Us capital markets folks have a way with words. Henry Jonas writes, “I started in this business in a Secondary Marketing in ‘86. Outside of maybe 1994 I cannot remember margins this thin. I went to Kroger and bought the jumbo economy pack of toilet paper with sheets thicker than my margins. The old saying is, ‘If watermelons cost 50 cents to produce, selling them for a quarter and just getting a bigger truck, won’t solve your problems.’ Companies are still making it, but it is tougher than a truck stop steak right now.” Regarding volume, business bank lending is beginning to pick up – banks have suffered through several quarters of tepid loan growth, but signs suggest trends may now be improving. The Fed suggests bank lending rose over 5% in CQ2. It helps that U.S. Treasury yields are falling, and traders expect the unfolding US-Chinese trade dispute to keep the bond-market rally going. The yield on 10-year Treasury debt fell from 3.13% around the middle of May to 2.82% as the US and China threatened, and then imposed, tariffs on each other.
Lender products
Deephaven Mortgage, a leading Non-QM lender, continues to shine the light on Non-QM through its offering of loan programs & technology aimed at making loans responsibly to the millions of Americans that have been locked out of the market. The primary mortgage origination market continues to experience challenges in the form of margin compression, low inventory, and declining volumes. Lenders are actively evaluating the introduction of Non-QM products to help offset some portion of the market dynamics. Deephaven constantly evaluates its products knowing that the target market is significant. Studies show 16+ million self-employed Americans (Bank Statement Loans), 83 million Millennials (Non-Warrantable Condos), 75 million Baby Boomers (Asset Depletion), and 57 million Americans earned more in 17’ than 16’ (1 Year Alt Doc). And these are just a few segments that have gone underserved but represent a significant opportunity for lenders, such as Deephaven, to diversify and change the course of their 2018 production and beyond. To find out more about how Non-QM can grow your business, contact Deephaven at [email protected] (Wholesale) or [email protected] (Correspondent). (Sources: Bureau of Labor Statistics, CNN.)
Smart Start from Stearns Wholesale is now available with HomeReady, FNMA Conforming & High-Balance Loans and FHA Standard & High-Balance Loans*. Stearns Smart Start is a Lender Paid Buydown Program with awesome features! Give your borrowers the peace of mind of having a fixed rate mortgage with option of keeping monthly mortgage payments lower for the first 24 months. First year, rates drop by 1.5%; second year rates drop by 0.5%; at the end of 24 months, borrowers start paying a monthly amount based on the full rate on the note rate. From the very first payment borrowers are building their equity in their homes because money is going toward principal and interest on the loan. Qualify more borrowers with the Stearns Smart Start Program today! *Coming July 14th.
Never lose another preapproved customer again! HomeScout®-HBM understands the challenges that lenders face when trying to service and retain preapproved borrowers who need to find a house. A local branch manager recently revealed that they estimate they are losing up to 25% to 30% of their preapproved buyers to the competition via public search sites. Siting the lack of monitoring and timely communications as being the culprit. HomeScout provides the only lead conversion solution that features an online back office that gathers business intelligence, indicating to loan officers when to communicate with buyers, without them feeling the pressure they would from strangers who bought their information from public search sites. Listen as national project consultant Mitch King explains how to engage and retain leads and preapproved borrowers using HomeScout. Find out more by contacting them here and scheduling a demo, or give them a call at 952-831-0623.
As a LO, your top priorities are to create an efficient loan process for your borrowers and to generate a healthy ROI for your mortgage operation. Wouldn’t it be great if there was a solution that helped you accomplish these goals and more? Well, look no further than Floify, the mortgage industry’s leading point-of-sale system. From its interview-style 1003 application to brand-focused landing pages, Floify is the ideal solution to streamline your loan process. Just ask Calum Ross, Canada’s $2.5 Billion Dollar Man, who recently said, “I signed up for Floify in 2015. In the last two years, I’ve averaged over $165 million in personal production and never email a client for documentation. The $50 monthly subscription cost contributed to my revenue of over $100,000 per month.” Now, what are you waiting for? To experience the ROI-generating power of Floify, request a demo today!
