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Leaders from housing agencies all agreed climate change is a current problem, but came up short on outlining future guidance for lenders and servicers maneuvering weather-related situations.Heads of the Federal Housing Administration, the Department of Veterans Affairs and the Federal Housing Finance Agency speaking on a panel at the AmeriCatalyst conference Friday, would not address how climate change will impact the relationships between themselves, borrowers and independent mortgage bankers. The private sector, including lenders, servicers and insurers, might have to start the push for clarity themselves. Julia Gordon, commissioner at FHA, hinted that servicers may have to act as leaders on this issue as they have done in other situations, such as pandemic-related solutions."I just want to shout out to the servicers [that did] a lot of heavy lifting for us over the past few years," she said during the panel. "We know it and we're very grateful for it. We're going to keep asking for your partnership."With some insurers pulling out of certain parts of the nation, including California and Florida, because of unpredictable weather patterns, the housing industry needs to put in "the analysis and investment now," said Gordon. But there are a lot of outstanding questions, she added."Is it some other kind of rating system that we come up with, so that people understand what they're getting into? How much does it fall on borrowers versus lenders?," Gordon pondered. "We have to keep having all these conversations, but they can't happen without running into some political walls and toxic third rails and we can't afford that. This is the only planet we have." John Bell, executive director of  VA's loan guarantee program, echoed sentiments that the industry needs to collectively iron out what can be done about homeowners insurance."The [main] thing that's facing us and consumers right now is what happens when homeowner insurance companies pull out and homeowners have no other avenues except for force-placed insurance, which we know is not the cheapest insurance in the world," Bell said. "We need to solve that problem together and collectively and more people need to bring solutions. We've been talking about the problems [for years.] Let's start solving the issue."Despite a lot of unknowns regarding how climate change will impact the dynamics between housing agencies, lenders and borrowers, all government heads outlined that steps are being taken to get the issue on the radar of their respective agencies.Jessica Shui, supervisory economist at the FHFA, said the agency established a climate change and ESG steering committee which now has 80 people working on it "passionate about climate change." Members of the committee work on climate data collection and research and climate scenario analysis."What we constantly have on our mind is how to help vulnerable communities recover from disasters, and also how we help them," she said.Bell said the VA has developed a climate change model, which "has been extremely helpful for us to understand when climate issues occur." "When a tornado or worse happens to an area [it helps us understand] what that means and what the financial impacts are that aren't a veteran's fault," Bell said. " What role does the government need to play in this space? Those are the conversations collectively that we need to have because it's not just veterans that are sitting in communities [impacted by climate change.]"Meanwhile, Gordon said the FHA has started distributing money received from the Inflation Reduction Act to its rental assistance program, which has helped "folks [in FHA's] portfolio and they live in buildings that are often extremely old and have not had a whole lot of investment in them.""They live in neighborhoods that are susceptible to everything that I've talked about here and we were able to take a big chunk of that $1 billion dollars and allocate it…when you ask how the government can help, the easiest way is to give the government some resources that they can get out into the field," she noted.Additionally, the FHA Commissioner floated the idea of including single-family in its green mortgage insurance premium program, which gives incentives for the adoption of more energy efficient builds. For now this program is available for participants in FHA's multifamily and healthcare portfolio."If you build to a certain standard, you get a break on your insurance," Gordon said. "We'd love to do something like that in single-family, which is a bigger issue, but it's something we're talking about."

