It’s Friday, so how ‘bout some non-mortgage supply and demand stuff? Let me start with an apology to Willie Mays’ family (who may or may not read this daily mortgage commentary) for missing his 90th birthday yesterday. (Years ago he was known for welcoming all ‘trick or treat’ kids, from anywhere, at Halloween, so we went. Yep, there he was!) There is only one Willie Mays. On the other hand, last year there were too many strawberries and Driscoll’s, which grows fresh berries, had to send $20 million worth of unwanted fresh berries to be frozen or juiced at a large loss. So it cut production on strawberries (which take a year of planning) by 5 percent, a bad call given that two months later berry sales exploded 8 percent by volume compared to the previous year and wholesale prices have hit $18 for an 8 pound flat, double the level a year ago. Now, Driscoll’s is asking California growers to plant as much as 8 percent more. Strawberries aren’t the only thing where a year ago we saw an “anti-demand” shock to prices. Now we’re seeing a demand shock in prices on copper, iron ore, computer chips, etc. Lenders know a lot about supply and demand, and the audio version of today’s commentary, available here, is sponsored by Origence. Robbie spoke with Brit Barker, VP of Enterprise Solutions, and Andrew Weiss, SVP of Platform Strategy about solving lender’s pain points and sorting through the choices in today’s mortgage origination marketplace.
Lender and Broker Products and Services
“It’s with great pleasure that Certified Credit Reporting, Inc. Founder and CEO Lucy Kereta-Block announces the newest additions to Team Certified! With a deep industry background in developing intuitive solutions across operations, product development, and technology, 25+ year vet Ron Carlson joins our team as the SVP of Product Development bringing a passionate enthusiasm for helping customers and borrowers through the homebuying experience. Chris Roth also joins our team as the VP of Operations, bringing with him over 15 years of national, large-scale operations expertise. As Certified continues to grow, Chris’ talent for blending customer-facing efficiencies with a seamless experience that’s both scalable and cost-effective for our partners will be a tremendous asset. His personal commitment to employee development and a team-oriented culture makes him an excellent fit for Team Certified. Looking for a mortgage solutions partner that values efficiency and personal service while continuously innovating on a full spectrum of products from pre-qual to closing? Contact Nicole Mattiello.”
Avlis Partners is proud to announce the launch of Avlis Agent, a Warehouse Lending as a Service Platform (WLaaS). Avlis Partners, a private warehouse lender brings more than 25 years of mortgage experience to an exciting new platform. This platform allows institutions to participate in warehouse lending without having to build the infrastructure, people, and processes. Avlis Agent helps companies in three unique ways; small to medium institutions have a hassle-free entry into warehouse lending to cater to specific clients. Larger institutions can leverage Agent to quickly ramp up strategic production to service conduits. And Agent grants existing warehouse lenders a creative option to reduce costs and increase efficiencies. To find out more about this innovative new platform; warehouse lending as a service, contact Brian Johnston.
MVS launches a new brand: A bold new look, backed by superior service and a new 24/7 appraisal review process. As a nationwide appraisal management company with a boutique feel, Market Valuation Services (MVS) takes efficiency and service seriously. Our lending partners and appraisers know they have a dedicated partner ready to do the heavy lifting, day and night. Our new look reflects the way we break the mold to elevate the appraisal management process. Dynamic and versatile, it is inspired by iconic trailblazers and masters of their crafts. Because at MVS, it’s about leading the way, and it’s about value, delivered.
There have been some exciting new developments recently at Stearns Wholesale! Stearns has embraced the recent industry change from LIBOR to SOFR ARMs, which is applicable with its new Garnet Jumbo product. SOFR ARMs offer a variety of advantages including lower initial monthly payments, lower initial interest rates, and greater cashflow flexibility for borrowers. Stearns Wholesale has also improved its Accelerator and Government programs with better pricing and quicker turn times. If you’d like to partner with Stearns or learn more, click here to be contacted.
The Radian Home Price Index (HPI), provided by Radian’s Red Bell Real Estate, LLC subsidiary, offers a complimentary interactive experience. In a dashboard environment, you can explore the difference in home prices by location and various attributes. With historical information dating to 2005, you can create a unique view to see trends across the U.S. housing market. Take a few minutes and check out the Radian HPI to see for yourself how easy it is to compare home prices based on bedroom count, square footage and more by city, state, or even zip code.
“Consumer Direct Lenders: You're losing purchase deals. The problem is twofold. Agents take your clients to local lenders, and your MLOs don't have time for follow ups. Clever Real Estate can help. We match your buyers with top Agents. Then our team nurtures them until close. With Clever, Loan Officers are seeing a 25% increase in purchase loans. It’s free: No contract and no technical integration needed. Too good to be true? Book a call with our cofounder Luke Babich and we'll show you how.”
