As rumors continue to swirl regarding the purchase of a well-known Southeastern Texas mortgage bank, lenders are watching the current drop in rates. It is generally believed that a slowing economy, aka a recession, leads to lower rates. Some have been predicting a recession for a few years, and it becomes a little tiresome, especially with the Fed continuing to focus on inflation. At some point, there will be agreement that things have slowed (like small business optimism is now) and they’ll be right. Meanwhile, it is hard to have a recession when the labor market, housing prices in much of the nation, consumer spending, and credit availability, remain as strong as they are. At this point rates probably won’t drop much in the near future, and vendors and lenders can’t sit there, wringing their hands, waiting for things to get better on their own. Are lenders suddenly going to make huge margins on lots of volume in the second half? Are LOs who were doing 2-3 loans a month in the first half suddenly going to do 4-6? Are vendor reps suddenly going to double their clients? Are rates going to plummet? Is the number of houses for sale going to skyrocket? (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.)
Lender and Broker Software, Services, and Products
The MBA defends mortgage servicers…. In response to audit reports recently published by the HUD OIG, Bob Broeksmit, MBA president and CEO, spoke out in defense of mortgage servicers. As the HUD OIG looks at areas of “failure” that occurred in handling loss mitigation and COVID-19 forbearance, Broeksmit points out this is due to “never-before-seen volume”. It is possible to rise above the problems of the past, scale effectively, and overcome industry obstacles. CLARIFIRE®’s “Conquering Record-Breaking Change” blog lists the points of failure identified by the HUD OIG and the solutions you need to prepare for the future. It’s time to act on how you use the experiences of the past to ensure readiness by implementing proven modern, intelligent, seamless process automation software. CLARIFIRE® is Truly BRIGHTER AUTOMATION®.
“I am looking to sell my Vendor Surf search engine platform! After more than 5-years of an immensely gratifying journey, Vendor Surf is being retired. Having just successfully navigated a major cancer battle, life’s priorities have never been clearer. Sadly, my seemingly undying passion for the vendor marketplace has met its match. Life awaits! I offer my sincere thanks and gratitude to our superb client base, as well as those that listened to our story and read our content over the years. Ours is a special industry. Scott Roller (FYI, we have enlisted a liaison to market the search engine platform for purchase, transferrable to any global industry. It can be re-skinned and launched as fast as you can define your search filters. Email me.)”
Rising interest rates and inflation causing a dip in originations? Maximize your portfolio reach with HELOC options designed to help your customers tap into their home value to remodel kitchens, fund education, and more. LoanCare has a comprehensive understanding of the special nuances involved in servicing HELOCs such as knowing what's required to appear on monthly statements, ensuring that interest calculations are accurate, and setting up the HELOCs correctly when the loans are on-boarded. We can accommodate segmented, fully amortized, and interest only HELOCs. Contact LoanCare today!
The digital online retail revolution has taught us that speeding up processes and increasing visibility can bring tremendous benefits. That's exactly why Equifax is delivering Telco, Pay TV and Utilities insights alongside our traditional mortgage credit report. With a better view of 191 million potential homebuyers, you can help lenders automate and streamline their underwriting process, save costs, and build a better consumer experience. And just as importantly, grow your business. Ready to make inefficient mortgage lending a thing of the past? Learn more about the solutions and latest news from Equifax Mortgage and Housing.
“Hey there lenders, how important are surveys in your mortgage origination process? Maybe you use them to collect needed info from borrowers? Or to get client feedback and reviews once the loan is closed? Have you ever wanted to send surveys straight from your LOS? Velma wants to know and is conducting a quick 3-minute survey to find out how mortgage pros, just like you, are using surveys in their day-to-day operations. (Plus, if you’re interested, we’ll share the results with you…) Take the Velma Connector Survey on Surveys Today!”
TPO Channels for Lenders and Brokers
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. Catch them in August at the Colorado MLA Annual and the Western Secondary Conference or check out their Upcoming Events page for details on where they’ll be this summer! Find your local sales rep here or send them an email to learn more about the advantages of partnering with AmeriHome.
