I was very excited last Saturday when I rode my bike by a garage sale and saw, “The Holy Bible” for sale, with a “signed edition” sticker on it. Of course I bought it. How cool is that? Trains are pretty cool too. “A railroad conductor needs to make sure he doesn’t go down the wrong track and lose his train of thought.” This morning I head to Milwaukee by train. While in Chicago I spent some time hearing how LOs must get back to the basics, including clear routines and discipline. They must provide education and guidance since LOs are in the “people business.” Technology is a great tool, but not the end-all in the loan process: AI may not take your job but somebody who can use AI might. Lenders, and real estate agents, are asking, “How are companies training a new generation of LOs and other residential mortgage workers?” (Today’s podcast can be found here, sponsored by Visio Lending and its top notch broker program. Visio is the nation’s premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Listen to Part Two of an interview with TechMor’s Chris Wiley on how mortgage companies can best assess the benefits of AI for their organizations.) Lender and Broker Software, Products, and Services In a housing market that feels like a fever dream to LMI and FTHBs, lenders are ramping up down payment assistance (DPA) support at a rapid pace. Just last month, Down Payment Resource (DPR) welcomed six new lenders to its platform, equipping them with an integrated toolset that makes it easy to operationalize DPA across departments and geographies. More than a comprehensive database of the nation’s 2,300+ programs, DPR takes the hard work out of DPA. Its DPA Directory enables product managers to curate programs that meet secondary market requirements, while its Loan Officer Portal automatically matches incoming borrowers with approved assistance programs, its Underwriter Portal provides quick access to program guidelines, and its Consumer Portal generates leads by inviting homebuyers to search for DPA. Schedule a demo with DPR to discover how you can stand out as the go-to resource for home financing in the communities you serve.

The Alabama bank reported that check fraud resulted in operational losses of $135 million between April and September, including $53 million last quarter. The entire banking industry has been beset by higher levels of check fraud since the start of the COVID-19 pandemic.

Loans more than 90 days past due increased for the first time this year in September, according to ICE Mortgage Technology.

The single-family rental giant struck a deal to manage homes for another major landlord at a time when scarce inventory of properties for sale is making it hard to expand.

Banks already share consumers’ transaction data with fintechs, mostly through data aggregators, and often grudgingly through screen scraping. The proposed 1033 regulation could give more control to consumers, better data access to fintechs and a competitive edge to big banks over smaller ones, some observers say.

Though home mortgage issuance has slumped in line with originations, new potential bank capital rules and increased consumer debt consolidation could boost activity for these two subsets in the secondary market.

Mortgage rates began the day in higher territory due to overnight weakness in the bond market.  Bonds (like US Treasuries or the MBS that determine mortgage rates) move higher in yield when they’re weakening.  Higher yields in Treasuries typically go hand in hand with higher MBS (mortgage-backed securities) yields with the latter being directly correlated to mortgage rates. With all of the above in mind, it was no surprise to see mortgage rates move up a bit as 10yr Treasury yields jumped from 4.92 on Friday afternoon to 5.0% at the start of today’s trading session.  Rates stayed high for the first few hours, but bonds experienced a fairly strong rally between 10am and noon ET.   10yr yields fell into the mid-4.8s and MBS were soon in stronger territory versus last Friday’s latest levels.  This allowed almost every mortgage lender to issue updated rate sheets with lower rates.  In terms of MND’s index, we started at 8.01 this morning versus 7.97 on Friday afternoon.  The intraday gains ultimately paved the way for a drop to 7.91. As always, keep in mind that this is an index value that represents an a effective top tier rate for the most ideal 30yr fixed scenario.  It means that plenty of loans are being done at rates in the 8%+ range and many continue to be quoted in the mid-to-high 7s.  Loans in the 7% range tend to have discount points or buydowns.

