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Cybersecurity, CE, CRM, Warehouse Products; Disaster News and Insurance – Scaling Back in FL and CA

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Cybersecurity, CE, CRM, Warehouse Products; Disaster News and Insurance – Scaling Back in FL and CA

By:
Rob Chrisman

Tue, Oct 3 2023, 11:00 AM

How will you always know that this Commentary is not produced by some AI thingy? Because of mistakes like yesterday, leaving Illinois off the list of top pumpkin growing states as several folks pointed out (thank you). Here are pumpkin stats out the proverbial wazoo. What autumn would be complete without this map of when fall foliage is peaking across the nation? While we’re on maps, the U.S. Census Bureau released an interactive map illustrating 2020 Census data about homeownership by the age, race, and ethnicity of the householder. The map provides data at the national, state and county levels and data from the 2010 Census for comparison. The Census Bureau also released the brief Housing Characteristics: 2020, which provides an overview of homeownership, renters, vacant housing and other 2020 Census housing statistics previously released through the 2020 Census Demographic and Housing Characteristics File (DHC). (Today’s podcast can be found here and this week’s is sponsored by TRUE. TRUE creates accurate data that powers automation and optimizes every step of the lending lifecycle, helping lending organizations rapidly process loans, dramatically cut costs and risk, and radically improve the customer experience. Interview between Robbie and Rob Chrisman on chatter from the capital markets and why people should tune in to their weekly Mortgage Matters video show each Wednesday.)

Lender and Broker Software, Programs, and Services

Not many lenders know this, but you can buy down points with down payment assistance (DPA). DPA has evolved over the years, and there are 2,373 to choose from today according to Down Payment Resource’s Q2 HPI report. What’s more, consumer interest in DPA is savage, and lenders who offer it have a competitive edge. Just ask anyone who originated one of the 2,300 CalHFA programs that disappeared in just 11 days. DPA is one of the best tools lenders have in today’s market and for the foreseeable future. Want to know how many homebuyer assistance programs are offered in your markets or to learn more about how Down Payment Resource makes it easy to support DPA? Schedule a demo with the Down Payment Resource team today.

The MBA Annual Conference & Expo is just around the corner. Be sure to book time with the key players at Flagstar Bank if you’re headed to Philly for the big event. Right now, you can secure private meetings with their top execs in Corporate Mortgage Finance, Secondary Marketing, Specialized Mortgage Banking Solutions, Treasury Management, TPO Sales, and more. Don’t miss your chance to get a scoop on what’s ahead for this $119 billion asset bank, from product enhancements to tech rollouts and warehouse lending opportunities. Connect with your RM or AE to reserve a time today. If you’re not a partner yet, sign up here.

“Why should you integrate your mortgage and consumer loan origination systems? We’re sharing five key ways MeridianLink’s end-to-end digital LOS can help you break down silos, facilitate seamless communication, boost cross-sell potential, and enhance the overall borrower journey. Learn more now.”

Making meaningful, in-person connections is critical for success and at the heart of ICE Experience. Registration opened this week for ICE Experience 2024, taking place on March 18-20 at the Wynn Las Vegas, and the agenda is packed full of even more ways for mortgage professionals to grow their skillset and professional network. Plus, registration fees for this year’s conference are at a new low price of $995 when you register by January 31, 2024. If you are an ICE customer, now is the time to secure your seat to soak up the latest information, address your most pressing challenges, see new innovative solutions up-close and strengthen the relationships that are the foundation of your business. Click here to learn more.

OptiFunder announces the release of Greyhound, a highly configurable and automated system for Warehouse Lenders. OptiFunder has changed the game for IMBs by optimizing and automating the historically manual funding process. As we continue our mission to connect the primary and capital markets, we’re expanding our software offering to include a highly configurable, automated Warehouse Lending System, called Greyhound. Greyhound connects warehouse lenders with all major LOS systems, giving lenders the ability to easily onboard new clients, receive loans, and manage their entire portfolio. Leveraging OptiFunder’s LOS integrations means warehouse lenders are directly connected to over 70 percent of total industry loan volume. Greyhound offers real-time insights into pipeline management, loan/collateral tracking, operational reporting, automated LOS data import, investor shipping requests, purchase advise matching, document imaging, and more. IMBs and Warehouse Lenders should meet with OptiFunder at MBA Annual to discuss automating funding through loan sale to the capital market.

Are you well prepared to manage your servicing portfolio heading into 2024? As inflation continues to cool and the labor market starts to weaken, economists at Fannie Mae recently stated they expect a mild recession in the first part of 2024. Your servicing portfolio is a sound investment and can generate positive returns, but what happens when your portfolio starts to show signs of trouble, such as an increase in delinquencies? How will you ensure your distressed loans are making it through the proper pipeline and loss mitigation steps? It is more important than ever to ensure your servicing portfolio is ready to handle the uncertain economic future, and the team at Velocity Servicing, a LoanCare division, is ready to help! Backed by LoanCare Analytics, a proprietary data analytics platform with real-time access to portfolio data, Velocity Servicing helps lenders manage troubled loans with speed and accuracy. If you want to learn more about how Velocity Servicing can change your servicing game, email Matt Stadler or click here to schedule a time to meet with them at the MBA Annual in Philadelphia!

There is a celebration going on in Denver. It’s the 15th anniversary of a company that has been providing great software for 28 years. How is this possible? Usherpa was founded in 1995 at the second largest retail mortgage company in the country and rebranded in 2008 and is truly a firm that was “Born in a Branch; Forged in a Meltdown.” It has since grown into the largest privately held CRM company in the real estate and mortgage industries. Usherpa’s Smart CRM is the industry’s most sophisticated, cloud-based Customer Engagement Platform with the most powerful CRM and Marketing Automation systems in existence. It’s helped thousands of Loan Officers stay connected with partners and clients, helping hundreds of thousands of borrowers fulfill their dreams of homeownership. Usherpa users convert 46 percent more prospects, close 2X more deals and increase repeat business by 57 percent. They show you the studies! Win more business even in this market. Find out how here.

Autumn is not just about the vibrant leaves and cooling weather; it’s also the crucial period for renewing your NMLS license! As the seasons transition, ensure your professional credentials don’t fall behind. Diehl offers the top-tier Continuing Education (CE) you need! Our live, interactive webinars aren’t just about compliance; they’re engaging, insightful, and designed to meet NMLS requirements for the 2023 renewal season. We make mandatory learning enjoyable! With multiple dates to choose from, we have a class that works for you. Don’t wait until it’s too late! Sign up today before spaces run out!

“With over 35 years of experience in mortgage banking, Richey May knows the industry from every angle. Many of our team members are credentialed industry experts who dedicate much time to building up other industry experts. From this expertise, Richey May has created a wealth of services and products to help lenders stay ahead: audit and tax services, cybersecurity solutions designed to protect company assets and sensitive borrower information, intelligent automation tools for streamlined operations…you name it! Whether you’re leveraging our innovative platforms or having us work as your extended team for outsourced internal audit or accounting services, get ready to tackle challenges faster with some serious firepower on your side. Everything you need: contact our experts today!”

Disasters and Insurance

Many will say that it doesn’t matter whether or not you believe in climate change, manmade or natural. What matters is that investors in mortgages, servicers, and insurance companies do, as that pricing impacts people in those areas, and therefore clients and borrowers.

Progressive insurance is rebalancing its exposure in the state of Florida, and will not renew 47,000 DP-3 policies and 53,000 high-risk homeowner’s policies in the state. DP-3 policies tend to cover vacation homes and properties that are not a primary residence. That said, Progressive plans to transfer the policies to Loggerhead Insurance in a deal that will affect 100,000 policyholders. Multiple insurers are winding down parts of their business in Florida as an insurance crisis hits the state, which has high exposure to natural disasters and a ruthless roofing scam industry that has made it difficult for insurers to operate there. This has driven many homeowners to the state-backed insurer of last resort, Citizens Property Insurance Corp, which now has 1.3 million policies, up from 500,000 as of July 2020.

Florida isn’t alone. Several top insurance companies (like Farmers, State Farm and Allstate) have reduced their footprint in California over the last several months. State Farm and Allstate say they’re not writing any new homeowner insurance policies in California moving forward due to it being too expense. And just ask a homeowner in a low-lying area of Florida, Louisiana, or the Carolinas how it’s going.

