Pricing, Processing, Audit Tools; Forbearance Numbers Improve; SPAC Mania!
The guy I was talking to yesterday asked about my background. I gave him a detailed history of my upbringing, my education, work experience, and why I get up at 4AM six days a week. Turns out he only wanted to know what was behind me on our Zoom call...
Seeing other mortgage folks in person in recent weeks has been very nice, and nearly everyone admits being more and more “Zoomed out” as the months have passed. JPMorgan Chase told U.S. employees they are expected back to the office on a rotating basis by July. Chase is headquartered in Manhattan, but then we have this story from earlier in May about how NY Municipal employees are not happy about returning to office work. Period. (What exactly does make city workers happy?)
Lenders and vendors around the nation are weighing options: no one wants anyone to become ill, whether or not requiring them to return to the office. And no one wants to be the defendant of a workplace lawsuit. (Today's audio version of the commentary is available here; this week's is sponsored by loanDepot Wholesale, and today's podcast features an interview with Mike Klotz, SVP of Sales, on how LDW is helping brokers, shortening cycle times, and injecting youth into the mortgage industry.)
Lender products and services
According to a recent Wall Street Journal article, waning refi volume paired with competitive pricing are driving down mortgage profit margins. In the coming years, lenders would be wise to remember that differentiating one's organization on price doesn't produce sustainable gains. But customer retention does! Homeowners 62+ hold $8.05 trillion in home equity and take out 1.5 million new mortgage loans each year. If you are not offering Home Equity Conversion Mortgages (HECM) to your database of older clients, then you probably don't have all the facts about reverse mortgage lending. ReverseVision invites you to test your HECM knowledge with this 10 question quiz to identify your knowledge gaps and while you're at it, download the Top Reverse Mortgage Myths explained.
Free eBook: The Complete Guide to Entering the Residential Mortgage Business. With mortgage originations forecasts predicting near-record highs through this year and beyond, residential lending represents a tremendous opportunity for financial institutions. Whether you're a first-time entrant or have previously had a mortgage operation, the latest eBook from Promontory MortgagePath will help you navigate the early planning stages of launching, or relaunching, a compliant, profitable, tech-driven mortgage division in today's market. Get the eBook here.
ACES Quality Management launches ACES CONNECTTM and Expanded Vendor Network. ACES CONNECT was designed to give senior management at mortgage lenders and third-party providers on-demand access to key reporting data and the ability to self-remediate audit findings, review audit documents, and manage corrective action plans in coordination with their organization's risk department. "ACES CONNECT not only provides lenders and financial institutions with a critical viewing window into exactly what's going on in their respective businesses from a quality and compliance standpoint, but it also creates a centralized access point for quick and easy defect identification, remediation and resolution tracking to effectively mitigate risk and maintain quality," said ACES CEO, Trevor Gauthier. In addition, the company also significantly expanded its integrated vendor network, allowing users to order, track and receive re-verification documents and data directly within ACES' core platform. Learn more!
The Mortgage Origination Checklist Manifesto could have been the name of a best-selling industry book. Perhaps it still needs to be written. From LOs and LOAs to Processors and Underwriters, everyone uses checklists to make sure things gets done right. Checklists are easy to create, easy to understand, and easy to use. However, they are often created for one person's needs and do little to enable the whole origination team to work together more efficiently. Now imagine an online, ultra-productive, collaborative checklist that coordinates every step of the process for every origination team member and integrates with your CRM+POS+LOS? That's what this division of American Pacific Mortgage did with TeamworkIQ. The results? After a quick implementation, efficiency jumped so much that 4x the loans got closed and revenues grew 280%. See the case study and test-drive a customized, actionable, online, collaborative lead-to-loan checklist for free.
QuickPricer Compare & Share, the latest feature from digital mortgage platform Maxwell, is a powerful addition for users of Optimal Blue's product and pricing engine. QuickPricer Compare & Share allows loan officers working borrower leads to quickly create and send multiple pricing scenarios. Unlike competitor pricing tools, which require the loan officer to manually create side-by-side comparisons for the borrower, Compare & Share seamlessly integrates with Maxwell for both the lender and the borrower. Its user-friendly interface saves the loan officer time and educates the borrower, driving them into the loan application. To find out more about QuickPricer Compare & Share and the other powerful benefits of Maxwell's point-of-sale, request a demo or start exploring here.
