenders, investors and servicers have realized that it’s simply too risky to rely solely on income information provided by anyone other than a neutral third party.”

Hmm…

(photo: tisue)

Source: thetruthaboutmortgage.com

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Are you considering refinancing your mortgage, but hesitant about the high cost of closing? A no-closing-cost refinance may be the solution for you.

In this article, we’ll explain what a no-closing-cost refinance is, how it works, and the benefits and drawbacks of this type of mortgage refinance. We’ll also go over the qualifications and the process of getting a no-closing-cost refinance, so you can decide if it’s the right choice for you.

What is a no-closing-cost refinance?

In short, it’s a mortgage loan that offers homeowners the option to refinance their mortgage without having to pay initial fees to lenders.

Closing costs usually pay for lender fees as well as loan origination fees, third-party expenditures, appraisal fees, and underwriting and processing costs. Refinance lenders also take on costs that originate from third parties, including escrow and title costs.

With a no-closing-cost refinance, you potentially save money on closing costs, lower your monthly payment, and build equity in your home faster.

It’s certainly tempting and may be the right choice for certain types of borrowers. However, those closing costs saved are costs added to the loan amount that you’ll eventually have to pay back.

How does a no-closing-cost refinance work?

The application process for a no-closing-cost refinance is similar to that of a traditional refinance. You’ll need to provide financial information and documentation to the lender, and they will run a credit check. Once the mortgage lender approves your application, the refinance process can begin.

You may be wondering how the lender makes money on a no-closing-cost refinance. The lender recoups their costs by charging a slightly higher interest rate on the loan. This way, they can potentially make more money in the long run, even though you don’t pay any closing costs up front.

Pros and Cons of No Closing Costs

Having no upfront closing costs comes with a range of both advantages and disadvantages. The idea of skipping the closing costs and fees upfront may be appealing, or even right for you.

However, it’s still important to consider the various ways it may affect your financial situation next month, next year, and next decade. Here are some pros and cons:

Pros

  • Upfront savings: The most immediate benefit of a no-closing-cost refinance is the elimination of substantial upfront fees. This can be particularly advantageous for homeowners who may not have the liquid assets to cover these costs at the time of refinancing. It allows for the conservation of cash that could be used for other pressing financial needs or opportunities.
  • Simplified financing: This type of refinance simplifies the financial burden for homeowners. It removes the hurdle of saving for and managing large, one-time closing costs. This is especially helpful for those with limited disposable income or those facing unexpected financial challenges.
  • Quicker break-even point: For homeowners planning to move or refinance again in the short term, a no-closing-cost refinance can be financially advantageous. By not paying closing costs upfront, they can reach a break-even point more quickly, especially if they sell the home or refinance before the added costs accrue significantly.

Cons

  • Increased long-term cost: While there’s an immediate saving on closing costs, this type of refinance often results in a higher interest rate or a larger loan balance. Over time, this can lead to significantly higher interest payments. Homeowners should carefully consider the long-term financial implications, such as how the increased loan balance or rate will impact the total interest paid over the life of the no-closing-cost loan.
  • Higher monthly payments: Due to the higher interest rate associated with a no-closing-cost refinance, homeowners might face higher monthly payments. This increase can strain monthly budgets, especially for those who are already managing tight finances.
  • Reduced home equity: Rolling closing costs into the loan balance can reduce the amount of equity a homeowner has in their property. This is a critical consideration for those who may need to leverage home equity in the future for other financial goals or emergencies.

How to Qualify for a No-Closing-Cost Refinance

When it comes to qualifying for a no-closing-cost refinance, the eligibility requirements are similar to those of a traditional refinance. Your lender will look at your credit score, income, and debt-to-income ratio to determine if you qualify.

To improve your chances of being approved for a no-closing-cost refinance, and potentially lower your monthly payment, it’s a good idea to make sure your credit score is as high as possible. You should also have a solid income and a low debt-to-income ratio, which lenders assess to determine your ability to manage the monthly payment. Additionally, having a good track record of paying your bills on time can also help.

Once you have determined that you are eligible for a no-closing-cost refinance, you need to compare different options to determine which one will be the most cost-effective for you in the long run. Be sure to consider the interest rate, fees, and overall costs of each option before making a decision.

Finding Lenders Offering No Closing Cost Refinance

When considering a no-closing-cost refinance, finding the right lender is a crucial step. Different lenders offer varying terms and rates, so it’s important to conduct thorough research to find the best option for your financial situation. Here’s a guide on how to find and compare lenders for a no-closing-cost refinance:

  • Start with your current lender: Your existing mortgage lender is a good starting point. They may offer competitive refinance options to retain your business. Ask about their no-closing-cost refinance options and compare these with what you might find elsewhere.
  • Research online: Many lenders provide details of their refinance products online. Use mortgage comparison websites to gather information on various lenders’ offerings. These platforms often allow you to compare rates, terms, and fees side by side.
  • Check with local banks and credit unions: Local financial institutions sometimes offer better terms to members or local residents. Visit or call your local banks and credit unions to inquire about their no-closing-cost refinance options.
  • Consult mortgage brokers: Mortgage brokers have access to various lending sources and can often find deals that may not be widely advertised. They can help you navigate through different offers and identify the most cost-effective option.
  • Consider online lenders: Online mortgage lenders can be a viable option as they often have lower overhead costs, potentially translating to better terms or lower rates. However, ensure you research their reputation and customer service record.

