Non-QM, TPO, Marketing Products; 2-yr Yield Lower Than Overnight FF - What is Moving Rates?
As we nip at the lowest interest rates in 2019, banking regulators are directing their attention to the declining quality of certain farm loans. A Federal Reserve report says from 2016 to 2018, nonperforming-loan ratios rose for farmland and agricultural production, as well as for credit cards and vehicles. Commercial loans aren’t risk free either. Flagstar has financial exposure totaling $69 million on a commercial and industrial loan to the now defunct reverse mortgage lender Live Well, per a 10-Q filing with the Securities and Exchange Commission. Flagstar’s stock sank accordingly. And for economic trivia, the U.S. is also seeing its lowest birthrate since 1986 – not exactly a recipe for an expanding economy. More on what is moving rates below.
Lender Products and Services
Non-QM origination volume continues to grow at a robust pace even in the face of the current refinance run that the industry is benefiting from, the key for originators right now is to invest in the non-agency industry to be prepared for when purchase season winds down and refinance activity slows. This is a challenging proposition, to invest in your future at a time when your plate is full, but the investment will be worth the effort. Those that invest in their education and business now will be the winners six months from now in the Non-QM origination market. To aid in your Non-QM education, please take the opportunity to watch and listen to the most recent webinar put on by Deephaven and LoanScorecard discussing trends in Non-QM and reviewing the Identi-FI AUS. Deephaven’s AUS powers Non-QM decisions at your fingertips. If you are interested in working with a Non-QM specialist, get in touch with us today at brokerinfo@deephavenmortgage.com (Wholesale) or sales@deephavenmortgage.com (Correspondent).
Start doing business faster with Stearns Lending Wholesale Division. Introducing the new TPO Application Portal. Stearns is excited to introduce a client application portal that makes it easier to start doing business with Stearns. Whether you’re in a pinch and need to get a loan submitted to Stearns for the first time or experience for yourself the power of Stearns, the SNAPstart portal is a quick and efficient to way to get approved with Stearns. Simply input 12 pieces of basic information about your business and get started in a SNAP with Stearns. For 30 years, Stearns has empowered their brokers with tools to help them work smarter, more efficiently and close more loans. Contact your AE for details or email Stearns.
Getting ready to attend the MBA’s National Secondary Market Conference May 19-22? Non-QM is on the rise and Angel Oak Mortgage Solutions is at the forefront. Now is the perfect time to learn more about non-QM and how you can work with the leader in this space. We’ll be at the Chatwal in Times Square talking non-Agency and how we can help you serve more borrowers. Schedule some time with our team by simply emailing infocorr@angeloakms.com to learn how you can become a correspondent lender with Angel Oak.
Did you know that the success of your brand is directly tied to the health of your culture? Do you want to learn what is working well and what areas need to improve? Seroka Brand Development offers a proprietary internal culture questionnaire for companies in the mortgage industry. It is designed to give you the insights you need to identify internal changes that can create a culture where people love to come to work every day, inspired to give their all to their fellow employees and your clients. The result is achieving an environment of operational excellence and continuous improvement fueled by employees who want the best for their company. To learn more email Scott@Seroka.comand get ready to #TurnUpYourBrand!
Floify just unleashed its completely redesigned landing pages, which now include built-in mortgage calculators AND lead capture forms. Now, every lender who uses the Floify point-of-sale system to automate their mortgage origination process can implement these powerful landing pages in minutes. Once enabled, lenders can customize the look and feel of their pages with an all-new in-browser editor, and even display their company and real estate agents’ branding together on unique co-branded pages, ensuring mutual clients receive a familiar and comfortable homebuying experience from start to finish. For lenders looking to generate more mortgage leads, a simple form can be required before allowing access to your calculators. Once a prospect calculates a mortgage scenario, you will receive a notification, complete with the prospect’s contact info for immediate follow-up. Check out how these exciting new features can take your lending to the next level – request a live demo of Floify today!
A slow economy leads to lower rates as lenders, notably banks, lower rates in order to encourage borrowing. Supply and demand! There has been a lot of talk around predicting recessions lately based on two well-known indicators: the unemployment rate reaching its trough and the fed funds rate reaching its peak before each recession since 1953, on average about eight months before a recession’s start date. Analysts are concerned we have reached a trough since the unemployment rate declined to the lowest in over 45 years at 3.7% in September.
This worry intensifies considering the fed funds rate may be reaching the peak of its cycle as it is expected the FOMC will slow the pace of rate hikes this year. Given the notorious associated with recession, it is worth asking if the unemployment rate and fed funds rate are actually reliable predictors of recession in real time? There is a varying degree of lead time per cycle and these inflection points are backward looking, making it difficult to identify them in real time.
Further, different business cycles have varying troughs for the unemployment rate, ranging from 2.5% to 7.2%, while the peak fed funds rate has ranged from 3.0% to 20.0%. If a specific unemployment rate is utilized as a threshold to predict the next recession, analysts would likely always be unsuccessful. The varying trough values across business cycles is because the depth and duration of each cycle are different and the evolving nature of the economy dictates the unemployment rate.
While the fed funds rate does peak before each recession, the range is from two to 18 months. And some business cycles have multiple peaks of the fed funds rate, meaning the peak fed funds rate may not always be associated with recession. Given that we are currently in the second-longest expansion on record, and multiple peaks are typical of long growth periods, it may be hard for analysts to utilize in real time. Like the unemployment rate, it is also a backward-looking indicator of recession. But recession prediction can be improved by monitoring things such as if the unemployment rate is persistently below the natural unemployment rate, indicating the labor market is functioning at full potential and the economy is close to its peak. Or a fed funds rate above its natural level would suggest that the current stance of monetary policy is neutral or contractionary, a stance associated with a mature expansion suggesting the possibility that the economy is near its peak.