The Federal Reserve's Office of the Inspector General, which also oversees the Consumer Financial Protection Bureau, said the agencies have yet to fulfill dozens of recommendations related to technology security and other concerns.Bloomberg In 2016, the Federal Reserve Board's internal watchdog said the organization lacks a sufficient approach for protecting sensitive information from internal threats. The Fed has yet to address this and 64 other issues, an audit from the agency's Office of the Inspector General found.Released Monday, the report highlights the corrective action recommendations made to the board of governors that have not been fully addressed. It also identified 18 open recommendations made to the Consumer Financial Protection Bureau, which is funded by the Fed and shares the same inspector general.The OIG report noted that many of the issues identified can take a long time to address. As such, it only discloses information about recommendations that are at least six months old. The agencies are in the process of addressing all but one of the open issues — a 2023 recommendation that the CFPB develop a testing regime for its information security contingency plans. The CFPB has acknowledged the shortcoming and plans to address it, according to the report.Representatives from the Fed and CFPB declined to comment on the OIG findings. A spokesperson for the CFPB confirmed the agency is working to implement all the outstanding recommendations.The 2016 recommendation to the Fed about internal security threats is the oldest outstanding issue. It was one of nine remedies called for by an audit of the Fed's information security program in November of that year. The report directed the Fed's chief operating officer to look across its security protocols and determine which measures might be appropriate for information that is sensitive but classified.The board has said it has begun taking steps to implement the recommendation. The report notes that separate recommendations are still open from similar information security audits conducted in 2017, 2018, 2019, 2020, 2022 and 2023. Similarly, all 11 open recommendations for the CFPB were also related to information and data security.Four open recommendations with the Fed stem from a 2023 audit of the Federal Open Market Committee's trading and investment rules. These include calls for more uniform disclosure policies across the Federal Reserve System, processes for better authenticating financial disclosures and a system for determining and enforcing consequences on individuals who violate the policies. FOMC trading and investments have been a topic of interest for Sen. Elizabeth Warren, D-Mass., and other lawmakers since 2021, when allegations of improprieties led to the resignations of a pair of Federal Reserve bank presidents — Eric Rosengren and Robert Kaplan, who headed the Boston and Dallas reserves, respectively. The officials were accused of using inside information from the committee to inform trades ahead of the Fed's monetary response to the COVID-19 pandemic.Last year, during a hearing of the Senate Banking Subcommittee on Economic Policy, Warren ripped into Fed Inspector General Mark Bialek for his handling of the trading scandal. "This is not strong oversight. In fact, it is not even competent oversight," Warren said. "It looks like, to anyone in the public, that you gave your boss a free pass and that's just not going to cut it here."Supervision was another area with several open recommendations. These touch upon the Fed's approach to third-party risk management and cybersecurity concerns at the institutions it oversees, as well as its governance process around reviewing and approving supervisory proposals. Two recent audits, the 2023 reviews of the material loss related to Silicon Valley Bank's failure and the supervision of Silvergate Bank — which elected to wind down its operations amid a liquidity crunch last year — account for 19 open recommendations.

Cherry Hill Mortgage Investment Corp. plans to "explore strategic alternatives," which could result in a future merger or sale. The board of directors at the Farmingdale, New Jersey-based real estate investment trust will establish a committee to look at a full range of options aimed at maximizing shareholder value. Among alternatives being explored are a merger, sales of all or part of the company's assets or "an internalization of the management of the company," Cherry Hill said in a press release.The special committee will consist of independent and disinterested directors and intends to consider all potential opportunities, the company noted. Guggenheim Advisors is providing financial guidance and expertise to the committee."There can be no assurance that the exploration of strategic alternatives will result in any transaction or other strategic outcome," Cherry Hill said. No timeline for a final outcome was established, nor will developments be disclosed until evaluation has been completed or the committee deems it necessary.   The REIT, which was originally launched as a publicly traded company in 2013 through a strategic alliance partnership with Freedom Mortgage, acquires, invests in and manages residential lending assets, including servicing rights and agency- and nonagency-backed securities. Since its inception, the company has been led by CEO and President Jay Lown, who also sits on the board of directors. Also currently serving as independent directors on the Cherry Hill board are Sharon Lee Cook, Robert Mercer Jr. and Joseph Murin.After closing at $3.30 on Friday, shares of Cherry Hill stock initially spiked in pre-market activity following the announcement, before opening at $3.38 on Monday. The stock's value rose to $3.50 by midday. Over the past 12 months, the closing price has fluctuated between $2.77 and $5.53, which it hit almost a year ago. At the end of 2023, the company held $20 billion worth of unpaid balances within its book of mortgage servicing rights and $1.4 billion in investable assets. In the fourth quarter, Cherry Hill also posted a $35.5 million net loss, after a $20.5 gain three months earlier. The latest announcement from Cherry Hill comes during a prolonged stretch of consolidation within the mortgage industry, as it attempts to rightsize in response to slowing lending activity. While many of the deals have involved originators and technology firms, the REIT segment has also figured into deals, including a merger between Ellington Financial and Great Ajax Corp. last summer. Targeted acquisitions of mortgage-servicing rights portfolios have also come into play.Cherry Hill is not the only REIT exploring a restructuring. Rithm Capital, parent company of residential lender Newrez, filed necessary paperwork for a possible separation of its mortgage operations into its own publicly traded entity in the second quarter last year. Like any potential future move at Cherry Hill, the proposed change was aimed at increasing shareholder value, Rithm leaders said at the time. But the company has also actively shifted some of its focus over the past several months to establish itself as an alternative asset manager.