Recall that in August the Biden administration urged a federal judge to reject a challenge by Florida and other states to an overhaul of the National Flood Insurance Program that has led to higher premiums for many property owners.

Nearly every part of the United States faces natural disasters, whether they be earthquakes, hurricanes, tornadoes, forest fires, drought, or volcanoes. A declaration by FEMA triggers lender and servicer policies and procedures.

On 9/19/2023, with Amendment No. 9 to DR-4720, FEMA updated the Incident Period End Date to 7/21/2023, for Vermont counties affected by severe storms, flooding, landslides, & mudslides from 7/7/2023 to 7/21/2023. See AmeriHome Mortgage Announcement 20230909-CL for inspection requirements.

PHH Correspondent posted information regarding Illinois DR-4728: New Disaster Declared, Mississippi DR-4727, and Vermont DR-4720. Go to the PHH company library to view the announcements and for all disaster declared counties, requirements, procedure.

In addition to the previously declared counties, a disaster declaration is being issued or modified pertaining to Hurricane Idalia landing causing wide-spread damage around Florida. Until FEMA has officially announced all Declared counties, PHH needs to cover this gap for areas determined to be of considerable concern to be declared a disaster by FEMA. Areas in Florida of concern not yet declared: Flood Zones only in both Hillsborough and Wakulla Counties. Go to the PHH company library to view the announcements and for all disaster declared counties, requirements, procedure.

Capital Markets

As foreign and bank buying of fixed-income securities has declined, you’ll notice all talk of an inverted yield curve leading to a recession has vanished. (The 2-year is yielding 5.12, the 10-year is at 4.73 percent.) Remember when that was trendy? A recession will happen at some point, but probably not in the near future. As markets adjust to continuously high interest rates, it is creating a new reality for bond yields, with investors now wondering how high they can go. Over the last few months, the markets were wrong because they thought inflation would come down quickly and central banks would be very dovish. Everything will depend on how inflation lands over the medium to long run, but it’s fair to say that we have changed from the ultra-low-yield regime.

Rates continued their rise to open the quarter, which means that government shutdown fears weren’t the main driver of recent yield increases. That was also despite economic activity in the manufacturing sector contracting in September for the 11th consecutive month following a 28-month period of growth, per the latest Manufacturing ISM report. PMI did exceed both expectations and August’s reading. The report will be construed as an economy tracking more for a soft landing than a hard landing at this juncture. Total construction spending increased 0.5 percent month-over-month in August, as expected. On a year-over-year basis, total construction spending was up 7.4 percent.

There was increased talk over the last week as to whether a “soft landing” will be achieved as the elevated inflationary environment experienced over the last two years subsides. New home sales declined to a worse than expected 8.7 percent in August as the recent move in interest rates towards 8 percent moves potential buyers to the sidelines. Builders have been able to take advantage of low inventory this year, however the recent home builder survey from the NAHB reported buyer traffic at a seven-month low in September. This has increased the number of builders offering discounts to 32 percent, the highest share since December 2022.

Meanwhile consumer confidence fell for the second straight month as consumers weighed the effects of rising food and gas prices, higher interest rates, and generally persistent elevated inflation. It is possible that consumers may finally start to pull back on spending as labor market growth slows, interest rates remain higher for longer, savings dwindle, and student loan payments resume.

Today’s economic calendar gets under way with remarks from Atlanta Fed President Bostic, and will be followed by Redbook same store sales, JOLTS job openings for August, and the latest monetary policy decision from the RBA. We begin the day with Agency MBS prices worse .125-.250 and the 10-year yielding 4.73 after closing yesterday at 4.68 percent.

LO Job Openings

A team of warehouse experts seeks an operations leader, with 5 plus years of experience managing internal warehouse operating platforms. This is a ground floor opportunity to launch and build a national warehouse lending business. If interested in this COO role, please send your confidential resume to Anjelica Nixt and specify this opportunity.

In the Northwest and California, Banner Bank is searching for Mortgage Loan Officers looking to create lasting Realtor and builder relationships at a bank focused on the market today. Banner has opportunities for lenders looking for local decision making with FHA, VA, USDA, state bond and true Portfolio lending opportunities along with servicing retained Fannie and Freddie loans to assist in client retention. Additional highlighted products cover CRA lending with private label no payment down payment assistance to help assist all borrowers with the right opportunity. Banner is the right fit for an established team, or the individual looking to grow their business and take the next step in their career. Please send resumes to Aaron Miller.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

Apache is functioning normally

Apache is functioning normally

If you visit most bank/lender websites and navigate to their home loans section, you’ll likely only see fixed-rate mortgages advertised.

This made perfect sense over the past several years because interest rates on popular mortgage products like the 30-year fixed were at record lows.

There was basically no need to look beyond it given the ultra-low rate and the security of a fixed interest for the entire loan term.

But that was then, and this now. Today, the 30-year fixed mortgage is hardly a deal, with many priced in the 7-8% range (or higher).

That begs the question; are adjustable-rate mortgages finally worth considering?

Are ARMs Worth Considering Again Now That 30-Year Fixed Mortgage Rates Are Nearing 8%?

In recent years, the adjustable-rate mortgage became a bit of a niche product.

Last year, about 75% of the home loans funded featured a fixed interest rate, per HMDA data.

And nearly 60% were 30-year fixed-rate mortgages, which are far and away the most popular loan choice.

As noted, low fixed rates meant there wasn’t much need for anything else, barring the ultra-wealthy who may have taken out ARMs at rates as low as 1%.

But for most homeowners, a 30-year fixed, or perhaps 15-year fixed, was all they really needed.

And now homeowners who took out these loans in 2021 get to enjoy another 28 years of fixed rate goodness at rates as low as 2-3%.

In case you haven’t heard, this is known as the mortgage rate lock-in effect, where existing homeowners are unable or uninterested in trading in their home loan for one at today’s much higher rates.

Anyway, while that’s great for existing homeowners, but what about prospective home buyers, or those who don’t have a super low, locked-in rate?

Well, it might be time to take a look at an ARM again, now that fixed mortgage rates are through the roof.

The spread between products like the 30-year fixed and 5/1 ARM is now wide enough to consider the discount.

In the recent past, both the 5/1 ARM and the 30-year fixed were priced very similarly, making it a no-brainer to go with the fixed rate. But this is no longer the case.

Just be sure to shop around carefully and extensively, as ARM rates are notoriously more variable, no pun intended.

How Much Can You Save With an ARM?

$500k Loan Amount 5/1 ARM
 30-Year Fixed
Interest Rate 6.125% 7.875%
Monthly Payment $3,038.05 $3,625.35
Monthly Savings $587.30 n/a
Savings @60 months $35,238 n/a
Balance @60 months $465,984.95 $474,798.84

Depending on the difference in rates, you could save a pretty penny with an ARM vs. fixed-rate mortgage, but the savings can vary tremendously.

Ultimately, the savings need to justify the risk of the variable rate, as the ARM can adjust higher once the initial fixed period comes to an end.

This is why you pay a premium for a 30-year fixed-rate mortgage, since the interest rate is locked for the entire 30-year loan term.

The ARM, on the other hand, can adjust, often 2% higher, at the first adjustment.

In our example above, the 5/1 ARM is fixed for the first 60 months, then subject to an annual adjustment for the remaining 25 years.

But our hypothetical borrower could save about $35,000 during those initial 60 months and they’d have a lower balance thanks to a reduced interest rate.

Thanks to the way mortgage amortization works, more of each payment would go toward the principal balance at the lower interest rate.

This could make it easier to refinance in the future when the ARM becomes adjustable.

Who Offers Adjustable-Rate Mortgages These Days?

Not all banks and lenders offer adjustable-rate mortgages. And even if they do, they may not offer much of a discount for the risk and uncertainty of an ARM.

For example, Wells Fargo advertises a 7/6 ARM, but the discount is only .125% for jumbo loans, and a slightly better .375% for conforming loans.

Meanwhile, some local credit unions are offering ARMs at more than 1% below their fixed-rate options.

I did some digging to see what was out there and was surprised to see such a range of rates and options.

This is why you need to be very thorough if you’re sold on the idea of an ARM. While fixed-rate products can range from lender to lender as well, they tend to vary less.

