The percentage of refinances of overall volume has fallen dramatically from a few years ago, leaving purchases to be the basis of business out there. Lenders are asking themselves, “How’s our non-owner product?” Investor buyers accounted for 15 percent of home purchases in the first quarter of 2024, the highest share in the data’s history. The number of investor purchases fell slightly annually, clocking in at the lowest level since 2020, but still exceeded pre-pandemic highs, topping 2019-Q1 by over 10 percent. Though more non-investors are purchasing in all cash, investor cash-purchase activity fell annually in the first quarter as all investors expanded their use of debt financing and as the mix of investor buyers shifted to small and medium investors, who are somewhat more likely to use debt over cash. Small investors made up 63 percent of investor purchases. Loan officers and borrowers often ask about who has purchased their mortgage, and why. The answer is very important from a capital markets perspective, and the current STRATMOR blog is titled, “What Happened to that Mortgage?” (Today’s podcast is found here and is sponsored by Calque. Calque provides a binding backup offer on a borrower’s departing residence, which empowers lenders to provide a bridge-like experience with easier qualification and less risk. Today's episode features an interview with Brian Gibson and Chandra Srivastava on current buy-before-you-sell products.)
Lender and broker software, services, and products
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On June 20, federal regulators published new quality control standards for automated valuation models (AVMs). The standards focus especially on safeguarding the credibility and integrity of AVMs to support fair lending practices and non-discrimination in real estate property valuations. Now is the time for you to prepare. Attend a complimentary webinar today hosted by ICE for an insightful discussion with leading valuation experts. The webinar, New quality standards for AVMs - are you ready?, will take place today from 2 - 3 p.m. ET. Register now.
Top loan officers use AI technology to stay ahead of the big direct-to-consumer lenders and investors who purchase your loans and then connect with your clients. For loan officers like you who build business through relationships, LoanMAPS by Take3Tech provides AI-driven marketing and upfront underwriting solutions at application for your clients. Combine high-tech solutions with your mortgage expertise. LoanMaps will increase your market share, provide you and your client upfront underwrites at application, and lower your costs using one technology vs 3+ and streamline departmental processes. LoanMAPS is a cloud-based POS/LOS that feeds the CRM. You have one set of credentials and a transparent workflow with PPE, disclosures, and more: loan officers who have been on multiple systems in the past rave about LoanMAPS. Sign up now for a demo, and Take3Tech will show you our appreciation by offering you a free 3-month subscription to www.TheRuleTool.com.
“Mortgage Machine™ is excited to invite you to an informative webinar featuring Leah Sommerville, a renowned industry expert in digital mortgages. Join us as we explore the latest innovations in SMART documents, eClosing, eNotes, and the benefits of a fully digital mortgage workflow. During this insightful webinar, Leah Sommerville and Dan McGrew will dive into the cutting-edge advancements of DocMagic and Mortgage Machine. Throughout this webinar, you'll witness firsthand how Mortgage Machine™, an all-in-one LOS, provides a completely digital workflow experience. Click here to register for this must-attend webinar on Thursday, July 18th at 12 pm CT and stay ahead of the curve in digital mortgage solutions.
“Visio Lending is breaking records with a relentless focus on improving our Broker Experience. We are the nation’s leader in Non-QM Investor DSCR loans for buy and hold SFR rentals with nearly a decade of experience and over $3 billion in originations. No-DTI, 30-year terms, rate buy downs, free 45-day rate locks; I/O and Sub-1 DSCR options available. Now choose your own title company (including on refinances). Through our top-notch Broker Program, brokers are able to earn up to 2 points YSP, and 5 points total. Visio Brokers can count on a designated Account Executive and in-house processing.”
Your customers don’t want to be sold to. They want the help and support of a trusted financial partner who has their best interests at heart. With the addition of Life Event insights to our Customer Intelligence capabilities, Total Expert can help you show up in the moments that matter to your customers. By monitoring your database for key behaviors and leveraging activity alerts that automatically surface opportunities to your loan officers, we'll help you engage customers as soon as they experience a life event or signal intent to take the next step on their financial journey. Watch our on-demand Life Events webinar to see how it all works.
CFPB v Townstone clarification
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In its InfoBytes newsletter, the law firm Orrick noted, “On July 11, the U.S. Court of Appeals for the Seventh Circuit reversed a district court’s decision to dismiss the CFPB’s claims that a Chicago-based nonbank mortgage company and its owner violated ECOA by engaging in discriminatory marketing. The CFPB initiated a redlining enforcement action against the company in 2020, alleging defendants discouraged African Americans from applying for mortgage loans from the company and redlined African American neighborhoods in Chicago. Last year, the U.S. District Court for the Northern District of Illinois dismissed the CFPB’s action. On appeal, the CFPB argued that its interpretation of ECOA is supported by the historical context of Regulation B and has not been contested by Congress. In remanding the case, the 7th Circuit left it to the district court to determine whether the defendants’ alleged conduct was prohibited discouragement under ECOA, in addition to whether defendants’ argument that their allegedly unlawful conduct is protected by the First Amendment’s guarantee of free speech.”
Yesterday the Commentary noted in reference to the 7th Circuit’s recent decision that, “The court validated the CFPB’s claims that the Chicago-based nonbank mortgage company and its owner violated ECOA by engaging in discriminatory marketing.” To clarify, the court did not validate anything about Townstone discriminating. What it did was send it back to district court with the decision that “prospective” applicants were covered by the federal Equal Credit Opportunity Act. We apologize for any confusion or implications otherwise.