Could climate change really disrupt pricing in the mortgage industry's secondary market?Mortgage servicing rights holders are "nowhere near" accounting for climate threats, said Seth Sprague, director of mortgage banking consulting services at Richey May. The industry veteran, speaking last week at the Americatalyst "Going to Extremes" event in Washington, D.C., highlighted the numerous risks to a servicer's portfolio. Sprague referenced Hibernia Bank, a New Orleans-based bank that sold its $10 billion MSR portfolio to CitiMortgage in 2004, months before Hurricane Katrina ravaged the region. The resulting damage led Capital One in 2005 to reduce its purchase price for the bank and its impacted branches. "Could we have actually had a bank failure due to an acute climate risk in 2005? I think the answer is yes," said Sprague. "I think we would have a very different viewpoint of these risks today."Amid panelists' wide-ranging discussion of climate pricing risks, the Richey May leader continued to shed light on risks to servicers, such as losses from forbearance and their payment obligations to bondholders."Servicing is [the] sweeper at the end of a parade," said Sprague. "It is their job to clean this up and the harder you make it for servicers, the less they'll pay for servicing, which has a direct impact on affordability and housing."Sprague's words drew a rare round of applause from the audience, among them representatives from nearly a dozen lenders and servicers. The consultant also said the industry isn't making the appropriate credit decisions on originations, and suggested "climate" could be added to the four "C"s of lending: credit, capacity, capital and collaterals. David Burt, founder and CEO of investment consulting firm DeltaTerra Capital, said the industry could qualify borrowers on an insurance-indexed debt-to-income ratio. A borrower with a DTI closer to 50% could see their ratio rise toward 60 if their insurance costs soar in a short period. Such costs have already skyrocketed in states like Florida and are affecting property values."What's left in those bonds is the borrowers that can't refinance, and that's a real risk to the industry outside of climate," he said. Multiple panelists theorized that climate pricing would be reflected in the private securitization market first. Burt said investors however aren't so incentivized to be the first to move on "uncertain risks."Cliff Rossi, a professor at the Robert H. Smith School of Business at the University of Maryland, meanwhile, said the industry isn't putting climate models through the same validation banks do with their internal models. He also proposed a national hazard insurance corporation to address rising homeowner's premiums. Insurers could face one government-sponsored enterprise rather than the 50 state insurance commissions to get rates approved. In California, for example, rate hikes need to pass through a rigorous review. Rossi also proposed climate risk transfer securities; panelists raised the example of weather derivatives. "I think they have to be big ideas and they can't be these nibbling at the edges," said Rossi. "There has to be something structurally different to be able to kind of get this across the goal line over the next 20 to 30 years."