“The 3rd quarter of 2023 is already upon us, and Newrez Wholesale is excited to reveal our 2nd Quarter RezClub qualifiers next month. One of the many reasons for being a RezClub member is our non-solicitation protection of your business through RezConnect. Get in RezClub and get protected! To learn more, click here or call your AE for details. Here are just a few reasons why you should send Newrez-serviced borrowers back to us: A 1/8th price improvement, the ability to net escrows, saving your borrower cash out of pocket at closing (on same property refinances), priority service and faster turn times, and ease of transaction: We already know your borrower. These benefits apply to any new loan transaction in good standing, whether that’s a purchase of a new home or a refinance of another property. We want to be your partner of choice for new and repeat business, and we’re serious about retaining your borrowers.”
Interest Rate Predictions: Keep Them in Perspective
I am asked all the time, “Hey Rob, where do you think rates will be in six months?” My answer, after I say that I can’t even predict where I’m going to have lunch tomorrow, is always the same, “Higher, or lower, or possibly the same.” Or sure, one can have a prediction until a ship becomes stuck in the Suez Canal, or a pandemic occurs. STRATMOR’s current blog is titled, “Interest Rates are Like the Weather? Or Like Signs of the Zodiac?”
For some outside input I asked James Hedvall, grizzled capital markets veteran. He replied, “The interest rate markets have a way of humbling almost all the ‘experts’ and the very first thing you learn in Secondary Marketing is that you shouldn’t take a view on where rates are headed because half the time, you’re wrong anyway. In Q4 last year the arm-chair prognosticators were predicting that we’d see rates come down by the end of 2023, however, that simply does not appear to be the case as many LOs are originating in the 7% range currently.
“The Federal Reserve, in its attempts to control inflation and cool a very strong economy, have raised Fed Funds three times just in 2023 alone, with another 25-bps increase predicted for July’s meeting, and a window left open for another increase before the end of the year. I continue to read, however, inside the world of mortgage banking, opinions expressed that rates will not only come down, but when to expect this to happen. Based upon what data, I ask? Are their views speculative, biased, or just hopeful?
“I would challenge these prognosticators as to ‘why’ mortgage rates are positioned to fall. What leads them to predict that? I’m sure some opinions are based on fundamentals: Fed raises rates to control inflation, money is taken out of the economy, the economy cools, Fed cuts rates, and mortgages come down to some predicted level. A lot of the predictions I see are not rooted in actuality, but rather rooted in exuberance for mortgage banking.
“Here’s some additional perspective. None of the macro data even hints at a reduction of short-term interest rates. Current inflation is a tad north of 4% with the Federal Reserve’s target set at 2% Economists have modeled that unemployment would need to reach as high as 7% in order for inflation to come down to 2%; however, June’s unemployment report had very little change from May’s with the current rate at 3.6% Remember, when an economy ‘slows’ jobs are not created, historically they’re lost.
“Everything points to the Fed being hawkish in its monetary policy for the remainder of the year. Anyone predicting where interest rates will be in the future would need to start by predicting where the Federal Funds rate NEEDS to be in order to see inflation that’s appealing to the Fed, and then ultimately, HOW LONG rates needs to remain there; when is it warranted to reduce borrowing rates under recessionary fears? These are two almost impossible questions to answer since the number of variables that you need to get right, coupled with unpredictable world events, play such a strong role in forecasting interest rates.”
Like I said before, a year from now, rates will either be higher, lower or the same. So let’s discuss your products and services!
