People who don’t attend the National Secondary here in Manhattan wonder what happens behind the scenes. Here you go. We had the MCT elevator failure last night, inconveniencing a carload of mortgage folks between floors. There is definitely an older crowd at the conference. I was walking by one fellow who had asked a non-QM rep for her number, and she replied “140 over 95.” Fewer wing tips and high heels, and more tennis shoes and talk of Fab Feet products. What are capital markets personnel talking about in the hallways? One issue is the rating agency Moody’s cutting the credit quality of the United States given our debt situation: it certainly won’t help lending rates. (Our nation isn’t approaching B or C or subprime status, but the current budget proposal adding trillions of dollars of debt won’t help.) Fox News reports that President Trump warned Walmart to eat the cost of the tariffs instead of raising prices, despite thin retail margins. The MBA’s expectation is that the U.S. economy will slow down due to the tariffs, and that their impact on the new home market, appliance cost, HVAC cost, will hurt housing affordability, not help it. (Today’s podcast can be found here and this week’s is sponsored by Xactus and its commitment to the continued transformation of the mortgage verification industry. Pioneering a new class of technology, “Intelligent Verification,” Xactus is redefining how the industry originates and services mortgages. Today’s has an interview with Xactus’ Greg Holmes on how the company’s consultative approach, intelligent verification, and strategic partnerships are helping lenders.)
Software, Products, and Services for Lenders and Brokers
“Trusted Legal Counsel for Mortgage Companies That Mean Business! In today’s regulatory crosshairs, you need legal counsel that understands the mortgage business from the inside. Garris Horn LLP isn’t just another law firm. We’re deeply familiar with the day-to-day realities and regulatory challenges mortgage companies face. From LO compensation and TRID compliance to CFPB defense, fair lending, M&A, and loan purchase agreements, we advise mortgage lenders and servicers across the country on the legal issues that matter most. Our attorneys have extensive experience in the mortgage space, offer effective senior-level engagement, and provide practical guidance that helps executives make confident, compliant decisions. If your legal team doesn’t understand your business like we do, maybe it’s time to upgrade. Visit www.garrishorn.com or reach out to Troy Garris or Richard Horn directly.
The Rhyze Residential HELOC program, built for IMBs as a national delegated correspondent solution, is breaking down barriers and solving common operational pain points. Things like controlling your brand and customer experience, managing complex interim-servicing processes, navigating frustrating program parameters, etc., etc. Among many others, these are examples of the challenges that the Rhyze HELOC experts understand. And that’s why we’ve solved them! To learn more about maximizing the value proposition for your clients with a win-win-win HELOC, contact us via online inquiry, email us, and bookmark our new Rhyze Residential Website.
A smarter, faster way to coach borrowers and close more deals is almost here! Join TrustEngine for a LIVE webinar on May 29th at 1 PM ET / 10 AM PT and be among the first to see the exciting new features included in Mortgage Coach NextGen. Coming soon, this will be the industry’s first loan explanation tool that works even when you’re not in front of your customer. With assistance from AI, loan officers will be able to tee up individualized and interactive presentations for each of their potential borrowers with just a few taps, creating memorable coaching experiences at scale and with less effort. You won’t want to miss this. Limited seats available: secure your spot here.
May Mortgage Madness is here! Grow Your Pipeline before Summer hits with May Specials from LoanStream Mortgage (DBA OCMBC, Inc.) Up to 60 BPS Price Improvement on FHA/VA (when combined with select), 25 BPS Price Improvement on FHA/VA may be combined with select special of 35 BPS for 60 BPS improvement, New Mid-Month MaxONE DPA Special of 50 BPS Price Improvement, 37.5 BPS Price Improvement with FHA/VA May FICO Special (600-679 FICOS), Non-QM Programs special of 37.5 BPS price improvement on all Non-QM programs. For loans locked 5/1/2025 – 5/31/2025, restrictions apply, contact your AE for details or go here.
Bring your deals, scenarios, and questions as NMP presents a DealDesk featuring The Loan Store’s Flex Income: the All-in-One Consumer NQM Solution, on Wednesday, May 21 at 1 PM ET / 10 AM PT. This interactive forum is where mortgage brokers and loan officers share real-world scenarios and get direct feedback from the experts behind the program. Flex Income is built for borrowers with non-traditional income, offering unmatched flexibility through a wide range of documentation options: Bank Statements, 1099s, P&Ls, Asset Depletion, and RSUs. With up to 90% LTV, loan amounts to $4 million, and Interest-Only options on 30- and 40-year terms, this program is ideal for self-employed borrowers, investors, and high-net-worth clients. Join us for this NMP Webinar and submit your scenario here.
Regenerative braking lets electric cars recapture energy as they slow down, turning friction into fuel. Here’s a quick explainer. Tropos takes a similar approach to the lending process. Tasks that usually generate operational drag (like verifications, conditions management, and post-close communication) get converted into customer trust and team efficiency. With Tropos, automation works with your business rules, so you decide when to apply horsepower and when to coast. The result? A more personalized experience for borrowers without burning through your budget. That’s cost-efficiency worth recapturing. Start saving smart.
When bumblebees can’t figure out a puzzle, they can learn how to solve it from another bee. The built-in business intelligence (BI) solution in the NOVA LOS from Dark Matter Technologies is like a problem-solving helper bee for lenders. The NOVA LOS merges a robust, end-to-end software solution with a cloud-hosted, browser-agnostic platform that delivers a modern user experience. The platform’s origination, processing, underwriting, closing and post-closing modules provide a beeline to substantial operational and profitability boosts, while its customizable workflows and best-in-class fintech integrations provide a consistent and seamless experience for borrowers and loan teams alike. Lenders can even use the BI solution to aggregate data from other software technologies, saving themselves the cost of a third-party reporting solution while unlocking additional benefits and cost savings to sharpen their competitive edge. When you’re ready to explore your options, give Dark Matter Technologies a buzz.