Understanding the Details of No-Closing-Cost Refinancing

Before you get excited about not paying anything upfront, sit down with your lender to discuss all the details. Be sure to keep an eye out for the following details:

  • Some loans are not actually “no cost”
  • Some loans solely cover lender fees, while others may cover all expenses, including third-party costs
  • Home loans differ from lender to lender, so it’s important to shop around
  • Lenders may pay different interest rates and costs on your behalf. Find out all the details before you commit.
  • Consider all the costs: title and appraisal, lender fees, credit report fees, escrow, home inspections, mortgage points and other third-party fees

Is a no-closing-cost refinance right for you?

Deciding on a no-closing-cost refinance requires weighing your immediate financial needs against the long-term effects on your mortgage. This option is attractive for its low initial fees, but understanding its overall impact is essential. For those planning to move or sell their home shortly, saving on upfront costs can offer immediate financial relief. It’s an appealing choice if staying in your current home isn’t part of your long-term plan.

However, a no-closing-cost refinance usually translates to a higher loan amount or increased interest rate, affecting the total cost over time. If you’re several years into your mortgage, like 10 years into a 30-year loan, the added expense from higher interest rates can surpass the benefits of initial savings.

Before deciding, it’s important to calculate how this choice will affect your monthly payment and compare the overall costs with those of a traditional refinance. Shopping around for the best deal is crucial to align this financial decision with your overall goals.

A Closer Look at No-Closing-Cost Mortgage Deals

Now that you understand the positives and negatives of selecting a no-closing-cost refinance, here’s an example of how these loans may play out in a lending setting:

For example, you may be charged $4,500 in closing costs, the average cost for homeowners today. If you choose to pay this out of pocket, the $4,500 cost will remain static as a one-time charge.

On the other hand, if you skip those fees, that sum will be rolled into your mortgage bills each month over the duration of that loan. Over 30 years at 4.125% interest, the borrower will eventually pay a total of $7,851.

Meanwhile, over the course of five years, the borrower will wind up paying $6,000 after initially skipping the $4,500 closing fee.

Whether this is worth it or not is entirely up to you. If you’re planning to sell your home within the next couple of years, the immediate savings may be worth it for you to pay a bit more over two years.

You can take that saved money to invest in repairs, remodels, realtor fees, and other associated costs that accompany selling a home. Moving a home quickly on and off the market can save you other costs that make this type of loan right for you.

How to Spot a Bad No-Closing-Cost Refinance Deal

No-closing-cost loans are each different from one lender to another. By seeking different opinions and home equity options, you can ensure that you’re getting a good deal. Here are a few warning signs to look out for:

  • The loan is called “no cost” but it turns out you’ll have to pay for appraisals, title fees, escrow, property taxes, insurance, and prepaid interest.
  • The loan is called a “no lenders fee loan,” which means the bank will only cover just that—lenders fees, and nothing else.
  • Carrying out a refinance through a mortgage broker, who then adds on a lender credit, further increases your interest rate.
  • A bank uses “bundles” that tack on closing costs on top of the cost of the loan. These bundles further increase the size of the loan, as well as the interest rate, leading to a higher monthly payment over time.

Be aware of potential red flags and take your time when considering any type of home loan. This is especially true if the terms of the loan are unclear, and you are feeling pressured to make a decision before fully understanding the details of the loan. It’s always better to be cautious and well-informed before making a commitment.

5 Tips for Negotiating No-Closing-Cost Refinances

Negotiating the terms of your no-closing-cost refinance is crucial in securing a favorable deal. Focus on these effective strategies:

  1. Conduct thorough market research: Understand the current market rates and terms from various lenders. This knowledge positions you as an informed borrower, giving you an edge in negotiations.
  2. Leverage your creditworthiness: If you have a strong credit history, use this as a bargaining chip. Lenders may offer better terms to borrowers who present lower credit risks.
  3. Discuss customization options: Each borrower’s situation is unique. Talk to your lender about tailoring the refinance terms to suit your specific financial needs and goals, especially if you plan to stay in your home for a long time or move soon.
  4. Be prepared to walk away: If the terms offered don’t align with your needs, be ready to explore other options. Showing your willingness to consider other lenders can motivate your current lender to offer better terms.
  5. Review the final offer thoroughly: Ensure that all negotiated terms are clearly included in the final offer. A careful review before agreeing can save you from unexpected terms or conditions.

