Jan. 18: Letters on W-2 and the S.A.F.E. Act; current cybersecurity tips – my car’s collecting what data on me?

This week the commentary discussed the compensation of mortgage loan originators via W-2 due (versus 1099) to various rules and regulations. The piece prompted Brad Hargrave with Hargrave Rosenthal to send, “I wanted to offer a few additional comments to round out Melissa’s insightful analysis of the W-2/1099 debate currently raging in the State of California in connection with CA DRE-licensed MLOs. Regrettably, the thoughts that follow don’t offer much in the way of clarity, but they are relevant to the discussion.

“First, the ‘real estate’ exemption under AB5 (now, CA Labor Code Section 2750.3(d)) is not, on its face, applicable to Realtors only. Rather, the exemption applies to “a real estate licensee licensed by the State of California pursuant to Division 4 (commencing with Section 10000) of the Business and Professions Code, for whom the determination of employee or independent contractor status shall be governed by subdivision (b) of Section 10032.” Division 4 of the CA B&P comprises the entire CA Real Estate Law, and thus applies to all real estate licensees, including Realtors, property managers, mortgage loan originators and anyone else performing services on behalf of another that fall within the definition of “broker” under CA B&P Section 10131.

“Second, CA B&P Section 10032(b), referenced in the above exemption, provides that a real estate broker and a real estate salesperson licensed under that broker ‘may contract between themselves as independent contractors or as employer or employee, for purposes of their legal relationship with and obligations to each other.’ This subsection goes on to discuss other CA Code sections, but importantly, nothing in this subsection suggests that it applies only to certain real estate licensees, such as Realtors.

“Third, while I agree with Melissa’s analysis of Reg. H, the critical language pertaining to the definition of ‘employee’ was not adopted by the CA legislature when it integrated the S.A.F.E. Act into the CA Real Estate Law.  Under Reg. H, the CFPB is free to determine that the State of California is not in compliance with the S.A.F.E. Act on this basis, but to my knowledge, no such determination has been made since the Act took effect. Moreover, I am unaware of the CA DRE having taken any position on this issue to date. (Notably, however, the CA Dept. of Industrial Relations has issued an advisory indicating that a real estate licensee must provide workers compensation coverage to all agents, including those characterized as independent contractors).

“Fourth, while HUD certainly requires W-2 employment of its mortgagees, mortgage brokers have not been subject to direct supervision by HUD for nearly a decade. In my view, HUD Handbook 4000.1 likely requires a wholesale lender to mandate W-2 employment of its third-party originators, which could be accomplished relatively easily by contract, but that view does not seem to be the predominant one within the wholesale lending community.

“Finally, it’s important to underscore that the real estate licensee exemption in CA Labor Code Section 2750.3(d) does NOT mean that a real estate broker is ‘in the clear’ when characterizing and compensating its MLOs as independent contractors. Rather, the preexisting ‘Borello’ multi-factor test remains in place for real estate licensees, as has been the case for nearly 30 years. Application of Borello to the tasks performed by a DRE-licensed MLO likely merits in favor of W-2 employment, but to date, neither the CA DRE, nor any other CA agency, has taken that position definitively. And, I might just add that per CA Labor Code Section 2750.3(d), a broker’s required supervision over a licensed agent for purposes of ensuring compliance with the Real Estate Law is not a factor to be considered when applying the Borello test.

“It’s just my opinion, but CA real estate licensees originating residential mortgage loans pursuant to a DRE-issued MLO endorsement deserve clarity from the State of California on this issue. Moreover, mortgage bankers operating in the State of CA under a DBO license (CRMLA or CFL), both of which require W-2 employment, deserve to know whether they are being placed at an unfair competitive disadvantage by the perpetuation of the independent contractor model within the world of DRE-licensees. The level of confusion, frustration and anxiety spawned by Dynamex and AB5 isn’t fair or healthy for anyone engaged in the business of originating residential mortgage loans in the State of CA, and it is my hope that 2020 brings some clarity to this issue.” Thank you, Brad!

