Fannie Mae issues lender letter on self-employment income

Fannie Mae issued a lender letter on Wednesday with additional requirements for borrowers who are self-employed. 

“Income from a business that has been negatively impacted by changing conditions is not necessarily ineligible for use in qualifying the borrower,” the letter said. “However, the lender is required to determine if the borrower’s income is stable and has a reasonable expectation of continuance.”

Fannie Mae said lenders were “encouraged to apply these requirements to existing loans in process,” with the new standards mandated for loans with application dates after June 11.

“Lenders must review the profit and loss statement, and business depository accounts if required, and other relevant factors to determine the extent to which a business has been impacted by COVID-19,” the Fannie Mae letter said.

The new requirements were necessitated by “the pandemic’s continuing impact on businesses throughout the country,” Fannie Mae said. The pandemic forced some businesses to close as states issued stay-at-home orders to stem the spread of disease. All 50 U.S. states have started reopening their economies, in varying degrees.

COVID-19 has infected 1.7 million Americans, and more than 102,000 have died of the disease, according to Johns Hopkins University.

Lenders are now required to obtain the following documentation to see if self-employment income meets Fannie Mae requirements: 

  • An audited year-to-date profit and loss statement reporting business revenue, expenses, and net income up to and including the most recent month preceding the loan application date or an unaudited year-to-date profit and loss statement signed by the borrower reporting business revenue, expenses, and net income up to and including the most recent month preceding the loan application date, plus two business depository account(s) statements no older than the latest two months represented on the year-to-date profit and loss statement.
  • Two of the most recent depository account statements to support and/or not conflict with the information presented in the current year-to-date profit and loss statement. Otherwise, the lender must obtain additional statements or other documentation to support the information from the current year-to-date profit and loss statement.

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Source: HousingWire Magazine

OCC finishes rule meant to sidestep 'Madden' ruling

The new regulation is intended as a workaround for banks affected by the 2015 decision that created legal uncertainty for loans sold across state lines.
Source: American Banker

Redfin begins mortgage lending in Arizona, Delaware, New Hampshire

Redfin, which restarted its home-buying business earlier this month after pausing in March, is now fully back in expansion mode.

The online real estate brokerage announced Friday that it is expanding its mortgage lending operations into three new states.

Redfin launched its mortgage lending operations in January 2017 and has consistently expanded its mortgage business since then.

The company is now lending in Arizona, Delaware, and New Hampshire. With this latest expansion, Redfin Mortgage is now offering fixed- and adjustable-rate conforming mortgages in 20 states and the District of Columbia.

According to the company, Redfin Mortgage features “no lender fees and offers competitive rates, fast pre-approvals and on-time closings.”

The company also offers fully remote digital closing capabilities, which allows customers to sign their mortgage documents “from the safety of home, even under stay at home orders.” But the company notes that digital closings are not available in Delaware due to local regulations.

Redfin Mortgage also offers a 30-day closing guarantee or the company will provide the buyer with an extra $1,000 credit towards their closing costs.

“The pandemic has made our virtual tools more important than ever. With our fully digital process borrowers can get a loan and close without ever having to touch a piece of paper or meet anyone in person,” said Jason Bateman, head of Redfin Mortgage.

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Source: HousingWire Magazine

Citi breaks with rivals on whether work from home is permanent

Though he acknowledged working remotely has definite advantages, CEO Michael Corbat says “our goal is to get our employees back.”
Source: American Banker

Wells Fargo struggling to stay under asset cap amid pandemic, CEO says

Even after the Fed eased some limitations in April to promote emergency lending, the bank has had to make some “tough choices” to heed the $1.95 trillion growth ceiling set by regulators in the aftermath of its phony-accounts scandal.
Source: American Banker

Brian Brooks takes over as Comptroller of the Currency, lays out plans for banking regulator

Just two months after joining the Office of the Comptroller of the Currency as chief operating officer and first deputy comptroller, Brian Brooks has now ascended to the top job at the banking regulator.

On Friday, Brooks officially became the acting comptroller of the currency when Joseph Otting stepped down from the role.

Otting announced his departure last week, just one day after the OCC released its final rule on “strengthening and modernizing” the CRA, which requires banks to meet the credit needs of all communities they serve, including low- and moderate-income neighborhoods.

Brooks is new to the OCC, but knows both Otting and Department of the Treasury Secretary Steven Mnuchin well.

Brooks and Otting both previously worked with Mnuchin at OneWest Bank, which Mnuchin and his partners at Dune Capital Management formed after buying the remains of IndyMac Federal Bank from the FDIC in 2009. Mnuchin and his partners later sold OneWest to CIT Group in 2015

Otting served as the CEO of OneWest from 2010 until 2015, while Brooks served as OneWest’s vice chairman and chief legal officer.

