This week’s HW+ member spotlight features Tom O’Donoghue, owner at Reverse Loans Now. O’Donoghue has been in mortgage banking for more than 30 years and has been helping and committed to working with Senior Citizens for the last seven years.

HW Media: What is your current favorite HW+ article and why?

Tom O’Donoghue: How inflation could be a net benefit for reverse mortgages by Chris Clow. This story just reiterated my thoughts on how our industry can help change lives in difficult economic conditions.

HW Media: If you had picked a different career path, what would it had been?

Tom O’Donoghue: I would have loved to play defensive end for the Los Angeles Rams back in the 1970s.

HW Media: When do you feel like a success in your job?

Tom O’Donoghue:  I know when I have success when my clients have tears of joy at the closing and refer their friends to me.

HW Media: What is the best piece of advice you’ve ever received?

Tom O’Donoghue: The best piece of advice I have received was to “chase after relationships not money.”

HW Media: What are 2-3 trends that you’re closely following? 

Tom O’Donoghue: One of the trends I’ve seen lately, sadly, is that many reverse reps are just “checking out” and waiting for the real estate market to come back or for principal limits to increase.  Instead of adjusting production goals or simply increasing efforts, they sit back and wonder why their production is off.

Another trend I am witnessing is that there are reverse reps that seem to have forgotten how to create a first-time reverse borrower, and now that H2H has dried up, they are out of business.

Lastly, the trend that is frustrating me is that when I do an unsolicited H2H for one of my current borrowers, and I run their credit report, they get a call from their current loan servicer to try and keep them as customers and not to work with me.

HW Media: What do you think will be the big themes for the housing market in 2022?

Tom O’Donoghue: In regard to the housing market for 2022, the big theme is how much of an adjustment will the market correct itself?  In the Great Recession, the housing crash was based on non-fundamental loan programs and simple greed.  Since the Great Recession, lending practices returned to acceptable guidelines and with unemployment at a historical low point, prices aren’t crashing 30-40% as before. I would expect about 10-15% depreciation.  As they say, ask five economists what will happen, and you’ll get six different answers.

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The post HW+ Member Spotlight: Tom O’Donoghue appeared first on HousingWire.

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Fannie Mae has launched its fourth reperforming-loan sale of the year — an offering of 6,130 loans with an unpaid principal balance of $997 million.

The offering, dubbed FNMA 2022-RPL4, represents the agency’s 27th sale of reperforming loans since the inaugural offering in October 2016, which involved a pool of 3,600 reperforming loans valued at about $806 million.

A reperforming loan is a mortgage that has been or is currently delinquent but has been reperforming for a period of time.

The FNMA 2022-RPL4 transaction involves three loan pools — with pool 1 composed of loans with about $341.6 million in unpaid principal balance; pool 2 is at $342.5 million; and pool 3, $312.9 million.

Loans in Pools 1 thru 3 are being serviced by New Residential Mortgage LLCNewRez LLC and Fannie Mae — and subserviced by NewRez LLC, Fannie’s fact sheet on the deal states. (The parent company of New Residential Mortgage, Caliber Home Loans and NewRez — New Residential Investment— earlier this summer was rebranded as Rithm Capital.)

The reperforming-loan sale is slated to close by late October 2022, after due-diligence period. The loan offering is being marketed with assistance from Citigroup Global Markets Inc.

“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,” Fannie’s announcement of the reperforming loan sale states. “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.”

The Federal Housing Finance Agency oversees Fannie Mae and its sister government-sponsored enterprise Freddie Mac, which have been in conservatorship since 2008 in the wake of the global financial crisis. The two GSEs, or agencies, buy loans from lenders, pool them and issue mortgage-backed securities that are sold to investors and guaranteed for a fee by Fannie and Freddie.

Fannie Mae attempts to sell its reperforming loans to investors, nonprofits and public-sector organizations.