From Texas Troy Garris with Garris Horn observed, “I have been dealing with people asking the independent contractor vs employee question (so-called 1099 vs. W-2) issue for years. There is simply no safe way to create an independent contractor loan originator these days under the numerous applicable laws (RESPA Section 8, FHA, federal and state minimum wage and overtime, ERISA benefits, state licensing, state income tax, workers’ compensation, unemployment insurance tax, the list goes on and on).

 

“Most people miss the point entirely. The question is not which form does the IRS require for reporting payments to an individual, W-2 or 1099. The question is, instead, whether the person is an employee (generally controlled by the company) or an independent contractor (generally outside the company’s control). If the company is not willing to let its so-called 1099 loan originator substitute someone else to do the work in his or her place, then the company probably has an employee – not a contractor.”

And in a somewhat related issue, Scott Olson, Executive Director of the Community Home Lenders Association, commented on some investors accepting, or denying, loans originated by MLOs through transitional licensing. “Great article about the SAFE Act. CHLA was instrumental in the process of enacting transitional licensing legislation, working closely with SAFE Act author Spencer Bachus (R-AL) on his introduction of the first transitional licensing bill six years ago, which was the template for the enacted bill that your article discusses.

“But that is just a first step. Your article alludes to the significant discrepancies in consumer protection licensing requirements between bank and non-bank LOs. For many years CHLA has pushed for a simple requirement that all LOs, including those working for banks, have to pass the SAFE Act test. CHLA believes it is not fair to consumers that thousands of bank LOs that failed the SAFE Act test are registered and authorized as mortgage loan originators, making mortgage loan origination really the only mortgage/real estate profession that does not have a uniform mandatory testing requirement.”

Cybersecurity & insurance

I realize that many people’s eyes glaze over when this topic comes up. Sometimes those same people are the ones with their passwords on a yellow sticky note inside their drawer so that, if they’re out of the office, a co-worker can have access to their computer. But with lenders, banks, and title companies having so much money flow through their hands every day, they are a common source of hacking.

The “smartest guys in the room” certainly aren’t immune. For example, here’s how hackers tricked a venture capital firm into sending them $1 million dollars. Yes, a Chinese VC firm and an Israeli startup had the money stolen right out from under their noses thanks to spoofed emails and bogus domains.

The Federal Financial Institutions Examination Council (FFIEC) members issued a joint statement to describe matters that financial institutions should consider if they are determining whether to use cyber insurance as a component of their risk management programs. For a more philosophical discussion, here’s a publication that asks, “Will Tech Companies Ever Take Ethics Seriously?”

Switching gears (ha ha) slightly, not only can hackers hack into your car, but did you know that your driving data is being collected? “There are no federal laws regulating what carmakers can collect or do with our driving data. And carmakers lag in taking steps to protect us and draw lines in the sand. Most hide what they’re collecting and sharing behind privacy policies written in the kind of language only a lawyer’s mother could love. Our privacy experiment found that automakers collect data through hundreds of sensors and an always-on Internet connection.

Driving surveillance is becoming hard to avoid. What does your car know about you? We hacked a Chevy to find out.

“Behind the wheel, it’s nothing but you, the open road, and your car quietly recording your every move. On a recent drive, a 2017 Chevrolet collected my precise location. It stored my phone’s ID and the people I called. It judged my acceleration and braking style, beaming back reports to its maker General Motors over an always-on Internet connection.

“Cars have become the most sophisticated computers many of us own, filled with hundreds of sensors. Even older models know an awful lot about you. Many copy over personal data as soon as you plug in a smartphone. But for the thousands you spend to buy a car, the data it produces doesn’t belong to you. My Chevy’s dashboard didn’t say what the car was recording. It wasn’t in the owner’s manual. There was no way to download it.”

(Speaking of cars, what does it take to drive coast to coast in less than 28 hours? Here you go.)

