Vendor Products, MI News, Fannie and Freddie in the Markets, Refis Down to 2009 Levels

By rchrisman@robchrisman.com

There's a man trying to cross the street. As he steps off the curb a car comes screaming around the corner and heads straight for him. The man walks faster, trying to hurry across the street, but the car changes lanes and is still coming at him.
So the guy turns around to go back, but the car changes lanes again and is still coming at him. By now, the car is so close and the man so scared that he just freezes and stops in the middle of the road. The car gets real close, then swerves at the last possible moment and screeches to a halt right next him.
The driver rolls down the window. The driver is a squirrel.

The squirrel says to the man, "See, it's not as easy as it looks, is it?"

"The flat earth society has members all around the globe." Speaking of orbs, while global wealth totals $255 trillion, the median wealth of all 4.8 billion global adults is just $2,222; the average is $52,819. Economist Elliot Eisenberg informs us that, "In North America, it takes $4.47 million in wealth to be in the top 1%, in Europe it takes $1.41 million, in Asia-Pacific $660,000 and in China $230,000. The 33 million earthly millionaires, 0.7% of the global adult population, own 45.6% of all planetary wealth."

 In vendor and MI news...

 The mortgage tech company Special Agent X has launched Version 2.0 of its X-Ray digital dashboard. We had already told you about how X-Ray transforms massive amounts of information on loans, leads and accounting, as well as information from CRM systems and loan operating systems, into easy-to-understand, readily available analytics and reports that drive top-level decisions at mortgage companies/branches. This new version of the dashboard features three new benchmarking tools that help you quickly get accurate reads on the close of loans and projected close rates. It also features a goal report based on historical performances. These benchmarking tools give you the ability to forecast in real time at the touch of a button from a smartphone or tablet. If you haven't checked X-Ray out yet, sign up for a demo at specialagentx.com.

 Pricing engine and loan product eligibility provider, Mortech, recently announced a new integration with California-based whole loan mortgage trade management software provider, Resitrader. The integrated solution provides a secondary marketing interface that allows lenders selling loans on the secondary market to compare offers from investors with best execution and mandatory pricing from Mortech. With Mortech's rate data APIs, the integrated platform gives lenders immediate and accurate pricing data for deeper insight into the best time to execute trades on the secondary market and see how a potential buyer's bid compares to their Mortech rate models. For more information on this service please contact Ryan Cameron.

 Radian Group Inc. has a new CEO & board of director member: Richard G. Thornberry. He was formerly chairman and chief executive officer of NexSpring Group, LLC, and will succeed S.A. Ibrahim, whom the company previously announced would retire this year. (NexSpring Group is a provider of mortgage industry advisory and technology services.) Thornberry began his career as a certified public accountant for Deloitte.  

 In addition, Radian Guaranty Inc., the mortgage insurance (MI) subsidiary of Radian Group Inc., has been named one of America's Top Mortgage Employers for 2017 by National Mortgage Professional Magazine. The award was announced in the January edition of the National Mortgage Professional Magazine. National Mortgage Professional magazine rated companies based upon reader's polls about their employers. The following criteria were considered: compensation, speed, marketing support, technology, corporate culture, long-term strategy, day-to-day management, internal communications, training resources, industry participation, and innovation, with some categories weighted more heavily than others.

 Essent Group Ltd. came out with its earnings which seemed to have beaten most estimates. (So, were the estimates wrong, or is Essent doing really well?) It seems ESNT had a stronger-than-expected premium margin. Flow NIW of $10.5 billion compared to $10.3 billion in 3Q and $6.0 billion in 4Q16. One analysis I saw said it would appear that "the average premium margin was down to 58.1 bps from 59.1 bps in 3Q, but above our 56.0 bps estimate (the company reported a margin of 56 bp down from 58 bp)."

 And Essent Guaranty, Inc. and Mortgage Cadence LLC, an Accenture Company, announced that ordering Essent MI services through the Mortgage Cadence Enterprise Lending Center (ELC) loan origination solution (LOS), "is now even easier for underwriters. The Essent MI integration, already available to lenders through Mortgage Cadence's LOS, now provides even greater efficiency."

 Post-closing errors related to trailing or missing documents are an expensive and follow up is manual, time-consuming, and expensive. However, technology is now available to automate and simplify post-closing processes without the need to outsource or hire additional resources. Learn how to overcome the challenges of post-closing in this free white paper from Simplifile.

 Global DMS and OpenClose jointly announced that they completed a seamless, bi-directional interface between Global DMS' eTrac Enterprise valuation management platform and OpenClose's LenderAssist™ loan origination system (LOS). The new integration eliminates manual touch points, reduces costs and ensures appraisal compliance. Using the integration, lenders can efficiently order appraisals, check real-time status, receive appraisal files back into OpenClose's LOS, and compliantly submit them to the Uniform Collateral Data Portal (UCDP) or Electronic Appraisal Delivery (EAD) portal. This completely streamlines data exchange and communication between the two platforms and speeds up the entire process. Global DMS provides OpenClose customers with detailed reports for audit tracking and visibility over their appraisal processes.