“Fannie Mae’s sales of non-performing loans … are intended to reduce the number of seriously-delinquent loans that Fannie Mae owns, to help stabilize neighborhoods and to help meet the portfolio reduction targets required under [Fannie Mae’s] senior preferred stock purchase agreement with the United States Treasury,” the program description states. 

Bids for the FNA 2022-RPL4 offering are due by Sept. 8. Buyers are required to offer loss mitigation options to borrowers who re-default within five years of the closing of the sale of the reperforming-loan portfolio. 

The three early reperforming loans sales this year included an offering unveiled in February of 8,050 reperforming loans valued at $1.3 billion (FMNA 2022-RPL1); a second deal (FMNA 2022-RPL2) announced in April of 7,600 reperforming loans valued at $1.49 billion; and the third sale (FMNA 2022-RPL3) was announced in early June, with bids due last month, and involved 10,000 reperforming loans valued at $1.57 billion. 

Through four offerings to date, Fannie Mae has brought to market 31,780 reperforming loans valued at $5.4 billion, which is about one-third of the loan volume and count offered in total for all of 2021. Fannie Mae last year put on the market some 100,000 reperforming loans across five offerings with an aggregate unpaid principal balance of $14.5 billion, according to an analysis of the agency’s records. 

By comparison, over the same period in 2020, as the pandemic raged and government protections kicked in, a total of 57,235 RPLs were put on the sales block by Fannie Mae through four pool offerings that had a total unpaid principal balance of $8.7 billion — or a bit more than half of the RPL sales by loan count and $5.7 billion shy of the 2021 aggregate value mark. 

In 2019, prior to the pandemic, Fannie brought to market nearly 104,000 reperforming loans valued in total at $17.1 billion.

The post Fannie Mae unveils $997M reperforming loan offering  appeared first on HousingWire.

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Redwood Trust Inc., a real estate investment trust (REIT) based in Mill Valley California that has residential operations focused on nonagency jumbo loans, recently reported a second-quarter 2022 net loss of $100 million, after recording a net gain of $31 million in the prior quarter.

Likewise, Atlanta-based Angel Oak Mortgage Inc., a real estate investment trust focused on nonqualified mortgages, or non-QM, recently announced that it was struggling with red ink — recording a net loss of $52.1 million for the second quarter ended June 30, bringing its total losses for the year so far to $95.7 million.

The common theme in the earnings results for both REITs is the impact of fast rising interest rates and general rate volatility on their residential mortgage holdings and operations. In general, lower-rate mortgages are at a competitive disadvantage in terms of pricing in securitization and loan-trading liquidity channels in such an environment because they are worth less than the newer crop of higher-rate mortgages. Keith Lind, CEO of non-QM lender Acra Lending, put it this way: “These aren’t bad loans, just bad prices.”

“We continued to experience a challenging economic environment in the second quarter of 2022,” said Robert Williams, president and CEO of Angel Oak Mortgage (AOMR). “Historic inflationary pressures resulted in continued volatility, both in nominal interest rates and in the widening of interest rate spreads, driving unrealized losses on our portfolio of target assets.”

Because they are deemed riskier loans than conforming agency-eligible mortgages, rates for non-QM loans generally average around 150 basis points higher than conforming rates in a normal market, according to industry experts.

AOMR is a publicly traded REIT that is part of Angel Oak Cos., a long-term player in the non-QM mortgage market. It is externally managed and advised by an affiliate of Angel Oak Capital Advisors. The Angel Oak Cos. family of affiliates also includes non-QM lenders Angel Oak Home Loans and Angel Oak Mortgage Solutions.

AOMR has bulked up its warehouse lending arsenal to help bolster liquidity to better cope with the volatility of the current market. Its earnings report shows that it added a new $340 million warehouse financing facility during the second quarter and since the end of the quarter it increased the capacity of an existing warehouse line by $260 million — to a total of $600 million. The added warehouse financing capacity brings “the maximum availability on all financing lines to $1.9 billion,” the REIT reports.

