Rates have gone up, refi volumes are dropping, and LOs are having plenty of discussions with potential borrowers about “rent vs. buy.” SmartAsset has now set up an interactive map that shows where buying a home, or renting, makes the most sense – page down a few times. (And yes, that is the company’s name.)


The Changing Residential Landscape

The Brookings Institute published a paper directly addressing the problems of nonbank mortgage companies. “Nonbanks originated about half of all mortgages in 2016, and 75% of mortgages insured by the FHA or VA. Both shares are much higher than those observed at any point in the 2000s. We describe in this paper how nonbank mortgage companies are vulnerable to liquidity pressures in both their loan origination and servicing activities, and we document that this sector in aggregate appears to have minimal resources to bring to bear in a stress scenario. We show how these exact same liquidity issues unfolded during the financial crisis, leading to the failure of many nonbank companies, requests for government assistance, and harm to consumers. The extremely high share of nonbank lenders in FHA and VA lending suggests that nonbank failures could be quite costly to the government, but this issue has received very little attention in the housing-reform debate.”

And the Federal Reserve Bank of New York released a Staff Report titled, “The Role of Technology in Mortgage Lending,” which concludes that technological innovation by fintech mortgage lenders has improved the efficiency of lending in the U.S. mortgage market. But what is a “fintech mortgage lending model?” It is one that features “an end-to-end online mortgage application platform and centralized mortgage underwriting and processing augmented by automation.” The report uses quantitative analysis to study the effects of technological innovation in the U.S. mortgage market by identifying several areas of friction in traditional lending and examining whether fintech lending improves them. There are plenty of findings, but one that stands out is that, without increasing risk, fintech lenders (i) process mortgages more quickly; (ii) respond more elastically to fluctuations in demand; and (iii) increase borrowers’ propensity to refinance. The report notes, however, that there is little evidence that fintech lending is more effective than traditional lending at providing financially constrained borrowers access to credit.

Lenders are keenly interested in developing signs that Amazon will become “America’s Biggest Lender”. Given its automated retail focus, “digital” is the name of their game. People outside of Amazon have been predicting for a long time that Amazon would like to enter consumer financial services, and stories have popped up like, “Amazon Wants Inside Your Wallet.” As Jeremy Potter points out, “The predictions usually take one of two angles: ‘Jeff Bezos is taking over the world,’ or ‘They already have all my money I might as well just send it right to them to start with.’ For banking, local banks were once the norm.  Services from direct deposit to mobile deposits to online application for loans increased cost and sophistication. Many people went to the big banks for convenience but struggled to connect with customers. Now those banks are susceptible to brands like Amazon, PayPal, or even Facebook who have higher loyalty among consumers.

“In this case, the Amazon proposal seems to be a partnership with a big bank. That brings up an interesting question if you were running JP Morgan Chase’s strategic partnerships: Would you brand a checking account as the Amazon Bank? Is this like letting a fox in the henhouse? On one hand, you can control the relationship (i.e. Amazon won’t go elsewhere, and people are still depositing with Chase ultimately). On the other hand, as Amazon gets the experience, institutional knowledge and consumer awareness as a trusted financial institution, as opposed to retailer, are you risking the long-term health of consumer banking at your bank?

“Often big tech brands like Amazon and others want all the benefits of being inside a consumer’s wallet without the infrastructure and regulatory burden.  For now, the back end and compliance are expensive (and complex) enough to ensure banks remain in control of market. How long will that last? My hunch is the next generation is not concerned with traditional institutions or “supposed to’s.” Brands like Amazon and even Starbucks have the loyalty, at least for now, but I guess we’re about to see how real that really is.”

And we have the political backdrop. Sen. Elizabeth Warren (D-MA) is insisting that the passage of S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, will lead to another Great Recession within a decade.

Capital Markets

The bond market, and therefore interest rates, paid more attention to Friday’s solid February nonfarm payrolls report than news of President Trump’s future meeting with North Korean Leader Kim Jong Un. The U.S. saw an addition of over 100k more jobs than expected but did show a slowdown in average hourly earnings growth – helping temper frustration surrounding increasing wage-based inflation pressures from the January employment report.

Jobs and housing drive the economy, and few can argue that the U.S. job market is weak – which would lead to lower rates. So, rates moved higher with the employment stats: the U.S. 10-year note touched 2.91%, the high of the month, before dropping back below 2.90%. For now, the NY Fed is continuing to buy agency mortgage-backed securities, helping the demand side of the supply & demand equation.

