Here’s a couple informal reads on the economy. When I have a few extra ducats in my pocket, sometimes I’ll spring for the more expensive Shrimp Alfredo at Olive Garden instead of the cheaper Lasagna Classico. When Freedom Mortgage’s Stan Middleman is faced with a similar situation, instead of buying a couple seats near the dugout of the Philadelphia Phillies, he bought a piece of the entire team. I have some Tupperware that I never bought. You? My Mom went to Tupperware parties: Not expensive, lasts forever, people would have their favorites pieces, using it better than thousands of miles of plastic wrap clogging the landfills every year. But Tupperware is faltering. And so is San Francisco’s 127-year-old, iconic Anchor Brewing Company. The brewer of Anchor Steam, owned by Japan’s Sapporo, confirmed that it would not brew its beloved Christmas Ale this year due to time and cost constraints. America’s first microbrewer is planning to pull back its 50-state distribution footprint to just one: California, where the Anchor brand does roughly 70 percent of its business. (Today’s podcast can be found here and this week’s is sponsored by SimpleNexus, the homeownership platform that unites the people, systems, and stages of the mortgage process into one seamless, end-to-end solution that spans engagement, origination, closing, incentive compensation, and business intelligence. Today’s has an Interview with 1st Signature Lending’s Matt Bridgman on all aspects of the construction-to-permanent (CTP) space.)

Broker and Lender Services and Software

Last year, one man made headlines after turning $26 into $283K by correctly predicting the winners of 6 major championships. Now that’s one investment that certainly paid off. In today’s market, lenders are betting on their tech stacks to help them win big as well. But how do they know if their bets are paying off? PRMG recently set out to answer that question and found that TrustEngine’s Mortgage Coach platform beat out all other technologies and helped its users generate 237% more annual loan volume than their peers. Similarly, PRMG found $121M of fundings in just 9 months was directly attributed to TrustEngine’s Sales Boomerang. Are you looking for a safe bet that will help increase production volume and revenue? Read more about how PRMG LOs doubled down with Mortgage Coach and Sales Boomerang to win big.

“Now is the time for mortgage servicers to take full control of their businesses. While many servicers may believe they are already in control, those using yesterday’s servicing software are not. Success will require mortgage servicers to become disrupters, according to MortgageFlex. Consumers may drive it, technology partners may enable it, but the servicer is the only party that can actually do it. The three main reasons this has to happen now are changing compliance requirements, increasing prices and the need to provide a better borrower experience while controlling costs. If the software the servicer is currently using doesn’t make it easy, or even possible, to take control of their business, the only thing they’ll be able to do is what they have always done in the past. That won’t work. Contact John McCrea today to see what will work or visit us.”

Did your team, like so many others, let good retail marketing practices go by the wayside during the height of the refi boom? Are you now scrambling to reestablish or up your marketing game? You should copy smart lenders and talk to Velma! With Velma CRM, you have the power to effortlessly manage and automate your marketing campaigns. Whether you prefer to centralize the process and handle all the marketing for each loan officer or empower individual loan officers to log in and market for themselves, Velma has the marketing solution for you. Easy, automatic, and brand compliant. Learn more about Velma CRM so you can start marketing like a machine!

What's an internal audit anyway and do you need one? An internal audit acts as a third line of defense for your mortgage operation. It provides comprehensive assurance based on the highest level of independence and objectivity to evaluate the effectiveness of management’s internal controls. This function should advise your mortgage operation on plans to achieve the company's strategic, operational, financial and compliance goals. An effective internal audit should go far beyond just checking a compliance box; it should be an integral part of protecting your company. If you want to ensure you’re adhering to regulatory requirements and demonstrating good faith business practices, a Richey May internal audit is a good fit. If you’re looking to be Fannie Mae approved in the future or want to maintain your approved status, it’s required. If you’re unsure whether you need an internal audit, ask one of Richey May’s experts today or learn more here.

TPO Products for Brokers and Correspondents

AmeriHome Correspondent, backed by the strength and stability of Western Alliance Bank, continues to grow market share in the correspondent space. When you combine AmeriHome’s industry leading loan purchase platform with Western Alliance Bank’s warehouse lending and treasury management services, this is one “must-have” relationship for mortgage bankers of all shapes and sizes. IMBs and financial institutions alike benefit from AmeriHome’s Delegated and Non-Delegated options, full suite of conventional and government products, and Bulk, Bulk/AOT and Best-Efforts delivery options. They are currently running a pricing special for Purchase loan amounts of $200,000 or less and offer a stable of temporary rate buy-down options. Check out their Upcoming Events page for details on where they’ll be this summer, find your sales rep here or send them an email to learn more about the advantages of partnering with AmeriHome.