Serious mortgage delinquencies in March were at their lowest level since before the Great Financial Crisis, although the overall rate of borrowers who didn't make their payment on time rose 9% from last year, ICE Mortgage Technology said.Delinquencies dipped slightly to a rate of 3.2% for March, down 4.15% or 14 basis points from 3.34% in February, its First Look report said. However, in March 2023 total delinquencies were at their all-time low point of 2.92%, making it a year-over-year increase of 9.2%.Industry observers have noted that the increased equity most homeowners have gained in recent years encouraged borrowers to keep making their payments. Those who are having difficulties have an exit strategy that lets them pay down their loan.Similarly, a recent report from Morningstar DBRS on securitized mortgages found the total delinquency rate down 3 basis points in March at 1.55% from February but up 10 basis points from one year prior.In a typical March, mortgage delinquency rates are down on average by 10.4% from February. However, when any month ends on a Sunday, because payments are not normally processed on that day (or the day before), the rate rises 6.9%.This was the third time in the past two decades where March ended on a Sunday, and that 4.15% improvement was in line with those other two occurrences, ICE Mortgage Technology said.Meanwhile, the number of properties for which the borrower is considered serious delinquent — more than 90 days late on their payments, but not yet in foreclosure — was 435,000, the lowest number since June 2006, according to ICE Mortgage Technology. This is 24,000 fewer than in February and 77,000 below March 2023.All properties where the borrower has missed at least one payment totaled over 1.7 million, which is 71,000 fewer a month ago, but 172,000 more than March 2023.The foreclosure pre-sale inventory consisted of 205,000 properties, a decline of 6,000 versus February and 35,000 fewer than one year ago.Prepayment speeds increased in March, primarily because mortgage rates were lower in January and at the start of February. It was the highest level of borrowers paying off their loans early in seven months.The monthly prepayment rate of 48 basis points was over 15% higher than February. But it was 4.14% slower than during March 2023.

Mortgage executives appear to love the third-party technology they have but hate the price tag, according to new research published by Fannie Mae.In a survey of almost 200 senior industry leaders this year, the government-sponsored enterprise found that companies' experiences with technology service providers, or TSPs, met or exceeded expectations in most circumstances. But satisfaction and the value placed on certain tools varied greatly depending on their role in the mortgage cycle. And despite the benefits delivered, leaders bemoaned the price of vendor tools and scarcity of choices. "In their comments, lenders expressed particular frustration with the rising cost of TSP solutions, which many believe is driven by a lack of competition," wrote Gregory Phillips and Hilary Hanel, both from Fannie Mae's digital management solutions.Business leaders see the most value with TSPs in the early stages of the mortgage process. A loan-origination system was ranked as a must-have product by 91% of respondents, and such software was the most common vendor tool already in use at 94%. Point-of-sale systems were deemed critical by 72%, in the second spot behind LOS, and are currently in use at three-quarters of companies.But some of the most common technology offerings were among the least likely to be considered critical tools among leaders surveyed. Tools used to verify or validate borrower data, including assets and incomes, and credit reporting technology are in use at 87% and 84% of companies, making them the second and third most prevalent products. But while they were seen as valuable, they were considered critical must-have software by less than half of respondents at 35% and 41%, lagging several other software categories. Lenders also were less likely to see them delivering a high return on investment relative to expectations, with only 21% and 20% of executives sharing that opinion.  Similarly, appraisal technology exhibited the same trends, currently found at 83% of businesses, but only 32% calling it critical. Only 16% of companies said it brought them high ROI, the least among nine usage categories. The divergence between the current levels of uptake for verification, credit reporting and appraisal software and where they place in importance within the home lending industry points to a difference in technology wish lists versus current development. While lenders and vendors are consistently coming up with ways to tap into artificial intelligence in the newest tech offerings, much of the growth and investment has come in data verification and appraisal software products.When selecting technology service providers, product cost came in as the most important factor, followed by functionality and integration capabilities. "Many of the lenders surveyed mentioned that they would like to see more competition in the TSP marketplace to help alleviate some of these costs, but they also acknowledged that the barriers to entry in the technology space are often high," Phillips and Hanel said.Mortgage executives said there were too few technology competitors in the LOS and borrower data verification space, particularly. Some indicated that the resulting higher costs of originating loans required them to increase charges to their clients. In the fourth quarter last year, mortgage production costs driven by increased expenses contributed to the largest per-loan loss ever reported by the Mortgage Bankers Association. In other research published earlier this year from Floify, loan originators also suggested the qualities of a lender's technology stack largely influenced who they chose to partner with.  But even if more technology providers were available, lenders surveyed by Fannie Mae said the cost of integration with a new partner may make switching too burdensome. On the other end, POS and appraisal were two segments of the industry with enough or too many vendors, they said.  Other data from the research showed the lowest rate of technology adoption within data analytics and the eClosing space, both currently in use at less than half of mortgage companies. The two categories were also the least likely to be called critical to mortgage operations, and each delivered a high return on investment for only an approximate quarter of home lending leaders.