Haven’t heard of The Loan Store? See why this conventional lender is creating a buzz in the wholesale channel! Along with their 5-Star average Google and Yelp service reviews, TLS continues to offer consistently aggressive pricing across all products, including the newly released 5- and 7-year ARMs! Be sure to add The Loan Store as an eligible lender in Loansifter and price them against the competition. TLS maintains the highest level of customer support by giving all broker partners direct access to their own support team, underwriters, and management. The Loan Store prioritizes purchases and are closing ALL loan types in less than 30 days on average! Click here to be approved as a broker partner with TLS.
As mortgage lenders move on from an unprecedented year, many are asking “what’s next?” On May 10, join Michael Fratantoni, MBA’s Chief Economist, and Aaron King, Snapdocs CEO, as they analyze industry trends, explain how lenders are adapting to market changes, and discuss the role technology is playing through it all. Fratanoni will also break down the state of the economy, the Federal Reserve's policies, the housing supply, and how the demographics driving purchase demand might impact lenders' profitability over the next year. When registering for this webinar, be sure to submit your questions for Fratantoni and King for an opportunity to have them answered during the session. As we all learned in 2020, the future belongs to those who are ready for it.
As lenders pivot to a purchase-centric mortgage business, the USDA Construction-to-Permanent loan presents an opportunity to offer more construction financing options with minimal credit risk. Land Gorilla is hosting a live webinar, “Diversify Your Mortgage Offerings with USDA Construction-to-Permanent Loans”, on Wednesday, May 19th at 2pm ET. Guest speakers Joaquin Tremols and David Corwin from the USDA will discuss the basics of the program, the benefits, best use cases, and how to get started. Attendees are encouraged to bring questions for the speakers to answer during the live Q&A portion of the webinar.
Transparency in the Industry
We are certainly in a new era of financial transparency. For example, the Mortgage Bankers Association, a terrific organization and a great advocate and education source for our industry, posts its financials in all their detail. (In the MBA’s case, the IRS publishes a public database for organizations that file a form 9900.
In terms of “for profit” companies, Fannie Mae reported its quarterly results (here are the first quarter results for 2021) as does Freddie Mac. loanDepot announced its 1st quarter results, as did Home Point and Mr. Cooper. United Wholesale’s comes out on May 10, and Guild Mortgage’s comes out May 11th.
I mention all of this since Rocket announced its first quarter earnings and its stock price, and the price of other residential lenders, sank. Yet Rocket’s volume was up 100% compared to the first quarter of 2020 to $103.5 billion, gain on sale margins hit 3.74 percent, an increase of 49 basis points compared to a year ago. Rocket reported a marginal miss to consensus as book value came in at $4.76. Looking forward, the company implied GOS income in the second quarter of $2.2 billion to 2.6 billion reflecting GOS margins normalizing more quickly than expected. Rocket's total net rate lock (IRLC) volume, which drives GAAP GOS revenue, was $95 billion, increasing 70 percent year-over-year. Total closed volume, which drives GAAP expenses, was $104 billion and there was no purchase/refi mix disclosed. The company announced its objective to be the #1 home purchase lender in the country in 24 months. For reference, Wells Fargo was the largest purchase originator in 2020 ($101 billion) while Rocket was #6 ($40 billion).
New Rez believes its Q2 originations will drop to $22-24 billion as it reported first quarter earnings of $0.65 per share. Origination rose 14% sequentially to $27.2 billion. Gain on sale margin slipped QOQ to 143 basis points compared to 157 in the fourth quarter. The company sees its servicing portfolio driving results going forward. KBW released its analysis: New Residential beat operating EPS estimates on the back of higher servicing revenue. This was offset by higher G&A expenses. The company paid a slightly higher cash dividend than predicted. Economic return for the quarter was 6.3 percent compared to economic return of 1.9 percent last quarter. Management indicated that it expects margins to continue to normalize but that it sees opportunities to grow its origination market share. The mortgage servicing portfolio decreased to $515 billion of unpaid principal balance (UPB) from $537 billion last quarter.
Penny Mac reported strong MSR and CRT fair value marks, which offset lower than expected net interest income and weak Agency MBS performance. Conventional correspondent production declined 11 percent quarter-over-quarter to $33.8 billion but still beat estimates. GAAP earnings ran well-ahead of the dividend. The company generated a 5.3 percent economic return, up from 4.8 percent in the fourth quarter. KBW points out that mortgage banking volumes exceed estimates while margins missed. First quarter conventional correspondent volume totaled $33.7 billion in unpaid principal balance (UPB), down 11 percent compared to the prior quarter. Penny Mac issued $1.4 billion in term debt, including $659 million of 3-year term notes that replaced repurchase agreements associated with a CRT transaction and $350 million of 5-year Fannie Mae MSR term notes issued to replace short term financing. The company also raised $345 million of 5-year senior exchangeable notes.
