Dec. 14: Watch that coffee or vet bill; the regulatory climate; vendor news; secondary deals; Saturday Spotlight: Docutech
Private equity firms are on the move, whether they’re buying a well-known winery (Duckhorn & Goldeneye), your local medical practice, or your pet’s vet. Few, if any, private equity firms are “in business for their health” and prices in the medical world, and for pet health care, are already jacked up. ( “Jacked up” is a technical term.) We can figure this won’t help inflation rates. Nor will java. Global droughts are causing the price of coffee to increase. This is obviously way beyond the U.S. Federal Reserve’s purview. Yes, core PCE (personal consumption expenditures) is what the Fed watches anyway, but none of this helps. Turning to the income side of things, lenders in rural areas know that the USDA forecasts that farm income in the U.S. decreased 3.5 percent in 2024, mostly due to declining sales of crops. The $158.8 billion projected in 2024 is still up 9.8 percent over the 20-year average. Forecasted crop receipts are down 9 percent, but sales of animal products are up 8 percent, which overall washes out to a 1 percent decline in agricultural commodities sold.
Saturday Spotlight: Docutech
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“Accelerate Closings. Accelerate the Dream.” Follow Docutech on LinkedIn.
In 3-5 sentences, describe your company (when was it founded and why, what it does, where, recent growth and plans for near-term future growth).
Docutech, a member of the First American family of companies, provides an end-to-end, integrated, digital mortgage experience that enables lenders to accelerate the real estate closing process. The company digitizes and streamlines the generation, delivery, execution, perfection, and clarification of mortgage documents. Docutech sets the standard in providing market-proven technology and unrivaled customer service to the financial industry. Founded in 1991 and acquired by First American in 2020, Docutech has become a technology powerhouse, combining its innovative technology and expertise with the broad solution set and financial strength of First American.
Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why. And tell us how your company maintains its culture in a work-from-home environment, or how you plan on bringing employees back into the office, if applicable.
Docutech’s client-centric approach involves supporting the charities that our clients care deeply about. Inspired by efforts across First American, we also support our employees as they give back to the communities where we live and work. Our employees contribute their passion, time and money to dozens of food banks, charity walks, children's causes, animal rescues and more every year.
Docutech employees are deeply ingrained in the mortgage and financial technology industry and play significant roles in numerous industry groups and associations. There are also numerous learning and development opportunities internally, including First American’s Women in Leadership, SPARK, and Emerging Leaders programs. The Women in Leadership and SPARK programs are designed to develop talented women who, through their influence, have a significant impact on our company’s operations and overall success. The company’s Emerging Leader program is a hallmark leadership development initiative within First American, focusing on enhancing the skills of up-and-coming leaders from divisions and regions across the company.
Things you are most proud of that don’t have to do with sales.
Docutech recently introduced an enhancement to our Solex® suite, Solex Vision. Solex Vision’s dashboard provides lenders with enhanced, real-time visibility into their loan disclosure pipeline. Docutech provides loan disclosures in foreign languages where required by applicable state laws and offers the translated versions of the Uniform Instruments from the GSEs to assist borrowers with limited English proficiency.
Docutech invests in ADA compliance, supporting screen readers for color blindness, and implementing responsive design upgrades that optimize viewing on any device – from cell phones and tablets to personal computers.
Is there anything else you’d like to share along these lines?
Docutech plays a leadership role in the eClosing adoption journey and the broader digital transformation taking place across both the real estate and mortgage lending industries. We are driven to simplify the complex needs for our customers and enhance the experience of the consumers they serve through innovative technologies and solutions.
As part of the First American family of companies, Docutech‘s strong culture is rooted in consistently providing the best-in-class products and services that deliver the certainty and trust needed to power seamless real estate transactions for our customers.
(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)
Because financial institutions regulate ourselves so well…
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The Trump transition team is considering significant regulatory changes, including the potential consolidation or elimination of major bank regulators. Discussions have included merging the FDIC, OCC, and parts of the Federal Reserve, as well as absorbing deposit insurance into the Treasury Department. On the other side of the balance sheet, some regulators have already resigned or announced plans to do so. Others, like the CFPB’s Rohit Chopra, are sticking around.
(The Verge reports that Trump is probably going to eliminate the crash reporting rule that makes Tesla look bad. Gee, imagine that?! My guess is that Tesla owners want more transparency and more reporting on such things, not less.)
Certainly, Wall Street expects less regulation under president-elect Donald Trump, his transition team is reportedly exploring ways to shrink, consolidate, or even eliminate top banking regulators. Elimination of any agency would require congressional approval, a minor point given Congress’ apparently mindset and political bent, but some believe that it may not be a slam dunk to find support for such a drastic step in slashing government oversight.
Per the Wall Street Journal, during the interview process Trump’s advisors asked bank regulatory job candidates whether the Federal Deposit Insurance Corp. could be abolished. The advisers, which include officials in the newly formed Department of Government Efficiency (DOGE), also asked the candidates if the deposit insurance could be absorbed into the Treasury Department once the FDIC is dismantled. Interview subject matter also included potentially consolidating or restructuring the FDIC, OCC, and the Federal Reserve, and/or having only one agency (the FDIC, OCC, or parts of the Fed) regulating banks.
