Years on a trading desk and hedging locked pipelines teaches one that different things move bonds at different times. Right now, rates are still being driven by pandemic news… Yes, rates went up yesterday and this morning, but up until then, many analysts found it odd that the bond market, which drive mortgage rates, continued to seem to shrug off inflation news. The old adage, “Don’t fight the Fed” is true. The Fed has made its intentions clear, and no, rates don’t move up or down in a straight line, but no one should be surprised if mortgage rates are higher in six months than they are now. Lenders with marginal branches and MLOs are focused on making them better and increasing their revenue… or else. Speaking of revenue, thank you to Nevada’s Guy S. for pointing out the Internal Revenue Service (formed in 1862, officially named in 1918) explaining in a helpful list of tax tips shared online: “If you steal property, you must report its fair market value in your income in the year you steal it, unless you return it to its rightful owner in the same year.” Thanks! Today’s audio version of the commentary is available here and this week’s is sponsored by Real Estate Connection (REC), a boutique real estate brokerage that acts as a centralized and organized, fully-managed real estate fulfillment service, connecting buyers with local qualified Real Estate Agents and walking them through the entire home purchase and selling process with the lender partner.

Services and Products

If your New Year’s Resolution revolves around keeping loan officers happy AND compliant, then Connector by Velma® customers may be on to something! When asked about the benefits of automating their ECOA-Adverse Action process, Dan S., Mortgage Loan Manager at CapEd Credit Union said, “The most difficult part of my job is keeping my loan officers happy AND compliant at the same time. Connector makes it possible to do both! Happy LOs are productive LOs!” Curious how Connector by Velma® can help solve your ECOA - Adverse Action headaches? See for yourself here.

Happy New Year from TENA Companies, Inc.! Do you have a plan set for your Mortgage Origination and Servicing Quality Control in 2022? The refi boom has left many lenders still rushing to catch up, while the end of COVID-19 forbearances and notices from the CFPB, OCC and others have kept servicers on their toes. Don’t wait to make your plan for your Mortgage Quality Control in 2022! Contact TENA today to start the year off right. All of TENA’s highly skilled and experienced auditors on staff have completed rigorous training to ensure the highest quality audits. With quick turnaround times of 35 days, TENA Companies, Inc. will help guide your firm’s quality control plan to success.

“Sophisticated originators, investors, and financiers in the residential mortgage industry rely on PHOENIX for MSR and Whole Loan expertise, insightful technology, global perspective, and an unrivaled customer experience. Confer with us to learn how our strategic insight can help you ensure 2022 success. PHOENIX offers MSR and Whole Loan sale advisory, valuations, and quantitative analysis/forecasting on a wide range of financial assets, mortgage capital markets consulting, mortgage servicing performance management, origination and servicing quality control, underwriting support, third party due diligence reviews, and a range of other mortgage operations outsourcing solutions. Differentiated from our competitors, each of our industry-leading services is honed to achieve substantial, actionable results for our clients. Learn how by contacting your PHOENIX representative or email us at”

Tired of being stuck in a long-term contract with a pricing and decisioning engine that doesn’t meet all your needs? Then you need to check out LoanPASS, a Next Gen PPE that can handle any loan product: Agency, Govie, NonQM, 2nds, Fix & Flip, etc. Combine that with results in under 1 second (with no “Submit” button), the option to create your own input fields or overlays and a flat monthly contract with unlimited users! And now, you may be able to get your own custom version of LoanPASS for free while you are stuck in your other PPE contract! Contact Derek Long or Mike Lewis for more details and to see the power of LoanPASS. And come by and see LoanPASS at the IMB Conference in Nashville later this month!

In the face of new market conditions, what strategy will drive growth for lenders in 2022? "Humanizing" the mortgage business is often considered a moral imperative: a nice-to-have without a one-to-one relationship with loan origination. The opposite is the case. Technology has made humanizing relationships a concrete contributor to the bottom line, and it’s exactly what the mortgage industry needs. Total Expert Founder and CEO Joe Welu weighs in on the impact of technology, how it serves as the best loan officer retention tool, and the opportunities it presents for lenders to drive value with every interaction.

It’s been almost 21 years since NSYNC released its hit single “Bye Bye Bye” and tugged the heartstrings of teen girls around the world. “Might sound crazy, but it ain’t no lie” that without a solid borrower retention strategy, lenders say “bye bye bye” to repeat business opportunities. Sales Boomerang helps lenders seriously maximize the value of their databases, turning a single loan into 5 or 6 loans from a lifetime customer. Stephen Barton, EVP at Eustis Mortgage, says: “Last year we closed over $72M in loans that we would have lost from not having Sale Boomerang.” See for yourself how Sales Boomerang delivers chart-topping results, like 20X average ROI, 65%+ borrower retention and a 20-40% lift to loan volume, by applying the best borrower intelligence in the business to your database.

Sales Managers and Loan Officers: Want to diversify your referral base in 2022 and tap into a blue ocean of financial advisor referrals? Most Loan Officers recognize this massive opportunity but don’t know what to say to get the advisor meeting, how to present once they do, and how to build a mortgage practice around this incredibly profitable niche. That’s where the Financial Advisor Referral System comes in. Craig Strent has been working with financial advisors for the last 20 years and gives the specific scripts, tools, and tactics he has used to build annual volume of $100M+ from Financial Advisors. Don’t miss this chance to make financial advisor referrals part of your 2022 business plan! Click here for more information or to sign up.