To illustrate, I found that Credit Union of Southern California was advertising a 30-year fixed at 8% (yes 8%!), while their 5/1 ARM was priced at 6.25%.

That’s a whopping 1.75% difference in rate. If we’re talking a $500,000 loan amount, the monthly payment is nearly $600 lower on the ARM.

We’re talking a principal and interest payment of $3,078.59 versus $3,668.82. And an outstanding balance of roughly $467,000 after five years vs. $475,000.

There’s an even cheaper option at California Coast Credit Union, which is advertising a 6.125% rate on a 5/1 ARM (vs. 7.875% on their 30-year fixed).

Then there’s Wescom Credit Union, which is currently advertising a rate of 8.25% on a 30-year fixed with no points, and a 5/6 ARM at 6.875% with no points.

A slightly smaller margin here of 1.375%, but still a large discount to be had on the ARM.

Another big discount can be seen at Randolph-Brooks Federal Credit Union (RBFCU), where their 30-year fixed is advertised as low as 7.375% and their 5/5 ARM as low as 6.25%.

The 5/5 ARM is unique in that it adjusts once every five years after the initial five years are up. This could be good or bad depending on where rates are in year six.

Remember I said you had to be a diligent shopper. Well, Boeing Employees’ Credit Union, or BECU for short, is advertising a 5/6 ARM at 8.061% APR.

They’re even higher at Bank of America, which is advertising a 5/6 ARM, 7/6 ARM, and 10/6 ARM all at 8.5%.

In other words, you’d be better off getting a 30-year fixed in the 7% range instead.

Some Lenders Have More of an Appetite for ARMs Than Others

As for why ARM pricing can vary so much from bank to bank, or credit union to credit union, it has to do with appetite. And I suppose profit margin too.

Some companies may have more interest in originating and holding ARMs in their portfolio, while others may not as be interested but still offer them. And credit unions are not-for-profit financial institutions.

This is why the rates might be higher at the big banks, who may still want to offer the full menu of loan programs without being competitive.

Conversely, the credit unions seem to be fighting harder to win business, and are more willing to offer markedly lower rates relative to their fixed-rate offerings.

Another example is Navy Federal CU, which is advertising interest rates as low as 5.125% on a 3/5 ARM, which adjusts after just three years (then adjusts every five years).

Meanwhile, Chase, which was the top adjustable-rate mortgage lender last year, is advertising a 5/6 ARM at 6.75%.

But other banks are more competitive, such as KeyBank, which was advertising a rate of 5.875% on its 5/6 ARM and 7.5% on its 30-year fixed (for clients in Ohio). That’s a whopping 1.625% difference.

To sum things up, adjustable-rate mortgages are beginning to make a lot more sense given the large spread in interest rates.

But you need to shop carefully as pricing seems to be all over the map from one lender to the next.

And for the most part, the credit unions seem to be offering the best rates. If you’re curious what’s out there, just start searching for banks and CUs in your state to see what you find.

Is an ARM a Good Idea in 2023?

As stated earlier, ARMs are inherently more risky than fixed-rate mortgages. After all, they can adjust higher after the typical 3, 5, or 7-year fixed period comes to an end.

The shorter the fixed period, the riskier, as you’d have less time to act if your rate reset higher.

While most ARMs have caps in place that limit rate movement, often maxed out at 2% for the first adjustment, going from a rate of 6.125% to 8.125% could still be a shock.

It isn’t a guarantee that the rate would adjust higher, but you need to consider it and be prepared for such an outcome if you take out an ARM.

You also need a plan in place for when that first adjustment comes. Do you plan to sell your home before then or refinance to another ARM or possibly a cheaper fixed-rate mortgage?

It all boils down to where mortgage rates land in the next five years. Will they be lower? Possibly. But they could be the same or worse. Nobody really knows with any certainty.

Granted, the Fed’s own target rate is projected to be lower by the end of 2024, and mortgage rates are also predicted to be lower by most economists.

And they could improve even more from there in 2025 and beyond. So an ARM taken out today could serve as a bridge to a lower rate in the future. You just have to prepare for the worst since you don’t have the security of a fixed rate.

Read more: What to do if your adjustable-rate mortgage is about to adjust.

Source: thetruthaboutmortgage.com

Apache is functioning normally

Apache is functioning normally

Wachovia announced today that it would no longer offer the negative amortization payment option on its popular and now infamous “Pick-a-Payment” loan program amid heightened criticism and rising defaults.

The Charlotte-based bank and mortgage lender said it will continue to offer the option arm with three payment choices, including the standard 30-year principal and interest option, a 30-year interest-only option, and a 15-year payment option.

The company is also waiving all prepayment penalties tied to the risky loans in order to give borrowers the freedom to refinance into more favorable programs if they so choose, assuming they’re not completely underwater.

It’s likely today’s action is tied to the recent enlistment of Goldman Sachs, who was hired to explore alternatives for the company’s mismanaged loan portfolio.

The company acquired a huge portfolio of the so-called “toxic loans” via its acquisition of Golden West in 2006, for which it paid a whopping $25 billion.

And as recently as late March, Wachovia was actively pitching the option arm loan program on national television, despite the fact that the mortgage industry was already in tatters.

Two weeks ago, Washington Mutual announced that it was discontinuing all negative amortization loan programs, joining Countrywide who revealed in late April that it would scrap the complicated loans after its merger with Bank of America.

Shares of Wachovia were off 62 cents, or 3.82%, to $15.60 in afternoon trading on Wall Street, hovering slightly above their 52-week low.

The company also noted today that it has helped roughly 18,000 borrowers stay in their homes over the past 12 months by making mortgage payments “more manageable.”

(photo: lesterofpuppets)

Source: thetruthaboutmortgage.com

Apache is functioning normally

Apache is functioning normally

Well, the Consumer Finance Protection Bureau finally released its “Ability to Repay” and “Qualified Mortgage” rules today.

At first glance, they look to be pretty lackluster, and the CFPB seems to be asking more questions than it is giving answers.

As part of Dodd-Frank reform arising out of the latest mortgage crisis, lenders must now ensure that borrowers have the ability to repay their mortgages.

While this sounds like a no-brainer, prior to the crisis just about anyone with a pulse could take out a home loan.

The CFPB included the story of a victimized borrower in its press release, though you have to wonder how many of these homeowners actually knew they couldn’t afford the loans before agreeing to apply for one.

Sure, it went both ways, but it was both lenders and borrowers who were at fault for the crisis.

Ability-to-Repay Rule

The new “Ability-to-Repay rule” requires lenders to underwrite pretty much ALL new residential home loans a lot more stringently than in past years, namely the 2000s.

However, the new mortgage rules are pretty much on par with today’s underwriting standards, which have become much more rigorous in light of past abuses.

I say pretty much all because HELOCs, time-share plans, reverse mortgages, bridge loans, and certain construction-to-perm loans are exempt from the ATR rule.

As part of the ATR rule, lenders must consider and verify eight (8) underwriting criteria:

– Current income or assets
– Current job status
– Credit history
– Monthly payment on mortgage
– Monthly payment on any other loan tied to subject property
– All other debt obligations
– The borrower’s debt-to-income ratio

So basically underwriters need to do their due diligence, which has always been the case.

There is nothing groundbreaking here, just basic underwriting at its purest and best, including verifying that borrowers have sufficient income and assets to take out a sizable home loan.

This means no stated income loans or no doc loans, which were prevalent during the housing boom.

Additionally, lenders can’t use teaser rates to qualify borrowers; only the full principal and interest payment will suffice.

However, if a borrower is being refinanced out of a high-risk loan, such as an ARM, interest-only loan, or option arm, into a more stable loan, the full underwriting process is not necessary.

Certain federal refinancing programs such as HARP 2 will also be exempt from these rules.

What Is a Qualified Mortgage?

The CFPB also released its definition of a “qualified mortgage,” which is presumed to meet the ATR rule requirements as well, and provide the most protection to borrowers (and more importantly, lenders).

Qualified mortgages have even more mandatory features, including the following:

– No excessive upfront points/fees
– No interest-only loans
– No negative amortization loans
– No loan terms beyond 30 years
– Max debt-to-income ratio of 43%
– No balloon mortgages (unless small creditor in rural/underserved area)

For a transitional period (seven years), the DTI limit will not be enforced if the loans are eligible for purchase by Fannie Mae, Freddie Mac, or the FHA.

