Automation, ROI Calculation, Homeowner Engagement Tools; STRATMOR on AI Adaption; Rates and Builders

Time is an interesting construct. The solstice is officially behind us, and we can officially hum “The Boys of Summer” with impunity. Time… “5,000 years of eating bread. And in less than a decade it seems half the population is allergic to gluten!” Shifting times, and ages, mean a lot to LOs. If 10,000 people a day turn 62, does that mean reverse mortgages might be worth exploring? I don’t know when the terms “elderly” or “middle-aged” became politically incorrect. How about the term “geriatric millennial?” Although there appears to be a bit of a baby boom going on, no one’s getting any younger: The nation’s median age increased by 0.2 years to 38.9 years between 2021 and 2022, according to Vintage 2022 Population Estimates released by the U.S. Census Bureau. (“Median:” half above and half below.) A third (17) of the states in the country had a median age above 40.0 in 2022, led by Maine with the highest at 44.8, and New Hampshire at 43.3. Utah (31.9), the District of Columbia (34.8), and Texas (35.5) had the lowest median ages in the nation. Hawai’i had the largest increase in median age among states, up 0.4 years to 40.7. LOs ignore demographics at their own risk. (Today’s podcast can be found here and this week’s is sponsored by MCT and its Hedge Advisory division. Download their recently released whitepaper, Mortgage Pipeline Hedging 101, for more information on hedging in today’s market. Today’s has an interview with MCT’s Andrew Rhodes on assignment of trade – AOT – and loan sale automation.)

Broker and Lender Services, Products, and Software

Despite the doom and gloom in the headlines these days, there is a market to tap into. Nearly 10 million families will need to buy or sell a house this year, and Percy has helped its clients earn the business of 10,000 of them in the first quarter of 2023 alone. Percy’s private-labeled homeowner engagement solutions hook homeowners with equity and financing insights and have helped housing professionals start conversations representing $7.5 billion worth of business this year. You deserve a partner that will put your brand front and center and deliver. Check out Percy’s Equity Insights to learn how our clients average 400% ROI.

Ascertaining value can be difficult without the right expertise, as a 2004 visitor to Antiques Roadshow discovered when his great-grandfather’s pocket watch turned out to be a 1914 Patek Philippe worth nearly $250,000 at the time. To help LOs assess the value of their referral partnerships, Mobility Market Intelligence (MMI) has announced the release of its ROI Calculator. Using the ROI Calculator, LOs gain deep insights into their buy-side real estate agent relationships and measure the impact on production volume by increasing their agent wallet share. For example, a lender averaging $1B in annual volume would see that increasing wallet share 0.1% with their current partners results in nearly $10M in additional volume. That same lender could also see that in the last year, they left more than $9B in uncaptured partner volume on the table. Know your partners. Know their worth. Get the ROI Calculator from MMI here.

Are you tired of having to adjust head count every time the market changes? The Mortgage Automation Suite, brought to you by Richey May and Zoral, can help. With scalable automated solutions that improve accuracy while reducing repurchases and costs, your business will be well-equipped for any market cycle. Leveraging this powerful automation will allow your team to close loans more easily, helping to retain your best staff. Plus, it adds the extra layer of stability needed during difficult times; something we could all use a bit more of these days! Find out how the Mortgage Automation Suite from Richey May & Zoral can help you today. Email info@richeymay.com.

Need processing support for Non-QM or FHA manual underwrites? Carrington Wholesale has launched ProcessIQ to help expand broker capacity and increase capabilities for time intensive and/or complicated loans such as those with low FICO, high DTI, Non-QM (bank statements, DSCR, high balance) and FHA/VA manual underwriting loans. The Carrington ProcessIQ team handles all the logistics, jumps in and works directly with borrowers to process the loan. For more information contact Amy Marsh at (714) 642-2044.

STRATMOR, AI, and Originators

What will it look like to be an AI-powered loan officer? In the brave new world of AI, an originator’s main value will not be in their ability to gather borrower information, quote a rate or even convey periodic progress updates. Their value will, more than ever before, be centered around soft skills like creating rapport and building trust. How can mortgage professionals benefit from AI while also taking advantage of its limiting factors? In his June CX Tip, STRATMOR Group’s MortgageCX Director Mike Seminari outlines what originators can do to adapt and reinvent themselves by harnessing, not competing with, AI. He shares three steps originators can take now to AI-proof their careers in his article, “Mortgage Originators' Guide to Success in the Age of AI.”

Capital Markets, Existing Home Sales, and Builders

Like frogs being cooked in cool water that gradually reaches boiling, rates have been edging higher as people realize that the Fed is actually doing what it has been talking about doing. As with anyone involved in real estate or lending, rising mortgage rates have trickled up to builders because many buyers can no longer afford the homes they ordered when rates were lower at current rates. Instead of cutting prices, builders are finding other ways (below market mortgage rates, free upgrades etc.) to give more value to the buyer without impacting the comps.