Elon Musk, who co-leads the DOGE, last month called for the elimination of the Consumer Financial Protection Bureau, which just hit banks with a cap on overdraft fees. That would be an uphill battle: doesn’t the consumer need protecting?
JPMorgan CEO Jamie Dimon said the banking industry is hopeful for less red tape under Trump "because they've had successive years of regulations, a lot of which stymied credit."
Vendor morsels
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Splitero, the financial technology company that provides homeowners options to access their home equity, announced a programmatic purchase commitment from funds managed by Blue Owl Capital. Blue Owl's Alternative Credit strategy funds will purchase up to $350 million of Home Equity Investments. In addition, Splitero announced that it expanded its home equity solutions to Tennessee and Virginia to provide more homeowners with access to home equity.
There’s a school of thought that thinks mortgage lenders can anticipate a minimum 20% increase in credit reporting costs in 2025 compared to 2024. This includes price increases for the tri-merge credit report, as well as other credit and verifications products. These higher costs can significantly impact mortgage lenders and homebuyers alike. Lenders One membership can help reduce your credit expenses and increase profitability. Through Lenders One Credit (“L1 Credit”), our credit reporting agency, we offer cost-effective credit and verification product options while maintaining the standard of customer service you have come to expect from Lenders One.
Base Price Solution (BPS) by Lender Price is here and lenders are jumping on board. BPS is a powerful new tool that provides lenders with the ability to automate the calculation of base pricing, which reduces the complexity of having to manage multiple spreadsheets to calculate pricing from market swings. In addition to greater efficiency, more accuracy, and real-time pricing updates to changing market conditions, BPS provides full transparency for regulators and auditors. It is specifically designed for capital markets and secondary marketing teams that want to ensure they are priced competitively while maximizing their profits.
Secondary markets deals drive primary market availability
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No car manufacturer spends huge sums of money building a car that no one buys. In a similar vein, no lender (in their right mind, as my mother used to say) is going to spending money originating mortgages that don’t have a home in securities or in a portfolio.
Fannie Mae announced the winning bidder for its twenty-fifth Community Impact Pool (CIP) of non-performing loans. The transaction is expected to close on December 20, 2024, and includes 29 deeply delinquent loans totaling $7.2 million in unpaid principal balance (UPB). The loans are geographically focused in the New York area, and the winning bidder was RCG Strategic Acquisitions, LLC. The pool was marketed with BofA Securities, Inc. and First Financial Network, Inc. as advisors. The CIP awarded in this most recent transaction includes 29 loans with an aggregate UPB of $7,175,159; average loan size of $247,419; and weighted average note rate of 4.93 percent. The cover bid, which was the second highest bid, for the CIP was 90.85 percent of UPB (27.56 percent of BPO). All purchasers are required to honor any approved or in-process loss mitigation efforts at the time of sale, including forbearance arrangements and loan modifications. In addition, purchasers must offer delinquent borrowers a waterfall of loss mitigation options, including loan modifications, which may include principal forgiveness, prior to initiating foreclosure on any loan. Interested bidders can register for ongoing announcements, training, and other information here.
Freddie Mac announced the pricing of the Freddie Mac Seasoned Loans Structured Transaction Trust (SLST) Series 2024-2, a securitization of approximately $272.2 million including both guaranteed senior and non-guaranteed subordinate securities backed by a pool of seasoned residential mortgage loans. The SLST program is a fundamental part of Freddie Mac's seasoned loan offerings which reduce less-liquid assets in its mortgage-related investments portfolio and shed credit and market risk via economically reasonable transactions. The transaction includes approximately $245.0 million in guaranteed senior certificates and approximately $27.2 million in non-guaranteed subordinate certificates. The subordinate certificates were auctioned and awarded on October 24. The transaction is expected to settle on October 30, 2024. The underlying collateral backing the certificates consists of 1,694 fixed-, adjustable-, and step-rate seasoned loans, and includes both loans modified to assist borrowers at risk of foreclosure and loans that were never modified. As of the cut-off date, none of the loans are more than 150 days delinquent. Since 2011, Freddie Mac has sold almost $10.3 billion of NPLs and securitized approximately $79.3 billion of RPLs consisting of $30.4 billion of fully guaranteed MBS, $36.2 billion through the Seasoned Credit Risk Transfer (SCRT) program, and $12.7 billion through the SLST program. Requirements guiding the servicing of these transactions are focused on improving borrower outcomes and stabilizing communities. Additional information about Freddie Mac’s seasoned loan offerings is available at: http://www.freddiemac.com/seasonedloanofferings/.
