I am often asked about the jumbo segment of our business. Frankly, aside from the coasts and a couple cities in-between, much of the nation is not overly concerned with it. Paying $1 million or more for a house may seem excessive to most Americans, although that doesn’t mean million-dollar homes aren’t prevalent in some parts of the U.S. Per LendingTree, only an average of 6.68 percent of owner-occupied homes in the nation’s 50 largest metros in 2021 were valued at $1 million or more. The share of million-dollar homes has grown: That’s up from an average of just 4.71 percent of owner-occupied homes in the nation’s 50 largest metros in 2020. San Jose (66.3 percent) and San Francisco, CA (52.9 percent) have the largest share of million-dollar homes, the only two cities where most homes are worth at least $1 million. Including San Jose and San Francisco, the four metros with the highest percentage of million-dollar homes are in California. Only four metros (Buffalo, NY, Cleveland, Pittsburgh and Louisville, KY) have fewer than 1.00 percent of owner-occupied homes valued at $1 million or more. (Today’s podcast can be found here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades. To experience how Richey May can help you transform your mortgage business, visit richeymay.com. Hear an interview with Richey May’s Nathan Lee on outsourcing considerations and changing fixed costs into variable costs.)

Lender and Broker Software, Services, and Products

“Citi Correspondent Lending remains dedicated to serving diverse markets as well as continued responsible, sustainable growth. With a growing product suite that includes our new HomeRun program (no MI, up to 97% LTV and as little as 1% borrower down payment contribution required), a robust set of CRA pricing incentives and a quality-focused pre-purchase loan review process, Citi is well positioned to help you grow your business. Complete our Prospective Correspondent Questionnaire or request an appointment to talk with a Citi Account Executive at the Western Secondary Conference next month. We would welcome the opportunity to chat with you about all that Citi Correspondent Lending has to offer.”

If you're looking for ways to squeeze every dollar out of each loan transaction, check out Computershare Loan Services (CLS). You can turn your fixed costs into variable expenses by outsourcing your processing, underwriting, and closing to CLS' originations fulfillment team. They maintain top-tier POS, LOS technology, and a robust compliance program that keep you one step ahead. CLS' money-saving solutions continue! Membership in their mortgage cooperative gives you exclusive access to negotiated pricing on commonly used mortgage services like VOI, flood determination, and trailing doc solutions. They do the hard work, uncovering best-in-class services that positively impact lenders. You're one call away from savings that could dramatically improve your bottom line. Contact Computershare Loan Services today.

Blend has always put borrowers at the forefront of their mortgage products. KeyBank, a regional bank that’s been around for nearly 200 years, knows that customers are the backbone of their business too. And with modern mortgage expectations, they needed a modern mortgage solution. Learn how KeyBank’s partnership with Blend improved their NPS scores, operational efficiency, and LO adoption in this case study.

Sleep in Your Office? What About the Vacant Homes Conspiracy?

Before “van life” people would occasionally sleep in their offices. But what about making the office into a place to sleep?

There’s an anomaly facing major cities in the U.S.: many office buildings are empty while housing is in short supply. There has been a lot of talk of simply converting large offices into more apartments, but it’s much more difficult than it seems. Conversions are possible, but real estate developers face a variety of physical, regulatory, and financial constraints. Zoning restrictions and regulations restrict alterations and limit the scope for office-to-residential conversions. Structural complexity and code requirements mean that not all buildings are conducive for repurposing (e.g., ceiling height, access to lighting, plumbing considerations, etc.), and many structures have to be reinforced with more steel. Repurposing is often an expensive process that comes on top of initial acquisition costs, and ultimately will not save or make any money.

High costs require high rents to offset, meaning that most office conversions tend to cater to the luxury segment of the market and won’t help to alleviate a shortage of affordable housing in the city. Finally, as the status of remote work remains in flux, there’s a big question mark over the desirability of these conversion projects in the first place.

While we’re talking about inventory solutions, Chris Maloney with BOKF had some recent thoughts on people who look at the level of vacant single-family homes “that are, to them, evidence of a nefarious plot by speculators to hold supply off the market, drive prices higher and then sell at an even greater profit.” “There are a number of problems with this viewpoint, the most evident being that the total of vacant houses in these United States is currently far below its historic average.

“Except that of the 145 million or so housing units in the country, only about 15.1 million (or 10.4 percent of total housing stock) are vacant, which if it were proportionate to what the average has been this millennium (12.7 percent of total housing stock) would mean we'd have about 3.3 million more vacant homes than we currently see. The supply of vacant homes, like everything else in the housing market, is scarce. And of the 15 million housing units that are vacant, the Census Bureau number crunchers estimate only about 3.6 million fall into the ‘other’ category where speculators reside, and of that 3.6 million only about 227,000 fall into a sub-category (such as "preparing to rent/sell") which points to the unit being readied for a near-term sale.