Historically, housing has been a critical driver of the broader business cycle. Existing-home sales (completed transactions that include single-family homes, townhomes, condominiums, and co-ops) increased 0.2 percent in May to a seasonally adjusted annual rate of 4.30 million, according to the National Association of Realtors. Sales were mixed among the four major U.S. regions, with the South and West posting improvements and the Northeast and Midwest experiencing pullbacks. All four regions experienced year-over-year sales declines, and aggregate sales nationally dropped 20.4 percent annually (down from 5.40 million in May 2022). Separately (and fortunately), the number of U.S. homes beginning construction unexpectedly surged in May by the most since 2016 and applications to build increased, suggesting residential construction is on track to help fuel economic growth. Homebuilders have responded to limited inventory in the resale market, and have grown more upbeat as demand firms up, and materials costs and supply chain pressures fade.

The housing market is likely to pull the economy out of any future slowdown, and mortgage rates heavily influence the direction of home sales. It’s widely known that millions of Americans are locked into their property through low mortgage rates from the QE4 program. It remains to be seen what happens in the coming months, but for June, borrowers have seen a slight stabilization of rates across a range of industries, which should be a tailwind for mortgages. Will steady rates spur those who have been holding off to finally engage in a new purchase or refinance? Consistent rates should lead to consistent home sales.

While volatility has dropped this month, affordability and credit availability issues remain. The shortage of skilled labor and cost of building materials means that new construction will have a limited effect on affordability, and wage growth will have to do the heavy lifting. The supply of homes available for sale sits at 2.9 months, well below the trailing average of 5.4 months seen over this millennium. A $300,000, 30-year 6.8 percent fixed rate mortgage has a monthly payment of about $2,000, up from around $1,300 at rates slightly above 3 percent as seen in January 2022. Lenders have pulled back on loan offerings for higher LTV and lower credit score loans, even as loan applications continue to run well behind last year’s pace. Reflecting higher mortgage rates and concerns about the economy, mortgage credit availability dropped 3.1 percent in May, according to MBA. The index has dropped ten of the past twelve months to now sit nearly 20 percent lower than it did one year ago and at the lowest level since January 2013.

And let’s remember the adage, “Don’t fight the Fed.” Yesterday’s market moves stemmed largely from overnight rate hikes from the Swiss National Bank (+25 basis points), Norges Bank (+50 basis points), Bank of England (+50 basis points), and the Central Bank of Turkey (+650 basis points), which served as reminders that central banks are not quite to the light at the end of the tunnel in the struggle to rein in inflation. On a related note, Fed Chairman Powell appeared before the Senate Banking Committee yesterday and he doubled down on the hawkish view that the Fed isn’t done battling inflation. He repeated the need for more rate hikes during the conclusion of his semiannual testimony on monetary policy and reiterated that the Federal Open Market Committee does not expect to cut rates anytime soon. He noted that policymakers believe that the appropriate fed funds rate range is within a couple hikes of the current level and that the central bank also remains attuned to its employment mandate.

Not much going on today except for preliminary June S&P Global PMIs and several Fed Presidents speaking starting with St. Louis’ Bullard, who will be followed by Atlanta’s Bostic and Cleveland’s Mester. We begin the day with Agency MBS prices better by .125-.250 and the 10-year yielding 3.74 after closing yesterday at 3.80 percent.

Employment

Angel Oak Mortgage Solutions’ is hiring in several markets across the country! Are you a Rockstar Account Executive looking for a new home? Looking to join a firm with a strong culture, new technology and an unparalleled operations focus? Come join the team with the leader in Non-QM at Angel Oak. Hiring locations: Missouri, Wisconsin, Indiana, Southern Ohio, Northern California, Northern Virginia, Charlotte, North Carolina, Philadelphia, Pennsylvania, Rhode Island, and Connecticut. Apply here.

A top-rated national retail lender with headquarters in the Southeast is searching for a VP of Sales to join its exec team. This lender has strong backing that provides stability, an elevated level of support and a large residential builder network which offers expansive growth. The VP of Sales will design, develop, and execute thoughtful strategies and tactics to increase business development and strengthen customer and partner relationships. Interested parties can send confidential resumes to Chrisman LLC’s Anjelica Nixt for forwarding to the company.

“Hey, mortgage sales professionals do not join radius financial group for our amazing culture, president club trips, best workplace accolades, 100% 401K match or because of our shared success program which grants phantom stock to ALL employees. Join radius to grow your business, mortgage team and wealth. Over the past 23 years, radius has become the best at what we do by caring intensely about the career growth of our team members and investing in technology that simplifies and automates our process. We are a world-class customer obsessed team focused on our loan officers’ growth and success. So, if you want real opportunities to grow, the ability to make a positive impact starting on day one and the freedom to chart the career you’ve always wanted, at radius, you can! For confidential inquires please contact Carla Herrera and visit us at radius financial group inc., Mortgage Lending Careers.”

Sovereign Lending Group, LLC is expanding its team of consumer direct loan officers at Fashion Island in Newport Beach, CA. This is a great opportunity for those interested in joining a company that provides superior marketing and a diverse suite of products, committed to adding value for Sovereign’s loan officers and creative borrower solutions. If you're interested in joining the team, be sure to contact Matthew Cataño (949-736-9148).