Rapidly rising interest rates also negatively impacted the bottom line for Redwood Trust. Since the beginning of the year, rates are up more than 2 percentage points — with the most recent Primary Mortgage Market Survey from Freddie Mac showing the conforming 30-year fixed-rate mortgage with an average rate of 5.22%. 

Redwood reported in a review of its second-quarter earnings performance that “profitability in the quarter was impacted by deterioration in the prices of jumbo loans….”

“Our financial results reflect the historic volatility and spread widening that characterized markets during the second quarter,” said Christopher Abate, CEO of Redwood. “The magnitude of rapidly rising rates impacted our residential mortgage banking business, while demand for shorter-term financing from our business-purpose lending borrowers [including bridge loans and single-family rental property loans] proved more resilient.”

Redwood, too, is ensuring it has adequate liquidity to ride out the rough patch in the market. Redwood reported in the earnings-review report that in addition to $412 million in cash and financeable loans as of June 30, “we also have over $450 million of other unencumbered assets and approximately $2.7 billion of unused warehouse capacity to support go-forward mortgage banking production.”

The REIT, however, warns that there are still plenty of low-rate jumbo mortgages for the nation’s housing market to digest. Redwood’s earnings-review report states that the majority of jumbo inventory “yet to be sold or securitized in the current market is at lower coupons [3.5% or less],” which will “impact executions for those seeking to securitize.”

“We believe this overhang will clear in the coming quarters,” Redwood’s earnings-review report states, adding that the REIT’s inventory of jumbos now has an average coupon greater than 5%.

“Redwood has sold substantially all of its lower-coupon jumbo mortgages, which should benefit our margin performance going forward,” the REIT earnings-review report states.

For another REIT focused on the non-QM market, Pasadena, California-based Western Asset Mortgage Capital Corp.(NYSE: WMC), the story is similar, though arguably more dire. 

Western Asset, which is managed by investment advisor Western Asset Management Co. LLC, recently announced that it is exploring a potential company sale or merger in the wake of posting a $22.4 million net loss for the second quarter ended June 30 — on the heels of posting a $22.2 million loss in the first quarter. The REIT, with some $2.8 billion in assets, has a diverse portfolio of residential and commercial real estate assets.

A closer look at Western Asset’s books shows that as of June 30 its residential whole loan portfolio, nearly all of which is comprised of non-QM loans, was underwater by some $44 million. That’s based on a comparison of the principal balance of the loans on the books and an assessment of their fair market value as reported by the REIT as of that date.

The fallout in the non-QM market, due in large measure to the volatility of rates this year, is not limited to REITs. Non-QM lender First Guaranty Mortgage Corp. filed for Chapter 11 bankruptcy protection at the end of June — leaving four warehouse lenders on the hook for more than $415 million. Then, in early July, another non-QM lender, Sprout Mortgage, shuttered its doors suddenly, leaving employees out in the cold.

Just weeks later, a text message leaked to the media revealed that Flagstar Bank is ramping up scrutiny of non-QM lenders prior to advancing warehouse funding. Flagstar will now require advance approval for funding advances.

The bank also indicated it may adjust “haircuts” — the percentage of the loan the originator must fund itself to ensure it has skin in the game. The leaked message included a list of 16 non-QM lenders that would be affected by the changes.

“We need to see rates kind of stabilize, flatten for a minute, just to kind of be able to work out the problems,” said John Toohig, head of whole loan trading at Raymond James in Memphis. He added that the hope is that at some point next year, once the Federal Reserve has eased up on its monetary tightening policy, rates might even dip some.

“That’s the hope, that rates will fall again, and we’ll start this baby back up,” Toohig said.

The post Redwood Trust, Angel Oak Mortgage awash in red ink in Q2 appeared first on HousingWire.

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After rising to its highest level in 40 years in June, inflation dropped slightly in July. Thanks to a decrease in the gasoline index the Consumer Price Index (CPI) remained unchanged from the month prior, after hitting a 1.3% seasonally adjusted rate in June, according to data released Wednesday by the Bureau of Labor Statistics. Year over year, the CPI for all items rose 8.5% in July, down from the 9.1% yearly increase reported a month ago.