Company
sponsored training & events this week
Are you ready to continue your digital lending momentum? At Forward, Blend's virtual summit taking place May 18-20, you can gather with innovators and industry leaders to learn about the technology trends shaping the future of lending. You'll hear from expert speakers, discover Blend success stories, and even have the opportunity to become a Digital Lending Platform expert with post-conference training. Join today's sessions.
Just because we've heard something doesn't make it true. Unfortunately, this applies to the belief that most borrowers who have a great mortgage experience will use their lender again. In actuality, only 18% of borrowers return to their original lender. And because they haven't invested in borrower retention, many lenders don't even know when or why they've lost so many customers. Luckily, it doesn't have to be this way. Join Kristin Messerli, Experience.com, Alex Kutsishin, CEO, Sales Boomerang, and Malcolm Hollensteiner, Head of Mortgage Production, Sandy Spring Bank, on May 19 at 2 pm ET to learn the truth about earning higher customer satisfaction and borrower retention.
Leaders, it's not too late to register for XINNIX's exclusive executive event happening this Thursday, May 20 at 2 PM ET. Hosted by XINNIX Founder & CEO, Casey Cunningham, "GRIT: Leading Through the Unimaginable" will feature special guest speaker, Paul J. Voss, PhD. Dr. Voss is a gifted speaker, intellectual historian, award-winning professor at Georgia State University in Atlanta and the rarest of thought leaders on leadership and change. Dr. Voss has expertly helped leaders and organizations across the country think about not just surviving but thriving through the worst of circumstances. This not-to-be-missed session is being offered free of charge as part of XINNIX's Quarterly Leadership Lessons Series. What's more, it includes bonus one-on-one time at the end for live question and answer with Dr Voss. Reserve your seat today!
Company soundbites
SPAC mania! Not only is Jay-Z's Pot Co. investing $50M in a marijuana-focused SPAC, but Social Finance, Inc. (aka, "SoFi") and which does home loans, has entered into a definitive agreement providing for a business combination with Social Capital Hedosophia Holdings Corp. V (NYSE: IPOE), a publicly-traded special purpose acquisition company (SPAC). Upon the Merger closing, which, if all the conditions are met and the shareholders approve, SCH will be renamed SoFi Technologies, Inc.
Redwood Trust published a new slide deck which quantified the potential upside from the company's earnings call strategy. Management reiterated that roughly $600 million of loans backed by securitizations could become callable over the next 12 months, which could provide significant earnings per share upside. There is also upside from existing discounts on the underlying bonds which are pulled to par when the securitization is unwound. Through April 2021, RWT has exercised three Sequoia call options, purchasing $75 million of seasoned loans onto its balance sheet at par. Redwood has roughly $350 million of discounts on its bonds, meaning strong credit performance and elevated prepayment speeds should provide the company with opportunities to realize this value sooner.
Remember that Redwood controls the call rights on certain securities in its investment portfolio, which include RWT-sponsored Sequoia securitizations, CoreVest-sponsored SFR securitizations, and certain Freddie Mac-sponsored RPL securitizations. The call rights are exercisable at par once the underlying portfolios pay down to a predetermined size. In addition to the embedded discount in these securities, the underlying loans can be sold or re-securitized at a premium to current values given the current market conditions.
Capital markets
Yesterday in the markets, aside from Fed Vice Chairman Clarida and Atlanta Fed President Bostic saying that it is too early to talk about tapering asset purchases which have totaled more than $2 trillion in the last 14 months, there is nothing to talk about. So, I won't waste your time. But the Mortgage Bankers Association's (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 14 bps to 4.22 percent of servicers' portfolio volume in the prior week as of May 9. According to MBA's estimate, 2.1 million homeowners are in forbearance plans.
Yes, lumber and copper prices are grabbing the headlines, but we have reached a point in this economic recovery where the data is being influenced by many variables, making it more difficult for economists to predict how the reports will shake out. Retail sales were flat in April after their big jump in March, which was not what economists were expecting, but still maintained their stimulus driven gains and were 18 percent above their pre-pandemic high in February 2020. Big ticket items remain difficult to acquire as ongoing supply and labor shortages create backlogs which are likely to continue in the near-term.