Every person needs to be aware of not only how to navigate online, but more importantly how to protect sensitive information from those who would steal or exploit it. (Of course this reaches far beyond mortgage banking. Politicians should be concerned about cybersecurity policy decisions or laws. The healthcare industry is focused on storing a patient’s medical records with no chance of a cybersecurity attack.)

Keep your system up to date: Don’t wait to click on that “update” button. Use a password manager, and don’t use the same password for all your online accounts. Some recommend LastPass for storing passwords or helping you come up with more secure password options. Avoid using short, common dictionary words as passwords. Use the lock screen on your phone and computer so that it locks when not in use for a certain period of time. Watch out for spam. The IRS doesn’t send out typo-ridden emails. Be suspicious of any unexpected request for your private information or unknown links. Watch for the lock icon in the address bar in your web browser as it indicates a site that has been verified secure by a reputable third-party source. Wherever possible, use two-factor authentication that require a second proof of identity besides a password. For example, receiving a code via text message when you login to your email.

Steve Brown with PCBB (Pacific Coast Bankers Bank) advised, “Here are three cybersecurity trends to be aware of for 2020. First, pay attention to mobile app and web-based security risks. As cash usage is diminishing, there are an increasing number of customers turning to mobile and web-based applications. This shift is only likely to accelerate, giving community financial institutions (CFIs) ample incentive to vigorously protect applications from cyber-thieves. The security of your online and mobile channels will be even more critical for customer data protection.

“Second, watch those third parties. We’re all for collaboration, but banking regulators have made it abundantly clear that CFIs cannot outsource their responsibility and accountability for outsourced services. A good course of action is to proactively ensure your management of third-party vendors is tip-top, and that you are taking an active role in due diligence and engaging in ongoing monitoring, among other best practices. If you are lax with third-party management, you could find yourself in regulatory hot water, not to mention the adverse impact on your customers.

“Third, beware of targeted ransomware. Symantec says ransomware groups are all around you and more have emerged in the past few years. They warn that means more organizations are being hit with attacks. Still other cybersecurity players expect criminals to focus on institutions because they have deeper pockets to make payments and may also threaten to publish sensitive corporate data that has been stolen. Still another approach that one criminal ring has tried is publicly naming on a website the businesses that refused to concede to demands, according to Krebs on Security.

“No matter what, be sure not to make the mistake of thinking your institution is immune from risk. Certainly, cyber-criminals have been known to target institutions when they find cyber-defenses that are less robust than at other institutions. So, make sure you use cybersecurity tools such as those available on the Financial Crimes Enforcement Network (FinCEN) site as you stay up to date on the latest threats.”

An elderly couple had dinner at another couple’s house, and after eating, the wives left the table and went into the kitchen.

The two gentlemen were talking, and one said, “Last night we went out to a new restaurant and it was really great. I would recommend it very highly.”

The other man asked, “What is the name of the restaurant?”

The first man thought and thought and finally said, “What is the name of that flower you give to someone you love? You know, the one that’s red and has thorns.”

“Do you mean a rose?”

“Yes, that’s the one,” replied the man. He then turned towards the kitchen and yelled, “Rose, what’s the name of that restaurant we went to last night?”

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, “Home Ownership is Still Part of the American Dream” If you have the 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 hundreds of 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 2020 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.)

 

Jan. 17: AE, DTC jobs; 2nd, renovation products; after DFSNY letter, CEOs can’t ignore LIBOR transition

I’ve gotta hand it to those writers who put out listings for real estate agents. Maybe if I had a bunch of money I could live in a “secluded retreat” or an “enchanted villa.” I have never lived in a place described as a “retreat,” having stunning or remarkable views or panoramic vistas in a “gorgeous natural setting.” No luxury living, nor a delightful “chalet.” No soaring ceilings in the spacious great room or mudroom, filled with “warm ambiance.” Prestigious enclave? Nope. Has a house ever brought me conveniences and lifestyle? No. I’ve never lived in a house with casual banquette dining, nor in a “one-of-a-kind cottage.” Sure those are the terms real estate agents use to sell houses. They are generally an optimistic lot, but homebuilders, who create these structures, saw their optimism slip slightly to start 2020. But is still high. Low interest rates are making home-buying more affordable, despite the price premium for new construction due (in part) to permit costs. Builders are also starting to pivot more to entry-level homes after a decade of building mostly move-up product. We need it. And look at those housing start numbers from this morning below!