So in essence, the DTI limit won’t really be an issue for most loans, seeing that the majority are sold to Fannie or Freddie.

*The FHA Qualified Mortgage definition is pretty much the same as Fannie and Freddie’s, except for the APR thresholds, which are detailed below.

Here is a look at the max points and fees for Qualified Mortgages, currently capped at 3% of the loan amount if $100,000 or higher, and a proposal made by the Mortgage Bankers Association to increase them for smaller loan amounts:

Note that many third-party fees for things like title insurance, escrow, appraisal and credit reports aren’t part of the fee calculation (unless they come from a creditor affiliate, the creditor receives compensation, or the fees are deemed unreasonable).

Additionally, discount points may be limited based on the loan’s APR relative to the average prime rate offer (APOR).

It’s all very confusing at the moment, so hopefully over time some of these issues will be clarified.

Types of Qualified Mortgages

Qualified Mortgages with Rebuttal Presumption

This category of QMs covers “higher-priced loans” reserved for borrowers with insufficient or poor credit history. These loans are distinguished as those with APR more than 150 basis points (1.5%) above the “Average Prime Offer Rate” (APOR) benchmark.

Assuming the loan finds its way into default, the borrower can “rebut the presumption” that the lender actually considered their ability to repay the loan.

The CFPB notes that the borrower would have to prove that the lender didn’t consider their other living expenses after the mortgage and other debts were accounted for.

Note: For FHA loans, mortgages with an APR greater than APOR + 115bps + on-going Mortgage Insurance Premium (MIP) are considered Rebuttable Presumption Qualified Mortgages.

Qualified Mortgages with Safe Harbor

The second category of QMs is reserved for lower-priced loans made to borrowers who present little risk. These loans are defined as those with APR less than or equal to 150 basis points (1.5%) above the APOR benchmark.

Lenders will be assumed to have “legally satisfied” ATR requirements, meaning they won’t be on the hook for the loan if it goes bad.

However, borrowers can still challenge the lender if they believe the loan fails to meet the rules of a QM.

In both categories, borrowers also have the right to challenge lenders for violating any other federal protection laws.

Note: For FHA loans, mortgages with APRs less than or equal to APOR + 115bps + on-going MIP are considered Safe Harbor Qualified Mortgages.

More Ability-to-Repay Proposals

The CFPB is also seeking public comment for a number of other proposals, including whether there should be exemptions for non-profit creditors and housing finance agencies promoting affordable housing and community development (grey area).

Exemptions are also being floated for homeownership stabilization programs intended to prevent foreclosures, such as the Making Home Affordable initiative.

Additionally, community banks and smaller credit unions that originate and hold loans in their own portfolios could be given QM status.

Finally, the CFPB wants advice on how best to calculate the loan origination compensation rules, including specific limits on mortgage points and fees.

All said, there are plenty of unanswered questions here, and much of it sounds like the same nonsense all over again. The type of rule making that is circumvented before it’s even written.

Still, it will be interesting to see if “QM loan” becomes a household name, and makes non-QM loans much more expensive.

The Ability-to-Repay rule and proposed amendments are expected to go into effect in January 2014.

(photo: Joe Shlabotnik)

Source: thetruthaboutmortgage.com

Apache is functioning normally

Apache is functioning normally

From charming towns to stunning coastlines.

From historic small towns to modern up-and-coming suburbs, Delaware is a state that has charmed many into laying down roots. Considering the significant benefits of a strategic location on the East Coast, plenty of diverse landscapes from beaches to farmlands and a favorable tax climate, it’s easy to see why Delaware is more than just a place on the map, it’s also a great place to call home.

  • Population: 70,750
  • Average age: 35.9
  • Median household income: $49,354
  • Average commute time: 22.0 minutes
  • One-bedroom average rent: $1,576

As the largest city in the First State, Wilmington certainly makes a compelling case for one of the best places to live in Delaware. It’s much more than just a hub for corporations and banks, though it wears that hat quite stylishly with its skyline punctuated by modern skyscrapers.

Wilmington offers a unique blend of urban amenities and natural beauty, thanks to its proximity to the Delaware River and Brandywine Creek. Foodies will feel right at home, with upscale eateries and cozy cafes offering everything from farm-to-table fare to international delicacies. The Wilmington Riverfront, once an industrial area, has undergone a renaissance to become a hotspot for dining, shopping and leisurely strolls.

Residents of Wilmington can enjoy the best of both worlds: a bustling city life, and the tranquility of suburban and outdoor settings just a stone’s throw away. Schools in the area are highly rated, and the job market is strong, making it a sensible choice for families and young professionals alike. For those seeking active lifestyles, the city is crisscrossed with bike lanes and walking trails, and you’re never too far away from a park. Also, given its central location, Wilmington offers easy access to Philadelphia, Baltimore, and New York City, making it ideal for weekend getaways or even longer daily commutes.

  • Population: 31,155
  • Average age: 24.7
  • Median household income: $60,767
  • Average commute time: 20.7 minutes
  • One-bedroom average rent: $1,482

If you’re looking through lists of the best places to live in Delaware, chances are Newark will appear with some frequency — and for good reason. Known primarily as the home of the University of Delaware, Newark exudes an academic yet laid-back atmosphere that is hard to resist. The town is far more than just a college hub; it’s a community bursting with energy, loaded with parks and equipped with a historic downtown district that can make anyone feel like a local. Whether it’s grabbing a fresh-baked pastry from a boutique bakery or attending a live outdoor concert, Newark serves up small-town charm and big-city conveniences in a unique mix.

Newark’s educational assets are not confined to its well-known university; local schools are highly regarded and offer a top-tier education for the younger crowd. The job market here is solid, especially for those in science, technology and healthcare, due in part to the university’s strong emphasis on research and innovation. The city is a paradise for nature enthusiasts, offering a multitude of walking and biking trails. Plus, with Wilmington just a short drive away and Philadelphia less than an hour’s commute, Newark is strategically positioned for those who like to expand their horizons.

  • Population: 38,992
  • Average age: 33.8
  • Median household income: $48,500
  • Average commute time: 26.0 minutes
  • One-bedroom average rent: $1,302

As the capital city of Delaware, Dover has an appealing mix of political prowess, rich history and contemporary amenities, making it an intriguing option for the title of one of the best places to live in Delaware. Aside from being the administrative heart of the state, Dover also stakes a claim in aerospace and manufacturing, thanks to its close relationship with Dover Air Force Base. And let’s not forget NASCAR; the city roars to life twice a year during the races at Dover Motor Speedway, attracting fans from all around the country. A blend of classic and modern, Dover’s Historic District showcases 18th-century architecture, while its growing retail and restaurant scenes keep things decidedly 21st-century.

Everyday life in Dover provides a bit of something for everyone. For families, excellent schools and a variety of recreational options — including abundant parks and nature reserves — make for an enriching environment to raise children. Professionals will appreciate the stable job market, and with the average commute time clocking in at less than the national average, work-life balance is more than achievable.

  • Population: 21,397
  • Average age: 36.7
  • Median household income: $76,920
  • Average commute time: 27.2 minutes
  • One-bedroom average rent: $1,885

If you’re considering the best places to live in Delaware but want to steer clear of bustling city centers, Bear might just be the diamond in the rough you’re seeking. Once a small farming community, Bear has evolved into a suburb with an interesting mix of residential developments, shopping districts and open spaces.

It’s a hit with families, thanks in part to its excellent school system and various recreational opportunities. Whether you’re interested in kayaking at Lums Pond State Park or enjoying an afternoon picnic with the family, the great outdoors are always within reach when you live in Bear.

What really sets Bear apart, though, is its versatility. This unincorporated community offers the calm and scenic views of suburban living along with the convenience of nearby city amenities—Wilmington and Newark are just a short drive away. Bear is more than just a place to hang your hat; it’s a place to build a life. With a strong sense of community and a wide variety of housing options to suit different tastes and budgets, Bear provides an inviting atmosphere for skilled professionals, growing families and newly minted retirees alike.