In today’s competitive mortgage marketplace, configurable workflows and borrower experience are crucial to differentiation. With the industry-first configurability of Maxwell Point of Sale, lenders can define workflows for any mortgage product, while configuring triggers and business rules to align the borrower experience to operational processes. Maxwell Point of Sale also features more than 60 third-party integrations, allowing lending teams to seamlessly connect with other vital pieces of their workflow, from credit and verifications to pricing and disclosures. Maxwell sees a 60% increase in pull-through from Rate Lock to Close on the vs top competitors. Want to learn more? Let us know and we’ll show you what Maxwell can do for you and your borrowers.
IMB Profits, Or Lack Thereof
The MBA reports that IMBs (independent mortgage bankers) reported a slight production loss in the first quarter of 2025. IMBs and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $28 on each loan they originated in the first quarter of 2025, compared to a net loss of $40 per loan in the fourth quarter of 2024. The Quarterly Mortgage Bankers Performance Report showed a decline in volume and an increase in production expenses. Marina Walsh, CMB, MBA’s VP of Industry Analysis observed, “Production revenues increased at about the same pace as costs, which mitigated losses.” Lenders with lower production volume were hit. Lenders with less than $100 million in dollar volume posted average losses of over $1,000 per loan. Lenders with low average loan balances (less than $250,000) recorded average production losses of over $1,300 per loan. Marina said, “Accounting for both production and servicing operations combined, 58 percent of mortgage companies in MBA’s sample are profitable, but that leaves 42 percent who are still not yet out of the woods.”
The average pre-tax production loss was 7 basis points (bps) in the first quarter of 2025, compared to a loss of 4 bps in the fourth quarter of 2024. The average quarterly pre-tax production profit, from the first quarter of 2008 to the most recent quarter, is 40 basis points. The average production volume was $488 million per company in the first quarter, down from $540 million per company in the fourth quarter. The volume by count per company averaged 1,448 loans in the first quarter, down from 1,609 loans in the fourth quarter.
Total production revenue (fee income, net secondary marketing income, and warehouse spread) increased to 373 bps in the first quarter, up from 339 bps in the fourth quarter. On a per-loan basis, production revenues increased to $12,551 per loan in the first quarter, up from $11,190 per loan in the fourth quarter.
Total loan production expenses (commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations) increased to 381 basis points in the first quarter of 2025 from 344 basis points in the fourth quarter of 2024. Per-loan costs increased to $12,579 per loan in the first quarter, up from $11,230 per loan in the fourth quarter of 2024. From the first quarter of 2008 to last quarter, loan production expenses have averaged $7,702 per loan.
The purchase share of first mortgage originations, by dollar volume, was 81 percent. For the mortgage industry as a whole, MBA estimates the purchase share was at 65 percent in the first quarter of 2025. Servicing net financial income for the first quarter (without annualizing) was $22 per loan, down from $142 per loan in the fourth quarter. Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses, and gains/losses on the bulk sale of MSRs, was $90 per loan in the first quarter, up from $84 per loan in the fourth quarter.
Capital Markets
Economic data released last week offered a mixed view of the U.S. outlook, underscored by persistent uncertainty that is leading to caution amongst both consumers and investors. Housing starts in April rose modestly by 1.6 percent, but the more forward-looking building permits fell 4.7 percent, with single-family permits declining across all regions, a sign that builders remain wary in the face of high mortgage rates and elevated construction costs. Similarly, consumer confidence continued to weaken, as the University of Michigan’s Index of Consumer Sentiment dropped to its second-lowest level since 1978, with inflation concerns dominating. Meanwhile, import and export prices ticked up just 0.1 percent each, and core CPI remained soft, with the three-month annualized core CPI at 2.1 percent, indicating that disinflationary trends remain intact despite tariff activity.
Progress on U.S.-China trade talks, including a temporary reduction in tariffs from 145 percent to 30 percent, was a welcome development to headline last week, but the lack of a finalized agreement continues to cloud the economic picture. The NFIB Small Business Optimism Index dropped again in April, reflecting subdued expectations and the weakest level of unfilled job openings in three years. Manufacturing also showed strain, with output falling 0.4 percent, suggesting that firms are holding back on production until more clarity on trade policy emerges. Although inflation data came in below expectations and tariffs have yet to meaningfully affect prices, the overall sentiment among businesses and consumers remains fragile. This mix of softening growth indicators and easing inflation pressures supports the Federal Reserve's cautious stance, with market expectations for rate cuts now pushed out to the fall.
This week’s economic calendar is relatively light on data, which is often the case after mid-month retail sales and inflation reports. Economic reports of interest include leading indicators, regional Fed surveys, housing data, and flash May PMIs from S&P Global. Besides bills, Treasury will auction $16 billion 20-year bonds and $18 billion reopened 10-year TIPS on Wednesday and Thursday, respectively. For MBS, Class D 48 hours is tomorrow. Today’s lone economic release is leading indicators for April, expected to come in -0.8 percent month-over-month versus -0.7 percent previously. The rest of the calendar is Fed speakers (Atlanta’s Bostic, Vice Chair Jefferson, Dallas’ Logan, and New York’s Williams) and supply. We begin the week with Agency MBS prices being hit by the downgrade: they’re worse .250-.375 versus Friday, the 2-year yielding 4.00, and the 10-year yielding 4.54 after closing last week at 4.44 percent.
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