Jobs

Newfi Lending, delivering great service, technology, and its own proprietary Non-QM suite of products continues to grow and innovate in 2020 positioning itself as a leader in the industry. “Newfi also offers a full set of competitive agency and government products, along with 5 different jumbo options that include a 40-year IO. In a market rally, when loan officers step away from Non-QM to refocus on refinances, Newfi is nimble and able to pivot quickly, making it a perfect fit for AEs who are looking for a lender with exceptional product diversity. Newfi is committed to providing excellent customer service with dedicated inside pipeline sales support allowing the AEs to focus on relationship development with brokers and building the Newfi brand. With leading edge technology, a simple easy to use broker portal and the on-going launch of unique new programs, Newfi is excited to continue to bring even more value to their partners by being a one stop lender. To learn more about career opportunities at Newfi reach out to Wendy Licis. Come grow with us!”

A well-known household name with a spectacular reputation of consumer trust is looking for Call Center Loan Officers (federal registration) for its St. Petersburg, Florida location. Warm leads are generated internally from existing consumer relationships across multiple states within their area of operation. Candidates should be familiar with Encompass and both conventional and government originations and demonstrate superior customer communication skills that reinforce the company’s commitment to an on-going relationship across multiple product lines. Excellent compensation including base plus incentive and benefits. Interested parties should send their resumes to Chrisman LLC’s Anjelica Nixt.  

Lender products and services

Brokers should know that American Financial Resources, Inc. (AFR) announced another addition to its suite of specialty loan programs: USDA Renovation. Great for clients in designated rural areas, USDA Renovation loans allow eligible borrowers to finance the cost of repairs to improve an existing dwelling at the time of purchase, all with up to 100% financing on the “as-improved” value (plus guarantee fee, if financed). This means eligible home buyers can purchase and improve a home beyond what is already permitted by the USDA Repair Escrow. In addition to unique products and services, AFR also provides its business partners with industry-leading technology, professional expertise and continuous educational opportunities. For more information on becoming an AFR partner, email sales@afrwholesale.com or call 1-800-375-6071.

Spring EQ Wholesale, the industry’s premier second lien lender, offers 95% combo, 100% CLTV stand-alone and pays Lender Paid Compensation (LPC) up to $10,000. Available equity is at historic highs, and Spring EQ is excited to announce a series of three fast paced educational webinars for its partners. 2nd mortgage Home Equity lending is often misunderstood; and has come in and out of favor for years. Originators refer them to other companies, as they think they are not worth the effort and worst of all, they let their past clients find ways of borrowing without giving trusted advice. You can sign up for the webinar here. Remember that Spring EQ currently offers fixed rates that are comparable to wholesale HELOC lender’s rates, creating a fiscally responsible, budget friendly way for clients with needs to tap their available equity. Please contact your Account Executive or visit Spring EQ Wholesale here.

LIBOR transition, probably to SOFR: you can’t ignore it

At this point nearly everyone know that the publication of LIBOR is not guaranteed beyond 2021. And we’re already in 2020. Yes, most lenders are already using Treasury securities for an index, and are waiting for the Agencies to provide firm documentation guidance (see below). For some basic information, this primer is a good place to start to learn about an overview of the LIBOR transition, as well as an actionable checklist, with a focus on the proposed US alternative reference rate, Secured Overnight Financing Rate (SOFR). And here’s a good summary as well.