We also learned last week that industrial production increased by 0.7 percent in April although it would have likely been a bit higher if not for the headwinds facing the global supply chain as demand for finished goods is still very strong. The gap between labor supply and demand was highlighted by the fact that the job openings rate was a record 5.3 percent in March while the hiring rate was 4.2 percent. In a move to encourage more potential workers to return to work, nine states have moved to reduce the enhanced unemployment benefits enacted during the pandemic.
Glancing at today's economic calendar we've had April housing starts and building permits (1.569 and 1.76 million, respectively; starts were -9.5 percent!). Later today, markets will receive more remarks from Atlanta Fed President Bostic and Dallas Fed President Kaplan. The NY Fed will be in for a modest $4.5 billion maximum MBS purchases across UMBS15 1.5 percent and 2.0 percent and UMBS30 2.0 percent and 2.5 percent. We begin the day with Agency MBS prices are roughly unchanged but the 10-year is unchanged at 1.64 percent.
At what point can we just start using 2020 as profanity? As in: "That's a load of 2020." Or "What in the 2020." Or "abso-2020-lutely."
Jobs & transitions
"Homeward is a fast-growing fintech that helps top real estate agents turn their clients into cash buyers. Backed by top-tier venture investors, Homeward has integrated its mortgage, title, and real estate businesses to create a seamless product experience that helps its clients overcome the shortcomings of traditional mortgage products in a highly competitive market. Homeward Mortgage is our affiliate mortgage provider that drives consumer financial innovation at the core of our cash offer products and has recently transitioned from broker to direct lender. We're seeking to make several additions to our mortgage leadership team including a Director of Mortgage Sales, who will lead our rapidly growing team of licensed loan originators, and a VP of Capital Markets that will own the development and execution of our secondary market strategy. Positions are fully remote. To apply or get more information, visit the job description links above or email careers@homeward.com."
Synergy One Lending Welcomes Top Producers Blair Katz and Brooke Cisneros! Synergy One Lending is proud to announce the launch of a new branch in Houston, TX! Under the direction of top-producing co-managers Blair Katz and Brooke Cisneros, the team joins a rapidly growing Texas region, and they are off to an amazing start! Asked about the onboarding and technology, Katz said, "The S1L transition team is A++, and the interaction between the different systems is incredible!" "Getting the chance to work with Brooke, Blair, their entire team, has been a blast and we're pumped to support their continued growth in such an important market for us!" said Synergy One's President, Aaron Nemec. Synergy One Lending is based in San Diego, CA, is currently licensed in 39 states and has Operational HUBS in Boise, ID, Denver, CO and Dallas, TX. To learn more about Synergy One Lending, reach out to Aaron Nemec or Ben Green.
"Assurance Financial is continuing to grow production, add retail branch offices, and expand its production reach into the midwestern U.S., particularly the Colorado, Arizona, Kansas, and New Mexico markets. We are searching for an established Regional Production Manager to help create and develop mortgage origination branches in the new midwestern territory - someone who is an outstanding talent and proven retail sales leader with a demonstrated track record of hiring and managing multiple production offices across several states. We are a profitable and well-capitalized full-service mortgage banker offering an entrepreneurial, customer-focused sales support environment, FNMA/FHLMC/GNMA direct status, and well-positioned to compete for more growth with state-of-the-art operations/support technology. This new Regional Production Manager position will report to the CEO. If you are interested in joining a dynamic group of mortgage bankers and building a dynamic production team, please contact Paul Peters, CMB or visit AssuranceMortgageLO.com to learn more."
Here's your chance to sign on with the Federal Housing Administration's (FHA) Office of Single-Family Housing as a Housing Program Policy Specialist and 150,000 bones a year.
The National Association of Local Housing Finance Agencies (NALHFA) elected its leadership team. Rich Froehlich, First EVP and COO of the New York City Housing Development Corp. will continue on as President, and other officers elected to a one year-term were VP Dawn Arnold, EVP and COO, Invest Atlanta, Treasurer Damon Burns, President and CEO, The Finance Authority of New Orleans, and Secretary Cheree Gulley, Executive Director, Miami-Dade County Housing Finance Authority.