 Switching to the government sector, the CFPB is offering a webinar on the 2015 HMDA final rule that discusses identifiers, as well as other data points including those related to applicants and borrowers. In addition, the Bureau has made available on its website a chart to illustrate the options a financial institution has for collecting and reporting ethnicity and race information under current Regulation C, Regulation C effective January 1, 2018, and the Bureau's Official Approval Notice (issued on September 23, 2016).

 Capital markets update

 Throughout the world, countries that have traditionally been the biggest foreign holders of US government debt are selling their Treasury securities. Given the laws of supply and demand, if foreign demand for US bonds continues to fall, prices drop, and rates go higher - borrowing could get more expensive.

 But issuance continues. If you have a few spare bucks in your wallet, Fannie Mae announced its latest sale of non-performing loans, including the company's sixth Community Impact Pool. "The Community Impact Pool is a smaller pool of loans that is geographically-focused, high occupancy, and marketed to encourage participation by non-profit organizations, minority- and women-owned businesses (MWOBs), and smaller investors." How much are we talking about? The four larger pools of approximately 10,000 loans totaling $1.76 billion in unpaid principal balance (UPB) are available for purchase by qualified bidders. Bids are due on the four larger pools on March 7^th and on the Community Impact Pool on March 21^st.

 PRNewswire notes that, "Among other elements, terms of Fannie Mae's non-performing loan transactions require the buyer of the non-performing loans to pursue loss mitigation options that are sustainable for borrowers. In the event a foreclosure cannot be prevented, the owner of the loan must market the property to owner-occupants and non-profits exclusively before offering it to investors, similar to Fannie Mae's FirstLook program. Interested bidders are invited to register for future announcements, training and other information here.

 Freddie, of course, doesn't want to be left behind, and priced a $752.5 million Structured Agency Credit Risk (STACR) debt notes offering, the first high LTV deal of the year. Through STACR, its flagship credit risk transfer offering, Freddie Mac transfers a significant portion of its mortgage credit risk on certain groups of loans to private investors.

 If you've ever wondered how the pricing works, STACR Series 2017-HQA1 is sliced and diced like this: M-1 class was one-month LIBOR plus a spread of 120 basis points, M-2 class was one month LIBOR plus a spread of 355 basis points, B-1 class was one month LIBOR plus a spread of 500 basis points, and B-2 class was one month LIBOR plus a spread of 1275 basis points.

 STACR 2017-HQA1 has a reference pool of single-family mortgages with an unpaid principal balance (UPB) of approximately $29.7 billion, consisting of a subset of fixed-rate, single-family mortgages with an original term of 241 to 360 months acquired by Freddie Mac between April 1, 2016, and July 31, 2016 and with LTVs ranging from 80 to 97 percent. Freddie Mac holds the senior loss risk in the capital structure and a portion of the risk in the Class M-1, M-2 and B-1 tranches, and a significant portion of the first loss in the B-2 tranche. If you want to learn more, Freddie has a STACR issuance calendar to help investors plan their allocations.

 All this supply (and demand) impact rates in some manner, but yesterday the markets were moved more by "dovish" comments from Fed Chair Yellen, in her testimony and Q&A in front of the Senate Banking Committee. Ms. Yellen indicated that the FOMC would consider a rate hike during the March meeting, but rate hikes could happen at any meeting. And regarding the Fed's portfolio of $4.5 trillion in agency MBS: the reinvestments would stop gradually, adding that balance sheet strategy would be discussed at coming FOMC meetings.

 What did rates do besides chop around a lot on Tuesday? The 10-year yield broke above 2.50% briefly but then plenty of buyers stepped in for it and agency MBS. At the close, the 10-year note had worsened nearly .375 but the 5-year note and MBS prices worsened less than .250.

 This morning we've already seen the application figures (not locks) from the MBA: down almost 4%, and 31% lower than a year ago. Refinance volume now stands at its lowest level since June 2009, and is down 50% from a year ago. We also saw the January Consumer Price Index (+.6%, core +.3%), Retail Sales (+.4%, ex-auto +.8%), and the February Empire State Manufacturing Survey (up to 18.7). Coming up are January Industrial Production & Capacity Utilization, December business inventories, the February NAHB Housing Market Index, and a bevy of Fed speakers across the nation at various events. After the strong inflation and retail sales figures, which indicate that the U.S. economy continues to be forging ahead, in the early going rates are higher versus last night: the 10-year is yielding 2.51% and agency MBS prices are worse a solid quarter.