This Conventional loan update got buried in Fannie Mae’s other bulletins, and it’s worth calling out. If you’re not yet familiar with automated underwriting systems ( AUS ), all lenders submit your electronic loan file to AUS for a real-time decision (with rare exceptions). Human underwriters are required for final approval, so they come in later. DU is Desktop Underwriter, which is the main AUS for approving Conventional loan files. This update relates to new logic programmed into DU over the weekend of November 18th. There are a couple of updates, with the most notable directed to multi-unit home buyers purchasing a Primary residence. Whether using a standard Conventional loan or HomeReady (income caps), this update is split between two scenarios: 2 unit and 3-4 unit.
For 2 unit purchases the required down payment relaxes from 15% to 5%.
3-4 unit purchase transactions get an even bigger gift. Previously requiring 25% down, these transactions only require 5% down.
That is, 5% becomes the minimum down payment , standardized across all 2-4 unit owner-occupied purchase transactions. While that’s specific to multi unit properties, there are plenty of programs that require 3% or less for 1 unit purchases (USDA, for one). Since this change was smothered in other bulletins, your preferred lender might not know about it but we’ve got your back. Here is the official announcement (PDF): DU Version 11.1 Nov Update

Big Rally, But Not Big Enough to Demand an Interesting Explanation

It is unfortunate that, due to timing and a few other factors, a tweet by activist investor Bill Ackman is in the best position to receive credit for sparking a 15bp rally in 10yr Treasury yields.  Ackman simply said “we covered our bond short,” which means he is a buyer instead of a seller.  It could also be taken to mean that he thinks yields have mostly topped out as 10s flirt with 5%.  That conclusion is one that much of the market is at least considering according to trading patterns over the past 3 days.  Ultimately, it will still take data to confirm, but restlessness is increasing.  As for the size of today’s move, compared to Friday’s close, it was roughly a 6bp rally by today’s 3pm CME close–not the sort of surge that demands a big, obvious root cause.

Market Movement Recap

09:12 AM Weaker overnight with 10s hitting 5.02 by 530am ET.  Pushing back now, but still up 5.3bps at 4.967%.  MBS down 3/8ths.

11:24 AM MBS turn green, now up 2 ticks (.06) on the day.  10yr yield down 4.3bps at 4.871.

01:43 PM Gains continue.  MBS up a quarter point.  10yr down 7.6bps at 4.838.

03:18 PM Generally flat since the last update.  10yr down 6.6bps at 4.848.  MBS up 9 ticks (.28).

This morning (as I head to Chicago) and every morning, I keep myself sharp by regularly asking myself the tough questions like, “What happened yesterday?” and “What was I planning on doing just now?” Looking forward, as some attendees of last week’s conference made note of the MBA Annual’s dates in Denver for next year butting up against Halloween, successful salespeople will tell you that many of their best business meetings last week, or at any conference, contained very little business and didn’t take place in a meeting room. I’ve seen this in action many times over the years. Numerous conversations were personal in nature and took place in the hallways or at social events. Yes, the sessions were valuable, although if you’re a company whose unofficial slogan is, “Survive until ’25,” you’re not likely to care much about some Agency’s “Five Year Plan.” (Today’s podcast can be found here, after 5:30AM PT, sponsored by Visio Lending and its top notch broker program. Visio is the nation’s premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Listen to Part One of an interview with TechMor’s Chris Wiley on how mortgage companies can best assess the benefits of AI for their organizations.) Lender and Broker Software, Products, and Services Given that servicing transfers deal with things called “BLOBs,” it’s not surprising that they can get a little messy. Binary large objects (or BLOBs) are the massive files containing the myriad documentation of a loan, or perhaps multiple loans. And servicers know BLOBs aren’t just a pain… They can open businesses up to risk too. In this new blog article, ICE Senior Vice President of Servicing Technology Product Dana Federspiel explores the pitfalls servicers need to be aware of during a servicing transfer to keep themselves and their borrowers safe. Read the blog, and then contact ICE when you’re ready to see how you can start streamlining your servicing transfers.