By applying these strategies, you can effectively negotiate and secure a no-closing-cost refinance that aligns with your financial objectives. Remember, your aim in negotiation is not just to lower costs, but to find a deal that supports your overall financial strategy.

Frequently Asked Questions

What are the average closing costs for a refinance?

The average closing costs for a refinance can vary depending on the location, property type, and loan type. Typically, closing costs for a refinance can range from 2% to 5% of the loan amount.

For example, on a $200,000 loan, the closing costs can be anywhere from $4,000 to $10,000. These costs include the loan origination fee, appraisal fee, title search and insurance, and other miscellaneous fees.

Can you negotiate closing costs on a refinance?

Yes, it is possible to negotiate closing costs on a refinance. While some costs, such as the appraisal fee or title search, are set by third-party providers and cannot be negotiated, other costs such as the origination fee or lender’s title insurance can be negotiated with your lender.

Here are a few strategies to negotiate closing costs on a refinance:

  • Shop around: Compare offers from multiple lenders and negotiate with them to see if they can lower or waive certain fees.
  • Timing: Closing costs tend to be lower during slow periods for the housing market.
  • Ask for a credit: Some lenders may offer a credit towards closing costs in exchange for a slightly higher interest rate.
  • Be prepared to walk away: If a lender is not willing to negotiate closing costs, it may be best to look for another lender that is more willing to work with you.

When would a no-closing-cost refinance be a bad idea?

A no-closing-cost refinance may not be the best idea in certain situations. Here are a few reasons why a no-closing-cost refinance may not be a good idea:

  • Short-term ownership: If you don’t plan to keep your home for a long time, you may not be in the house long enough to recoup the costs of the refinance.
  • Not enough equity: If you don’t have enough equity in your home, you may not be able to qualify for a no-closing-cost refinance.
  • Higher interest rate: If the interest rate is higher than the rate you already have, it typically does not make sense to refinance.
  • Limited budget: if you’re tight on budget, and the higher interest rate on the no-closing-cost refinance will put you in a difficult financial situation, then it’s not a good idea.

Source: crediful.com

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Merrill Lynch is reportedly shutting down its wholesale mortgage unit First Franklin, according to a report by CNBC.

Although it’s unclear how many of the thousands who used to work there are still employed, the report said roughly 400 to 500 could lose their jobs.

First Franklin began as a retail brokerage in San Jose, California in 1981, transitioned to a mortgage lender in 1984, and was later sold to National City in 1999.

In 2003, the company began offering 100% loan-to-value single-lien mortgages and other higher-risk loan programs, reaching $29.6 billion in loan origination volume in 2005, and a year later Merrill Lynch picked it up for $1.3 billion.

However, Merrill acquired First Franklin in December 2006, just when serious problems in the mortgage market began to surface, leading to substantial losses at the brokerage house and the eventual ousting of its CEO Stan O’Neal.

Last September, First Franklin cut an unknown number of jobs so staffing levels would be in line with their volume of business.

Around that same time, there were scores of rumors that First Franklin was actually firing staff that failed to meet performance goals, despite dismal industry loan volume that would be dealt with more appropriately through layoffs.

It’s unclear what operating levels were like recently, but it’s doubtful that the closure will have a significant impact on the industry given separate accounts that claimed the company was running on a severely reduced staff.

After the crisis hit full swing, First Franklin reduced its subprime offerings, and began focusing on Alt-A, although they still had programs for Fico scores below 600.

There is no notice on the First Franklin website at this time, and Merrill Lynch declined to comment when reached by the press.

Check out the latest list of closed lenders, mortgage layoffs and mergers.

(photo: span)

Source: thetruthaboutmortgage.com

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Editor in Chief Sarah Wheeler sat down with Kenon Chen, executive vice president of strategy and growth at Clear Capital, to talk about appraisal modernization and how technology is just part of the solution.

Sarah Wheeler: What are some of the biggest challenges right now?

Kenon Chen: The challenge that’s in front of everyone continues to be the market itself, and then housing affordability. With mortgage rates continuing to remain high and home prices remaining high because of low supply, we’ve had another year of a reduced market. It’s difficult for lenders who don’t have a lot of extra cash to invest in making big changes right now — they need to stay focused on running their business in a smart way. But that’s why I think it’s really on solution providers like us to run ahead and create great opportunities that don’t require a lot of extra work and time and investment.

For us that means really simple APIs that are easy to integrate with, providing flexible options for how lenders can consume the products. That’s also making sure we’re partnering with the ecosystem to solve problems before the lender even asks for it and working with partners to make sure they can consume these products within the solutions they’re already using. That’s been a big part of the focus: getting the whole ecosystem to work together better so it doesn’t put all the onus on lenders to have to integrate a lot of different places to just get one solution together.