Scott Reise, senior vice president at Atlantic Bay Mortgage Group, has been in the lending industry for almost three decades, with stints at banks, independent mortgage companies and broker shops.Though he's currently at an IMB, Reise thinks no channel is better than the other. The only thing that differentiates a company is leadership."It's the leadership, or the C-level people running the company that really dictates, not just in our industry, but in any industry, how success is going to happen," he said.  With the mortgage industry currently weathering an extended spell of tumult, Reise says he's observed a trend of leaders not stepping up to the plate to be transparent."I do feel like there's an incredible amount of selfish people in this industry that are only looking out for themselves and don't give a damn about anybody else," he said. "I'm not saying that's the majority, I think that's in the minority."The lack of leaders stepping up at companies is especially highlighted when companies make tough decisions to rightsize their shops, he said. Executives should be "present, on the front lines and communicating with their people, [thereby] building loyalty within the organization," Reise added.National Mortgage News interviewed Reise about the state of the mortgage industry today, how leaders should handle rightsizing and why originators may be on the chopping block this year. This interview has been condensed and edited for clarity.

The Federal Reserve's latest semiannual financial stability report — a survey of financial professionals — found inflation and high interest rates to be respondents' top concern. But policy uncertainty — a lack of clarity about the direction of foreign and domestic policy — was the No. 2 concern.Bloomberg News WASHINGTON — Inflation and uncertainty surrounding the direction of federal policy on trade, spending and other issues are banks' top financial stability concerns, the Federal Reserve Board said in a report released Friday.For its semiannual report on financial stability, the Fed surveyed a range of financial professionals — including broker-dealers, investment fund managers, research and advisory professionals as well as academics — about the top issues facing the financial system. Policy uncertainty emerged as a major new source of anxiety for industry experts — it was cited by 60% of respondents, up from the just 24% of respondents who cited it as a top concern in the Fed's last survey in October 2023. Since 2019, the Fed has issued two reports on financial stability per year, usually releasing one in the spring and another in the fall.Persistent inflation and high interest rates remained the top concern across the board, with 72% of respondents listing it as their primary concern — the same percentage as in the October report. The report indicated that interest rates may remain elevated above current market expectations for an extended period and that persistent inflation could prompt a more stringent monetary policy, causing increased volatility in financial markets and adjustments in asset valuations. But the rise of policy uncertainty — including unpredictability stemming from fluctuating trade policies, influenced by geopolitical tensions such as the conflict in the Middle East and Russia's war against Ukraine that has lasted more than two years — was an unexpected source of market disruption for many survey respondents. Respondents also flagged the upcoming U.S. elections in November as a source of stress."Further escalation of geopolitical tensions or policy uncertainty could reduce economic activity, boost inflation, and heighten volatility in financial markets," the report said. "The global financial system could be affected by a pullback from risk-taking, declines in asset prices, and losses for exposed U.S. and foreign businesses and investors."Concerns about the credit quality of commercial real estate — which was the No. 2 concern cited in the October report — was cited as a top concern among 56% of the survey's respondents. But that fell from 72% in the October report. The Fed noted that prices across all sectors of CRE continued to decline in the second half of 2023, and the report makes clear the full impact of CRE price drops have yet to be reflected in the data."These transaction-based price measures likely do not yet fully reflect the deterioration in CRE market prices because, rather than realizing losses, many owners wait for more favorable conditions to put their properties on the market," noted the report. "Capitalization rates at the time of property purchase, which measure the annual income of commercial properties relative to their prices, moved modestly higher but remained at historically low levels, suggesting that prices remain high relative to fundamentals."Banking sector instability continued to feature prominently despite the report noting high levels of liquidity and low funding risks in the sector since the October report.While the Fed's emergency lending facility, the Bank Term Funding Program, ceased operations on March 11, the report noted the BTFP continues to reduce liquidity pressures for depositories. The report said mostly small institutions with under $10 billion of assets — representing 95% of beneficiaries — benefited from the program.