“I see a significant risk of high inflation into next year for necessities including food, housing, fuel, and vehicles,” Michelle Bowman, a member of the Board of Governors of the Federal Reserve System, said in a statement. “Rents have grown dramatically, and while home sales have slowed, the continued increasing price of single-family homes indicates to me that rents won’t decline anytime in the near future. Recently, gasoline prices have moderated but are still roughly 80% higher than pre-pandemic levels due to constrained domestic supply and the disruption of world markets.”

According to CPI data, the energy index fell 4.6% from the month prior due to price drops on natural gas and gasoline, with Americans spending 7.7% less to fill their tanks than they did in June. The energy index was still up 32.9% compared to a year ago, though the rate slowed from the 41.6% jump recorded in June.

The indexes for airline fares, used cars and trucks, communication, and apparel also all showed month over month in July.

However, these decreases were offset by increases in the indexes for shelter and food. From June, the food index rose 1.1% and the shelter index jumped 0.5%, with the rent index rising 0.7% and the owners’ equivalent rent index increasing 0.6%. Year over year, the food index rose 10.9%, the largest yearly increase since the period ending May 1979, while the shelter index rose 5.8%.

“The growth rate of inflation cooled down a bit more than anticipated,” Logan Mohtashami, HousingWire’s lead analyst, said. “Airline inflation which was getting hotter in recent months, gave some back today, along with anticipated declines in other categories. We still have a lot of work to get back toward the pre-COVID-19 trend, but the stock market and the bond market loved the news. Mortgage pricing should improve on today’s news.”

Excluding food and energy, which are more volatile items, the CPI was up 0.3% in July, after rising 0.7% in June. Over the last 12 months, inflation that excludes food and energy rose 5.9%, the same as in June.

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Angel Oak Capital Advisors, the investment management arm of non-QM lender Angel Oak Cos., has agreed to pay $1.75 million to settle charges brought by the U.S. Securities and Exchange Commission (SEC) alleging that the company misled investors about the delinquency rates in a 2018 private-label securitization involving fix-and-flip loans.

Also charged in the case, according to the SEC, was Ashish Negandhi, the portfolio manager for Angel Oak Capital Advisors. Negandhi also agreed to settle the charges and pay a penalty of $75,000.

At the core of the case is the allegation by the SEC that Atlanta-based Angel Oak Capital Advisors and Negandhi were seeking to protect the reputation of the company’s securitization business and avoid an early repayment to investors triggered by loan delinquencies reaching a predefined level. The SEC alleges that Angel Oak raised $90 million through a March 2018 securitization of “loans made to borrowers for the purpose of purchasing, renovating and selling residential properties” — also known as fix-and-flip loans, which were originated by an Angel Oak-affiliated entity.

“Shortly after the [securitization] deal closed, loan delinquency rates increased unexpectedly,” the SEC alleges.

Angel Oak and Negandhi, consequently, “artificially reduced delinquency rates,” the SEC claims. That was accomplished by diverting funds being held for borrowers to complete property renovations and redirecting them to “instead pay down outstanding loan balances.”

“Because Angel Oak and Negandhi did not disclose these actions, the performance data regularly disseminated to investors provided an inaccurate view of the actual delinquency rates on the mortgages in the securitization pool as well as the securitization’s compliance with the early repayment trigger,” the SEC alleges.

A spokesperson for Angel Oak offered the following comment on the SEC case: 

“While not admitting or denying the findings, Angel Oak Capital Advisors accepts the ruling set forth by the SEC relating to a 2018 securitization involving fix-and-flip mortgage loans. The Angel Oak affiliate mortgage company has not originated these loans since 2019, and all senior noteholders in the securitization received full payment of principal and interest.”