Today sees central bank decisions from both the SNB and Norges Bank. The economic calendar kicks off with the February Employment Trends Index, followed by a February Treasury Budget Briefing. Major economic releases this week include the Consumer Price Index tomorrow, the MBA’s application numbers, Producer Price Index, Retail Sales, and business inventories Wednesday, Initial Jobless Claims Thursday, and finally housing data, industrial production and Michigan sentiment on Friday. We start the week with agency MBS prices little changed from Friday’s close, and the 10-year is yielding 2.90%.

Jobs, Sales Training, and New Products

The Harvard University Credit Union is searching for a mortgage servicing manager.

Caliber Home Loans, Inc., America's fastest growing mortgage company, today announced the launch of a new mobile platform. Featuring three phone apps customized for borrowers, the Caliber sales force and their business associates, all users can receive and respond to real-time information from virtually anywhere. Combined with Caliber’s latest digital technology, the apps help prevent delays and ensure loan applications are approved and close on schedule. Caliber CEO Sanjiv Das said, “Caliber’s investment in technology extends beyond our customers to our own loan professionals and business partners. Now each group will have their own app that works together to provide an interconnected, secure digital platform.” While digital technology is essential to keep up with the pace of the ever-evolving mortgage business, Caliber continues to offer high-touch service and personalized guidance from a national network of more than 1500 Loan Consultants and 340 branches. All three mobile apps are available to download in both the App Store and Google Play.

NRL Mortgage is pleased to announce the joining of Branch Manager Tony Votaw and his team of prominent mortgage professionals in the Southern California area. With over 500 years of combined mortgage experience, the Votaw Group consists of seven branches across the Southwest region that collectively average more than $200M in annual loan production. “This group shares our company’s core values and compliments our culture on a corporate level, so we are really excited to see this partnership flourish,” said NRL President, Ron Zach. The addition of these branches significantly enhances NRL’s presence in the western United States and compounds the company’s rapid growth. NRL is looking to continue its expansion and with branches across the country and welcomes branch managers to reach out to info@explorenrl.com to discuss your options.

American Pacific Mortgage’s March Training gives you the perfect opportunity to become informed, inspired, and educated on ways to grow your real estate purchase business. The Training consists of 3 core modules: (1) Total Expert CRM to provide centralized co-marketing to your borrower before, during and after the loan transaction closes; (2) AP Connect to nurture your online leads into sales-ready opportunities, and (3) Traditional Reverse Mortgage and Reverse Mortgage Purchase loan programs for both your borrowers and real estate agent partners. Michael Pankow, EVP of National Production, states, “We are excited to bring this level of education and expertise to the market to enable originators and their realtor partners with strategies to grow their market share.” The first event is scheduled for Denver, CO on March 12, and travels to 7 different cities. Click here to find and register for an event near you.

Seats are filling up fast and registration is closing soon for the Sales Momentum Workshops that kick off today in Irvine, California and make their way to 10 cities across the country. “I’m excited about these workshops because you will walk away with some key takeaways to sell more effectively in light of rising interest rates, low housing inventory and the new tax law,” says Gibran Nicholas, who is the keynote speaker and CEO of CMPS Institute.  This is also a great opportunity for industry vendors to come out and learn about the key challenges facing their customers right now and how their product could help. “This workshop is designed for mortgage and housing professionals and anyone who sells to mortgage and housing professionals because we’ll be showing you how to transform some key market challenges into market opportunities,” says Gibran.  Click here to watch a 3-minute video and sign up.  Vendors and branch managers can click here to inquire about group registrations.

After overhauling its technology platforms to support future growth, First Community Mortgage realized it continued to ail from a very specific operational performance pain point: managing LO compensation plans. “When we were very small as a company, we could administer payroll and never miss a beat,” said Andy Voyles, executive vice president and director of lending at First Community Mortgage, “But as we expanded into different states and different production channels, managing the different compensation plans we were creating for loan originators, account executives and operational staff with just a spreadsheet became increasingly more difficult.” A chance meeting with LBA Ware CEO Lori Brewer introduced Voyles and First Community mortgage to the CompenSafe automated mortgage compensation calculation platform, and Voyles knew it would be a perfect fit. The results? Find out by downloading the free case study.

The Wholesale Division of Finance of America Mortgage is pleased to announce the launch of its new Cella Suite of Non-QM Mid-term ARMs. Offering loan amounts starting at $50,000 all the way up to $4M, the Cella Suite features up to $750,000 cash-out, a 660 FICO, and a 10-year interest only option (available on 5, 7 & 10 yr. programs), reserve requirements for subject only (no other REO). Other features include optional business bank statements for income, assets used for income, vesting in LLCs, one day short sale/foreclosure seasoning. To learn more about the Cella Suite and other great products, contact your local account executive or visit FAMwholesale.com.