Mnuchin spoke highly of Brooks last week when Otting announced his departure.

“I am confident that Brian will lead the agency effectively during this challenging time,” Mnuchin said in a statement. “He recognizes the importance of a robust federal banking system to the health and strength of the nation’s economy and has the skills and experience to succeed in this important role.”

As for Brooks, his first act as comptroller was to lay out his mission for the banking regulator, citing the recent challenges banks have faced in the wake of the pandemic and casting an eye to the future.

“I am deeply honored to serve my country as Acting Comptroller of the Currency and lead this important and prestigious agency during this challenging time,” Brooks said in a statement.

“Over the past several months, the federal banking system has been integral to the nation’s response to COVID-19. It has been a central means to deliver relief to businesses and consumers and has continued to function admirably under significant stress. Banks and savings associations entered this crisis well positioned to play this important role. They remain a source of strength for the economy and an engine of opportunity,” Brooks continued.

“The nation can rely on the federal banking system due in large part to the 3,600 men and women of the Office of the Comptroller of the Currency who have maintained a flexible regulatory framework in which banks can evolve to meet the needs of their communities; rigorously examined banks to ensure their safe, sound, and fair operation; and when necessary exercised our authority to enforce corrective action,” Brooks said.

“An agency with a 157-year history understands COVID-19’s seemingly long shadow is temporary. While managing through its effects will take significant focus and effort, we must not lose sight that we aim toward a longer, brighter purpose,” Brooks added. “We should approach our work not just with an eye to the next year, but to ensure the federal banking system adapts to the changing needs of consumers, markets, and the nation for the next 50 or 100 years.”

To that end, Brooks laid out four priorities for the OCC moving forward, including:

  1. Build upon responsible innovation to help the banking system keep up with changes in the way American consumers and businesses manage their finances.
  2. Enhance the strength of the federal banking system by enhancing the scope and relevance of the national charter.
  3. Ensure banks serve their entire community through fair access to credit, capital, and financial services.
  4. Provide OCC employees engaging, rewarding, and challenging career opportunities.

According to Brooks, innovation is a “personal passion of mine.”

“The OCC can build on its foundation of innovation to provide banks and thrifts the regulatory certainty, the flexible framework, and oversight that allows them to evolve and capitalize on technology and innovation to deliver better products and services, to operate more efficiently, and to reduce risk in the system,” Brooks said.

“We should support banks’ use of new technology, products, and models that safely and fairly accelerate the velocity of money, create greater financial inclusion, and empower consumers and businesses with more control over their financial affairs.”

In closing, Brooks honored Otting for his service at the OCC and thanked Mnuchin for naming him acting comptroller.

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Source: HousingWire Magazine

Insellerate founder/CEO to speak at June’s summit

In today’s lending environment, interacting with prospective and current borrowers requires more than a phone call or email. Now it’s about tapping into new media channels like social media and text to reach consumers where they’re most active online.

That’s the crux of what Josh Friend, founder and CEO of Insellerate, has created and scaled. His mortgage customer relationship management (CRM) platform taps automated marketing and lead management, all while increasing efficiency and nurturing long-terms customers for the lender.

Friend embodies the role of The Agile Marketer, our theme for this year’s virtual summit, which is why we’ve invited him to speak at the event in less than two weeks. His platform handles more than 50,000 applications a month, and that transactional data helps to identify what communication strategies move a lead along, giving critical marketing insight.

“Over the past decade I founded and developed companies that have consistently operated at 30 – 40% higher conversation rates than the national average,” Friend said in his LinkedIn profile. “As the percent of consumers who research and purchase products and services online continues to increase at an accelerated pace, the keys to driving ROI will be efficiency and immediacy.”

Friend started as a loan officer and moved on to open six mortgage call centers, training loan officers, processors and marketing managers throughout the last 18 years.

Friend saw a need for an end-to-end sales support technology for mortgage loan officers, and he started Insellerate in 2013. Five years later, the company was named to HousingWire’s Tech100, highlighting the most innovating technology companies in housing.

Don’t miss the opportunity to hear Friend’s session, Keeping Prospects Warm, at the virtual summit by registering here. He is just one of the incredible real estate and mortgage leaders we have lined up for June 11-12, including Casey HurbisRick ArvieloPatty ArvieloSarah DeCiantisBarbara YollesAlec HansonBrian CoveyKevin Peranio and many more.