SW: How are appraisers adapting to some of these challenges, including new rules on valuations from the GSEs?

KC: Change is always hard. The GSEs implemented a number of policy changes that are an evolution from what appraisal has been for decades. So now we have multiple risk-based options: waivers, waiver plus property data, desktop appraisals, hybrid. Lenders and appraisal companies have a lot more menu options and their tech choices have to take them down the right path.

We’ve invested in the property data collection process and scaled it for a national level with mobile tech to capture all of the data right at the site. We’re using computer vision, AI, to capture the whole property into the space. We’re creating a digital twin and bringing the property into the digital realm, building a formation model and driving from that place as opposed to starting from a clipboard.

That’s required changes for everyone involved and we’ve been rolling that out as the market change happened at the same time. We see lenders really looking to the future and preparing for when volume returns — investing now to have a competitive edge in the future.

SW: How hard is it to change the way valuations are done at a fundamental level?

KC: Many lenders’ loan origination systems are really just providing a document repository and maybe some screens. But what ends up happening is that underwriters have to open up a lot of different documents, go to a lot of different sites. And one, that’s inefficient, but two, I think there’s something powerful about aggregating all the data first, running models on it, and then bringing back findings that focus underwriters where they need to look.

Most lenders’ loan origination systems are not designed to do that, for collateral especially. That’s been an area that’s a lot more PDF-based, because you have a PDF-based appraisal, you have a PDF base SSR. So that’s why we’ve invested a lot in a tool with an API that you can bring all your findings in at one place, as well as underwriting tools that put the right information in front of the right person at the right time. But all of that takes years of investment to create something that is really battle tested and can have proven results.

SW: Is the end goal of appraisal modernization to replace appraisers?

KC: The GSEs say all the time that they didn’t redesign these processes to replace appraisers, but to add more objectivity to the process, to create efficiencies in the process. Regardless of the tech used, there are human eyes reading, observing and looking at the data or a model, but starting with objective truth about the subject property is essential. And having a process that’s repeatable and standardized and consistent in every community — that’s where tech really helps.

We’ve been able to roll out standards through our mobile app that guides appraisers so that they’re grabbing the same data in the same way at every home. The evolution of mobile tech and AI and then greater connectivity when it comes to APIs to bring that data to people at their desks is what’s allowed us to approach this differently and do it at scale.

SW: Getting accurate square footage and floor plans has been a thorn in the side of the GSEs and agencies for years. Is that now solved?

KC: We went shopping for a solution back in 2016. There was a refi boom in Oregon and Colorado and appraisals were taking six weeks at the time. There was so much pain caused by elongated turn times — borrowers having to live In hotels when they were in between properties. We thought there has to be a better way.

Looking at the amount of time just driving, a time study showed appraisers were spending sometimes 30-40 hours a month just driving. Instead, we wanted to bring homes to the appraiser. We tried everything but we didn’t find anything that scaled to where anyone could do it with a mobile phone. Then we discovered CubiCasa and it actually worked. We had a partnership that led to acquiring the company. It’s now been adopted by real estate agents, brokers, photographers. We have about 30 Multiple Listing Services who have partnered with us as well.

MLSs want more accurate data and public records not always up to date. CubiCasa provides better data, shortening the days on market for the property. Consumers can really understand the property before they visit. It’s really rare that an app helps both the real estate process and the mortgage process and also makes secondary investors more comfortable. 

SW: What keeps you up at night?

KC: Tech is always changing. And the conversations around generative AI have captivated the industry because seeing how fast things are changing and how fast these new capabilities are coming is now a lot more visible. So it’s always necessary to innovate, but in a way where you’re not introducing risk into the system. For us, it’s always about innovating in a thoughtful way, not just to try the new thing for the sake of trying a new thing, but making sure it really will have the outcome, the benefits we’re looking for and that it can be really useful to our clients.

Source: housingwire.com

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Citi said today that it plans to reduce its residential mortgage assets by a whopping $45 billion within the next 12 months while cutting the amount of new loans to be held in its portfolio by more than 50 percent.

The flagging bank also plans to integrate virtually all aspects of its U.S. mortgage operations under the CitiMortgage brand, moves the company believes will lead to roughly $200 million in annual savings to free up much needed capital.

CitiMortgage, Citi Home Equity and Citi Residential Lending will all fall under this umbrella, offering a single set of loan programs and “staffing levels that reflect market and economic realities.”

Not sure how many layoffs that equates to, but it’s sure to be several hundred if not more given the sheer size of their operations.

“Consistent with the key priorities of Citi Chief Executive Vikram Pandit, this end-to-end realignment will create a simplified and streamlined organization that is more sharply focused on clients and able to direct resources to the business lines and customer segments with the highest growth potential,” said Bill Beckmann, President of CitiMortgage Inc., in a statement.

