Are you gradually eating dinner earlier? Join the trend. Want to know another trend that isn’t so benign? Along the lines of the STRATMOR piece below, I received this email over the weekend. “Rob, I’m a processor at a lender who was doing about $80 million a month in 2020 and 2021 but is now doing $15 million. We saved money during those years and retained servicing. But now we’ve eaten through our savings, sold all of our servicing, had some Agency buybacks, and are barely breaking even. We’ve moved to entirely best-efforts execution, outsourced as much as we can, are continuing to lay people off, and are shedding unused, expensive technology. Where will we go from here?” That is a rough note, but, if it is any help, you’re not alone out there. It’s going to be a difficult autumn and winter, and lender management not doing anything is similar to an ocean swimmer being caught in the waves while everyone is telling them to swim out past the breakers or in to the beach. (Today’s podcast can be found here and this week’s is sponsored by Built. Built is powering smarter and faster money movement for the entire construction and real estate ecosystem, all while reducing risk. Hear an interview with Nationwide Processing’s Guru Amrit Khalsa on offshoring operations and reducing fixed costs for lenders.)

Lender and Broker Software, Programs, and Services

Since hitting the scene, SimpleNexus’ single sign-on simplicity and mobile convenience have raised the bar for what mortgage technology should be. Now an nCino company, SimpleNexus is backed by a new wealth of resources that will raise the bar even higher. nCino has already harnessed the power of AI to fuel data intelligence and automation across every aspect of banking. For an up-close view into how nCino is using AI to redefine the customer lifecycle and banking as we know it, join us via webinar tomorrow, 9/26, at 11 a.m. ET. Register now for a front-row seat to how nCino is shaping the future of financial services.

Land Gorilla has launched its state Compliance Library, an online guide designed to help construction lenders navigate statutory requirements in different U.S. states. Featuring an interactive map, the Land Gorilla Compliance Library lets you access state lien laws, contractor licensing information, title practices, and forms for specific states. The guide debuted with compliance resources in 16 states, including California, Texas, and Florida, with resources for all 50 states expected by year’s end. Additionally, Land Gorilla will be hosting a series of complimentary training webinars, each focused on a specific state. The first webinar, Texas Lien Law Overview, will be held on Wednesday, September 27 at 11 a.m. PT. This is a must-watch for lenders currently offering construction loans in Texas or considering adding a construction product for one of the nation's largest housing markets. Register here.

Rates are high, but so is untapped home equity, currently at $30 trillion. Homeowners are turning to HELOCs for debt consolidation, renovations, and emergency cash. Do you have a top-rated subservicer for second lien volume? Computershare Loan Services (CLS) is a recognized subservicing leader with a reputation for tightly managed processes, superior loan performance, and air-tight compliance. But don’t take my word for it. Their second lien agency ratings speak for themselves, with an RPS2+ rating from Fitch, SQ2 from Moody's, and STRONG from S&P. That’s just one reason banks, credit unions, and IMBs choose and stay with CLS. With demand for equity products rising, you can count on its commitment to servicing excellence and customer care. Learn how CLS is bringing together the industry’s best talent to protect clients’ portfolios.

In a realm shaped by rapid technological advancements, traditional linear workflows struggle to keep pace. Dark Matter Technologies utilizes a dynamic solution for its customers: task-based workflows. Task-based workflows transcend conventional processes by prioritizing tasks, automating them at the right time, and, where human touch is needed, allocating them to the right hands. This approach eliminates bottlenecks, accelerates loan processing, facilitates a true exception-based process, and enhances the borrower experience. Does your current workflow match this efficiency? While automation tackles routine tasks, human intervention is reserved for exceptions. It's a nuanced blend of technology and human touch. As the industry continues to evolve, adopting task-based workflows is pivotal. Dark Matter Technologies spearheads this evolution, ushering lenders into an era of streamlined processes and borrower-centric practices. Are you ready to embrace the transformation? Step into the future with Dark Matter, where loan origination meets innovation.

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.

Curinos and Polly have partnered to create the industry’s largest competitive dataset and empower informed, data-driven decisions for mortgage lenders. The collaboration leverages the combined strengths of both organizations, providing the depth and breadth of intelligence a lender needs to effectively assess and benchmark their competitive position, establish proactive margin management processes, and make more profitable and strategic decisions in any market environment. It also marks the next phase in Polly’s long-term data and analytics strategy. Embedded with Curinos’ comprehensive dataset, Polly is currently in development with a next-level suite of competitive data and analytics that will layer into its end-to-end capital markets platform. Read the press release, here.