Company Sponsored Webinars and Training

“Register for QC Industry Trends Webinar to learn how to navigate volatile financial landscape. ACES Quality Management just released its Q4 2022 Mortgage QC Industry Trends Report, showing defect rates declined 25.5% over Q3, while the annual defect rate remained above 2%. Join us for our QC Trends and Industry Insights webinar on June 28th at 11:00 AM PDT as ACES Quality Management's President, Phillip McCall and EVP, Nick Volpe cover an analysis of the Mortgage QC Industry Trends Report, a deep dive into mortgage quality control trend reporting and how it aligns with the current state of the industry, and industry insights and how to best navigate through the volatile financial landscape. As the GSEs begin taking an aggressive stance on repurchase requests for loans with curable defects, now is the time to take steps towards ensuring true loan quality. Register today.

“Free webinar alert! With volumes down 40% or more midway through 2023, large-scale digital transformation feels more out of reach than ever. Instead, many lenders are focusing on smaller projects to produce short-term ROI gains. Join executives from Fairway Independent Mortgage Corp., Lennar Mortgage, Stavvy, Wolters Kluwer and Falcon Capital Advisors as they discuss the shift in approach from open-ended “digital journeys” to targeted incremental “sprints." We will delve into various aspects such as the prioritization of digital transformation projects, the evolving objective of achieving fully digital closings and eNotes, and the potential impact on the upcoming cycle. Don’t miss out: register now for this July 19th event.”

Join ACUMA and MCT on June 22nd at 11am PT for their upcoming webinar on Strategies for Credit Unions to Mitigate Market Risk. This webinar will provide a current market overview and include actionable insights and recommendations for credit unions to mitigate market risk. ACUMA's President, Peter J. Benjamin, CMB, and MCT's Phil Rasori and Andrew Rhodes will also review strategies to improve profitability to add value for members. MCT also recently released a new whitepaper on Mortgage Pipeline Hedging 101. The whitepaper reviews information on moving to mandatory, the strategy of hedging, the benefits of hedging, and how to determine if you are ready. Read the whitepaper to learn how you can use hedging as a tactic to mitigate risk and optimize profitability when selling mortgage loans.

One For All and All For One

Benjamin Franklin, during the Revolutionary War, sagely observed, “We Must Hang Together or Surely We Shall Hang Separately." Things are not that dire in residential lending, but it is important to know we’re better off standing together as an industry.

With that in mind, the week of June 12-16th, the Mortgage Bankers Association (MBA) is hosting its eighth annual action week, a national, industry-wide campaign to grow its FREE grassroots advocacy network, the Mortgage Action Alliance (MAA). MAA is non-partisan and one of the most effective ways to participate in the political process. The industry’s well-being and future are in our hands. To help strengthen our industry’s voice, we encourage all mortgage industry professionals to support this effort. MAA unites all industry advocates and allows them to have an active role in shaping legislation and regulations, impacting our company, customers, and the broader economy. To join this free grassroots advocacy network, click here or text “MAA” to 50457 to receive a signup link. Renewing or joining takes less than 30 seconds! MAA members receive many benefits with real-time news alerts impacting our industry, “Calls to Actions,” pre-drafted communications directly to their elected officials or federal regulators when immediate action is needed, monthly newsletters with legislative developments, and access to MAA quarterly webinars/townhalls. Our legislators and regulators shaping policies impacting our industry must hear from you. You are the experts; your voices are needed to share the vital work we do. I have joined MAA, and I encourage you to do the same. The larger the group, the louder the voice.

Capital Markets

The FOMC concluded its two-day policy meeting yesterday with the unanimous interest rate decision of “pause, not stop,” keeping its benchmark rate range from 5.00-5.25 percent as well as the door open for future rate hikes.

While the pause was widely predicted via much foreshadowing by Fed officials, the “dot plot”, used by analysts to predict Fed activities, showed two more rate hikes projected in 2023 (for up to 50 basis points, which would make for an overnight rate as high as 5.6 percent), making the decision a "hawkish pause" (or skip). This is the first pause since the Federal Reserve began a historically aggressive round of monetary tightening 15 months ago, hiking the fed funds rate 10 times for a total of 500 basis points. However, there was plenty of hawkishness in the accompanying commentary and in Chair Powell’s press-conference.