“At the same time, these changes will enable us to manage the business unit’s capital for enhanced returns.”

Additionally, the New York-based bank and mortgage lender said it would cut back on portfolio lending dramatically, with plans to increase agency-backed lending to 90 percent of production by the third quarter, up from 65 percent in 2007.

Citi also intends to make sure its capital markets unit Citi Markets & Banking has a large hand in determining which products and pricing are available to consumers, perhaps to avoid any snafus this time around.

To that effect, the loan origination process will also be revamped to ensure higher loan quality, with pullbacks in areas like second mortgage lending, higher fico score requirements, lower maximum loan-to-value ratios, and more direct-to-consumer lending (bye mortgage brokers).

CitiMortgage already reduced third party second-lien lending by more than 90 percent from a year ago, and said it will only work with top quality (profitable) brokers.

The mortgage unit has also stamped out loans on 3-4 unit investment properties, eliminated short-term adjustable-rate mortgages, and ditched home equity loans for borrowers with poor credit.

Shares of Citi fell 98 cents, or 4.42 percent, to $21.17, hitting a fresh 52-week low during the session.

(photo: dogbomb)

Source: thetruthaboutmortgage.com

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With the mortgage crisis in full swing, you never quite know what will happen next, especially as the situation continues to threaten markets worldwide.

That brings us to one of the latest victims of the credit crunch, a familiar name in an unfamiliar place.

GMAC Mortgage and Atlas Funding, both subsidiaries of GMAC’s finance unit ResCap, announced that because of ongoing problems in the credit markets, they would be suspending loan origination in the Netherlands indefinitely.

“GMAC Mortgage and Atlas Funding can reconsider this decision if market conditions improve in the future,” the companies said in a statement, obtained by Reuters.

It is believed that recent troubles in the mortgage securities department forced the company to make the decision, as the unit could no longer securitize its mortgage loans.

Per the Dutch paper Financieele Dagblad (which I’ve translated with Google), the companies halted the issuing of new mortgages on Monday after aggressively building up a 4 percent market share in the country.

The paper said the mortgage lenders provided loans to 50,000 Dutch homeowners and would continue to service existing mortgages despite the halt in new production.

ResCap has seen its share of problems over the last year and change, recording a $4.35 billion loss for all of 2007 while cutting 3,000 jobs, or roughly 25 percent of its workforce.

Last month, parent GMAC said it had no plans to inject additional capital into ResCap and was actively pursuing strategic alternatives for the money-losing unit, including a possible sale of all or parts of the unit.

ResCap includes a number of large brands worldwide, including Homecomings Financial, Ditech, GMAC-RFC, GMAC Mortgage, and GMAC Bank.

(photo: caswelltom)

Source: thetruthaboutmortgage.com

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CUSO Home Lending rolled out Dark Matter Technologies’ Empower loan origination system (LOS) for its credit union owners. 

CUSO Home Lending — a lender owned by Maine credit unions — became the first credit union service organization to leverage Empower’s newly developed joint-venture feature that allows credit unions to offer individualized branding, products and pricing while saving costs under CUSO’s shared services model.

“We are proud to introduce expanded support for joint ventures that frees credit unions to offer customized member experiences while reaping all the benefits of the CUSO model,” Rich Gagliano, CEO of Dark Matter Technologies, said in a prepared statement.

“Technology has become a central focus of our business strategy because of the value it drives for our credit union owners and partners and the superior mortgage experience it enables us to deliver to consumers,” said CUSO Home Lending president and CEO Lori Michaud.

CUSO Home Lending — established in 1993 — supported its owner credit unions and the communities with cost-effective access to mortgage fulfillment services, loan servicing and origination technology, according to its website. 

Dark Matter Technologies, which completed the acquisition of Black Knight’s Empower and Optimal Blue in September, is prioritizing bringing down origination costs for lenders.

Speaking to HousingWire previously, Gagliano noted the firm saw up to 300% year-over-year growth in new user numbers for the past couple of years as an increasing number of lenders are focused on cutting origination costs.

“We actually do well in any kind of market,” Gagliano said in an interview in September. 

“Now we’re in a down cycle, they need to do it with fewer people and they need to be more efficient to get the cost down. So it’s really the same story, just different markets,” Gagliano said.

Dark Matter Technologies, under Constellation Software‘s umbrella, is also focused on working towards a smooth transition over to Constellation with its 1,300-plus employees for the remainder of 2023.

Source: housingwire.com

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IndyMac said it chalked $3.5 billion in total loan production in February, a 21 percent increase from January but a 58 percent decline from a year earlier.

The wholesale channel produced $2 billion during the month, up 14 percent from January, but down a whopping 53 percent from the same period last year.

Conversely, the retail unit saw total production of $455 million, up 51 percent from January and an exponential increase from the $21 million in loan origination seen in February 2007.