The senior management of lenders and servicers cannot ignore this, nor rely on vendors to tell them what to do. The question is not only is your company knowingly putting borrowers into adjustable rate mortgages tied to an index that is expected to cease being published, but what are your policies and procedures in dealing with your servicing portfolio that contains loans tied to LIBOR?

Owners and CEOs were reminded of this when a wide variety of institutions received a letter from the New York Department of Financial Services requesting them to provide the Department with their company’s LIBOR transition plan. NY is requesting information on governance, operational risk, communications with borrowers, and so on – check out the link above. Each NYDFS-regulated institution must submit the institution’s plan for addressing the transition away from Libor-based credit, derivative, and securities exposures. The NYDFS letter has spurred additional focus by financial institutions in the issue, and not only by those regulated by NYDFS. Buckley wrote a full special alert.

We can all assume that other states and other regulators will follow suit. Questions will be asked during regulator audit exams. ARRC is a helpful resource with its implementation checklist. Lenders and other financial institutions are basing their transition on this document, especially if lenders are wondering how to even start the process. It helps you catalog LIBOR exposure, assets and liabilities, and helps you bucket your exposure on maturity. ARRC published its White Paper in July, with Freddie and Fannie rumored to play a large role in it.

And this isn’t confined to the forward lending business. The switch impacts reverse lenders, as well as their clients, and once again it is important for senior management to be ahead of the curve.

Recall that both Fannie Mae and Freddie Mac published information about the LIBOR-SOFR transition, including additional information about the structure of SOFR-based Adjustable-Rate mortgage offering and how it compares with LIBOR-based hybrid ARMs. Here is the Fannie Mae SOFR information webpage. Click to view the Freddie Mac publication. Freddie priced a new offering of Structured Pass-Through Certificates (K Certificates), which includes a class of floating rate bonds indexed to the Secured Overnight Financing Rate (SOFR). The $765 million in K Certificates (K-F73 Certificates) settled last month.

Banks are looking into whether artificial intelligence can smooth migration from Libor to another benchmark for existing contracts. AI could be useful for the switch, but much of the analysis still has to be done by humans. Yet here’s a story on how regional banks face a bumpy road away from Libor. Lenders fear replacement could notch outsize drops at times of economic stress. And the U.S. Commodity Futures Trading Commission aims to make it easier to convert Libor swaps contracts to the Secured Overnight Financing Rate.

But the argument that the Secured Overnight Financing Rate should be the exclusive replacement for US dollar Libor is increasingly called into question. “I believe, as many do, that there is no reason why Libor, having been a singular rate, should be replaced by a singular rate,” says J. Christopher Giancarlo, former chairman of the Commodity Futures Trading Commission.

If you want to do what the “Big Boys” are doing, large global banks are transitioning away from Libor the quickest because of their access to resources, regulators and experience, according to researchers at Cadwalader, Wickersham & Taft and Sia Partners. The law firm’s survey of 75 financial firms found that while US regional banks haven’t made as much progress, they plan to specifically budget for the transition during the coming year.

Banks are preparing to transition from Libor to another interest-rate benchmark, but completing the shift by the end of 2021 will be a challenge, particularly regarding altering legacy contracts. Fiona Maxwell writes, “They may face the huge task of identifying thousands of investors to make changes to the provisions of existing contracts; if they don’t, these may fall into noncompliance.”

It may not be a slam dunk. Slow progress in updating software for using an alternative reference rate could cause UK banks to miss an October 2020 deadline for ending use of Libor in contracts. The deadline is an industry goal, not a regulatory deadline, but the Financial Conduct Authority says banks that miss it “will face a lot of questions from us as to how they are managing the risks.”

And so the FSB plans more scrutiny regarding Libor switch. A Financial Stability Board report on benchmark reform recommends financial and nonfinancial firms make “significant and sustained efforts” to switch away from Libor by the end of 2021. “Given the degree of risk arising from the continued reliance on Libor, regulated firms should expect increasing scrutiny of their transition efforts as the end of 2021 approaches,” the report states.