Powell went out of his way to remind market participants that it may raise rates down the line as the Fed remains focused on taming inflation and bringing it back in-line with its 2 percent target. With inflation cooling, though the core reading is still above 5 percent, and America’s employment picture remaining robust (the unemployment rate sits below 4 percent), the Fed certainly has rationale for more raises.

It’s now wait and see how it all shakes out until the Fed’s next meeting in July. The Fed is hoping to bring the post-pandemic U.S. economy in for a gentle landing, and “judged it prudent” to hold rates steady given how quickly they have risen, wanting to take time to assess. Powell added that the pause is a continuation of its moderating pace of policy measures and the full effects of the Fed’s tightening have yet to be felt at a time when inflation has already decelerated to 4 percent.

With GDP up, unemployment down, CPI and PPI going marginally in the Fed’s desired direction (we learned yesterday that the Producer Price Index benignly declined 0.3 percent month-over-month in May to register up 1.1 for the year, which is below the Fed's target rate for inflation), another 25 basis points hike is currently priced in for the July meeting. The likelihood of an additional hike after that has also increased given the dot plot and the lack of credit crunch the Fed was expecting from the banking sector. Banking challenges have already resulted in a tight credit environment, and the threat of further hikes will only further slow economic activity.

But lenders care about mortgage rates, and they’ve generally increased in the past month, and this has slowed the pace of housing market activity, as potential homebuyers have been very sensitive to any changes in rates this year. The yield on the 10-year U.S. Treasury is sitting around 3.8 percent. That normally means the 30-year mortgage rate would be around 5.6 percent. However, mortgage rates have been near 7 percent recently, so there is the potential for a decline as we progress through the year.

With pull through rates jumping, the selling needs of originators have jumped significantly as pipelines extend with pull through rates rising. It is certainly notable that pipelines are much more reactive to rate moves now than they were in early 2023. After the Fed’s decision, the yield curve immediately flipped from "calm steepener" to "angry bear flattener" on the news. The 2s/10s spread went as far as 95 basis points inverted and 2-year Treasury notes are now officially in technical no-man’s land. Some yield curve steepening is desperately needed.

Today’s calendar is packed with market moving potential starting with the latest rate decision from the European Central Bank (+.25 percent to 3.50 percent, as expected) and ECB head Lagarde’s press conference. The U.S. calendar is under way with retail sales (+.3 percent, ex-auto +.1 percent, stronger than expected), Empire and Philadelphia Fed manufacturing (6.6, a huge jump, and -13.7, respectively), weekly jobless claims (262k, unchanged) and import & export prices (imports were -.6 percent). May industrial production and capacity utilization, April business inventories, Treasury auction sizes for next week’s reopened 20-year bonds and 5-year TIPS, and Freddie Mac’s Primary Mortgage Markets Survey are also on tap. We begin the day with the 2-year up at 4.74 percent, Agency MBS prices roughly unchanged from the ugly Wednesday afternoon, and the 10-year yielding 3.81 after closing yesterday at 3.80 percent.

Employment

“At Planet, we understand you’re facing ever-increasing challenges of running a successful nonbank retail organization: the relentless competition for shrinking volume, perpetually squeezed profit margins, and the unpredictable evolution of the marketplace. You've built an extraordinary empire, and a move to Planet can ensure it continues to thrive. With us, you’re not just plugging into a platform. You’re joining a multichannel family of companies that works with you to ensure your business operates at peak performance. Go beyond just keeping the lights on. Gain the confidence to shine brighter than ever. Benefit from the unparalleled stability, scalability, and competitive pricing generated by $26 billion a year in volume and an $82 billion servicing portfolio. Considering the potential advantages of selling your purchase-centric distributed retail company? For a comprehensive and confidential discussion of the benefits of acquisition, reach out today to Planet SVP Talent Acquisition Brian Miller ( 214-223-9986) or VP Talent Acquisition Peter Briggs (435-709-6278).”

“PrimeLending is the ultimate destination for loan originators seeking to fuel their rise to greatness. Through May of this year, we’ve experienced a remarkable growth surge, adding over 100 top performing LOs and establishing seven new branches nationwide. Why are so many producers choosing PrimeLending? It's simple: our strength, stability, experienced leadership team, extensive loan product offerings, and world-class operations. Our commitment to excellence is further validated by our rankings: 11th among top retail lenders and 15th overall, according to the Scotsman Guide. Contact Nic Hartke to discover how PrimeLending provides an unparalleled platform for loan originators to shine. Unleash your potential and experience extraordinary opportunities with PrimeLending today.”