A pass rate of 51% on July’s California bar exam may not seem like cause for celebration, but it’s the first time in six years that a majority of people who took the July test passed. If the majority of people think that there will be a U.S. recession in 2020, will it be a self-fulfilling prophesy? We’re a long way away from negative GDP, especially two straight readings of it. (More on the economy in capital markets below.) In other money matters, the lawsuits and penalties just don’t stop, the latest involving Paul Mangione, an ex-Deutsche Bank exec who must pony up $500k for his role in “misrepresenting the characteristics of the loans backing the two securities and misleading potential investors about the loan origination practices of Deutsche Bank’s wholly-owned subsidiary…”

Lender Products and Services

Looking for a quick read to inspire your borrower experience improvements for 2020? Check out Maxwell’s recent blog: “7 Ways to Improve Your Borrower Experience for Profitable Growth & Competitive Differentiation.” Recommended for all lending managers and professionals, this quick read will give you the ideas and confidence to start improving your process today.

Home Point Financial’s independent research indicates that brokers recapture only 14% of their customers. Big lenders who prey on broker client lists can recapture up to 70%. What’s causing that gap? Chief Business Officer Phil Shoemaker shares his reasoning, and a potential solution, in this video. That’s not all they have on tap over on YouTube; here’s a video you can use to explain escrow to your borrowers! Just another example of how Customer For Life can make a difference. Don’t wait to partner with Home Point Financial.

Take charge of next year’s production and profitability numbers by getting the book Conquering Shifts into the hands of all of your originators. Companies who incorporate the principles and techniques discussed are seeing phenomenal results. Building and executing a plan does not happen on a whim. It takes thought, intention and execution. That is exactly how the individuals interviewed in this book became and continue to remain successful. Some soared during double-digit interest rates; for others, amazing achievement happened during the Great Recession of 2007-2008. “I’ve endorsed this well-crafted book which is filled with inspiration and bullet proof tactics”, says Daniel Harkavy, CEO of Building Champions. For loan officers and senior management looking to boost production Conquering shifts is a must readDiscount pricing ends today, November 19. I have indicated the value of reading this book in several posts. Have you bought your copies yet? If not, why not?

With less than 45 days left in the year, everyone is working diligently to finalize their 2020 plans. Is performance training part of your plan for greater success next year? If it’s not, it should be. What you do in January sets the stage for elevated production throughout the year, and XINNIX, The Mortgage Academy, is ready to help you exceed industry averages. Based on an 18-month scorecard released this quarter, XINNIX graduates are outperforming the industry average in any market. Download your free copy of the report here. Don’t get left behind in the new year. Visit the XINNIX website or schedule a call with a XINNIX Account Executive today to see how The XINNIX System of Training, Accountability, and Coaching can jumpstart your salesforce into an incredible 2020!

M&A and Joint Ventures

Nothing stops mergers and acquisitions. The latest example is United Bankshares, Inc. and Carolina Financial Corporation (owner of Crescom Bank, owner of Crescent Mortgage Co.) announcing a merger in the Southeast and Mid-Atlantic regions creating a $25 billion entitiy.

NewRez LLC announced the formation of a new joint venture mortgage company to be added to its network of partners. NewRez and Shelter Mortgage Company, L.L.C., the NewRez business division focused on JV lending, have partnered in this venture with Landed, Inc., a company based in San Francisco with down payment support and homebuyer education programs aimed at helping teachers and school employees afford to buy homes.

Capital Markets

The U.S. economy is still expanding, but data on retail sales and industrial production shows growth has fallen since earlier this year. Bank, manufacturer and oil-producer stocks have driven stock market gains in recent months, while safe sectors have underperformed, showing money managers think the economy is slowing but a recession is not imminent. Positive data and the return of a normal yield curve are among reassurances, but a Bank of America survey finds more than a third of fund managers think the US-Chinese trade dispute is the biggest threat to markets. Stock prices have been hitting record highs and investors no longer see an imminent recession, but economic indicators point to slowing growth.

People think they know where rates are headed, but in truth, nobody does with certainty where or when. What we do know is that news, whether it is political, geo-political, or economic, impacts interest rates as much as anything else. Mortgage rates move with investors buying or selling fixed rate financial instruments (e.g. bonds or long-term mortgages). Interest rates and bond prices move inversely, as more selling of MBS causes prices to drop and pushes mortgage rates up, and vice versa. Historically, if equity markets are rising in price, fixed rate investments are dropping in price because investors sell their fixed rate investments to purchase the equities. The opposite is also true, if investors are selling equities, they will generally take the sale proceeds and purchase fixed rate investments. News that creates more value for equities will cause buying interest in equities and the prices of equities to increase. Before equities become overpriced, this reduces demand for bonds and MBS at their current rate levels, reducing rates to a point where these instruments become attractive investments again. At some point the rates of return on the long-term fixed investments become high enough, therefore the prices low enough, that investors will start to return to these investments, slowing rate increases and potentially reversing the trend. And equities usually respond well to positive news and negatively to bad news, meaning rates go up with good news (e.g. the economy is humming) and go down with bad news (e.g. China just announced retaliatory tariffs). All this should come as no surprise that LOs are rooting for “bad” news so that rates will decrease and they can lock in their borrowers at lower rates.