Jenny Vipperman (left), president and chief executive of ORNL Federal Credit Union, and Mike de Vere (right), CEO of Zest AI. “The reason that we exist as a not-for-profit cooperative, is that our intention is to serve the underserved and what better way to serve the underserved than to be able to [use] LuLu … and figure out what can we do differently to bring everybody in and then still do it in a safe and sound way,” Vipperman said. Jenny Vipperman, president and chief executive of ORNL Federal Credit Union in Oak Ridge, Tennessee, is partnering with the Burbank, California-based lending software firm Zest AI to pilot an artificial intelligence-powered tool for ensuring that fair lending is done right.Zest AI formally debuted its large language lending intelligence bot LuLu in late February. The conversational AI assistant, which is kept separate from underwriting models as per regulatory requirements, is first trained using roughly 15 years' worth of customer queries recorded by the fintech as well as public sources of data such as National Credit Union Administration quarterly call report data and Home Mortgage Disclosure Act filings.From there, LuLu is tailored to each institution, including the $3.7 billion-asset ORNL, through sets of business data on loan portfolios and applications, as well as internal reports and documents that are unique to each organization. Users conversing with the bot can ask questions about their institution's loan performance compared to others in a similar asset class, in addition to questions about how they can improve automation or fair lending compliance.Vipperman said that she hopes to use LuLu in conjunction with Zest AI's underwriting models to "increase approvals across protected classes while not taking anything away from non protected classes" and continually check in on "what would have happened if we made different decisions" while asking "could we have brought more consumers in and grown even more with lower risk," amid other questions."The reason that we exist as a not-for-profit cooperative, is that our intention is to serve the underserved and what better way to serve the underserved than to be able to [use] LuLu … and figure out what can we do differently to bring everybody in and then still do it in a safe and sound way," Vipperman said. The credit union's iteration of the gen AI tool is set to go live this month. A visual of LuLu's dashboard, where current and past conversations are stored for reference.Zest AI Use of gen AI tools is growing across the financial services space. A survey released last month by Arizent, which publishes American Banker, found that roughly 55% of global and national banks with more than $100 billion of assets are implementing generative AI in some capacity. Credit unions and regional banks with assets between $10 billion and $100 billion recorded 40% implementation, and community banks with less than $10 billion of assets responded with 28%.More specific use cases involve Citi's rollout of the GitHub Copilot to developers and the $733 million-asset Grasshopper Bank in New York, which instituted an AI-based assistant for its compliance team handling tasks necessary under the Bank Secrecy Act. Credit Karma, which was acquired by Intuit in 2020, implemented its financial assistant earlier this year.Jerry Haywood, CEO of the Sandnes, Norway-based conversational AI provider boost.ai, said customer experience, marketing and customer assessment for credit-based decisions are the three key areas where gen AI is being tested, but understanding how to apply it in individual use cases means knowing how much involvement is needed."While gen AI is the newest tech on the block, there are still many use cases where traditional, pre-written flows are the right tool for the job, and may even be a more practical solution. … For example, any process that needs to be 100% the same in every case, such as the transfer of funds between accounts, should be handled by a pre-written flow," Haywood said. The fintech debuted its newest iteration of AI-powered assistants earlier this week.Not all financial institutions are keen on rushing to adopt new technologies, however.Roughly 15% of respondents to the aforementioned Arizent research have prohibited their employees from using any form of gen AI for work-related tasks, while a further 46% either restrict its use to specific functions and roles or are considering putting limiting policies in place. Many hold back due to concerns that technology that can produce new content can have unforeseen results."Unlike deterministic tools, generative AI produces outputs that aren't always foreseeable," said Lei Wang, chief technology officer of Torpago, a card and spend management fintech. "This lack of control over the output becomes especially concerning when these tools are directly interfacing with end-users."Thorough testing is important when developing and implementing these models to minimize the possibility of hallucinations — the creation of false information or results — and biases unintentionally included in the training data, said Jay Venkateswaran, business unit head of banking and financial services for