“Bottom line, it does not appear (at the national level) that speculators holding homes off the market, waiting for a better selling point, are the cause of the housing crisis. Of course, an institutional investor can concentrate its fiscal firepower onto specific areas, but even if they do the question here comes down to private property. If someone buys a home and wishes to take the risk of holding it off the market until they decide it's the right time to sell, that is their right as it is their house, not society's." Thank you, Chris.

Capital Markets

Where to start with last week? Upbeat quarterly earnings reports on Friday from three of the largest U.S. banks capped a week in which almost everything rallied in markets. JPMorgan Chase, Citigroup, and Wells Fargo all reported above-consensus results to kick off the Q2 earnings season. However, the main economic headline over the last week was the continued deceleration in inflation, as core CPI was below 5 percent for the first time since November 2021. Consumer prices rose 0.2 percent in June and core CPI increased 4.8 percent from one year ago as durable and nondurable goods saw price declines. U.S. inflation is down from its peak of 8.9 percent, and suddenly “disinflation” is the buzzword on trading desks.

While the lower inflation numbers were welcomed by the markets, the Fed is still expected to increase the federal funds target following its next meeting on July 26. The committee is likely to feel validated that tighter monetary policy is slowing inflation while economic growth has not turned negative. Housing costs may continue to be a headwind in the Fed’s fight to get back to 2 percent inflation as higher interest rates not only reduced demand as intended but have also severely limited supply which has buoyed home prices. For those thinking that the Fed is done hiking rates, Fed Governor Waller said on Friday that he expects two more rate hikes this year.

This week kicks off with a limited calendar that consists of just NY Fed manufacturing for July. Data and supply pick up over the remainder of the week and include June retail sales, June industrial production/capacity utilization, May business inventories, and July homebuilder sentiment tomorrow, June housing starts and permits on Wednesday, and July Philly Fed manufacturing, June existing home sales, June leading indicators, and $17 billion in new 10-year TIPS on Thursday. After the 10-year U.S. Treasury yield dropped 23 basis points over the course of last week to 3.82 percent, in the early going to start the week, Agency MBS prices are better about .125 versus Friday, the 10-year is yielding 3.78,
and the 2-year is 4.72.


Black Knight is hiring an MSR Account Manager in its Optimal Blue division. This person will be responsible for helping clients with strategies related to mortgage servicing rights valuation and hedging, whole loan valuations, and more through the employment of industry-leading, proprietary analytics. This position is available in Chevy Chase, Md., Denver, Colo., and San Francisco, Calif. For more details on this role, contact Betsy Meek. In addition, Black Knight is always looking for talent across many roles. Visit BlackKnightInc.com/Careers for a full listing of all open positions.

Recently named by Euromoney.com as the Best U.S. Super Regional Bank in 2023, Citizens is garnering attention for its clear vision, strong leadership and disciplined execution. With the recent strategic acquisitions of HSBC branches and Investors Bancorp., making it geographically complete, Citizens is looking for talented salespeople (managers, loan officers, account representatives) in all three mortgage lines of business – Retail, Wholesale and Correspondent businesses throughout the Northeast, MidAtlantic, Midwest and Florida. Our deep product mix allows us to help many different loan needs, from affordable loan programs such as HomeReady to a best-in-class one-time close construction to permanent product, Citizens has what you need to succeed. Our specialty loan programs such as condo/co-op financing, rate protection programs with extended rate locks, along with an amazing Private Wealth discount value proposition for high net worth banking clients, ensures you have all the tools to win in this challenging market. To learn more, contact Sean Reilly or visit here.

Nations Lending continues growth, expanded opportunities for producers! Nations Lending is continuing its growth with multiple in-house product offerings, creating a world of opportunities for its origination team nationwide. The company's dedication to servicing almost all its agency business and its licensure in all 50 states highlights its commitment to building the businesses of its loan officers. This proves true with the expansion of its recent product offerings: RIO and ACE. RIO is the company’s DSCR product (underwritten in-house), which eliminates proof of employment or income verification, services LLCs, and caters to short-term rentals. With ACE, borrowers complete their loan application and receive financing approval before initiating the homebuying process, varying largely from traditional pre-approval methods. Corey Caster, EVP of National Production says, "We know the headwinds originators are faced with today and our goal is to give them as much ammunition as possible. Every day our Leadership Team is focused on how we can improve our platform.”

“At Guaranteed Rate Affinity we believe our loan officers need the perfect combination of technology and human touch to succeed in this market. Not only are we a fintech organization but we focus on memorable experiences to drive loan officers’ personal branding. We have a dedicated events team to support our loan officers in the creation of these experiences that will leave a lasting impact. Build your business by leveraging the power of events to make connections and partnerships organically and stay top of mind in your community. Your Events Coordinator will take care of everything from start to finish, all you have to do is host your referral partners and clients. Learn more about what sets us apart. Contact Tim McGraw to get started.”