  • Population: 1,151
  • Average age: 62.1
  • Median household income: $137,783
  • Average commute time: 35.0 minutes
  • One-bedroom average rent: $1,250

Dubbed the “Nation’s Summer Capital,” Rehoboth Beach isn’t just a vacation hotspot; it’s also a contender for one of the best places to live in Delaware. With its iconic boardwalk, beautiful sandy shores and unparalleled ocean views, living here feels like a year-round holiday.

However, don’t mistake it for just another beach town; Rehoboth Beach is as well-rounded as they come. It offers exceptional dining options that range from seafood shacks to gourmet restaurants, boutique shopping that rivals much larger cities, and a ton of community events and festivals that keep the community engaged throughout the year.

Schools in the area are highly rated, making it a viable option for families. For the health-conscious, the town provides ample outdoor activities — think paddleboarding, cycling and of course, swimming, all at the drop of a hat. The local job market is surprisingly diverse, boasting opportunities in tourism, retail and even tech. Plus, the low property taxes and no sales tax add an extra layer of allure for those looking to stretch their dollar to the max.

  • Population: 6,987
  • Average age: 42.1
  • Median household income: $131,603
  • Average commute time: 29.9 minutes
  • One-bedroom average rent: $1,384

Pike Creek offers an appealing blend of winding roads, upscale homes and scenic vistas, including panoramic views from the popular White Clay Creek State Park. Far from being just a pretty face, Pike Creek is known for its quality schools, making it an educational haven for families. Local fitness centers, golf courses and even a shopping center carved from a renovated barn add a distinct flair to this undeniable Delaware gem.

Everyday life in Pike Creek balances convenience with a sense of community. The area is exceptionally safe, and local amenities range from family-run grocery stores to highly rated medical facilities. Job opportunities in nearby Wilmington and Newark make for an easy commute, and Pike Creek itself is home to a range of businesses, from local restaurants on the rise to established retailers.

  • Population: 3,420
  • Average age: 66.4
  • Median household income: $78,125
  • Average commute time: 35.9 minutes
  • One-bedroom average rent: $3,100

With a history dating back to 1631, Lewes wears its title as the “First Town in the First State” with pride, and it’s easy to see why it’s frequently dubbed one of the best places to live in Delaware. The town’s coastal charm comes from a potent mix of historic sites, scenic beaches and maritime character.

The Cape May-Lewes Ferry not only offers picturesque views but also a practical connection to New Jersey. But the ferry isn’t the only water-bound vessel here; the town is a hub for boating and fishing. Local fish markets, quirky boutiques and cozy restaurants line the streets, offering a taste of small-town living with a uniquely appealing maritime twist.

A strong focus on quality education and healthcare makes Lewes an ideal location for families and retirees alike. The town has become increasingly popular for its low property taxes and affordable cost of living, all while offering a high quality of life. Those with a passion for the outdoors will find a range of activities, from kayaking to bird-watching at Cape Henlopen State Park. Lewes is more than just a seasonal destination; it’s a great place to lay down roots and live out your life in peace. Plus, it’s an absolute paradise for leaf peeping.

  • Population: 14,172
  • Average age: 46.9
  • Median household income: $158,063
  • Average commute time: 23.1 minutes
  • One-bedroom average rent: $1,773

Perched in the northern tip of Delaware, Hockessin effortlessly claims its spot among the best places to live in Delaware. Known for its rolling hills, lush green spaces and upscale homes, this sweet spot draws people in with its serene ambiance. Hockessin boasts an interesting blend of history and modernity, with sites like the Ashland Nature Center and numerous upscale dining and shopping outlets. Whether it’s the annual Fourth of July Relays or the panoramic views from the Auburn Heights Preserve, Hockessin never falls short of leaving an impression.

Hockessin is known for its commitment to education, with several top-rated schools making it a magnet for families. The local farmers market is a testament to the town’s dedication to fresh, local produce, while a slew of fitness centers and wellness outlets cater to the health-conscious. With its strategic location, Hockessin offers convenient access to Philadelphia and Wilmington, providing ample opportunities for work and recreation.

  • Population: 24,164
  • Average age: 39.7
  • Median household income: $93,750
  • Average commute time: 36.6 minutes
  • One-bedroom average rent: $1,745

Once a sleepy farming village, Middletown has transformed into a buzzing hub and, as a result, become indisputably one of the best places to live in Delaware. This growth hasn’t robbed it of its charm; instead, Middletown effortlessly blends the conveniences of urban living with the tranquility of its rural roots.

The historic Everett Theatre, which has been the centerpiece for entertainment for over a century, is a surefire hotspot every weekend. Couple this with the town’s shopping centers, locally loved restaurants and the much-anticipated annual Peach Festival, and it’s clear that Middletown has it all and then some.

Families thrive here, thanks to the community’s outstanding schools, myriad parks and an array of recreational programs. The town places a strong emphasis on community engagement, evident in its many events and gatherings throughout the year. As the cherry on top, Middletown’s strategic location along the Route 301 corridor offers ease of access to major employment areas in Delaware, Maryland and New Jersey.

  • Population: 13,149
  • Average age: 36.5
  • Median household income: $63,794
  • Average commute time: 34.8 minutes
  • One-bedroom average rent: $1,050

Strategically positioned between Wilmington and Dover, Smyrna is more than just a waypoint; it’s steadily gaining recognition as one of the best places to live in Delaware. This town is a treasure trove of history, evident in its well-preserved architecture and the rich stories housed within the Smyrna Museum. But Smyrna is not one to rest on its historical laurels. The town has embraced the future with an evolving array of attractions, from bustling shopping centers to eclectic eateries, ensuring residents have everything they need right at their doorstep.

The community radiates a close-knit, small-town feel where neighbors are more like family, and yet, the conveniences of urban living are never far away. Lake Como, the heart of local outdoor activities, sees residents flocking for a peaceful stroll, fishing or simply soaking up nature’s splendor. Proximity to major highways ensures that bigger cities, with their job markets and recreational options, are within easy reach.

Find your dream Delaware apartment

In a state brimming with scenic beauty, historical significance and modern conveniences, selecting the best places to live in Delaware is no small feat. Each location mentioned offers its unique flavor, promising an enviable quality of life.

Whether it’s the coastal allure of Rehoboth Beach or the historical charm of Smyrna, Delaware ensures its residents don’t just live, but thrive. As you consider the next place to call home, remember that in Delaware, every town and city offers more than just an address — it promises an experience.

Source: rent.com

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Apache is functioning normally

Newrez has launched Onward Home Mortgage, a joint venture mortgage company in partnership with Keller Williams Georgia Legacy Group (GLCG).

Through the partnership with agents at Keller Williams GLG, mortgage professionals at Onward Home Mortgage and Newrez will target borrowers in the Southeast United States.

“This is a marriage of outstanding organizations that will now grow even stronger. I am humbled and honored to lead such a talented group of professionals and can’t wait to continue getting more borrowers into the homes of their dreams,” Kathy Vitali, President of Onward Home Mortgage, said in a prepared statement.

Headquartered in Roswell, Georgia, Onward Home Mortgage specializes in residential purchase mortgage lending and has a presence in the greater Georgia and Alabama areas. It is part of the Newrez Ventures platform.

GLG is a Keller Williams Realty franchise group of residential real estate brokerages located in Georgia, servicing Alpharetta as Keller Williams Realty North Atlanta, Roswell as Keller Williams Realty Consultants, Peachtree Corners as Keller Williams Realty Chattahoochee North and surrounding metropolitan Atlanta areas. 

Established in 2017 as a group, the three franchises have been in operation independently for more than two decades and have more than 2,000 licensed real estate agents in Georgia.

Newrez has 15 joint venture partners including Carolina One Mortgage, Shelter Mortgage Company and Summit Home Mortgage, according to its website. 

“Newrez and Newrez Ventures’ commitment to bringing affordable housing to borrowers nationwide continues as Onward’s vast product suite tailors uniquely to the needs of today’s borrowers, from FHA to First Time Homebuyer programs,” Newrez said. 

A joint venture typically ramps up faster than a traditional mortgage company. At a mortgage brokerage joint venture, loan officers generally get paid a lower base salary than counterparts at traditional lenders and may get a smaller commission because the LO is doing less work finding customers as there are greater real estate agent referrals.

Though the mortgage-real estate brokerage JV model was popular during the pandemic years, the Consumer Financial Protection Bureau’s relative newfound interest in scrutinizing possible RESPA violations could chill interest.

