POS, Bridge, Jumbo ARM Programs; M and A Continues; Deep Dive Into Rate Movement
“Why don't you tell rumors in a Botox Clinic? Nobody raises an eyebrow.” Who can keep track of the rumors out there, like a combo of a well-known real estate search engine and a company that exited wholesale a few years ago? (Totally unsubstantiated, unlike the actual Luminate/NJ Lenders news below!) Who can keep track of thousands of products from hundreds of countries to tax them? In yet another change, smartphones, computers, and other electronics are exempt from Trump’s reciprocal tariffs, for now. It’s difficult hedging a mortgage pipeline; try being a purchasing manager for a car maker! Or a homebuyer or builder: Canada and Mexico, respectively, are important sources of softwood lumber and gypsum (used in drywall). China is an important source of steel and aluminum, as well as a supplier of home appliances and other products used in residential construction. Many of the raw materials and goods sourced from China are already subject to tariffs. It is important to note that Canada, Mexico, and China are the United States’ three largest trading partners. Economists at the National Association of Home Builders (NAHB) project that the proposed new tariffs on Mexico and Canada, along with the recently imposed tariffs on China, could raise the cost of imported construction materials by more than $3 billion. (Today’s podcast can be found here and this week’s are sponsored by BeSmartee, transforming mortgage lending with Bright Connect, its native mobile app designed to boost loan officer productivity, speed up referrals, and simplify the borrower experience. Hear an interview with TrustEngine’s Dave Savage on the evolution of the industry since he entered more than three decades ago, how he's driven to make an impact, and more tidbits from one of the most recognizable names in mortgage that you won’t want to miss.)
Products, Software, and Services for Lenders
Struggling to stay ahead in today's rollercoaster market? With mortgage rates swinging due to tariff uncertainties, maintaining a competitive edge is critical. Optimal Blue's hedging and trading solutions deliver unrivaled automation and efficiency, reducing manual errors and supercharging productivity. Real-time risk management means you can make quick, informed decisions, cutting potential losses and maximizing profitability on every loan transaction. Seamless data connections boost operational efficiency and data integrity. With rates fluctuating daily, Optimal Blue’s advanced analytics and modeling tools provide insights to hedge against volatility and seize market opportunities. Powered by decades of industry expertise, we help you optimize your advantage no matter the market conditions. Transform your operations and thrive, even in the wildest markets. Explore how Optimal Blue’s hedging and trading solutions can transform your operations and drive success.
“Boost your production with Axos WCPL (NMLS# 524995). We closed March with the highest funding volume we’ve had in over two years. Axos’ non-QM products, and Jumbo Portfolio ARMs are priced aggressively. See for yourself by pricing your next loan today with our Quick Pricer tool. We just reduced our bridge-to-sale rates by a full 1.00%, making this a great time to help your borrowers buy their next home before completing the sale of their current residence. Big news: Axos WCPL now offers Jumbo and Super Jumbo portfolio construction loans. Starting at amounts of $1 million or more, our tailored construction products are available as construction to permanent (owner-occupied and second homes) and investor purpose loans (spec construction/professional real estate developers). Want to join a winning team? Axos is expanding with two open National Account Executive positions. If you’re an experienced AE ready to grow your business and career, apply today.”
Elevate Your Social Media Strategy with loanDepot: loanDepot continues to invest in best-in-class training and support resources to meet the evolving needs of today’s originators, equipping our team with the tools they need to thrive. From industry-leading platforms and tailored training programs to coaching from the industry’s top subject matter experts, we deliver the support, mentoring, and resources you need to build your business. The company will host an online Modern Lending Lab session focused on social media strategies and best practices for mortgage pros, open to anyone in the industry. Led by loanDepot Head of Revenue Development and Growth Alec Hanson, author of Modern Lending Playbook, the session will explore how to leverage social platforms to engage clients, build your brand, and drive business growth. It takes place Wednesday, April 23 at 2PM EST. Are you ready to grow your audience and connect with confidence? Email Shane Stanton to register.
American Heritage Lending’s Bridge Star Webinar returns by popular demand. After an overwhelmingly positive response to February’s session, American Heritage Lending is bringing back its Bridge Star Loan Program webinar on Wednesday, April 23 at 1:00 PM EST. In the last session, the Q&A alone ran an extra 30 minutes, highlighting the value brokers found in real-life loan scenarios and direct interaction with program experts. This upcoming webinar will dive deeper into strategies to close more deals with Bridge Star, while addressing common borrower profiles and funding challenges. Reserve your spot now: Registration.