Osman Nawaz, chief of the complex financial instruments unit of the SEC’s Division of Enforcement, said Angel Oak and Negandhi painted a misleading picture for investors by failing to disclose the improper use of funds “while continuing to issue larger securitizations.”

“Firms must provide investors with full and accurate information regarding the performance of an investment, even after closing, to ensure the integrity of our markets,” Nawaz said.

The SEC found that Angel Oak Capital Advisors and Negandhi violated antifraud provisions of U.S. securities regulations. Angel Oak and Negandhi, without admitting or denying guilt, agreed to a cease-and-desist order, a censure and the payment of civil monetary penalties, according to the SEC.

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Mortgage demand remained relatively flat last week amid volatility in mortgage rates in recent weeks. 

The market composite index, a measure of mortgage loan application volume, rose a marginal 0.2% for the week ending August 5, according to the Mortgage Bankers Association (MBA). The market index is down 62% compared to the same week in 2021.  

The refinance index rose 4% from the previous week while the purchase index fell 1% in the same period. Mortgage demand remains weak compared to a year ago. The refi index fell 82% from the same week in 2021 and the purchase index was down 18.6%, according to the MBA.

“Mortgage applications were relatively flat, with a decline in purchase activity offset by an increase in refinance applications,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Despite mortgage rates on a downward trend following the Federal Reserve’s rate hike of 75 basis points on July 27, a cooling of the housing market is expected. Purchase mortgage rates dropped to below 5% last week, according to Freddie Mac, marking three consecutive weeks of decline. Leading up to the Fed’s July meeting, rates were on a roller coaster shooting back up to 5.50% in mid-July after falling to 5.3% earlier that month.

“The purchase market continues to experience a slowdown, despite the strong job market,” said Kan. “Activity has now fallen in five of the last six weeks, as buyers remain on the sidelines due to still-challenging affordability conditions and doubts about the strength of the economy.”

MBA’s estimate shows rates rising. The average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) rose to 5.47%, from the previous week’s 5.73%. Jumbo mortgage loans (greater than $647,200) increased to 5.09% from 5.06% in the same period. 

The MBA data shows the refinance share of all mortgage activity rose to 32% from the previous week’s 30.8% of total applications this week. 

The Federal Housing Administration’s (FHA) share of total applications increased to 12.1% from the previous week’s 11.9%. The Veterans Affairs’s (V.A.) share of applications also rose marginally to 10.9%, from 10.8% and the United States Department of Agriculture’s (USDA) share held steady at 0.6%. 

The share of adjustable-rate mortgages (ARM) applications decreased to 7.4% of total applications. According to the MBA, the average interest rate for a 5/1 ARM increased to 4.6% from 4.55% a week prior. 

The survey, conducted weekly since 1990, covers 75% of all U.S. retail, residential mortgage applications.

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Black Knight‘s Optimal Blue product, pricing and eligibility (PPE) engine added a location-based pricing feature amid a slowdown in the mortgage market. The functionality expansion will assist investors and lenders in promoting affordable housing in underserved markets, the firm said. 

The new capability automates the process of collecting census tract data to deliver applicable pricing premiums at the time of rate quote. According to Black Knight, the Optimal Blue PPE can support affordable housing in line with the Community Reinvestment Act, which requires the Federal Reserve and other federal banking regulators to encourage financial institutions to help meet the credit needs of communities in which they do business. 

“This expanded functionality is part of Optimal Blue’s ongoing commitment to provide innovation that addresses the latest needs of the market, as well as the credit needs of low- and moderate- income neighborhoods,” said Scott Happ, president of Optimal Blue, a division of Black Knight. 

Optimal Blue’s expanded functionality in its PPE follows a new feature rolled out for brokers and comes amid a drop in mortgage loan origination volume. 

In May, the division added Quick Quote to its Loansifter PPE, enabling brokers to make accurate quote offers for products available to consumers. Loansifter PPE, a component of Black Knight’s suite of integrated solutions designed for brokers, allows searches across more than 120 wholesale investors.