Source: housingwire.com

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Apache is functioning normally

Here’s a little nugget of potentially good news that may materialize out of the fiscal cliff.

The Treasury Department is reportedly floating a new initiative, referred to as the “Market Rate Modification Program,” which will allow underwater borrowers with non-agency mortgages to do a rate and term refinance to take advantage of today’s low interest rates.

As it stands, if Fannie Mae, Freddie Mac, or Ginnie Mae don’t back your mortgage, getting a loan modification is difficult, if not impossible.

And while most newly originated loans are now backed by these government agencies, many non-agency mortgages, also referred to as private-label mortgages, were originated during the housing boom.

As a result, millions of Alt-A loans, subprime loans, option arms, jumbo loans, and so forth are not eligible for the existing government refinance and modification programs, such as the popular HARP II.

The Treasury Department has determined that “Significantly Underwater Borrowers,” characterized as those with loan-to-value ratios of 125% or higher who have such loans are more likely to default, despite being current on payments.

In short, these borrowers are unable to get the assistance fellow Americans (or even neighbors) receive because their loans aren’t backed by Fannie, Freddie, or the FHA/VA, so the Obama Administration fears they may walk.

Obviously, the last thing we need is more foreclosures, especially now that everyone seems to think we’ve “turned the corner.”

How the Market Rate Modification Program Would Work

It all sounds quite simple. If you’re one of those “Significantly Underwater Borrowers” that is current on mortgage payments, all you’d need to do is provide a hardship affidavit with your application.

The letter is meant to prove a “reasonably foreseeable default” under mortgage securitization rules to appease investors who might otherwise prefer their higher original yield.

From there, if approved, participating loan servicers would lower your mortgage rate to the “current market rate,” as determined by the Freddie Mac Primary Mortgage Market Survey.

At last check, the going rate for a 30-year fixed was a very attractive 3.32%, a far cry from the 6-7% rates seen during the housing run-up.

Surely that reduction in mortgage payment would make homeowners think twice about hating their “now worthless” properties.

Each month during the five years after the modification took place, the Treasury would pay loan servicers the difference in interest between the borrower’s old rate and new.

After the five years are up, the Treasury would stop compensating servicers, regardless of whether said loans were above water or not, and the borrower’s interest rate would remain at the lower rate.

Apparently this would appease investors while also providing much needed relief to homeowners thinking of throwing in the towel.

It would also provide much needed stability to the housing market, which is surely not yet on solid ground.

Why It’s Important

Back in 2009, I wrote about private-label mortgages, which while only making up a small percentage of total mortgages outstanding, accounted for 62% of the delinquencies.

If these bad loans continue not to be addressed, the resulting defaults and foreclosures could hamper a housing recovery for everyone, including those with agency-backed loans.

So this is a very important initiative, and one that could make the impending fiscal cliff a little less painful.

For the record, House Democrats are also working on a bill that would provide principal reductions for those with Fannie and Freddie backed loans.

Of course, the more they attempt to stuff into negotiations, the longer it will take to reach a resolution.

Source: thetruthaboutmortgage.com

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Apache is functioning normally

Optimization, Document Tracking, MSR Financing Products; Saving Money on Credit Reports and CE

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Optimization, Document Tracking, MSR Financing Products; Saving Money on Credit Reports and CE

By:
Rob Chrisman

Mon, Oct 2 2023, 10:32 AM

As President Jimmy Carter celebrated his 99th birthday seven months into hospice, welcome to the 4th quarter! (Will lenders experience any “Q-4-ia”? Say out loud.) Let’s talk U.S. lists! California, Indiana, Michigan, Texas, and Virginia are top five in pumpkin growing. The National Association of Realtors, U.S. Chamber of Commerce, Pharmaceuticals, American Hospital Association, and Blue Cross/Blue Shield are the leading five lobbying spenders. And you can add the Internal Revenue Service’s Income Verification Express Service (IVES) to the list of “essential” government activities that would continue to operate in the event of a government shutdown. We won’t have to worry about that until mid-November, as the government kicked the can down the road and passed a Continuing Resolution that averts a government shutdown to November 17. HUD (Ginnie Mae and FHA included), USDA, and the VA will continue to operate temporarily uninterrupted, and for a bonus the bill also includes $16 billion in disaster aid and an extension of the National Flood Insurance Program (NFIP). (Today’s podcast can be found here and this week’s is sponsored by TRUE. TRUE creates accurate data that powers automation and optimizes every step of the lending lifecycle, helping lending organizations rapidly process loans, dramatically cut costs and risk, and radically improve the customer experience. Hear an interview with Keyspire’s Michael Sarracini on housing affordability problems and the best advice for young potential homeowners.)

Lender and Broker Software, Programs, and Services

“ACUMA Matata! What a wonderful phrase!” This phrase captures the essence of the ACUMA Annual Conference, where Dark Matter is currently meeting with its Credit Union clients and prospects. Credit unions gather at this event to explore new horizons in loan origination. In this dynamic financial landscape, credit unions require a powerful, adaptable LOS that caters to their unique needs. Enter Empower LOS, Dark Matter’s King of the Jungle. Empower embodies next-gen solutions, automating tasks, and ensuring precision with “lights-out processing.” It enhances loan origination, improves quality, reduces turnaround times, and supports compliance while boosting member satisfaction. Our integrated suite of tools complements Empower, elevating lending operations. From automation assistants to machine learning-powered document management, we have it all. Ready to transform your lending game? Connect with us and we’ll explore how Empower and Dark Matter Technologies can redefine credit union lending. “ACUMA Matata!” No worries: our tech-forward solutions make lending possibilities endless.

Your bank can be more than just a bank. With powerful national resources and personalized, one-on-one relationships with industry experts, you have a strategic edge. Western Alliance Bank Specialized Mortgage Services delivers stable, trusted treasury management and mortgage banking services that can keep pace with your company’s growth needs and help keep your operations running smoothly while taking advantage of competitive rates. Advanced payment technology provides streamlined online wire transfer origination with just a few clicks as well as embedded finance, API, file-based and online platform options, all customizable to meet your current and future priorities. You’ll also appreciate our options for warehouse lending, MSR financing, note financing and other mortgage finance products that offer speed to approval and certainty of execution. Contact Mark Short(469) 702-6212, Nick Richards (646) 708-1211, Nicole Avey (720) 633-4759, Elizabeth Mix (480) 329-2122, Jim Karr (626) 390-8534 and Chris Martin (480) 341-5483. Western Alliance Bank, Member FDIC.

“Falcon Capital Advisors’ team of experienced advisors can take your digital mortgage goals from vision to reality. Our team of subject matter specialists has provided guidance to major lenders and investors, expertly guiding them through the various processes and potential obstacles to quickly stand up their digital mortgage programs. Our comprehensive suite of services includes eMortgage readiness assessments, strategic roadmap development, vendor selection support, program implementation, and securing investor and MERS approval. Our experts can mitigate risks and achieve faster (and less expensive) results and even revitalize stalled eMortgage efforts. Contact Jim Voth to learn more.”

To deliver the best borrower experience and remain compliant, servicers and investors must release liens in a narrow window after payoff. NTC, the leader in lien and assignment release services for 35 years, now offers lenders two options: their traditional full-service offering, and a self-serve, “share-the-work” option: PerfectDocs. The first, complete web-based lien solution, PerfectDocs enables the creation and tracking of all documents needed to complete a lien release and mortgage assignment including reviewing, executing, and notarizing documents and sending them to counties for e-recording for non-MERS and MERS loans. It also features intuitive queues for exceptions, downstream mailings to borrowers or custodians, recording confirmations and fee reconciliations. The platform allows users to share the work with NTC’s team during volume fluctuations or request assistance on complex “cures.” Interested in 100 percent client control with on-demand integration to full service to cure exceptions? Request a PerfectDocs demo to learn more and see how we can share the work!

Fall has arrived, kicking off the football and conference season! And that means plenty of opportunities to grab a pumpkin spice latte and meet up with the Computershare Loan Services (CLS) team at some of the industry’s most significant events. This year, MBA’s Annual Convention is in Philadelphia on October 15-18, and CLS wants to meet you there. Contact them at [email protected] to schedule time together in the city of brotherly love. They’ll tell you all about CLS’ subservicing solutions, origination fulfillment services, co-issue MSR acquisition program, and mortgage cooperative that can help you stay one step ahead.