the Mumbai, Maharashtra-based global WNS.Regulatory concerns are also a worry. Following the White House's executive order on AI released last November, developers of AI models like Zest and the financial institutions they partner with have been cautiously moving ahead when implementing products such as underwriting algorithms, conversational bots, employee co-pilots and more — all to avoid any potential missteps with regulators.Banking officials with the Federal Deposit Insurance Corp. that are exploring the risks of overreliance on AI maintain that existing laws and tools are capable of preventing any vulnerabilities from impacting consumers or the financial system at large. But others with the Consumer Financial Protection Bureau, which has continued its campaign to root out instances of bias in algorithmic-based lending and other transparency issues, remain skeptical.Another hurdle to gen AI adoption in the  banking industry is the fear among entry-level employees that AI will take over their tasks, and thus render their roles redundant. Executives are working to assuage these doubts by including staffers who would be most affected by the addition of AI tools in the testing and rollout of any new products.There is still work to be done where end users are concerned, as institutions "are understandably being prudent while savvy fintechs are fast at work to roll out customer-facing generative AI tools," said Dylan Lerner, senior digital banking analyst at Javelin Strategy & Research."The last thing financial institutions need right now is a misunderstood element embedded in their tech stack," Lerner said.

Ginnie Mae President Alanna McCargo announced plans to retire Friday, calling it a "deeply personal decision to return to private life."Her impending departure will end the tenure of Ginnie's first woman president, who brought stability to the role after a period in which there hadn't been a Senate-confirmed holder in almost five years.McCargo stabilized the agency at a crucial time as she helped navigate it through both a pandemic and subsequent dramatic interest-rate cycle change that put strain on some mortgage companies that were Ginnie's counterparties.Ginnie helped stand up an emergency liquidity facility during the pandemic and also later coordinated with the Federal Housing Finance Agency in the development of a series of modernized counterparty requirements during her time there.While Ginnie drew some criticism for having to seize servicing from one of those counterparties in the specialized reverse mortgage market, where there are limited players, it appears to have otherwise minimized issuer failures in a stressed environment.A nonbank risk-based capital rule proposed under McCargo's watch drew some industry criticism but relations with mortgage companies became more conciliatory after Ginnie extended its deadline and promised to work with issuers.During McCargo's time at Ginnie, the agency took some steps in the wake of its experience with the Reverse Mortgage Funding bankruptcy to reduce liquidity strain in that sector.It also has drawn up policies to address more recent risks that have become apparent around cybersecurity concerns and managed to keep its funding intact amid a federal budget crisis, sustaining liquidity for a massive government-guaranteed housing market.Ginnie guarantees securitizations of mortgages backed at the loan-level by other government agencies like the Federal Housing Administration and the Department of Veterans Affairs, and it helps fund a significant number of loans made to first-time home buyers."The past 3.5 years in public service with the Biden-Harris Administration has been the most important and fulfilling work of my 25-year career in housing finance," said McCargo, who plans to leave the agency May 3."I am deeply grateful for the opportunity to serve my country and advance a bold housing agenda across the globe," she added, alluding to the international investor base for the securities Ginnie guarantees. Ginnie increased outreach to Latin America during her tenure.McCargo's planned departure will come not long after that of Marcia Fudge, the Department of Housing and Urban Development's secretary, who announced last month she would step down. Ginnie is an arm of HUD. Adrianne Todman, previously a deputy secretary at HUD, is now serving in Fudge's former role on an acting basis.Todman called McCargo, who brought expertise in areas like small-loan funding challenges and servicing from her previous role at the Urban Institute to Ginnie, "a zealous advocate for housing affordability and ensuring a more equitable housing finance system."As president of Ginnie Mae, Alanna has helped expand Ginnie Mae's reach in serving historically underserved communities and has been a champion for advancing market-driven initiatives that support mortgage programs across the government," Todman added.Sam Valverde, principal executive vice president at Ginnie, will take on McCargo's role on an acting basis after she leaves. Laura Kenney, Ginnie's senior advisor for strategic operations and interim chief operating officer, also will take on some of McCargo's former responsibilities.