Black Knight acquired Optimal Blue in July 2020 in a $1.8 billion deal to boost origination offerings. At the time of acquisition, Optimal Blue, founded in 2002, had about 1,000 originators and 185 investors using the firm’s PPE engine, which produced more than 240 million pricing quotes per year, the firm said. 

Staying nimble in a fast-paced market with the right mortgage technology

In the rapid-fire, volatile mortgage marketplace, lenders need technologies to help them remain nimble and successfully navigate constant change. Advanced product, pricing and eligibility technology creates efficiencies and helps lenders compete in a fast-paced market.

Presented by: Black Knight

Optimal Blue, which has more than 213,000 users, supports more than $1.9 trillion in rate locks and loan trades annually, according to the division’s website. 

The mortgage tech giant reported net earnings of $40.3 million, a 90% drop from the previous quarter’s $364.6 million due to a gain on the investment in credit report services company Dun & Bradstreet Holdings

While Black Knight’s revenue climbed to $394.5 million, increasing 9% from the same period in 2021, the company said organic revenue growth slowed down to 7% from the previous quarter in line with the firm’s expectations of a downturn in the mortgage industry. 

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Rachel Luna, principal of Patriot Title Company

With over 13,000 followers on Instagram, Rachel Luna, the principal of Texas-based Patriot Title Company, is the self-proclaimed “Texas Title Queen.” Luna has worked her way through the ranks and is now among the most recognizable pros in the title industry.

“I have worked every position in the title industry, from the front desk to file clerk, to copy girl, to a notary, to an escrow officer. And now I am the principal of the largest woman-owned title company in Texas,” Luna said.

HousingWire recently caught up with Luna to discuss her career, the “boutique title experience,” and bringing title knowledge to the masses through social media.

This interview has been edited for brevity and clarity.

Brooklee Han: Can you tell me a little bit about your background and how you found your way into the title industry?

Rachel Luna:  I was born and raised in Houston, and I am of Mexican-American decent. It was a very modest upbringing, and we were taught to be hard workers by my family. During school I had the opportunity to be part of a co-op program with a title company. I graduated high school quite early and I ended up being a title clerk there for a while before going to university, where I got a degree in business. I then went to work for a builder and from there I just stayed in real estate. I eventually became a salesperson for the builder and learned the sales side of things, then I worked with a title company to partner with the builder, and then I found myself transitioning back into title. And the rest as they say is history. I never left title again.

BH: A saying frequently thrown around in the world of title is that you are either born into the industry or you stumble into it. It sounds like you stumbled into title! Prior to the co-op program, did you know anything about title or had you considered a career in the world of real estate?

Luna: I definitely stumbled into it. I was originally interested in doing journalism or law. So, I had these two different interests, but I ended up in title. I like that title has a legal aspect to it, but I also like that we are able to talk to people and get to know them a bit through their transaction. Then there is the investigative piece and that was what I wanted to do with journalism — I wanted to be an investigative journalist, so I loved going to the courthouse or the town hall and looking for records. But I like that there is a balance between legal stuff and people. And I love seeing people buy their first home — it is such a moment for them, and it was infectious for me to be around that at such a young age. And then every deal is so different, so every day is different. Also, having been in sales, I like that title is right in the middle of the real estate transaction. Title sees everything and we are how it all gets done. I really enjoy and feel gratified by getting deals done because I know we have helped those people cross the finish line.

BH: You mentioned doing sales for a builder before getting back in title. What led you to leave the sales side of real estate?

Luna: I was a top salesperson and was making a lot of money, but I had no life. I was working every Saturday and Sunday, every Memorial Day weekend, Fourth of July weekend and one day I woke up and was like, “I am not giving up another Thanksgiving weekend to help people shop for houses.” I was young and I think I had bitten off a bit more than I could chew, and I felt that maybe I just wasn’t ready to give up so much. I wanted to stay in real estate because growing up I had read so much about how most self-made millionaires did it through real estate, and then my grandmother had rental properties and I saw how she was able to build wealth from that. So, I moved back into title, and I really feel like it is some sort of divine destiny for me because here we are years later and I have been able to build my business, perform with a high level of integrity, gain respect in the industry and still have time to be fabulous in between.