Free eBook: Market-Proof: How to Build a Flexible Lending Business Resilient in Upcycles & Downturns. The exaggerated upcycles and downturns of the past few years underscore just how crucial it is for lenders to build resilience and flexibility into their businesses. To overcome today’s challenges, lenders need to hone their lending process at each step. In this new eBook, Maxwell provides 12 tips from industry veterans to help you optimize your mortgage process from loan application to the secondary market. You’ll get insight from exclusive interviews with industry veterans on how to increase efficiency, access economic scale, and become resilient to market volatility like never before. Click here to download Maxwell’s new eBook “Market-Proof: How to Build a Flexible Lending Business Resilient in Upcycles & Downturns.”

Saving Pennies Into Saving Dollars

My cat Myrtle thinks nothing of enjoying the benefits of minced, line-caught halibut from the 48-degree waters off Kodiak, Alaska. No expense spared. But for lenders and vendors, staring at an autumn and winter with relatively high rates, saving pennies is critical especially if it means saving jobs and many money-saving ideas are simple and right under your nose.

Mike Metz, with VIP Mortgage, and Faith Howard-Mooney, with The Mortgage Collaborative, recently led a discussion at TMC’s Nashville event on cost saving ideas. For example, are you bundling or cascading credit reports and verification providers? Are you looking at alternatives for courier and shipping vendors? Or, looking at alternatives for tax transcripts? You’d be surprised to hear how much these seemingly small things can add up. (If you want to get involved in conversations like these, contact Faith to learn how you can get involved, or about TMC’s next event in Louisville.)

The conversation continues. Lenders are still seeking ways to reduce costs in the current market environment. Lenders One helps its membership with various benefits, such as free NMLS CE Courses via OnCourse Learning. Consider the math. If you have 100 MLOs needing continuing education at an average $100 per course, you’d spend $10,000 just on CE courses. As a member, your MLOs would take NMLS CE Courses at no cost to your company! Also, with L1 Credit, an approved credit reporting agency with a full suite of credit, flood, fraud, and verification solutions, L1 can offer members pricing that is consistently less than other offerings while still providing industry-leading customer support. L1 Verifications includes the top VOE/I and VOA products in an available waterfall sequence for more savings opportunities. L1 Events? Don’t miss the Executive Roundtable in San Diego, 11/7-8, and registration is open for L1 Summit 2024 in LA, 3/3-6. Visit L1 or contact Tricia Migliazzo to learn more.

Capital Markets

The month and quarter ended on Friday, and it was, to put it mildly, an awful month for bonds and MBS, and therefore mortgage rates. The Fed’s restrictive monetary policy has tightened financial conditions by design, and 30-year fixed rate mortgages closed the month at nearly 7.5 percent, up roughly 30 basis points over the past 30 days. The 10-year currently sits around 4.6 percent, a far cry from the 1.5 percent yield it paid in the weeks leading up to the Fed’s initial rate hike in March 2022 (or the 51 basis points low in August 2020, or even the 3.31 percent it closed at on April 6); it closed Friday +13 basis points for the week and +48 basis points for the month. The Fed is showing no sign that it is going to pivot back to an easy money policy anytime soon. The first fed funds cut is forecasted for next summer (2024).

Is a soft landing becoming less likely? The effects of the auto workers strike, higher energy prices, and student loan payment resumption may ripple through the economy in the form of lower consumer spending and a slowdown in hiring. The potential federal government shutdown in mid-November may eventually throw a curveball at the Fed, which admittedly relies on economic data reports to enact forward looking policy.

Meanwhile the year-over-year core PCE index, which excludes food and energy, declined to 3.9 percent in August, its lowest annualized pace since early 2021. The latest update to second quarter GDP was unrevised at 2.1 percent annualized growth, however consumer spending growth was revised down from 1.7 percent to 0.8 percent. Durable goods orders in August rose 0.2 percent, exceeding market expectations for a 0.5 decline as new orders for defense aircraft and parts jumped 19.2 percent. Excluding defense, orders for capital goods increased 0.9 percent as businesses continued to invest in equipment. The resilience of the economy up to this point has increased the prospects of a “soft landing” in the eyes of some Fed officials, however recent economic headwinds have increased the level of uncertainty which could have implications for future Fed policy.

This week culminates with the September payrolls report on Friday, and expectations are for 170k in the headline figure. Several labor market indicators are also on the calendar including JOLTS job opening on Tuesday, ADP employment on Wednesday, and Challenger job cuts on Thursday. Other releases of interest include PMIs, construction spending, factory orders, trade, and consumer credit. Fedspeak is on the heavy side, including four speakers today. Regarding MBS, Agency prepayments will be released after Thursday’s close. Today’s calendar kicks off with the final September S&P Global manufacturing PMI later this morning and will be followed by ISM manufacturing PMI for September and construction spending for August. We begin the day, week, month, and quarter with Agency MBS prices worse than Friday night by .125-.250 and the 10-year yielding 4.62 after closing Friday at 4.57 percent.

Job Openings

“Pezian Search Group continues to have success in this difficult market. With thousands upon thousands of Client contacts and candidates from coast-to-coast throughout the United States, we are the go-to hiring experts in the Mortgage, Banking, Credit Union, Title & Escrow, Financial Services and Technology spaces that help companies succeed and people grow in their careers. We offer flexible search options, added benefits to long-term Clients, as well as a satisfaction guarantee on our placements that cover both skill set and culture fit. From Loan Officers to Loan Operations, Front-office to Back-office, the Call Center, the C-Suite, and everything in between, let us show you how we can make an impact for your organization. Clients and Job Seekers can connect with us and our Leadership on LinkedIn, reach our team, by completing the contact forms on our website, and reviewing our current openings.”

A large, well-known financial institution is looking to purchase a small wholesale mortgage banker who is in good standing, has its “tickets” with Fannie, Freddie, and Ginnie, and (preferred) has a national footprint with licensing. Loan production volume is not a priority. Strong chance that employees, ownership, and AEs will be retained, as will the name of the seller. Seller/servicer a plus. Interested parties should send me a confidential note for forwarding.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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Apache is functioning normally

Editor’s Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

What happens if I miss a student loan payment? That’s the question on many borrowers’ minds as federal student loan payments resume after more than three years of emergency forbearance.

Missing payments on student loans can have a variety of negative consequences, including damage to your credit score and wage garnishment. However, the Biden administration is offering a temporary “on-ramp” to ease the transition back into repayment. Until the end of September 2024, borrowers will not have to worry about their student loans falling into default or damage to their credit score if they miss payments.

Interest will continue to accrue during this time, though, and any missed student loan payments will be due eventually. Rather than ignoring your student loan bills, take some time to review your options for making them more affordable. The Department of Education offers various plans to help struggling borrowers get back on track.

What Happens if I Miss a Federal Student Loan Payment?

Missing federal student loan payments typically leads to delinquency and default, but from October 2023 through September 2024, borrowers who miss a payment will avoid these consequences. Here’s a closer look at what this student loan on-ramp entails, followed by what typically happens when you miss payments.

Understanding the Student Loan On-Ramp

Federal student loan borrowers have been exempt from student loan payments and interest since March of 2020. With the end of this emergency forbearance, the Biden administration is offering a one-year on-ramp for borrowers to adjust to the new reality. Until Sep. 30, 2024, borrowers won’t face the usual consequences if they miss payments.

For example, your loans won’t fall into delinquency or default, and missed payments won’t be reported to the credit bureaus. Your loans won’t go into collections, and you won’t have to worry about garnishment of your wages, tax refund, or Social Security benefits.

What’s more, the interest that accrues during this year won’t be capitalized, or added onto, your principal balance when the on-ramp expires. This on-ramp gives borrowers time to start making payments again after the lengthy pause.

However, interest will still accrue during this time, and you’ll still have to pay back your loan eventually. Instead of skipping payments over the next year, you may be better off applying for an income-driven repayment plan for more affordable monthly bills.

What Normally Happens When You Miss a Student Loan Payment

Normally, your student loan is considered delinquent the day after you miss a payment. Even if you start making the next payments, your account will remain delinquent until you make up for the missed payment or receive deferment or forbearance.