The Pasadena, CA-based mortgage lender said 89 percent, or $3.1 billion of February production was saleable to the GSEs, compared to 83 percent in January and just 73 percent in December.

Prime jumbo loans made up the largest division of non-GSE saleable production, totaling $176 million during February, down from $233 million a month earlier.

IndyMac’s loan pipeline ended February at $7.6 billion, down 14 percent from January and down 45 percent from February 2007.

However, the company noted that credit quality on current loan production has improved and that actual loan losses for Alt-A and subprime loans, although rising, remain far lower compared to others in the industry.

Additionally, the company said first payment defaults on recent production declined to 1.8 percent in February from 2 percent in January, 2.2 percent in December and 3 percent in August 2007, thanks in part to recent underwriting tightening.

IndyMac also made clear that it was not one of the top subprime lenders over the past five years and that despite its relatively large share of the Alt-A market, its cumulative loss experience on such loans was 43% lower than the industry.

“While Indymac produced 7.2% of the industry’s total Alt-A production for the period measured (2002 to 2007), our market share was only 0.90% for subprime, and we were not ranked among the top 25 subprime lenders from 2005 to 2007 according to National Mortgage News,” said Grove Nichols, IndyMac Communications Director.

“Historically, subprime lending has been less than 3% of our total production, and we now only generate subprime loans which meet GSE or FHA/VA guidelines.”

IndyMac plans to release an update on the credit quality of its loan servicing portfolio as of the end of February in coming weeks.

Shares of IndyMac were down 6 cents, or 1.45%, to $4.75 in late trading on Wall Street.

See the full report at their blog.

(photo: ljcybergal)

Source: thetruthaboutmortgage.com

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TPO and Correspondent, Non-Agency Best Ex, Verification; Equity Figures for Refis; STRATMOR on Customer Experience

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TPO and Correspondent, Non-Agency Best Ex, Verification; Equity Figures for Refis; STRATMOR on Customer Experience

By:
Rob Chrisman

Fri, Nov 17 2023, 11:13 AM

Talk can be humorous. “That lowdown scoundrel deserves to be kicked to death by a jackass, and I’m just the one to do it.” (Attributed to a congressional candidate in Texas.) Here in Dallas, mortgage talk is certainly wide-ranging and varied as there’s a lot going on out there as we head toward Thanksgiving week, including cost cutting, M&A, and Fair Lending. Today’s Rundown features Feliks Viner, VP of Capital Markets with First World Mortgage discussing rate volatility at 3PM ET. We have the Wall Street Journal story about the union between hoops and loans: “Mortgage King Wants the NBA Crown, Too.” Some housing industry observers may only think it was “only a flesh wound,” but the Realtors™ antitrust case decision in Missouri, coupled with other recent settlements and an onslaught of new cases, likely portend real changes for how homes are bought and sold in the US with the assistance of real estate brokers. Attorney Brian Levy, breaks it down and offers his view of the crumbling dam for buyer broker commissions and the Realtors’ control over local listings in his most recent Levy’s Mortgage Musings. (Today’s podcast can be found here, sponsored by LoanCare, the mortgage subservicer known for delivering superior customer experience through personalization and convenience. Its award-winning portfolio management tool, LoanCare Analytics, supports MSR investors with a focus on customer engagement, liquidity, and credit risk. Interview with Calque’s Chandra Srivastava on the inner workings of a mortgage marketing department and how companies justify ROI on marketing spend.)

Lender and Broker Software, Products, and Services

“Truv is saving Lenders 60-80 percent over competitors. That’s the savings of multiple full-time employees. For example, Compass Mortgage saved roughly 60 percent in verification costs and maintained their same conversion rate. “Truv has given us the ability to lower costs, all while speeding up the verification process and providing better employment data” said Justin Venhousen, COO, Compass Mortgage. Stop wasting money. Contact TRUV today to discuss how we can help you with your income, employment, insurance, and asset verifications.”

The Work Number® can help streamline processes and provide greater value to employment and income verification processes. Wider data coverage can help streamline lending processes. The Work Number is the largest commercial repository for consolidated income and employment data with access to 641 million instantly returned records, updated each pay cycle, provided directly by employers and payroll providers, so there’s no need to collect an applicant’s private banking or payroll credentials, potentially exposing them and yourself to risk. Lenders and brokers have a choice: access The Work Number directly from Equifax OR through our pre-built integrations with over 60 Point of Sale (POS) and Loan Origination Systems (LOS). Not all methods for verification of income and employment are created equal. Discover why The Work Number is the leading choice for seamless, swift, and automated verifications.