“Outsourced loan processing services for approved Carrington brokers! Move complicated or time intensive Non-QM, full doc FHA, VA, and USDA loans through your pipeline seamlessly with Carrington Wholesale’s ProcessIQ. After the application has been taken and the initial licensable activities have been completed our team of processing experts will take the lead and work directly with borrowers to process these loans. You can expect a first-rate experience for your borrower, to be informed every step of the way, the capability to originate more loans, the capability to originate loans you may have passed on in the past, no expensive 3rd Party processing fees. Get the details here and contact us today with questions or to sign-up.”

Are you ready for VA Cash Out opportunities in your market? Looking for tips to accelerate your underwriting experience? How can a VA Cash Out Refinance benefit your borrowers? Join the Freedom Mortgage Wholesale Division, along with the National Association of Mortgage Brokers (NAMB), for a LIVE webinar training session on our VA Cash Out Refinance mortgage product and origination processes. Ideal for new or experienced government originations. Reserve your seat for Friday, January 7th, 2:00 PM ET. See you there!

Paycheck Protection Program Developments

James Brody, Chair of Johnston Thomas's Mortgage Banking Practice Group, shares insight on recent Paycheck Protection Program Loan (“PPP”)  developments as it pertains to the mortgage banking community. Mr. Brody notes that if your request for PPP Loan Forgiveness has been denied, you will first want to carefully review the Loan Decision Letter from SBA, which will typically indicate the reason for denial of forgiveness. Next, the timing for an appeal petition is vital because your appeal petition must be filed with OHA within thirty calendar days after the appellant’s receipt of the final SBA loan review decision. Also, it is important to note that an Appellant must provide their lender with a copy of the timely appeal petition upon filing, for the lender to extend the deferment period of the PPP loan until a final decision is issued. According to Mr. Brody, whose Firm continues to represent several mortgage bankers and credit unions with their PPP Loan Forgiveness Applications, if your PPP Loan Forgiveness Application has been denied, the timing of your response and filing a proper appeal is critical. 

For those who would like to learn more about Johnston Thomas’s team of mortgage banking attorneys and how their firm can assist your company with its compliance and other industry related legal needs (PPP denial appeals, LO compensation, contract negotiations, licensing, trademark, employment, CFPB/State audits, ransomware/data breach, M&A, litigation and more), Mr. Brody can be reached directly at (415) 246-3995. Otherwise, as Mr. Brody and his team of mortgage banking attorneys will attend the MBA’s upcoming IMB Conference that is being held in Nashville, between 1/24-1/27/22, you may contact Mr. Brody to schedule a complimentary in person meeting while there.

Capital Markets

Agency mortgage-backed securities and U.S. Treasuries had a poor start to 2022 as selling pressure hit all maturities. What has the Fed’s imminent reduction of its purchases of MBS done? Yesterday’s market move “evened out the basis” a little bit as mortgage rates have been stuck at elevated levels relative to falling Treasury yields.

I realize that this commentary focuses on mortgages, but stocks are grabbing headlines. Equities had a strong 2021 for each of the indices despite fears of inflation, tighter monetary policy, business disruptions, and new COVID-19 variants. Stock market investors seemed to focus on the bright spots of the macroeconomic picture instead, such as increased consumer spending, hiring ramp-ups, and solid corporate earnings growth. Oddly, bond market investors (that drive mortgage rates) as of late have focused on opposite facets of economic news. Who will win out?

One of the main storylines to start the year is the market attention paid to the removal of policy accommodation by the Fed, e.g., tapering leading to higher short-term rates. This is historically the seasonally slow period for MBS issuance (home buying lessens when there’s snow in the yard), meaning the effect of the Fed's reduction will be somewhat muted. The Fed’s aggressive taper should become more evident in the Spring when purchase activity picks up again. Investors are looking for a pullback to put money to work buying Agency MBS. But remember that a pullback in the bond market prices means higher rates.

For economic news yesterday, total construction spending increased 0.4 percent month-over-month in November, slightly less than expected following an upwardly revised 0.4 percent increase in October. On a year-over-year basis, total construction spending was up 9.3 percent, largely due to the strength seen in new single-family construction, which is a reflection of the persistently strong housing demand amid a scarcity of supply in the existing home market. Separately, if anyone cares, December IHS Markit Manufacturing PMI dropped slightly.

Today’s calendar gets under way here shortly with some second-tier numbers: weekly same store sales from Redbook, followed by ISM manufacturing PMI for December and JOLTS job openings for November. We begin the day with Agency MBS prices worse .125-.250 and the 10-year yielding 1.68 after closing yesterday at 1.63 percent, driven by COVID headlines and thoughts that omicron will go away as soon as it came.


When PennyMac says it “never met a charismatic, go-getting, ethical, goal-chasing Loan Officer we didn't like,” PennMac is serious. Not only is PennyMac a top lender in the U.S., but it was recently ranked #4 on Fortune’s List of the “100 Fastest-Growing Companies” in 2021. As a Loan Officer, you’ll receive 6-weeks of extensive training, access to an established book of business from their large portfolio of customers, uncapped earnings potential, competitive benefits, and career advancement opportunities. When you add it all up, it’s a foundation for long-term success and individual growth. If go-getter describes you, then go get it. Learn more.