In reality, there are many variables and it is difficult to obtain real-time reliable estimates of the natural rate of unemployment and the fed funds rate. This much has been suggested recently by FOMC Chairman Powell, adding that in real time it is very difficult to reliably estimate the natural unemployment rate and fed funds rate as evidenced by the Congressional Budget Office’s revising the non-accelerating inflation rate of unemployment estimates significantly. Powell stated policy recommendations would have been very different based on the revised figures rather than those using the real-time estimates. In summary, the start date of a recession determines the value of the unemployment rate trough, and while during longer expansions the fed funds rate has experienced multiple cycles, it is tough to predict the next recession with either benchmark as both indicators are backward looking.
U.S. Treasuries bounced back slightly from Monday’s rally, including the 10-year closing at 2.42% after a slight improvement in sentiment. The Trump administration indicated that talks with trade officials from China will continue, but a timetable released by U.S. trade rep Robert Lighthizer suggested that tariffs on the remaining imports from China could be imposed in late June. Import prices declined in April, creating another data point that shows a lack of worrisome inflation pressure. Concerns for bond investors revolved around if Prime Minister May will be able to hold onto her position and Salvini's comments about potentially breaking EU fiscal rules.
Throwing investors for a loop with the announcement by PIMCO that it is postponing what was expected to be the largest ($1 billion) mortgage REIT (PIMCO Mortgage Trust) IPO on record, which was expected to issue 50 million shares at $20 per and price after Wednesday close. PIMCO cited "unfavorable equity market conditions, specifically in the market for initial public offerings" as the reason with no future date mentioned in its press release.
MBA mortgage applications for the week ending May 10 kicked off today's busy calendar (apps dropped slightly). We’ve also had April Retail Sales and NY Fed Manufacturing for May (-.2%, disappointing, and 17.8, respectively). Later this morning sees April industrial production and capacity utilization, Fed Governor Quarles speaking, March business inventories, the NAHB Housing Market Index for May, Richmond Fed President Barkin, and finally March TIC data. We start the day with agency MBS prices better .125-.250 and the 10-year yielding 2.37%.
Employment
Are you looking to grow your career? NewRez, formally New Penn Financial, is a national lender backed by a well-capitalized publicly traded parent company seeking multiple operations and underwriting positions to support growth: seasoned underwriters, underwriter team leads, condo project review analysts, wholesale credit analysts, wholesale processors, closing managers, closers, wholesale loan setup & disclosure analysts, wholesale operation managers, team leads, and client relations representatives. Positions are available in Concord, CA, Milwaukee, WI, Atlanta, GA, Mt. Laurel, NJ and Plymouth Meeting, PA. “It is an exciting time to join NewRez,” says Dena Kwaschyn, Chief Fulfillment Officer. “We have implemented cutting-edge technology with a focus on automation and improved processes, heightening our productivity – and taking your career to the next level.” Signing bonuses available for the right candidates in certain roles. Contact Vince Daino, VP of Recruiting to “Rise with NewRez!”
In wholesale job news, ClearEdge Lending recently announced John Burns, VP of Sales has joined its team to lead the company’s growth in new markets across the Southeast region. Burns will lead company’s efforts to expand its Non-QM presence in GA, FL, NC, TN, AL, MS & SC. ClearEdge recently hired Account Executives Nina Barroso (Atlanta MSA), Rick Culp (“Space Coast” area of FL) and Bob DellaPorta (N. Miami and the Atlantic coastal counties of FL) who each bring over 20 years’ experience in the wholesale and mini-correspondent mortgage lending channels. “We are excited about adding these extraordinary individuals to our ClearEdge family and look forward to see the growth throughout the Southeast.” Those interested in a growth-oriented career with ClearEdge Lending should email John Burns for outside sales positions in GA, FL, NC, SC, TN and Matt Shaw in CA & AZ.
“Several top producers just returned from the annual Circle of Excellence trip at Secrets Maroma Resort in Cancún. Each year, First Community Mortgage recognizes top producers, along with loan originators who achieved the greatest production increases from the previous year. We are looking for loan originators throughout the Southeast who are ready to join a team that invests in you. First Community Mortgage, affectionately known as Human Mortgage, is the perfect place for loan originators to thrive. Our experienced support staff and advanced technology help streamline the mortgage process, so you have more time to be more human. Just think how much more human you can be if technology is doing all the work. Our emphasis on work-life balance helps ensure you have time for the humans in your life that matter at work and at home.” Those interested should apply through the First Community Mortgage careers page.
Amerifirst Home Mortgage, a division of Amerifirst Financial Corporation, is continuing its strong growth trend in the southeastern U.S. with the addition of mortgage industry veteran Linda Thomas as district manager. In this key leadership role, she will utilize her two decades of mortgage knowledge and sales experience to identify new opportunities, develop and maintain strong business relationships and support the team as they continue to provide superior customer experiences for new homebuyers. Linda She is based in the Tampa, FL, office. The 35-year-old mortgage lender also hired 16 new loan officers to serve the central Florida area; Amerifirst now operates eight full-service branches in the state. Read the Amerifirst Southeast Region expansion press release.