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March 2018

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IMN Residential Mortgage Servicing Rights Conference 2018

IMN International Mortgage Servicing Rights ConferenceNew York, NY (March 26-27)
The annual IMN Residential Mortgage Servicing Rights Conference attracted more than 400 participants to New York City, 180 of them from banks, non-bank originators, mortgage investors, hedge funds, and other institutional investors. The IMN forum is the only opportunity on the calendar for owners and administrators of mortgage servicing rights to get together for a dedicated day and a half and discuss nothing but mortgage servicing rights. Given our climate of heightened regulatory scrutiny and low interest rates, it is even more important for the $10 trillion MSR industry to gather and examine the latest developments.

Relax Basel III Capital Restrictions

Executives attending the forum agreed that banks want to see Basel III capital restrictions loosened because it would make holding mortgage servicing rights easier and stop depositories abandoning the servicing business. Flagstar Bank executive vice president and COO, Lee Smith, revealed that federal banking regulators are considering a plan that would boost the percentage of Tier 1 capital that can be based on mortgage servicing rights (MSRs) from 10 percent to 25 percent and ease the pressure on banks to sell MSRs. He pointed out that Flagstar, which has a 10 percent limit, is constantly selling because of the more restrictive capital treatment its retained MSRs could undergo undergo based on current Basel II capital rules. If the limit was changed to 25 percent, he maintained that the bank could be considerably more patient.

Other Shifts in the Market

Predictions for the year also discussed at the conference included a higher profile and liquidity for Ginnie Mae MSRs. Houlihan Lokey‘s managing director of capital markets, Jeffrey Levine, asserted nonetheless that Ginnie MSRs are not an easy asset class.

Stan Middleman, president and CEO of Freedom Mortgage Corp. highlighted the greater likelihood of mortgage rate volatility this year. Because of this, he considers hedging to be particularly important in this stage of the cycle.

Rate volatility is unlikely to deter buying, however, according to Tom Millon, president and CEO of the Capital Markets Cooperative, a subsidiary of Computershare.

Digital Mortgages

Panel discussions revealed that mortgage servicers remain unsure about how to leverage the increasing use of electronic notes and other digital mortgage tools by lenders and the secondary market. New opportunities are emerging for servicers to reconsider both their internal operations and their interactions with borrowers due to the growing use of third-party data sources and automation to make origination processes more efficient.  Simon Moir, senior vice president at vendor eOriginal, pointed out that these opportunities are largely driven by the originators, but that success depends on everybody embracing the digital mortgage, instead of simply following the originators’ lead. He said that e-notes are gathering momentum in housing finance with major players such as Quicken Loans and Fannie Mae promoting the use of digital mortgage technologies.

Fannie Mae’s director of e-mortgage strategy and operations, Shane Hartzler, noted that subservicers are revealing a greater readiness to work with master servicers approved for Fannie’s e-notes. Some servicers and lenders are slow to accept the automation of the closing process and all that comes after it because manual work is still required due to differences in jurisdictions’ rules regarding closings, recordings, and security instruments.

Although a partially automated process is often perceived as being more difficult to maintain than a manual one, Wells Fargo senior vice president Brian Webster revealed that there are few differences between them, and that a partly automated process may offer advantages.

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Five Star Fintech Summit 2018

five star fintech 2018Nashville, Tennessee (March 21-22)
The inaugural Five Start Fintech Summit heralded a new approach for the industry, covering all aspects of fintech and its future applications. At the inaugural event, speakers from the technology, operations, and mortgage industries discussed the latest approaches to bringing financial technology into the forefront of consumers’ experience. Transparency, accessibility, and ease of use were all discussed during this two-day meeting.

Based at the Renaissance Nashville Hotel, the summit gathered together professionals from two different worlds that are intersecting more and more. Representatives from the housing industry and the tech world immersed themselves in a full day of curriculum involving the technologies that are set to transform numerous industries. Their discussions centered on how those technologies can bring mortgage and housing to the next level.

Aspen CEO Sean Ryan discussed the case for blockchain in innovation strategies. Other topics included cryptocurrencies, big data, and machine learning. The summit combined TED Talk-style presentations with smaller panels encouraging audience participation to progress discussions of how the industry is changing, and how companies can leverage the changes successfully.

Five Star Institute  president and CEO Ed Delgado emphasized the importance of seizing the current opportunity to deepen the industry’s understanding of emerging technology capabilities and incorporate them into procedures and products that will serve and and educate its customers better.

FiveStar Fintech Summit The summit kicked off on the Thursday with panels on cryptocurrency, its potential, and its implications for the future of the industry. Then discussion turned to the technology that drives cryptocurrencies—blockchain. The focus was on how the concept of distributed ledgers could transform processes such as record-keeping and title. Afternoon topics included big data, artificial intelligence, and machine learning. The panels discussed how automating asset management,risk assessment, and data analysis could make processes more efficient, reduce costs, and improve accuracy.

The Five Star Fintech Summit concluded on a high note, with the general consensus that this should be an annual event.

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NAMFS Leadership Summit & Open Forum

namfs Dallas, TX (March 6-8)
The annual NAMFS Leadership Summit and Open Forum focused on the direction and opportunities available to the National Association of Mortgage Field Services. It involved two separate events—an invitation-only leadership summit and a forum that was open to all members.

Summit and Forum

The NAMFS Leadership Summit took place the day after the open forum on March 8 and featured discussion of the open forum topics, as well as a review of strategic initiatives for NAMFS. The Open Forum (March 7) was available to all NAMFS members and gave members an opportunity to bring their questions, feedback, and ideas to the NAMFS officers and board of directors. Aspen attended this event and contributed to the open discussion regarding industry-related issues. The main focus of the event was on working toward solutions rather than simply airing grievances.

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SFIG Vegas 2018

SFIG_vegas_2018Las Vegas, NV (February 25-28)
SFIG and co-host IMN hosted the largest capital markets conference in the world at the Aria Resort & Casino in Las Vegas this February. The three-and-a-half day program was designed by leaders within the structured finance industry representing the full spectrum of industry participants, including investors, issuers, financial intermediaries, regulators, law firms, accounting firms, technology firms, rating agencies, servicers and trustees. Aspen executives were in attendance.

Some fascinating insights emerged from the conference, with Michael Bright, acting president of Ginnie Mae revealing that risk-sharing transactions could involve the private market taking credit risk on FHA loans in mortgage-backed securities (MBS) guaranteed by Ginnie. He noted that he would welcome the issue of at least one pilot transaction this year. One option he suggested for risk sharing on Ginnie Mae MBS might involve re-insurance on FHA mortgages, with substantially reduced mortgage insurance premiums for the loans with private-capital risk sharing.