Any interesting news to start the week? Well, despite President Trump being relentlessly critical of Fed Chair Jerome Powell’s monetary policies, the pair met for a sit-down yesterday. The Fed said Powell “did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.” Trump tweeted that the pair discussed “negative interest” among other topics. U.S. Treasuries did not pay much attention to that news, but instead rallied on the back of a report that Chinese officials have a pessimistic view of the ongoing negotiations with the U.S. due to President Trump’s reluctance to roll back import tariffs. The 10-year closed the day -3 bps to 1.81 percent amid the geopolitical uncertainty. Also regarding China, the People’s Bank of China lowered its reverse repurchase rate by five basis points to 2.50 percent, and the U.S. Department of Commerce extended a temporary license that allows U.S. companies to continue selling components to Huawei.

In the mortgage sector, there was a Class A FedTrade operation, with the NY Fed accepting $1.598 billion out of a $1.604 billion max UMBS30 2.5 percent ($450 million) and 3.0 percent ($1.148 billion). Separately, the NAHB Housing Market Index for November declined for the first time in five months, though it remains higher by nearly 17 percent versus a year ago. And, the FHFA announced that it was extending its December 19, 2019 deadline to January 21, 2020 on its Request for Input on the GSEs’ pooling practices. Today’s calendar is light with only the October Housing Starts and Building Permits couplet – hardly market moving. Additionally, markets will receive remarks from New York Fed President Williams later this morning. (As I send this the bond market hasn’t begun trading yet.)

Companies Hiring

Valuation Partners, a leading nationwide appraisal management company is expanding its sales force. The AMC is having a record year, has been in business for over 35 years and has a best of class reputation. Valuation Partners is looking for a Vice President of National Sales for Equity Valuation. The ideal candidate will have experience working in the Consumer lending space or correspondent channel focused on banks and credit unions. Responsibilities include representing the firm regarding customized valuation solutions that support Home Equity and related second mortgage products. Professionalism and a commitment to a strong work ethic are a must.  Experience in high end sales efforts is desirable. Resumes can be confidentially submitted to sales@valuationpartners.com.

Congrats to Ray Brousseau who has joined River City Mortgage as Partner and EVP of Strategy and Expansion! (read the entire press release). Management is committed to adding talented MLOs and is actively hiring, Inside, Outside and Work from Home LOs!  Notes Managing Partner and COO Nick Hunter, “We’re excited about the expansion in both our hometown and coast to coast from Oregon to Maine!”  “Our success is due to making people our #1 priority. When this becomes more than just words, when it becomes a practice, good things happen. Relationships are built. Ray Brousseau understands this commitment and we’re all ecstatic to have him as part of our team.” Loan volume is anticipated to reach nearly $1 billion in 2020. Parties interested in learning more about River City Mortgage should contact Ray or attend a GoToMeeting being hosted by Nick Hunter and Ray Brousseau on Friday, Nov. 22 at 11AM-12PM ET; Dial in: +1 (408) 650-3123; Access Code: 178-568-085.

Attention mortgage professionals! Selecting the right company in the financial industry doesn’t have to be based on a game of chance. The NewRez Family of Companies offers the right candidates multiple reasons to strategically map their career paths with confidence. Join us at our open house tomorrow, Wednesday November 20th from 5 PM to 8 PM at our Fort Washington, PA headquarters. Click here to view all our current open positions. If you are unable to attend the open house and are interested in learning more about openings within NewRez, please contact Recruiting@newrez.com.

National lender Sierra Pacific Mortgage recently announced the launch of its new mobile app. Powered by the industry-recognized mobile application developer Simple Nexus LLC, the Sierra Pacific Mortgage app features an encrypted platform that provides seamless, secure communications and updates to loan officers, borrowers and REALTOR® associates. Borrowers can apply for home financing in 20 minutes or less after downloading the Sierra Pacific Mortgage app. Paperwork’s thankfully kept to a minimum, as users can photograph and upload their support documents. The app also delivers accurate client status updates and milestones to borrowers, their Sierra Pacific loan officer and REALTOR® with a single click, keeping everyone up to date. And when they have a question, borrowers can contact their Sierra Pacific loan officer through the app’s built-in Instant Messaging. Want to learn more? Download the Sierra Pacific Mortgage app to your to your Android or iPhone or visit Sierra Pacific’s blog.

Gateway First Bank announced that Tony Taveekanjana is joining the organization as EVP and Chief Production Officer, subject to regulatory approval, to oversee all retail and correspondent mortgage production across the country.