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Source: HousingWire Magazine

Housing rebound? To get a home in these cities you have to win a bidding war

luxury home

Throughout metropolitan areas nationwide, the tight supply of for-sale homes – already constrained pre-coronavirus and intensified in recent months – is continuing.

Although the increase in purchase mortgage applications signal a rebound of home-buyer interest and record-low mortgage rates could spur that further, “steeper declines in inventory could be on the horizon if more sellers don’t list homes to meet rising demand,” said in its weekly inventory report released Thursday.

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Source: HousingWire Magazine

How data and analytics can give lenders a competitive edge in a changing market

The transition from 2019 into 2020 proved to be more difficult for mortgage lenders than in past years. In the switch of a year and the blink of an eye, the world changed dramatically.

The first quarter of 2020 ushered in a sea of change, including a worldwide pandemic, national and state stay-at-home orders, significant economic challenges, business shutdowns, record unemployment, and more.

Yet, despite it all and fueled by a lengthy period of historically low rates, today’s lenders generated a record number of mortgage rate locks in the first quarter — production levels rarely experienced in our industry.

As the federal government continued to provide stimulus and assistance to consumers, businesses and the economy as a whole, the challenging market volatility experienced in Q1 of 2020 did not subside in the second quarter. Nor did the heavy mortgage volumes.

Mortgage investors and servicers changed pricing, product eligibility requirements and underwriting standards at a record clip, further multiplying the complexities facing mortgage lenders. Now, as many states begin to open back up and start their economic engines, opportunities and challenges are once again shifting.

No matter what comes next, successful mortgage lenders have learned that maximum market transparency is the key to anticipating and understanding rapidly changing conditions.

Real-time data and comprehensive analytics are at the heart of market transparency, providing highly sought-after insights into competitive position, market trends and risk mitigation strategies amid these uncertain times.

Although Optimal Blue did not initially develop its actionable data and analytics products with a global pandemic in mind, they serve as a perfect fit for what lenders need in this volatile and dynamic environment.

The largest single source of rate lock data, Optimal Blue provides the mortgage industry with information on pricing and key transaction variables 60 to 90 days before closing data is available.

Updated daily, Optimal Blue’s rate lock data is deep and comprehensive, including a robust set of transactional data elements such as loan product, property type, LTV, FICO, geographical location, borrower demographics and more.

Representing over one-third of all mortgage loans completed within the industry every year, Optimal Blue’s platform locks more than $1 trillion of mortgage loans annually.     

Optimal Blue’s actionable data and analytics products provide clients and partners with highly granular, early insights across the entire mortgage market. Delivered in raw data form and through a visually compelling analytics tool, Optimal Blue has drawn particularly strong interest from a diverse array of companies, including mortgage lenders, mortgage investors, investment firms and industry regulators.

In addition, attention has grown across public policy think tanks that study the mortgage industry, such as the American Enterprise Institute (AEI), as well as risk analytics and consulting firms for residential loans and MBS, and mortgage insurance providers like Genworth. Optimal Blue’s data and analytics enable users within those companies to:

1. Benchmark against the competition.

In today’s highly competitive industry, lenders need to not only understand their position relative to their competition but also have access to the tools that provide visibility into those specifics. Optimal Blue’s data and analytics products provide that sought-after transparency.

Lenders that use Optimal Blue’s Product & Pricing Solution can leverage Optimal Blue’s Competitive Analytics to more effectively analyze the competition, understand overall market composition, create competitive comparisons in real time and effectively evaluate how their margins measure up — both as a whole and at the more detailed, MSA level. This can help inform smarter lending strategies and decisions moving forward.

“Lenders that utilize Competitive Analytics are far better equipped to make agile decisions and take appropriate action, particularly in times of market uncertainty and fluctuation,” said Rick Allen, vice president of Business Transformation at Optimal Blue. “Their ability to remain nimble is in large part due to their use of a real-time, transactional data set as opposed to surveyed or aged data.”

For lenders that are not using Optimal Blue’s Product & Pricing Solution, Optimal Blue’s Market Analytics product enables any lender to benchmark their production against the broader market in a variety of different ways, including loan types, rate and price, FICO, LTV and more.

2. Focus marketing efforts.

When analytics are broken down at the geographical level, lenders gain visibility into new opportunities, have the power to better refine their outreach efforts and make more effective use of marketing dollars.

Optimal Blue’s Competitive Analytics product analyzes transactional mortgage data on over 350 MSAs across the country, offering visibility into local loan volume, pricing and other trends. Each granular filter enables the lender to hone into specific loan programs and assess trends across various timeframes, and due to the diversity and extensive reach of Optimal Blue’s network, data is available on a wide range of scenarios.