Non-QM webinar. JMAC Lending, a leader in innovative Non-QM lending products, is hosting a free webinar on the company’s dynamic Venice Non-QM program. Offering 6- and 12-month bank statements, one-year seasoning on BK, foreclosures and short sales, non-warrantable condos, plus incredible options for Foreign Nationals. The webinar is on Tuesday, July 24 at 11:00 a.m. PST. Learn more and register today here! All webinar attendees will be entered to win a $100 Amazon Gift Card.
LoanStream Mortgage, currently focused on growing all production channels, is pleased to announce that Greg Armstrong has joined as EVP of TPO Production. Greg’s responsibility will be to expand the TPO sales team nationally. “I’m excited to join Loan Stream Mortgage because it’s executive management team is committed to supporting wholesale brokers and correspondent lending, it’s expansive product offering including Non-QM and non-prime jumbo products, as well as its commitment to provide the best possible service to its clients”, says Armstrong. If you are an experienced AE and you are frustrated because you are restricted by a lack of products to offer your clients or you struggle getting loans closed on time, please contact Greg (916.792.6554). LoanStream Mortgage has been a leader in the new NonQM/Non-Prime products since 2013 and is pleased to announce its new Correspondent offering.
Personnel moves
Weiner Brodsky Kider PC announced today that Ken Markison has joined the firm as Of Counsel in its regulatory compliance practice. Congrats to Ken who has more than 40 years of experience in the housing and mortgage industry, including 32 years at the U.S. Department of Housing and Urban Development, and more than a decade at the Mortgage Bankers Association, where he served as Vice President and Regulatory Counsel. (Obviously he has trouble keeping a job for any length of time.)
Equity Prime Mortgage has added Keith Webster as its SVP, and the Legacy Division. “The primary focus of the initiative is to crush disparity in mortgage lending in underserved markets.”
Did someone say, “buying and selling, M&A?”
STRATMOR Group Senior Partner Jeff Babcock writes: “Market timing is becoming a critically important consideration for prospective M&A sellers. In a recent conversation with a STRATMOR client who sold their company in 2016, the CEO commented on their propitious timing. This was an entity that was enjoying profitable growth when they elected to put themselves ‘in play.’ Had they not executed a transaction in 2016 and remained independent, the CEO speculated that, as a standalone entity, his company would be struggling to survive under the adverse 2018 market conditions. Under the favorable markets of 2015 through mid-2017, the rising tide was indeed raising all boats. Fast forward to 2018 YTD when the market outlook offers no near-term relief from housing inventory shortages, unrelenting margin compression, flat market volume and prospects for losing money in the first and fourth quarters. Insufficient capital and the prospects for a cash crunch are now realities for some lenders. From STRATMOR’s perspective, it’s still an M&A seller’s market with motivated, qualified buyers offering a range of strategic solutions to acquire well-managed Retail organizations. Now is the time to explore your strategic options before the M&A market becomes crowded with necessitous sellers.” Thanks Jeff!
Although not necessarily a merger or acquisition in the strict sense of the term, Home Point Financial Corporation announced today that it will transition its east coast retail branches to Northpointe Bank. “Home Point has been focused on simplifying activities to enable a greater focus on segments where we see the greatest opportunity for growth,” said Willie Newman, Home Point Financial President and CEO. “At the same time, it was important for us to find the right partnership that would provide the support and structure our retail sales teams deserve to be successful. Over the next few months, we will be working with Northpointe to ensure a smooth transfer.” “Northpointe is excited to welcome the Home Point retail sales and operations employees to our team,” said Chuck Williams, President and CEO, Northpointe Bank. “In cases of industry consolidation, Northpointe Bank continues to leverage its strong products, pricing and superior customer experience to attract transactions that are accretive to the bank’s earnings.”