Once 90 days pass, your loan servicer will let the major credit reporting agencies know that your loan is delinquent. Your credit score will take a hit, making it more difficult to qualify for good terms on loans or credit cards or to rent an apartment.

If you continue not paying, your loan will go into default. For federal loans, the government will wait 270 days. Defaulting on your student loan has serious consequences. The entire amount you owe on your loan, including interest, becomes due immediately.

You won’t be able to take out any other student loans, and you’ll no longer qualify for deferment or forbearance or be able to choose your own mortgage, car loan, or other forms of credit. The government may take your tax refund or federal benefits to pay off your loan. You may also have your wages garnished, meaning your employer will take part of your paycheck and send it to the government to be applied toward the loan.

It’s rare, but the government can also sue you at any time — there’s no statute of limitations. You may also be responsible for collection fees, attorney’s fees, and other costs. In other words, you do not want to default on your student loans. (If you do, options exist for getting out of default, such as the Fresh Start program.)
💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

What Happens if I Miss a Private Student Loan Payment?

Private lenders usually give you much less leeway than the federal government. Exactly what happens if you miss a payment depends on the company’s policies and your loan terms. A private lender can tack on late fees and transfer your loan to a debt collection agency.

Also, private lenders can sue you if you stop paying your student loans. If they win, a court can sign a judgment allowing them to garnish your wages. States set the statute of limitations for lawsuits about payment of private loans; the time period usually ranges from three years to a decade. But the lender can continue trying to collect the debt for as long as they want. Plus, certain actions can reset the statute of limitations, such as making a payment or even acknowledging that the debt belongs to you.

Will My Loans Eventually Go Away if I Can’t Pay?

If you stop paying your student loans, they will not go away. However, it may be possible to discharge student loans in bankruptcy or qualify for student loan forgiveness or discharge.

For example, federal student loans can be discharged if you suffer from a total permanent disability or your school closes while you’re attending or soon after you leave. You can also pursue student loan forgiveness programs, such as Public Service Loan Forgiveness or Teacher Loan Forgiveness.

Student loan cancellation from an income-driven repayment plan may also be an option. Income-driven plans will discharge your remaining student loan balance at the end of your term. While the term is 20 or 25 years for some plans, the new SAVE plan will offer forgiveness after 10 years if your original principal balance was $12,000 or less. On all the income-driven plans, it’s possible that your monthly payment could be $0, depending on your discretionary income.

For instance, borrowers who earn less than $32,800 as individuals or $67,500 as a family of four in most states could have $0 monthly payments on the SAVE plan. If this describes you, you could essentially stop paying your student loans and see them go away after anywhere from 10 to 25 years on the plan, depending on how much you borrowed and whether you took out the loans for undergraduate or graduate school.

However, you’ll have to apply for income-driven repayment and recertify your income annually to stay on the plan and keep making progress toward loan cancellation. If you give the Department of Education permission to access your tax information, it can recertify your plan automatically each year.

What if I’m Experiencing Financial Hardship?

If you are having a tough time with your finances or are putting off making a late student loan payment, don’t just ignore your loans; instead, approach your lender or loan servicer to discuss your options.

For federal loans, an income-driven repayment plan could help. Income-driven plans, which include SAVE, PAYE, Income-Based Repayment, and Income-Contingent Repayment, adjust your monthly payments based on a percentage of your discretionary income. Most also extend your loan terms and offer loan forgiveness if you still owe a balance at the end. The new SAVE plan particularly has the most generous terms for borrowers.

You might also be able to qualify for a deferment or student loan forbearance, allowing you to temporarily stop or reduce payments. If you’re in deferment, depending on the type of loan you have, you may not be responsible for paying the interest that accrues during the deferment period. Among other reasons, you can apply for deferment if you’re in school, in the military, unemployed, or not working full-time.

You can apply for forbearance if your student loan payments represent 20% or more of your gross monthly income, if you’ve lost your job or seen your pay reduced, if you can’t pay because of medical bills, or if you’re facing another financial hardship, among other things. Private lenders are not required to offer relief if you’re facing hardship, but some, including SoFi, do.

Will I Be Sent to Collections if I Do Not Pay My Student Loans?

It is possible that if your student loan is in default it may be sent to a collections agency. Federal student loans in default are managed by the Department of Education’s Default Resolution Group. The Default Resolution Group oversees collections for all federal student loans that are in default, so they are not sent to a private collections agency.

The Department of Education is temporarily offering a Fresh Start program for student loans in default. By calling your loan servicer or logging into myeddebt.ed.gov, you can get your loans back into active repayment, enroll in a new repayment plan, and have the record of default removed from your credit report. You’ll also regain access to federal financial aid.

Private student loans may be sent to a collection agency as soon as the loan enters default, which is generally after 90 days of non-payment.

What if I Don’t Expect My Situation to Change Anytime Soon?

Deferment, forbearance, and relief offered by private lenders are temporary solutions. If your financial hardship looks like a long-term issue, you’ll need a permanent fix.

With federal loans, you may be eligible for an income-driven repayment plan. The government currently offers four plans that aim to make payments affordable by tying them to your monthly income.

On most plans, the payments range between 10% and 20% of your discretionary income, and if you make them on time, the balance is eligible to be forgiven in 20 or 25 years.. As mentioned, though, the new SAVE plan may offer loan forgiveness after just 10 years, depending on your original loan balance. Plus, starting in July 2024 it will cut monthly payments on undergraduate loans in half. For most borrowers, the SAVE plan will likely offer the most affordable monthly payments. However, parent loans are not eligible for SAVE. If you’re a parent borrower, your only option for an income-driven plan is Income-Contingent Repayment.

Private student loans are also not eligible for income-driven repayment, and most private lenders don’t offer this option. If you’re struggling to afford your private student loan bills, though, it’s worth explaining your situation to the lender and seeing if they can work with you on a feasible repayment plan. It’s in their interest to continue collecting even partial payments from you, rather than seeing payments stop altogether and having to go through the trouble of lawsuits or referrals to collection agencies.

Why You May Want to Consider Refinancing

Another potential long-term solution to unaffordable payments is student loan refinancing. With a private lender like SoFi, you can refinance federal student loans, private loans, or both. Refinancing involves obtaining a new loan to pay off all of your old ones and committing to the new terms and interest rate.

Refinancing your student loans can make sense if you qualify for a lower interest rate, which, depending on the term you choose, may be able to cut down the money you spend in interest over the life of your loan. Or, if you choose a longer term than you originally had when refinancing, you could lower your monthly payments, which can make the loan more affordable for you now. You may pay more interest over the life of the loan if you refinance with an extended term.

When you refinance with SoFi, you won’t pay any origination fees to refinance, and if your financial situation improves down the line and you want to pay off your loan faster, you won’t face prepayment penalties. It takes just two minutes online to figure out whether you qualify and the potential rates you can obtain.

The Takeaway

Missing student loan payments can have serious consequences, including entering default and damaging your credit score. Fortunately, borrowers have some leeway through September 2024 as they adjust to making payments on their federal loans again. However, private student loans offer no such benefit.

Refinancing could be an option to consider for borrowers looking to secure a lower interest rate. Consider SoFi — where there are zero fees for refinancing student loans and qualifying borrowers can secure a competitive interest rate.

Hoping to get a handle on your student debt? Look into whether refinancing your student loans with SoFi could help you lower your payments or save money in the long term.

FAQ

What happens if I’m late on a student loan payment?

If you are late on a student loan payment, the loan may be considered delinquent. The loan will remain delinquent until a payment is made, or other arrangements — such as deferment or forbearance — are made. Through Sep. 30, 2024, missing payments on your federal loan payments won’t cause them to go into delinquency or default thanks to the student loan on-ramp.

Does a late payment on a student loan affect credit?

A late payment may have a negative impact on your credit score. With the exception of the student loan on-ramp through the fall of 2024, federal loans are normally reported to the credit bureau if they remain delinquent for 90 days. Private student lenders may report a late payment to credit bureaus after 30 days.

What happens if you miss a student loan payment by 270 days?

If you fail to make payments on your federal student loan for 270 days, the student loan will enter default (again, with the exception of the temporary student loan on-ramp). Consequences of default can be serious, such as the total balance of the loan becoming due immediately.

Private student loans may be considered in default after 90 days.

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Student Loan Refinancing
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.

SoFi Private Student Loans
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SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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