BH: Your fabulous side is definitely showcased on your social media platforms – you do a great job of highlighting your personality, while educating people about title insurance. How did you start using social media?

Luna: So, the whole COVID thing happened, and we had been talking about doing a podcast and I just wasn’t sure. You know, what if we couldn’t get a guest on or what if they weren’t dynamic? I just didn’t feel like a podcast was my vibe. But I am really great with crowds and with the pandemic I was looking for a way to stay in touch with my clients, so I decided to start filming some shows and posting them on social media and YouTube. The platforms are all changing right now – our main audience is Millennial homebuyers, and to connect with them you really have to use these tools to elevate your business and brand. So, I just started by showing the daily life of someone in title and showing them around the office and the different tasks we do and basically how we run a title company. I think a lot of people were curious about title, so they started watching. And I think the videos resonate because I am just being myself, there is no falseness here. But, by showcasing this to a massive audience through social, that was really the secret sauce of us elevating the brand name and who we are. I am making title popular and a lot of people in the industry are happy about that.

BH: Consumer education and understanding is typically viewed as a major hurdle by most title companies. How are you using your YouTube channel and your social media to improve consumer knowledge of title?

Luna: That is something I am a huge advocate for because the consumer needs to know what they are buying and what title insurance does because it is their insurance policy. I feel like most people just think the title company disburses funds and gives them the title to the house, but we are actually an insurance company and people don’t understand that. They don’t understand that we are actually protecting their purchase. Sometimes we get calls from clients asking about papers they get in the mail because they just don’t understand that they are purchasing an insurance policy and those papers are the physical copy of their policy.

A home is one of the largest investments a person will make in their life and it is important to protect that investment and protect everyone in the transaction. We are also working to educate lenders and real estate agents because a lot of them don’t know that if you refinance within a certain time frame you can get an extra discount on your policy. We are actually working on some content about that now that we will share soon.

BH: We are hearing a lot about real estate agents leveraging their social media to generate leads. Have you had any success with this through your social media?

Luna: After I started my social media, that was when we actually started having consumers directly reach out to ask us questions about selling their home and how much the closing costs would be to see if they really did want to sell. So, we give them a complimentary breakdown of the settlement costs and then when they are ready to sell they almost always come back to us for their title company. Sometimes we are even the ones who recommend their realtor which is kind of the opposite of how things normally work.

But our inbox is always full of questions about title from consumers and we take those engagements very seriously because that is how you develop public awareness of the industry and what we do.

BH: What have been some of the biggest challenges you have faced as you have built your business and how did you overcome them?

Luna: The biggest challenge in building the company was realizing how much I needed to invest in my frontline. I always tell people that this is a customer service business and when I started out, I did not invest as much as I should have in my frontline — my receptionist and all the people out front. I was putting more into watching my bottom line than really investing in my team and the people out front because as a new business owner you are always looking at where you can cut back and increase revenue. But I learned really quickly that the frontline is everything in the title business and you have to invest in your folks out front if you want to increase your bottom line.

Then one of the other obstacles was dealing with the big competitors in our industry because we are an independent and we are up against these big publicly traded companies like Stewart or First American. But I came at it like we are a boutique title company trying to create our own space in the market. But creating that rapport with clients and getting them to see it as they could either be a little fish in a big pond over at one of the Big Four or they could be a big fish in a smaller pond with us. As a boutique, we value their business, but we also know their kids and their dogs — they are more to us than just a file number. So, changing the perspective our client base to trust us as an independent boutique company with their business and to give them an experience was the biggest challenge.

BH: What differentiates a boutique firm like yours from the larger title companies?

