Industry Observations from an Industry Old-Timer

By: Rob Chrisman •

[I am away from the computer on a daily basis, and I cannot respond to e-mails until September 11th. In my place are daily commentaries from a series of very knowledgeable mortgage industry people with different backgrounds, and they have been given very little direction about what to write about - the latest is below. Our views may or may not coincide, but I thank them for their time in volunteering and helping out.]  

Today's contribution comes from...

John Boyles
Opes Advisors
jboyles(at)opesadvisors.com

I often pick on Rob about his commentary, primarily because I remember when he was at Tuttle, where his humor was a bit more locker-room appropriate and his opinions were a little more... opinionated.  In asking me to guest write this commentary, I am sure was his way of telling me to put up or shut up.

He left the door wide open and I have been struggling about what I should pontificate on.  I received several suggestions:

  • volatility in the MSR's;
  • my experiences with hedging firms from Tuttle, Compass and finally MIAC;
  • the upcoming conference in Chicago and the relevance of the MBA;
  • anything about new hedge fund money coming into the industry (unfortunately they all made me sign NDA's)
  • The stubbornly high unemployment...

None of these topics did it for me, so onto a few other topics....

I am sure Bank of America didn't like being outed by the WSJ, but anyone paying attention knew something was up. I never expected BAC to stay in correspondent lending in the first place. They stepped out of the market years ago, and only inherited the CLD channel with the Countrywide bailout. 

Many critics say a correspondent lending division distances an institution from the borrower, and the reps & warrants are only as good as the counterparty.  As a mortgage banker and correspondent lender I am obliged to disagree.  I am hopeful that BAC finds a committed buyer for their platform or that at least someone like Flagstar, MetLife, Franklin American or Aurora will step up and try to fill the 24% market share void left behind.

We try and do considerable amount of forward looking planning here at Opes... we, like many mortgage bankers, are always trying to be ahead of the curve in our planning.  Some in this industry might look at this as an opportunity to build out their own servicing portfolio. A great resource is the MBA, which recently published a white paper on the subject. 

Rob is currently in South America, I assume trying to unravel the mystery of the Mayan calendar.  He often tells me I can be "retired" like him but only after spending another decade or two defending my pricing strategy and dealing with pull through, lock renegotiations and regulatory changes. 

Occasionally when I speak with originators, they express concern about the effects of LQI and similar initiatives.   On August 19th, FNMA updated their FAQ on the subject -- it's worth a read.

How do you take something that is inherently complex, always subjective and surprisingly fluid and improve the quality? According to FNMA you focus on "facilitating a match between the loan file data and the delivery data in both the loan origination and loan delivery processes." That's code for saying they want to make sure what you say you did is exactly what you did. This is a conversation I often have with my four-year-old son JP. 

I will leave you with one last thought. This month we saw:

  • the ^TNX drop below 2%.
  • unprecedented declaration from the Fed about rates.
  • S&P downgrade of US debt
  • And the swelling pipelines and bulging bellies of mortgage bankers.

All this news gave many of us a gift of production.  Yet I look forward and I know "winter is coming." I hope that we all have enough deliberate practice, dedication and mentorship to make it through. 

I asked Rob to take a look at this before I was complete. He said; "A little more about who you are. You have a very good perspective on the business, and the audience needs to know it."

I never like talking about myself.  I thought maybe I could share something of myself by writing about a few of the mentors and coaches who have helped me along the way. 

Lennart Wahlquist. When I went to work for this guy in 1994, I didn't know what a "1003" was. He made me read every seller's guide starting with Saxon, Impac, then ALS.  My first retail loan was for my sister. (We were a wholesale shop.) He made me come up with the difference when I was floating her price and in one day the market sold off. Two weeks later the price was back to where I wanted it. He made me eat the lock. This taught me two things: 1) Never promise a borrower and not deliver. 2) Never blow a lock at a lender for a better price.

Nancy Corlett (Carter).  Nancy ran me into the ground at Aurora Loan Services (Lehman) - I never worked so hard in my life. (That said, we were in San Diego, where mandatory office attire included board shorts and flip flops.)  No matter how late we were out the night before with clients, Nancy was in the office by 6:00 the following morning.  I learned the value of hard work and dedication; her drive to grow the business is the strongest I know.

Susan McHan.  A little over six years ago she invited me into her company (Opes Advisors) to run secondary and eventually capital markets.  At this small business headquartered in Northern California, never a day goes by where I don't learn something new.  She has grown Opes from about 15 to over 300, and she cares for each one of us.  She reminds me of that when I start to complain about giving free lock extensions or price concessions.  Here I learned the most important lesson about operating with care and concern for everyone.