“Lenderful Solutions continues to lead the industry with innovative Point-of-Sale solutions. We are excited to share our pioneering new relationship with Fairway Reverse and leaders Dan Ventura and Tom Evans, which we hope can evolve the customer experience in the Reverse Mortgage industry. We also continue to expand our footprint with banking institutions nationwide, implementing our Mortgage with PreQual Express and Home Equity Turbo solutions to support Isabella Bank, the eighth-largest bank in Michigan. Our latest solutions, Purchase Turbo, Refi Turbo, and Home Equity Turbo, continue to add measurable operational efficiency. Lastly, our new Loan Officer Portal enables file review before delivery into an LOS system, increasing efficiency for lending teams. Lenderful Solutions, a division of national title agency Mortgage Information Services, Inc. (MIS), believes borrowers deserve a superior lending experience, and lenders deserve an affordable, customizable, and proven results-driven platform that delivers. Contact Paul Lehnert today to get started!”
On today's episode of Now Next Later, Jeremy and Robbie are joined by Brock Cassidy, Chief Revenue Officer of NewZip, to discuss the future of lead generation in 2025, especially around purchase leads. Brock shares insights from LeadsCon and explores how innovation and product management are transforming lead nurturing and conversion.
Mergers and Acquisitions
Out of Minnesota and New Jersey comes news that Luminate Bank® is welcoming the NJ Lenders Team to the Luminate Bank community, integrating its home lending expertise into the Luminate Bank brand. “This collaboration combines the expertise of mortgage lenders and operational staff at NJ Lenders Corp., which has been developed with exceptional purpose over the past 30 years, with the national banking and lending capabilities and financial strength of Luminate Bank. With the NJ Lenders team operating within Luminate Bank's robust and highly personalized banking systems, customers will find unmatched home mortgage and digital banking services.
“With an approximately 200-person team, including loan officers, sales management, operations staff, and support staff, the NJ Lenders team will operate within the Luminate Bank umbrella while retaining Loan Production offices in seven states and expanding their reach to originate nationally. NJ Lenders Corp was founded in 1991 and has closed more than 100,000 mortgage loans totaling more than $40 billion. Licensed to lend in 22 states, NJ Lenders Corp. is privately owned and keeps more than 95% of its files in house, controlling the entire underwriting and closing process.
Last month’s STRATMOR piece is titled, “Mergers and Acquisitions Aren’t Going Away, and In Fact…”
In general, Garth Graham and the M&A team at STRATMOR have their eye on trends in the mortgage industry. One area that has plagued deals in the past from seeing the best results is culture. Is a lender or bank merging with another lender or bank that you’ve been competing with, and despising, for decades? Is there too much “history” to make it work, even if the financials and footprints work perfectly? Lenders and banks may have differences from others in operating structure, hierarchy, dictatorial management vs. more open styles, pay structures and other factors. Here too, candidates should evaluate things very carefully before jumping into the pool, if success is to be truly achieved over the short and long term.
Meanwhile, STRATMOR is very active in confidential M&A, and the team told me that the pace of deals in 2025 remains very high and may exceed 2024’s.
Garth stated, “Of the last dozen deals we have done, the timing has ranged from two months from start to finish, to over one year to get the deal done. Asset sales are faster, while stock sales take longer, so it depends on the needs of the buyers and sellers and what works best. But I warn potential sellers not to WAIT too long to engage in the process, even if you hold to pull the trigger. For example, we have deals in process where the parties have worked together for months (getting to know each other, share financials) and now are finalizing terms.”
The other key item is to be very careful about premature disclosure. “We are super careful about the NDA and non-solicitation process, and also with ensuring that the potential buyer signs a blind NDA before they know the seller’s name.”
“We try to do a lot of financial due diligence in advance, so the buyers and sellers go into the process with a full understanding of the financial synergies. There is a lot of potential savings in back office and corporate expenses for the right acquisitions, so getting down to detailed analysis of those expenses is key to be done BEFORE the offer is made, not wait until due diligence.
“We did multiple deals in 2024, and all had upfront premiums with solid earn out. Often the premium being paid is driven by the ability for the seller to add the production without having to add all the corporate expense, so it can be painful decisions about the corporate departments (secondary, HR, Risk, technology etc.), but the end result is that the production is worth more to the buyer than it is to the seller due to the cost savings. And that shows up on premium offers. And the seller gets the balance sheet plus a share of that financial benefit. So, it can be a potential win-win.”
(Anyone interested in learning more should talk to David Hrobon or Garth Graham.)