Want some good news? 30-year and 15-year fixed mortgage rates ticked a couple basis points lower in yesterday’s Primary Mortgage Market Survey from Freddie Mac to 2.96 percent and 2.30 percent, respectively. Black Knight reported that forbearance volumes fell by 105k (-4.5 percent) this week, continuing the strong trend of early-in-the-month improvements. Some 73k plans are still listed with April 2021 expirations, suggesting opportunity may remain in coming days for additional moderate improvements, and another 350k plans are set to be reviewed for extension/removal in May. The number of plans set to be reviewed jumps to nearly 900k in June, which marks the final quarterly review before early forbearance entrants begin to reach their 18-month plan expirations later this year.
This “first Friday of the first week of the month” means employment Friday, and we’ve seen that April nonfarm payrolls (up only 266k), the unemployment rate (6.1 percent), and hourly earnings (+.7 percent). Later this morning brings wholesale inventories and sales for March and March consumer credit. Today’s lone Fed speaker is Richmond’s Barkin. The NY Fed Desk will conduct two operations that will total up to $5.5 billion 30-year 2 percent and 2.5 percent. We begin the day with Agency MBS prices up .375-.50 and the 10-year yielding 1.49 after closing yesterday at 1.56 percent after a poor employment report.
Employment and Promotions
A mid- Atlantic, multistate, non-delegated lender that has been in business for over 20 years is looking for an operations manager to help bring delegated underwriting back into its company. “Our geographic footprint has grown and we have carefully been laying the groundwork and lowering risk, how now we’re excited to take this step and need the right person to do it.” If interested, please send your resume to Anjelica Nixt and specify this opportunity.
“Highlands Residential Mortgage is thrilled to announce that Tim Bartosh has joined our Executive Production leadership team! For over two decades, Tim has been one the industry’s most talented and respected leaders having played a major role in the growth and success of two national mortgage lenders. Tim led CTX Mortgage in the 1990’s and 2000’s to become one of America’s largest non-bank mortgage companies during that span. He now reunites at Highlands with former colleagues and industry veterans Brian Bennett, President and Danny Deaton, EVP-Chief Production Officer, to help continue expanding the company’s rapidly growing national footprint. “We have grown every year for seven consecutive years and adding someone with Tim’s background and experience is another example of the top-notch talent we continue to attract. We are very excited to welcome Tim to the Highlands family.” Ken Hickman, CEO.”
“CWDL, a CPA firm providing mortgage industry-specific audit, accounting, and tax solutions, is looking for our next senior staff accountant, regardless of where you’re located in the country. This fully remote position allows you the flexibility to work from home while being a part of a dynamic and supportive team dedicated to providing professional accounting services to our growing client base of small to mid-size mortgage lenders. CWDL is committed to providing growth opportunities for our employees through challenging work, career advancement, ongoing training, and encouraging innovation and leadership from all levels of our organization – all in a fun, optimistic environment where your life outside of work is valued. Contact us to learn more, or apply directly here.”
Rapid underwriting turn times, + 275 basis point Agency & 325 basis point Govie P&L. Recently named among “Top 6 Best Large Mortgage Companies to Work For” by National Mortgage News, Geneva Financial, Home Loans Powered By Humans®, is filling 100 branch manager and 500 LO positions in 45 states. Average closing 14-21 days on purchase, less if needed. Large volume branches can opt for same-day Underwriting with in-branch Ops option. 275/325 BPS P&L includes zero fees for credit reports, AUS, LOS, CRM, technology fees, employer taxes (commissioned employees), VOEs, 4506Ts, and warehouse costs. See why Geneva was rated 95.2/100 on Inc. Magazine’s independent employee survey.
Bryce Long has been promoted to CEO of Salt Lake City-based mortgage lender Veritas Funding, assuming the position effective October 1 from the organization's co-founders and existing co-CEOs, Tim and Elizabeth Roush. (The Roush’s will remain with the company and transition into co-Chair roles.)
At Evergreen Home Loans, Carolyn Garris has been promoted to director of marketing from her role as senior marketing manager. And Jeanne Hussin is the company’s very first chief marketing officer, moving up from VP and Director of marketing.
6 Solutions, a housing and banking data startup transforming how banks and lenders make strategic growth decisions, appointed Jeff Walton as CEO and launched three data products for loan officer recruiting, realtor partnerships, and fair lending compliance.