Barry Sturner, CEO of Townstone, wrote, “The District Court as well as the 7th Circuit has never ruled on what the CFPB has accused Townstone of saying, in fact, even after eight years the audio (the radio and podcast statements were from 2016 and 2017) of what was said as well as the 1st Amendment right to Free Speech part of this case has never been heard in court. Last February, the District Court Judge ruled that ECOA did not apply to “prospective applicants” and dismissed the case with prejudice. Late last week the 7th Circuit overturned the District Courts ruling on the issue of Prospective Applicant under ECOA. This is all they decided.”
Barry continued, “The 7th Circuit in no way shape or form, validated the CFPB’s claims that the Chicago-based nonbank mortgage company and its owner violated ECOA by engaging in discriminatory marketing, in fact, the 7th Circuit stated in their conclusion that they had no opinion on the CFPB’s claims that talking about crime in the City of Chicago is illegal. The 7th Circuit stated, ‘We do not, however, express an opinion on the underlying merits of the CFPB’s claim. Such analysis is best left for the district court to address on remand.’”
The actual text of the 7th Circuit concluded, “We hold that Regulation B’s prohibition on the discouragement of prospective applications is consistent with the plain text of the ECOA. We do not, however, express an opinion on the underlying merits of the CFPB’s claim. Such analysis is best left for the district court to address on remand. Reversed and Remanded.”
STRATMOR Ops Workshop Coming Up
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While we were all hoping for a modest rebound in the housing market during the spring and summer selling season, it simply has not materialized. It’s still a challenge to earn profits on the production side of the house. Based on MBA Quarterly Performance Report data, 58 percent of lenders were not profitable on production (excluding servicing) for Q1 2024. Operations executives have tried to keep their core team together, but even that has become problematic as staff reductions continue. So, what can lenders do now to continue to streamline operations and weather the enduring downturn? Join STRATMOR Group for its virtual Operations Workshop, August 13,14, and 15, to interact with STRATMOR advisors and peer lenders about improving operational efficiency, overcoming recent challenges and pain points, and current trends in mortgage operations. The three two-hour virtual sessions are designed specifically for senior operations executives. Contact STRATMOR to learn more and reserve your seat today.
MBA Opposes Rent Cap
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President Joe Biden is scheduled to propose a 5 percent cap on annual rent increases when the president visits Nevada today. The plan would require solid Democratic control of Congress to become law. MBA’s President and CEO Bob Broeksmit, CMB, released the following statement on President Joe Biden’s campaign proposal to cap rents nationally:
“Increasing the supply of affordable rental housing nationwide, not politically motivated and self-defeating rent control proposals floated during election campaigns, is the best way to alleviate affordability constraints for renters.
“There are endless examples in localities in America and around the world that prove that rent control is a counter-productive policy idea that ultimately harms renters by distorting market pricing, discouraging new construction, and degrading the quality of rental housing. While the odds are stacked against this proposal ever passing Congress, a federal rent control law would be catastrophic to renters and our nation’s rental housing market.
“MBA is focused on working with the Biden administration, Congress, and local communities on common sense solutions that will boost housing supply, lower costs for renters, and improve the federal government’s multifamily lending programs. One such example would be for the Senate to approve the bipartisan House measure that passed earlier this year that includes meaningful enhancements to the Low-Income Housing Tax Credit program that would encourage the construction of more low-and moderate-income and workforce housing.”
Capital markets: the Trump trade
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The overall economic narrative helps to drive mortgage rates, and after the assassination attempt on former President Trump over the weekend added to the growing sense that he will win the election in November, yields rose to open the week on the belief that his victory will pave the way for friendlier business conditions. A Trump presidency is seen as more inflationary relative to the current administration so would cause investors to pare back rate cut expectations. You may hear some chatter about a “Trump Trade,” which is a bet on growth (read: expected high deficits and increased pressure from the White House on the Fed to lower rates). The yield on 30-year Treasury bonds yesterday surpassed the rate on two-year notes for the first time since January on bets that Trump’s policies will spur growth, and we could see the yield curve continue to reduce its inversion if the market sees stronger growth going forward.
With the Fed going into its blackout period ahead of the next FOMC meeting, this week’s roster of Fed speakers sees no fewer than nine on tap, including remarks from Chair Powell. He spoke yesterday, saying that recent data raises confidence that inflation is on the path to 2 percent, possibly paving the way for a near-term rate cut. Traders are betting that the central bank will cut interest rates up to three times this year despite the Fed’s latest dot plot having the Fed at one cut. What about no rate cuts this year? Some would argue that inflation is far too high and the system is already filled with excess liquidity. A Fed rate cut doesn’t exactly constitute “easing,” since inflation-adjusted interest rates have been rising even sing the Fed stopped tightening last year at this time.
Today’s economic calendar kicked off with retail sales for June (+0.9 percent, well above expectations). Retail sales were expected to come in at -0.2 percent month-over-month on lower auto dealer and gas station sales. Later today brings import/export prices, Redbook same store sales for the week ending July 13, business inventories in May, the NAHB Housing Market Index for July, a couple of short-duration Treasury auctions, remarks from Fed Governor Kugler, and more bank earnings from Wall Street, including Bank of America and Morgan Stanley. We begin the day with Agency MBS prices slightly worse than yesterday’s close and the 10-year yielding 4.21 after closing yesterday at 4.23 percent.
What did the Secret Service agents say to former President Trump during his assassination attempt?
“Donald Duck”
Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current STRATMOR blog is titled, “What Happened to that Mortgage?” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).
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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2024 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)