Luna: What I say, is that you can shop at Gucci, or you can shop at Macy’s. At Gucci or Chanel or Versace, you are going to have an experience when you shop. You can have a glass of wine or some strawberries and champagne or a croissant and there will be flowers and beautiful music. So, for us this means making sure that the closing set up is elegant and that the homebuyers and sellers feel relaxed and a little spoiled. At Macy’s you are going to have some comfortable chairs, but that is it. Buying a home is an occasion and it should be treated as an event. We want real estate agents to look good for their clients, so we make sure they don’t have a cookie cutter closing experience.

BH: One of the biggest challenges facing the title industry is the talent crunch. Some people in the industry have termed it the “silver wave.” What are your thoughts on this and what role do you see your social media presence playing in potentially driving more people into title?

Luna: Through social media we get a lot of people reaching out saying things like, “My mom is a Realtor and I have gone to her closings, and I don’t want to be a realtor, but I am really intrigued by title,” and that is great. If you are a detail-oriented person or you love numbers title can be a great business. We have recruited people from some accounting firms and from the county clerk’s office because they saw what we do on social media. Obviously, it helps if they have some knowledge, but I tell everyone that it they are willing to put in the work, we will train them because so much in our industry is hands on learning. We put them in our incubator program and within two of three years they are licensed and are closing agents. Once they become closers, they can build their book of business and then they can grow their business as large as they want.

BH: What is your best piece of advice for someone considering a career in title?

Luna: If you want a long, stable career where you will be able to increase both your income and your knowledge and you will always be challenged, title in a great place for you. Something similar can be said for real estate agents, but there are so many of them, it is such a big pool to compete with, but in title and escrow it is a lot smaller and if you are willing to put in the work, you can become the best. If you are powerful, passionate and the best version of yourself then anything is possible.

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Lending standards tightened in July with the mortgage credit availability index (MCAI) dropping 9%, the largest monthly drop since April 2020, according to the Mortgage Bankers Association (MBA).

The MCAI fell to 108.8 in July as lenders streamlined their loan offerings in a shrinking mortgage origination environment, said Joel Kan, associate vice president of economic and industry forecasting at MBA. A decline of the index, benchmarked to 100 in March 2012, indicates lending standards are tightening while an increase suggests loosening credit.

“Lenders have responded accordingly to the decrease in demand for refinance and purchase loans by reducing loan offerings, including for adjustable-rate mortgages (ARMs), cash-out refinances, and investment properties,” Kan said. “The overall general tightening in credit availability also affected jumbo loans and non-QM loan programs.”

Credit tightening was most notable in the government and jumbo segments.

Conventional MCAI, which does not include loans backed by the government, decreased 9.8%, and Government MCAI, which examines FHA, VA and USDA loan programs, dropped 8.4%. Of the component indices of the Conventional MCAI, the Jumbo MCAI fell by 13.4% and the Conforming MCAI decreased by 3.3%. 

The drop in mortgage credit availability follows volatile mortgage rates that remained in the 5% range before falling to 4.99% in the first week of August, according to the purchase mortgage survey from Freddie Mac.

What opportunities do lenders miss out on by not focusing on credit

HousingWire recently spoke to Mike Darne, Vice President of Marketing for CreditXpert, who said focusing first on the borrower’s credit holds the key to winning business that other lenders won’t even see.

Presented by: CreditXpert

Demand for mortgage loans last month trended downward before it ticked up the last week of July, with loan application volume increasing 1.15% from the prior week. Borrower demand, however, remains weak compared to a year ago, the MBA said. 

Mortgage application volume for refis dropped 82.6% from the last week of July 2021. For purchase mortgage applications, it fell about 16% compared with the same period last year.

Kan had projected that lower rates combined with signs of more inventory coming to the market could lead to a rebound in purchase activity. 

The latest mortgage monitor report from Black Knight showed a cool down in the housing market as June saw record-low home price appreciation and the largest single-month increase of for-sale inventory in 12 years.

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