In this market, hustle is everything. You can’t afford to waste a single deal, or a single minute. That’s why ReadyPrice has launched Shop, Lock, Deliver, an innovative platform designed to help independent mortgage brokers and their lenders save time and money. Now you can shop competitive loan offerings from multiple lenders, get rate lock guarantees in real time, receive underwriting findings, and deliver the borrower’s complete loan file to lenders, all on a single platform, at no cost to brokers. It’s already helping brokers around the country thrive and compete in the toughest market. Multiple lenders. One platform. Zero b.s. Come check us out today.

Join MAXEX at 2 p.m. ET on Thursday, December 7, for a special webinar on how the company is expanding its role as the cash window for the non-agency market. MAXEX’s multi-buyer-to-multi-seller exchange now provides more than 300 originators with access to more than 25 leading jumbo, non-QM, DSCR, Agency-eligible (NOO and 2nd Homes), and scratch & dent investors through a single clearinghouse. Join this event to learn about how MAXEX can help your business stay nimble and prepare for profitable, efficient growth in 2024.

Homebot is making a move towards an even more connected consumer experience through its launch of the Homebot Mobile App, allowing clients to connect with their trusted home advisors in a single tap right from their mobile device. With this announcement, every Homebot customer has the opportunity to engage their clients more deeply while generating more relationships with first-time homebuyers. See full story here.

Broker and Correspondent Products

Spring EQ Wholesale is now offering investment property HELOCs for 1st and 2nd lien positions! There is high demand for this product, and now is a great time to reach out to your clients who own investment properties and offer a way to access the equity in those homes. Need help with pricing? Click here to submit a scenario to Spring EQ’s team of Account Executives. Don’t forget, with Spring EQ you can earn up to 2.5 percent in traditional broker compensation on HELOCs and HELOANs. Looking for new opportunities in the mortgage space? We’d love to speak with you! Explore our job postings and come join our growing team of fun and experienced mortgage professionals! At Spring EQ our primary focus is second mortgages. So, think of us first for all your seconds. Become a partner now or contact your Account Executive to learn more.

“Now is the perfect time to align yourself with a top-tier correspondent partner like Newrez Correspondent. How are you going to meet and exceed your 2024 goals in this challenging market? By choosing a partner with the strength, size, and quality of Newrez. We provide competitive pricing, an expansive product line and an unwavering commitment to service. Don’t take it from us. Visit our website to read what our valued clients have to say. More reasons? We offer multiple affordable lending options, a comprehensive monthly client training calendar and access to marketing materials you can customize on The Marketplace by Newrez. Non delegated/Non-QM product availability with access to LoanNEX (pricing and product eligibility platform). Contact your RSM to learn more by clicking here. At Newrez, there is much to be thankful for: our team, our clients, and our families. Wishing you and yours a safe and Happy Thanksgiving.”

What if you had a powerful tool that could help you close your purchase pipeline at four times the rate? Rocket Pro TPO’s Verified Approval (VAL) goes beyond typical pre-approvals by providing a fully underwritten solution that includes a review of your client’s credit, income, and assets. As a result, you will realize the benefit of more committed clients with a clear picture of affordability and the confidence to start shopping. And partners can rely on fast Verified Approval reviews to jump start the purchase process: VALs are available to partners from their portal in as little as 24 hours after the request. Plus, clients using a VAL have the option to lock their rate before finding their new home! Interested in learning more about a Broker or Non-Delegated Correspondent partnership? Contact Rocket Pro TPO to learn more.

STRATMOR on Customer Relationships

What if our response to the prolonged market downturn was less about waiting it out, and more about learning and improving? What if we became learners and doers, not just survivors? In his November Customer Experience Tip, STRATMOR CX Director Mike Seminari talks about the need for being active in the downtime, building relationships, gaining product knowledge, reading books and listening to podcasts, always in pursuit of self-betterment and excellence in customer care. He shares three lessons that 2023 has taught us and how we can parlay them into success in 2024. Check out, “Top Three CX Lessons That Will Drive 2024 Success.”

M&A is not Lender-Exlusive

Lenders are not the only ones in our biz with shrinking balance sheets, competitive pressures, and owners looking at strategic alternatives to battling it out every day.

Stavvy, a fintech firm specializing in digital and remote collaboration for lending and real estate companies, acquired SigniaDocuments, a technology suite from Texas-based lender Evolve Mortgage Services. “Stavvy will acquire assets, including eClosing tools, eNote and eVault services, eRegistry capabilities for agency and non-agency loans and SigniaDocuments’ SMART Doc technology – a data-driven electronic document engine.” Stavvy will offer eNote, SMART Doc disclosures and loan documents for all 50 states across all loan programs and Evolve’s Charlie Epperson and Tim Anderson will join Stavvy as chief product officer and EVP of digital mortgage strategy, respectively. Recall that in August, Stavvy acquired digital mortgage servicing tech firm Brace to provide a streamlined platform for mortgage servicers and homeowners.