As the market moves through different cycles, lenders are continuously evaluating whether to retain or release mortgage servicing rights (MSR) as part of their overall strategy. MCT & Mr. Cooper released a whitepaper, Getting Started with Co-Issue Transactions, that reviews the basics of co-issue transactions, helps dispel common MSR myths, and explains how to incorporate various strategies to achieve your business objectives. If you’re interested in co-issue executions, MCT’s BAMCO offers expanded execution options for sellers while providing new client acquisition options for buyers, creating a more convenient way to conduct co-issue transactions. BAMCO provides sellers with the ability to incorporate co-issue pricing from MSR buyers on the platform into the best execution analysis, regardless of approval status. Learn more about how MCT’s Marketplace is maximizing liquidity, eliminating barriers, and optimizing execution.
For those hoping for lower rates, yesterday's report on the Consumer Price Index for June brought good news. Headline consumer price inflation cooled versus May, increasing just 0.2 percent over the month and 3.0 percent over the past year, the slowest rate in more than two years. Excluding food and energy prices, the core CPI increased 0.2 percent over the month, the smallest monthly increase in core inflation since February 2021. Consumer-price inflation is now just one-third of the level it reached a year ago, good news for consumers, the markets, and the Fed. The report likely isn’t enough to stop the Fed from going ahead with its well-signaled interest rate hike this month (92 percent probability) after the June jobs report showed wage increases still running hot, but it raises doubts about whether more hikes will be forthcoming. The implied likelihood of another increase in November fell to 26.8 percent from 42.4 percent on Tuesday.
Inflation has been moderating on the heels of severe tightening by the Fed, but core-inflation printed at 4.8 percent in June, still a far cry from the Fed’s 2 percent target. Speaking of the Fed, yesterday it released its Beige Book for June describing overall economic activity as having increased slightly since the May report. Five Fed Districts saw slight or modest growth while five saw no change and two reported slight declines. Consumer spending was mixed with some pressure on discretionary spending. Tourism was robust and demand for hospitality services is expected to remain strong during the summer. Auto sales were little changed while manufacturing improved in six Districts and weakened in the other six. Lending softened but demand for residential real estate remained solid. Employment increased modestly while growth in prices was also described as modest. Related to inflation, the report said, “price expectations were generally stable or lower over the next several months,” and “some Districts noted reluctance to raise prices because consumers had grown more sensitive to prices.”
Today’s economic calendar kicked off with two key economic releases: jobless claims (237k, lower than expected) and wholesale inflation for June (+.1 percent versus expectations of +0.2 percent month-over-month and 0.4 percent year-over-year). The other primary event for the market is the final leg of the mini-Refunding consisting of an auction of $18 billion reopened 30-year bonds, though markets will also receive remarks from San Francisco President Daly and Board Governor Waller. We begin the day with Agency MBS prices better by .125, the 10-year yielding 3.83 after closing yesterday at 3.86 percent, and the 2-year, which a week ago was north of 5.10, is at 4.66 after the producer price numbers.
Evergreen Home Loans™ is committed to its GROWTH conviction. One way is by positioning loan officers for success, beginning with its VIP onboarding experience. “Our onboarding team is amazing,” said Loan Officer and Branch Manager Amber Page. “They walk right beside you to make sure you are all plugged in with the right passwords and system setups. Makes you feel like you have a friend right from the start at the company.” Evergreen also invests heavily in digital mortgage technologies, offers product training and business coaching opportunities, and develops innovative programs to answer current and future market challenges, among other things. And not only do these advantages support loan officer growth, but they also help win business for agent partners. Loan officers looking to experience feeling supported in professional growth can explore current opportunities on the Evergreen careers page.
“Planet Home Lending is defying the odds and achieving remarkable retail growth. Halfway through one of the industry’s toughest years, we've welcomed more than 100 MLOs. Our response to the challenges of shrinking volume, constrained margins, and market unpredictability was to build a foundation for growth. You can expect financial stability, operational sophistication, approachable leadership, and unwavering multichannel support, along with competitive pricing to help you reach more borrowers and close more loans. To thrive in an ever-evolving market, reach out today for a confidential discussion with Brian Miller, Planet's SVP Talent Acquisition, at 214-223-9986, or Peter Briggs, VP Talent Acquisition, at 949-202-8213.”