Fannie Mae announced the results of its thirty-third reperforming loan sale transaction. The deal, announced on October 8, 2024, included the sale of 8,678 loans totaling $1,424,118,043 in unpaid principal balance (UPB), offered in three pools. The winning bidder for Pool 1 and Pool 2 was Pacific Investment Management Company LLC, and for Pool 3 was JP Morgan Mortgage Acquisitions Corp. The transaction is expected to close by December 20, 2024. Pool 1 consisted of 2,924 loans with an aggregate UPB of $510,578,698, an average loan size of $174,617, a weighted average note rate of 3.82 percent, and weighted average broker's price opinion (BPO) loan-to-value ratio of 47 percent. Pool 2 consisted of 3,311 loans with an aggregate UPB of $524,573,434, an average loan size of $158,434, a weighted average note rate of 4.03 percent, and weighted average BPO loan-to-value ratio of 48 percent. Pool 3 consisted of 2,443 loans with an aggregate UPB of $388,965,911, an average loan size of $159,217, a weighted average note rate of 3.96 percent, and weighted average BPO loan-to-value ratio of 49 percent. The cover bid, which is the second highest bid for the pool, was 83.55 percent of UPB (32.26 percent of BPO) for Pool 1, 84.375 percent of UPB (31.73 percent of BPO) for Pool 2, and 82.09 percent of UPB (31.98 percent of BPO) for Pool 3. The terms of Fannie Mae's reperforming loan sale require the buyer to offer loss mitigation options to any borrower who may re-default within five years following the closing of the reperforming loan sale. All purchasers are required to honor any approved or in-process loss mitigation efforts at the time of sale, including loan modifications. Interested bidders can register for ongoing announcements, training, and other information here.
Freddie Mac Multifamily announced a new CUSIP registration capability to better align its ML-Deal offerings for both commercial mortgage-backed securities and municipal bond investors, increasing liquidity across both markets and advancing Freddie Mac’s mission. The new CUSIP registration capability will allow investors to choose their preferred CUSIP identifier, Mortgage or Municipal, at deal settlement and subsequently exchange their certificates between either of the two CUSIPs through a Freddie Mac approved Broker Dealer. Since 2017, Freddie Mac’s ML program has provided the opportunity for investors to invest in predominantly tax-exempt securities secured by loans on completed, occupied, and stabilized affordable housing properties. ML-Deals are backed by tax-exempt loans related to properties receiving new-issue 4 percent low-income housing tax credits (LIHTC). This feature will start with ML-27 and is anticipated to be available for all future ML Deals. ML-27 is expected to go to market the week of December 9th with an issuance size of approximately $250 million and be designated as Sustainability Bonds. ML-Deals with this feature will include two sets of Structured Pass-Through Certificates (SPCs), one registered under Freddie Mac’s corporate issuer 144A CUSIP identifier and another registered under municipal issuer 144A CUSIP identifier. The underlying loan characteristics and structure for both will be identical. Although the underlying loans are obligations of various state and local entities, the state and local governmental entities are not directly obligated on the SPCs and do not issue the SPCs. Accordingly, the SPCs are not municipal securities as defined in Section (a)(29) of the Securities Exchange Act of 1934 and Freddie Mac is not a municipal issuer.
Here’s something useful for team building quizzes or a family party around the tree.
Name the carols described in each riddle
1. Oh, member of the round table with missing areas = Oh Holy Night
2. Boulder of the tinkling metal spheres = Jingle Bell Rock
3. Vehicular homicide was committed on Dad’s mom by a precipitous darling = Grandma Got Run Over by a Reindeer
4. Wanted in December: top forward incisors = All I Want for Christmas Is My Two Front Teeth
5. The apartment of two psychiatrists = The Nutcracker Suite
6. The lad is a diminutive percussionist = Little Drummer Boy
7. Sir Lancelot with laryngitis = Silent Night
8. Decorate the entryways = Deck the Halls
9. Cup-shaped instruments fashioned of a whitish metallic element = Silver Bells
10. Oh small Israel urban center = Oh Little Town of Bethlehem
11. Far off in a hay bin = Away in a Manger
12. We are Kong, Lear, and Nat Cole = We Three Kings
13. Duodecimal enumeration of the passage of the yuletide season = The Twelve Days of Christmas
14. Leave and broadcast from an elevation = Go Tell It on the Mountain
15. Our fervent hope is that you thoroughly enjoy your yuletide season = We Wish You a Merry Christmas
16. Listen, the winged heavenly messengers are proclaiming tunefully = Hark the Herald Angels Sing
17. As the guardians of the woolly animals protected their charges in the dark hours = Shepherds Watched Their Flocks by Night
18. I beheld a trio of nautical vessels moving in this direction = I Saw Three Ships
19. Jubilation to the entire terrestrial globe = Joy to the World
20. Do you perceive the same vibrations which stimulate my auditory sense organ? = Do You Hear What I Hear?
21. A joyful song of reverence relative to hollow metallic vessels which vibrate and bring forth a ringing sound when struck = Carol of the Bells
22. Parent was observed osculating a red-coated unshaven teamster = I Saw Mommy Kissing Santa Claus
23. May the Deity bestow an absence of fatigue to mild male humans = God Rest Ye Merry Gentlemen
24. Rose-colored uncouth dolf is aware of the nature of precipitation, darling = Rudolph the Red-Nosed Reindeer
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 “A Lender’s Personal Touch Can Help After a Disaster.” 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. The views and opinions in this newsletter are mine alone unless otherwise specifically stated herein.)