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Compensation, Sales, Underwriting Tools; Tariffs, Trade, and Rate Primer

By: Rob Chrisman
Posted Tue, Nov 12 2019, 8:38 AM

Everyone has a different opinion about the economy. “Nobody’s right, if everybody’s wrong” or “Everybody’s right (eventually), if nobody’s wrong.” How many times do we hear, “Even if interest rates are low, tight lending and high home prices stand as barriers to potential buyers.” Global central banks are taking a wait-and-see attitude toward further interest rate cuts, with rates in Europe and Japan already in negative territory. The slowdown in rate cutting includes emerging market central banks. Fannie Mae is out with its housing forecasts for 2020 expecting 30-year fixed rates will continue to fall, hitting 3.5% by the end of 2020, and home prices will rise about 4%. Fannie expects housing starts to be flat in 2020 compared to 2019 and anticipates origination volumes will fall to $1.86 trillion from $2.04 trillion as the refinance share of the market falls from 37% to 31%. In the meantime, lenders are doing what they do best: helping borrowers one loan at a time.


Lender Products and Services

Vacation Rental or Long-term Rental? Visio Lending is the nation’s leader in Non-QM loans for buy and hold SFR rentals. No income verification or tax documentation. 30-year terms (no balloons), buy ups and buy downs on rates and pre-pays, I/O available. Through our top-notch Broker Program, brokers earn up to 3 points per closed loan; Visio always pays the broker the first 1%. Additionally, Visio Brokers can count on a designated Account Executive, in-house processing, and one-year broker protection.

Blend, the digital lending platform, has published an ebook that details how to integrate home equity into your growth strategy. The guide teaches you how to create branding tools that keep you top of mind and deliver your message at the right time in the customer journey, when and where it matters. Get started here.

A report by LoanCraft is something MLOs should be aware of. The report provides early visibility for loan officers on applicants with rental or business income. All types of income are handled. Underwriters are typically 15-25% more efficient. Also very important: LoanCraft does all the work of splitting out tax returns and capturing the data. You can upload a single large PDF with all the documents and LoanCraft divides it up.

Join National Mortgage Professional Magazine for a DealDesk webinar on Bank Statement Programs, 1099 Programs, and General Non-QM products, being held this Thursday, 11/14, at 2 pm ET / 11 am PT. The webinar will be focused on the Non-QM space and reviewing how brokers can use Non-QM to increase business, save loans, and please their referral partners. Non-QM should be viewed as another “tool in the tool belt” to pair with conventional and government products. Non-QM fills a void left by the agency world and provides loan options for millions of consumers that do not qualify for agency loans. You can register here.

It’s time to reimagine how sales and marketing work together to drive growth and humanize the customer experience. Connect, engage, and learn with leading financial brands at Total Expert’s second annual road show, Accelerate 2020. Join us in New York City, San Diego, or Dallas as we explore best practices to drive ROI, deliver value for consumers, and look at the latest technology trends in the industry. Network with some of the top lenders in the country and walk away with new strategies to modernize your sales and marketing processes and create customers for life. Get ready for a day of thought leadership, actionable insights, and winning strategies. Space is limited, so register today to secure your spot. See you there!

Freddie Mac Single-Family is ALL FOR building the future of home. Affordable lending is evolving and Freddie Mac is ALL IN on providing solutions that enable emerging populations to achieve the dream of HOME. We are changing perceptions by developing products and resources that drive real opportunities for businesses while creating a renewed sense of access for borrowers. Read an Executive Perspective from Danny Gardner, Senior Vice President, Freddie Affordable Lending and Access to Credit, that highlights the value of education and strategic outreach to overcome barriers to homeownership. In addition, don’t miss Freddie Mac’s take on The Future of Affordable Lending in Housingwire. Learn more about All For HomeSM, Freddie Mac’s approach to affordable lending, and discover key insights to inform your business and take advantage of solutions and tools that will further enable your borrowers to make Home Possible®. All in.  All of us.  All For Home.

Luxury Mortgage Corporation has observed significant growth in Non-QM and Expanded Criteria loan production. Larry Maitlin of Luxury’s Correspondent Lending division attributes much of the growth to the company’s focus on automating the Non-QM origination process. Luxury Mortgage Corporation turned to industry leader, Optimal Blue, to deliver unrivaled automation and support for these unique loan products, specifically by implementing the newly released Expanded Guidelines search fields which are focused on income verification, payment history, debt consolidation, bankruptcy, and more. According to Maitlin, “Optimal Blue’s Non-QM filters allow our lending partners to quickly determine loan eligibility and provide immediate, reliable pricing to their borrowers.” To learn more about how Luxury Mortgage Corporation can help your lending organization, visit www.luxurymortgage.com.

In the mortgage world, it is no easy feat to convince a lender to move its subservicing business from one company to another. The mere thought of all that’s involved in the process, no matter how bad the switch may be needed, can be positively daunting. TMS is out to change that way of thinking. In a recent White Paper, management lays out the advantages of their Human + Technology approach, which makes the process easy. With its expert team to onboard and support you, and the power of SIME at your fingertips, TMS gives you best-in-class service combined with best-in-class technology…and an easy way to get it.

According to Guaranteed Rate’s Chief Accounting Officer Ken Kane, the switch from spreadsheet-based incentive calculation to CompenSafe by LBA Ware has enabled Guaranteed Rate to provide its 1,500 LOs and other bonus-eligible employees with a top-tier compensation product that also keeps them focused on customers and production. Schedule a demo of CompenSafe to see why lenders of all sizes are leveraging the platform to drive efficiency and enhance the originator experience.