NEW: Market-Proof: How to Build a Flexible Lending Business Resilient in Upcycles & Downturns. From the heights of 2020 and 2021 to the depths of 2022 and 2023, lenders have been forced to quickly adapt their practices to stay profitable. Market cycles always exist, but the exaggerated upcycles and downturns of the past few years underscore just how crucial it is for lenders to build resilience and flexibility into their businesses. To overcome these challenges, lenders need to hone their lending process at each step. In this new eBook, Maxwell walks through four crucial elements of the loan lifecycle: borrower engagement & application, fulfillment, diligence, and secondary market trading. Each section features insight from exclusive interviews with industry veterans on how to increase efficiency, access economic scale, and become resilient to market volatility like never before. Click here to download Maxwell’s free eBook “Market-Proof: How to Build a Flexible Lending Business Resilient in Upcycles & Downturns.”

STRATMOR on Business Momentum

When leaders avoid making a strategic decision in the hope that the market will change, STRATMOR Group’s Senior Partner Garth Graham calls that inertia. And he says it’s a good way to lose their businesses. In the new STRATMOR Insight Report, Graham says it’s time for business owners to decide whether they will invest for growth, maintain, sell the business or shut it down and every moment they wait is costing them. “Hope is not a strategy,” says Graham. “Executives must break inertia by applying concentrated strategic force in new directions.” In his article, “It’s Inertia, and It Can Kill Your Mortgage Business,” Graham leads leaders through the process of gathering information required to make this strategic decision. He urges them to act soon, while they still have time. Find the entire article in the September Insights Report on the STRATMOR website.

CRA News

As a reminder, STRATMOR’s current blog is titled, “Knowing CRA Developments is Critical.”

The federal bank regulatory agencies announced they’re extending the period for giving favorable consideration under their Community Reinvestment Act (CRA) regulations to institutions located outside of Puerto Rico and the U.S. Virgin Islands, for bank activities that continue to help revitalize or stabilize these areas devastated by Hurricane Maria.

The agencies have determined that a 36-month extension through September 20, 2026, is appropriate given the continuing economic impact of Hurricane Maria from September 2017 in Puerto Rico and the U.S. Virgin Islands Read the September 20th Joint Press Release.

Capital Markets

In the news? America's national debt this week topped $33 trillion for the first time, according to the figures from the Treasury Department. The record-breaking red ink comes as Congress braces for another fight over federal spending. Unless DC can agree on a dozen appropriations bills by Sept. 30, or ink a short-term continuing resolution to fund the government, the U.S. would face its first federal shutdown since 2019. We all know that rates have gone up over the past year and a half, and that has also made the cost of servicing the national debt way more expensive, posing significant risks to the fiscal and economic outlook.

Mortgage rates and U.S. Treasury yields surged to nearly 20-year highs last week given the “hawkishness” from the Federal Reserve. The yield on the 10-year Treasury note climbed 12 basis points in the week to 4.44 percent, slipping a bit on Friday after surging Thursday to its highest level since October 2007, as the Fed projected interest rates would remain higher for longer. Adding to the rise in yields are a combination of rising oil prices, economic resilience in the U.S., and hefty government bond supply. The ultimate direction of rates will be determined by economic performance and inflation, both of which remain stronger than anticipated.

In a widely expected move, the Federal Open Market Committee unanimously kept the fed funds target unchanged at 5.25 to 5.50 percent last week. The supporting economic projections released in conjunction with the monetary policy statement indicated all signs point to one more rate hike this year (the “terminal” rate?) along with fewer rate cuts in 2024. Projections for the fed funds target in 2024 were half a percentage point higher than in the previous release and remain higher than previously anticipated through 2026. Fed Chairman Powell noted many times in the press conference following the FOMC statement that the committee wants to see a rebalancing of the labor market and softer growth as signals that inflation is sustainably moving towards the Fed’s 2 percent target. The Fed Chair also said that a soft landing was not a baseline expectation, and also highlighted that economic activity had been stronger than all expectations.

Inflation trends, which are driving the Federal Reserve’s thinking, will again be the key focus this week, with the U.S. PCE inflation reading and flash CPI reports from Europe due to be released. PCE inflation, also known informally as the Fed's preferred inflation gauge, is forecast to be up 0.2 percent month-over-month to push the year-over-year rate down to 3.8 percent. Other economic releases that will be of interest to the mortgage market include home prices from FHFA and S&P Case-Shiller, New Home Sales, Consumer Confidence, Durable Goods Orders, GDP, Personal Income and Spending, and PCE Prices. With no economic releases of note today, we begin the week with Agency MBS prices worse .125-.250 and the 10-year yielding 4.49 after closing last week at 4.44 percent.