Vendor excitement
There are scores of vendors out there, and not all of them will remain independent, or in business, as time goes on. The latest news is that Optimal Blue has acquired Resitrader, a mortgage loan trading platform. “The Resitrader platform is an excellent complement to Optimal Blue’s secondary services solution and will soon replace our method of selling loans via emailed bid tapes. By integrating technology and combining our trading volume, this merger will create the largest platform for bulk loan auctions in the industry. We are pleased that the entire Resitrader team will be joining Optimal Blue…Resitrader has created a portal which allows sellers to obtain competitive bids from investors and replaces the process of exchanging bid tapes via email. In addition to providing a full-featured interactive trading environment, the system enables traders to optimize executions by supporting shadow-bidding, the posting of axes, chat-based communication, and color reports.” Questions should be addressed to OB’s Scott Happ.
First American Mortgage Solutions LLC announced a while back the expansion of the application programming interfaces (APIs) available through its Digital Gateway, giving users greater flexibility to create modern, consumer-friendly applications and workflows. First American APIs and datasets available through Digital Gateway include: Multiple Identity APIs for comprehensive searches of applicants’ Social Security numbers with identity and occupancy validation.
First Allegiance, a woman-owned national field services company, performs BPOs across the country for both residential and commercial properties. Individual or bulk orders are accepted.
Broker Price Opinion Product List includes Residential BPO, Residential: Single Family, Multi- Family: 2 -4 units, Vacant Land, Commercial BPO, Commercial BOV: Sales Comparable and income approach, Commercial sales comparison only report and Vacant Land. For more information contact Brian Daily, Chief Strategy Officer.
Accurate Group announced the next-gen release of its mobile app for property inspections. The GroundWorks app combines a crowdsourcing model, localized expertise and mobile technology to accelerate the delivery of more accurate interior and exterior property condition reports. The application connects Accurate Group’s nationwide network of pre-screened real estate property inspectors with lenders and servicers requesting property inspections.
Capital markets
A flattening yield curve isn’t the only bond-market benchmark suggesting the US economy is nearing a downturn. Pricing of Eurodollar futures indicates traders think major central banks will stop interest-rate increases in late 2019 or early 2020 to prop up their economies.
With fewer trade-war headlines rattling markets since Friday’s rollout of U.S. and Chinese tariffs, investors turn their attention to earnings season in the hope that strong results can complement a recent run of positive economic data. Stocks rose, and Treasuries fell (that doesn’t always happen!) as a lull in the trade war gave investors room to focus on the start of the earnings season ahead of JPMorgan Chase and Citigroup results Friday. The 10-year closed +1 bp to 2.87% despite the $33 billion 3-year note auction drawing the lowest bid-cover ratio since 2009. The soft demand for shorter-term paper comes as the Federal Reserve remains intent on raising rates and continuing the balance sheet run-off. Other releases from yesterday included the NFIB Small Business Optimism Index decreasing in June from May and the May Job Openings and Labor Turnover Survey showing that job opening decreased to 6.638 million in May from a revised 6.840 million in April.
This morning we’ve already had the reaction to the potential retaliation from China in response to the most recent announcement from the US on new tariffs that will be levied on an additional $200 billion in goods. The holiday-impacted weekly MBA mortgage applications for the week ending July 6 were +2.5% although refi biz hit its lowest level since 2000. Next up was June’s Producer Price Index where increases were expected after flat readings in May and they were +.3%, core +.3%, year over year +3.4% – heating up. May wholesale inventories and sales, at 10AM ET, are seen increasing and decreasing, respectively, versus prior figures. Then we have the Treasury completing a mini-Refunding when $22 billion reopened 10-year notes are auctioned. The day begins with the 10-year yielding 2.85% and agency MBS prices roughly flat versus last night’s close.
(Thank you to Steve R. for this one.)
Given all the trade issues we now have, clear communication is critical – as shown by this short video.
Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “With Regulations, Be Careful What You Wish For.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.
Rob
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are over 300 mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2018 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)
- Dec. 31: Rates, the Fed, world economies, affordability, and the shutdown – all tied together - December 31, 2018
- Dec. 29: FEMA reverses flood ruling; cybersecurity notes; observations on general housing trends - December 29, 2018
- Dec. 28: Doc automation product; FHA & VA changes around our biz; Agency deals continue to share risk - December 28, 2018