Capital Markets

Rates have been stuck in a range, more focused on trade talk than on actual economic metrics coming out of the United States. True. It seems markets have keenly swung their attention to uncertainty about the trade war in recent months, which has contributed to weakness in global equities and emerging currency markets. Even the hope of potential good news now spurs a recovery in markets, as the longer the dispute drags on, the higher the likelihood of American and Chinese consumers facing higher prices, the increased erosion of business and consumer confidence, and the further disruption of global business supply chains increases.

To reach an agreement, China requires the United States to remove extraneous tariffs, eliminate the ban on American technology sales to Huawei Technologies and set a trade balance that will satisfy actual demand in both countries. Considering these conditions, a deal remains elusive. This means incoming economic data points are unlikely to dissuade the Fed from cutting rates as the trade deal is viewed as the key dictator of economic policy currently. Without a resolution to trade disputes with China, factory activity will remain sluggish, durable goods orders will fall, the economy will experience slower job growth, and consumer confidence will decline, in addition to other things – all of which the Fed is monitoring. We have already seen the effects on recent data points, like ISM indices, manufacturing surveys, PMIs, and payroll reports.

Central banks around the globe have been quick to note these issues as well. Several banks have been cutting rates, with only Norway raising rates this summer. Reasons for rate cuts by specific central banks vary, but the general backdrop of slowing global growth and benign inflation is conducive for more monetary policy accommodation. It seems the FOMC is taking a similar view, realizing that the data revealed to them recently may not be reflective of the true economy, as trade war talks are putting a pallor over every reading. 

Recent economic data in the U.S. continues to paint a picture of a slowing, but still growing economy. The ISM Non-Manufacturing Index edged higher, indicating that services, which are the largest sector of the economy, are moderately expanding. Total job openings were 7.0 million in September and the total number of unemployed was 5.8 million. Trade data, which has become more volatile since the trade ware with China, shows the trade gap at -$52.2 billion in September with imports declining. Consumer confidence was little changed from October though it will continue to be watched closely for signs consumers are losing faith in the economy. Productivity took a hit in the third quarter, contracting at a 0.3 percent rate after increasing the previous two quarters. Slow growth in productivity seems counter intuitive given that many businesses are adopting more technology in the hopes of increasing automation.  

Investors spent the long weekend looking for signs of progress toward an interim trade deal. Both sides said they were ready to drop some tariffs on Thursday, but on Friday President Trump said he hasn’t agreed to roll back all tariffs on China, which cooled hopes the U.S. would make such a concession to secure a trade deal. After a week of contradictory news on the subject, market reaction was mixed, and the 10-year yield closed the week barely changed yielding 1.93 percent.

In Europe, the outlook worsened while Britain’s central bank seemed split over its Brexit response. As far as domestic releases went, September Wholesale inventories posted the largest decline since October 2017, proving it could be difficult for wholesalers to gain pricing power given that inventory growth remains well ahead of sales growth. And the preliminary University of Michigan Consumer Sentiment Index for November beat expectations, showing consumer expectations should continue to manifest itself in relatively solid consumer spending activity.

The bond market was closed yesterday for Veterans Day. Today’s economic calendar sees just one release: the NFIB Small Business Optimism Index (102.4, up 0.6). There will be two Fed speakers, the Richmond Fed’s Barkin and Philadelphia Fed President Harker. President Trump will speak on Trade and Economic Policy before the Economic Club of New York. And the NY Fed will conduct the last operation on the current schedule when they purchase up to $576 million GNII 3 percent ($414 million) and 3.5 percent ($162 million).

Tomorrow, things pick back up again with October CPI and core CPI figures in addition to the October Treasury Budget. The RBNZ will be out with their latest monetary policy decision, though the likely highlight of the week’s calendar will come when Fed Chair Powell speaks before the Joint Economic Committee. Chair Powell again appears on Thursday before the House Budget Committee. Also on Thursday, markets will receive October PPI, core PPI, and the usual claims figures. The week closes with the busiest economic slate, including October Retail Sales, the November Empire State Manufacturing Survey, October Import Prices ex-oil, October Export Prices ex-agriculture, October Industrial Production and Capacity Utilization, September Business Inventories, and Class C net is due out. We begin today with Agency MBS prices slightly better than Friday’s close and the 10-year yielding 1.94%.

 

Jobs

Bay Equity Home Loans continues its growth strategy with another asset purchase. Century Mortgage Company, Kentucky’s largest residential lender, has joined Bay to run its Mid-South division. Monica Bohn, Century’s CEO will run the region and said “We undertook an exhaustive search for a national lender to help us be competitive in today’s environment. We wanted the best technology, marketing and operations platform but most importantly the best culture match for our long-standing company. Combining the best tools with a family culture where we knew the legacy of our family-oriented business would be fostered and enabled was very attractive to us. We expect to grow and thrive under our new partnership with Bay.” If you are a CEO and want to explore a win-win partnership to help you achieve your goals reach out to Renee Hildebrand.  

A Top 20 Independent Mortgage Bank seeks a Chief Marketing Officer to drive expansion of digital footprint. Candidate will have relevant experience in the mortgage industry creating and driving brand strategies, internal and external communications, and building a team in a fast-paced environment. Interested parties should contact Chrisman LLC’s Anjelica Nixt with resumes or questions.

 

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