Capital Markets
Investors have taken a step back in an effort to allow trade war dust to settle and markets to stabilize before establishing or adding to positions, with yields on (usually steady) U.S. government bonds having spiked sharply, a signal that President Trump’s trade war has shaken faith in the U.S. economy. Trading activity hasn’t subsided, but rather there is a collective unwillingness by traders to take sharp repricings on the chin. Treasuries are trading like a risky asset, or at least closer to the debt of an emerging-market country than what one would expect given the circumstances. Case in point: investors dumped 10-year and 30-year Treasuries at the same time they dumped stocks, crypto, and other risky assets over the past two weeks. The inverse is also true, with Treasury prices rising in unison with these other asset classes.
It’s okay to have some nerves when you (read: your country, your president, his administration) pick a fight with a country (China) that owns a lot of your debt instruments. China’s holdings of Treasuries are increasingly under scrutiny as some analysts have postulated that the country could dump U.S. debt in the future as a response to the steepest American tariffs in a century. There are also (unsubstantiated) whispers that sales by Beijing may have already helped fuel the biggest surge in 30-year yields since the pandemic.
If, in fact, the move did have its origins from overseas, fingers crossed that the 60-basis points selloff likely represents the extent of such influence. There also exists a separate narrative that it was a dash-for-cash (a la the pandemic) that triggered further position unwinds at a moment in which uncertainty was peaking. 10-year and 30-year U.S. Treasury auctions last week went remarkably well, all things considered, although those weren’t enough to materially offset general selling pressures in the market.
If it wasn’t clear from the above two paragraphs, last week’s economic data was overshadowed by trade policy as President Trump launched the U.S. into a higher tariff environment. Price pressures remain as uncertainty around trade negotiations continue. Markets received a welcome surprise when March’s inflation data came in much softer than expected with the consumer price index (CPI) falling 0.1 percent from February. The data takes some of the pressure off the Fed to remain overly hawkish if the labor market experiences a downturn although expectations are for the Committee to keep monetary policy unchanged following its May meeting. The Fed is likely in a wait and see pattern until economic conditions force their hand one way or the other. Sure, chatter about some form of intervention from the Fed should the weakness continue has gained momentum. However, recent chatter from Fed members paints consensus thought of one signaling that the current modestly restrictive policy stance remains entirely appropriate.
Put another way, don’t hold your breath that U.S. rates are data dependent. Instead, expect that upcoming releases (e.g., retail sales due out later this week) will provide an incremental trading impulse while the broader tone will ultimately be a function of sentiment surrounding news emanating from Washington D.C., at least as it relates to the impact of the trade war on consumer confidence. And make no bones about it, the U.S. economy is "facing considerable turbulence” as it navigates global trade wars, persistent inflation, the climbing budget deficit, and high asset prices. Your takeaway after reading the above should be that this all-out assault on global trade has brought into question Treasuries status as a safe bet, which does not bode well for mortgage-backed securities (MBS).
Aside from benign consumer and producer price inflation readings last week, we did receive the preliminary April University of Michigan Index of Consumer Sentiment on Friday, which not only posted the second-lowest reading on record but also showed that the decline in consumer sentiment is broad-based. So, stop reading now if you don’t like bad news. There were steep declines in both current conditions and future expectations, one-year inflation expectations surged to 6.7 percent (the highest since 1981) while long-term expectations rose to 4.4 percent (the highest since 1991), and expectations for unemployment to rise are at the highest level since 2009.
The report fomented concerns about future consumer spending strength and highlighted growing fears of a recession, signaling increasing economic anxiety and waning consumer confidence. Fed Chair Powell has downplayed the importance of the survey-based measures of inflation expectations of late, which is a shift from the Fed’s traditional stance, but one that is understandable in the context of the recent volatility. Let’s hope that equities stabilize, and President Trump’s social media posts don’t reveal any new levies or trade restrictions.
This week’s key data includes Fed surveys, import prices, retail sales, industrial production/capacity utilization, business inventories, and housing data. Fed Chair Powell is scheduled to deliver remarks, while governors Bowman and Barr, and several Fed presidents, are scattered throughout the rest of the week. The ECB will be out with its latest monetary policy decision on Thursday, where another 25-basis point cut (to a 2.25 percent deposit rate) is fully priced in. Treasury supply will be headlined by $13 billion reopened 20-years and $25 billion new 5-year TIPS. The bond and equity markets are both closed on Good Friday and the bond market will close early on Thursday.
Bank earnings continue with Goldman Sachs scheduled to report today and Bank of America and Citigroup reporting tomorrow. In the world of MBS, besides Class B 48-hours today, Class C is on Wednesday. Today’s economic calendar is mostly about bill auctions, Fed speakers, and contains no notable data on the docket. We begin the holiday shortened week with Agency MBS prices better than Friday by about .125, the 2-year yielding 3.91, and the 10-year yielding 4.45 after closing last week at 4.49 percent (50-basis points higher than where it began the week).