Equity and the Future of Refinance

A report from ATTOM shows that in Q3 2023, fewer homes were equity-rich, meaning their loan balances were less than half of their market values. The share of equity rich mortgaged homes was 47.4 percent. This is a drop from 49.2 percent in Q2 2023, making it the largest quarterly decline since 2019. The decline in equity-rich properties happened despite recent home value rebounds. That said, the percentage of seriously underwater mortgaged homes continued to improve. Only 2.5 percent were considered seriously underwater in Q3 2023. That’s the lowest point in the past four years. It’s down from 1 in 36 homes in Q2 2023 and 1 in 35 homes in Q3 2022.

Elliot F. Eisenberg, Ph.D. writes, “As of 9/23, the percentage of home mortgage holders with negative equity is just 383,000 or 0.7 percent, less than half the percentage prior to Covid and prior to the Housing Bust. The percentage peaked in 2009 at 30 percent. Currently, the city with the highest percentage of underwater mortgage holders is Austin at 2.1 percent, because prices are 14 percent off 2022 peaks, followed by Las Vegas at 1.7% and Phoenix at 1.6 percent.”

Capital Markets

Have you stopped your spending? Inflationary price tags, high interest rates and the return of student loan payments were thought to prompt many Americans to hold back on opening their wallets, but that doesn’t appear to be the case. A strong labor market has helped keep spending afloat across the economy, with new revisions even showing that the blowout retail reports from the summer were even better than initially estimated. Those trends are expected to continue with Black Friday only a week away, followed by the traditional holiday spending spree.

But as the fabled “soft landing” for the U.S. economy comes more and more into focus, we have seen mortgage rates and other bond yields drop as of late. Yesterday morning’s batch of data showed a larger than expected increase in weekly jobless claims coupled with a two-year high in continuing claims, fitting the Fed’s preferred script of seeing some softening in the labor market. Initial claims are at their highest levels since August and continuing jobless claims are at their highest level since November 2021. Export prices were down 1.1 percent month-over-month in October and down 4.9 percent year-over-year. Import prices were down 0.8 percent month-over-month and down 2.0 percent year-over-year. And total industrial production declined 0.6 percent month-over-month in October while the capacity utilization rate fell to 78.9 percent, though all figures were adversely affected by the UAW strike. Today’s calendar kicked off with housing starts and building permits for October (+1.9 percent and +1.1 percent, respectively). As has been the case all week, there are plenty of Fed speakers, and today features Boston President Collins, Vice Chair for Supervision Barr, San Francisco President Daly, and Chicago President Goolsbee. Today is also 48-hour notification for Class D MBS. We begin the day with Agency MBS prices better by .125-.250 and the 10-year yielding 4.40 after closing yesterday at 4.45 percent.

Employment

“If you are looking for a lifeline to save your people and your business in this challenging rate environment, you have an opportunity to partner with a well-capitalized independent mortgage company with over 40 years of experience. We offer a portfolio product line that gives our origination team the opportunity to quote unique scenarios for DPA, 2nd liens, ARMs, non-owner, Jumbo, Doctor/Professional, and more. Our proprietary coaching program is free to all Loan Officers. Even in this market, we’ve doubled-down on the support we provide, from a dollar-for-dollar marketing match to in-house creative & design services, video marketing, social media, training, and credit services. With unmatched operations support at the branch and corporate levels, your clients and referral partners will be more than impressed. Our company is Fannie and Freddie seller/servicer, FHA, VA, and USDA approved. For a confidential conversation, please contact Anjelica Nixt and mention this opportunity.”

“It’s all part of the Plan! Operating as MWF Home Loans in Tennessee, Mountain West Financial is continuing our expansion plans in Tennessee. Throughout this year, we have continued our growth with recent launches in North Carolina, South Carolina, Florida, and several other states east of Texas. The expansion is part of our overall growth strategy to expand our footprint. EVP and Board member, Ben Holloway has relocated to Tennessee in an effort to help drive our expansion. For more information about our growth plans and career opportunities, contact Ed Adams or Ben Holloway. Or visit us here for more information.”

“At Evergreen Home Loans™, we’ve always believed in supporting our associates and team members in their commitment to local causes. With the establishment of the Evergreen Cares Foundation, we’ve provided a powerful tool to help them do just that. The Evergreen Cares Foundation is our way of enabling our team to make a difference in the community. Whether it’s addressing hunger, promoting education, or providing assistance during crises, this foundation reflects our dedication to community well-being. Our associates are passionate about giving back, and this foundation allows them to channel their energy and resources toward causes they care deeply about. By doing so, we strengthen our community and embody our core values of empathy and support. Learn more about the Evergreen Cares Foundation and the remarkable impact it’s making. Together, we can build a brighter future for everyone.”

“Explore Spring EQ’s job postings and come join our growing team of fun and experienced mortgage professionals! At Spring EQ our primary focus is second mortgages.”

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Source: mortgagenewsdaily.com