Lenders can then leverage this data to identify high-potential markets and better allocate financial and human resources. It can also cut down on wasted ad spend.

3. Understand borrower segments.

Borrowers can vary widely from one market to the next, in profile and in behavior. Actionable analytics can help lenders better grasp these market-level nuances, offering insights into borrower credit scores, LTV, DTI, loan amounts, property types and more. Further, they can even spot trends related to loan use which can inform better investment, hedging and resource allocation decisions.

AEI Housing Center produces a weekly research product focused specifically on the mortgage industry, called the “AEI Housing Market Nowcast” (formerly the Flash HMI Report). Released every Monday, the Housing Market Nowcast provides much-needed and timely insights on the single-family residential housing market convulsing from the effects of the Coronavirus Disease 2019 (COVID-19) pandemic.

“Using newly acquired data from Optimal Blue, the AEI Housing Center is now able to provide near-real-time market indicators on purchase loan rate lock volume, home price, credit, and cash out refinance trends,” said Ed Pinto, resident fellow and director of the AEI Housing Center.

“After extensive historical analysis of Optimal Blue data going back seven years, we have concluded that this rate lock data tracks closely with that which is reported in our National Mortgage Risk Index (NMRI), covering 99% of the agency market. As a result, today’s Housing Market Nowcast will provide an advanced look at tomorrow’s housing market as today’s rate locks will become next month’s home purchases and mortgages.”

4. Predict and leverage industry-wide trends.

Optimal Blue’s Market Analytics product enables users to better understand ongoing market tendencies, including trends in refinancing, specific loan products, home price trends and mortgage volume as a whole.

Because of its frequency, depth and overall position in the mortgage process, Market Analytics users gain an early indication of closing volume months before it occurs. Confidently understanding the mix of business that the industry will close in future months can be an immense benefit to lenders and other firms, such as mortgage insurance companies, that provide valuable services to the mortgage industry.

“In order to remain a committed, long-term provider of relevant products and services to the mortgage industry, it is imperative that Genworth closely monitors the trends, hotspots, and overall mix of business within industry,” said Kevin McMahon, senior vice president of Customer Solutions at Genworth. “Because Optimal Blue’s data and analytics products leverage actual mortgage rate lock data, our company has early and very detailed insight into industry closing activity, months before it occurs.”

5. Fine-tune MBS and MSR analytics to effectively mitigate risk.

With access to loan-level pricing, rate and loan data that covers over one-third of the market, lenders can improve predictive modeling efforts and reduce risk. Various studies using Optimal Blue’s Mortgage Market Indices (“OBMMI”) or custom indices derived from Optimal Blue’s Market Analytics product have shown the increased precision of using a more granular and accurate primary rate input, which can significantly improve prepayment modeling and estimates of refinance propensity.

The depth and granularity of Optimal Blue’s data may also help lenders and risk analytics and consulting firms for residential loans and MBS, like Andrew Davidson & Co., Inc. (AD&Co.), produce more vigorous prepayment forecasts in the future. Because the data is based on actual rates locked by consumers and fully reflects all risk-based pricing adjustments, it is proven to be more precise than the static risk-based spreads that many firms use for MBS and MSR analytics. A more accurate primary rate input results in a better prepayment prediction, which helps drive improved buy/sell and pricing decisions.

“Accurate and timely market data should be a part of every modeler’s toolkit,” explained Sanj Chatterjee, director of Modeling for Andrew Davidson & Co. “Optimal Blue’s rate lock data helps us monitor the evolution of rates on a continuous basis, especially for FHA, VA and jumbo prime loans.”

Making the case for data & analytics

Data and analytics that enable participants to benchmark against the competition and understand the impact of trends as early as possible are status quo in most every industry. While this level of granular business intelligence has always been important, conditions are now changing at such a pace that it would be incredibly difficult for any lender to keep up without it.

Being able to make informed decisions amid rapidly changing conditions, and doing so in near real time, leads to more effective and more profitable results — making actionable data and analytics a critical ingredient of success over the long haul.

“Operating in today’s volatile mortgage market without the right data is like taking a road trip without your GPS,” Allen concluded. “You might find your way with a lot of trial and error, but it won’t be the best or most economical path forward by any means.”

The post How data and analytics can give lenders a competitive edge in a changing market appeared first on HousingWire.

Source: HousingWire Magazine

Banks told by EU to take climate change into account in lending

European authorities have told banks for the first time to take account of environmental risks in lending decisions, ramping up pressure on the financial industry to respond to climate change.
Source: American Banker