 

Swaps firms get CFTC no-action relief during Libor switch. Three separate divisions of the Commodity Futures Trading Commission have issued letters stating no-action relief until Dec. 2021 for swaps firms transitioning from Libor. The relief covers rules that include uncleared swap margin and swap clearing requirements. And a Financial Stability Board report on benchmark reform recommends financial and nonfinancial firms make “significant and sustained efforts” to switch away from Libor by the end of 2021. “Given the degree of risk arising from the continued reliance on Libor, regulated firms should expect increasing scrutiny of their transition efforts as the end of 2021 approaches,” the report states.

Lastly, the first options on futures contracts based on the Secured Overnight Financing Rate have been listed by CME Group. The first trade involved December options on three-month SOFR futures.

Capital markets

To keep things in perspective, knowing that jobs and housing drive the economy, last week we learned that the U.S. economy added 145,000 jobs in December to finish out the year and unemployment remained near 50-year lows at 3.5%. But we’ve seen unimpressive wage growth for a long time: hourly earnings increased slightly during the month and for the prior twelve months rose by the smallest amount since July 2018. Most of the jobs created were in retail trade, leisure and hospitality, and health care. For the year, the economy averaged +176,000 jobs per month, well below 2018’s monthly average of 223,000. The labor market remains tight, but given the categories of jobs being created, there is little upward pressure on wages or inflation. From the Fed’s point of view, the data should not provide motivation for changes to the current monetary policy. Barring a significant widening in December’s trade report, the recent contraction in the trade gap should provide a nice boost to Q4 GDP. It remains to be seen, however, if the decline in imports during November was due to imports pulling forward demand ahead of the potential tariffs that ultimately did not go into effect. This could potentially lead to a reversal as import activity returns to normal given the Phase 1 trade deal.

Yesterday U.S. Treasuries pulled back (MBS barely moved, equity indices hit new all-time highs and the 10-year yield is once again trading back above 1.80 percent) with most of the price action coming early in the day due to stronger than expected data. The December Retail Sales report showed a larger than expected increase in sales excluding autos, surging past expectations in December following an upwardly revised increase in November, as consumers continue to be a focal point of growth for the U.S. economy. Initial claims registered lower than expected, and the Philadelphia Fed Survey increased well beyond expectations for January, jumping to its highest level since August. The Senate voted 90-10 in favor of the U.S.-Mexico-Canada Agreement, good for our economy.

Today’s economic calendar is already underway with December Housing Starts (up almost 17 percent, a 15-year high) and December Building Permits (dropping almost 4 percent). Rounding out the week in a bit will be December Industrial Production and Capacity Utilization, JOLTS job openings for November, as well as the preliminary January Michigan Consumer Sentiment figures. There are two Fed speakers: Philadelphia’s Harker in the morning and closing with Fed Governor Quarles in the afternoon. In between, the Desk will conduct a UMBS15 FedTrade operation targeting up to $203 million 2.5 percent. We begin the day with Agency MBS prices worse a few ticks and the 10-year yielding 1.83 percent.

I’m terrible with names. It’s not my fault, it’s a condition. There’s a name for it…

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, “Home Ownership is Still Part of the American Dream” If you have the 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 hundreds of 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 2020 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.)

Jan. 16: MLO, AE, HUD jobs; borrower satisfaction report; misc. vendor updates

For folks who like numbers and trends, according to the U.S. Census Bureau’s national and state population estimates released in December, 42 states and the District of Columbia had fewer births in 2019 than 2018. Natural increase, or when the number of births is greater than the number of deaths, dropped below 1 million in 2019 for the first time in decades. The nation’s population was 328,239,523 in 2019, growing by 0.5 percent between 2018 and 2019, or 1,552,022 people, which is reflective of a multiyear slowdown since 2014. New York state lost the most population, while California had the largest net domestic migration loss, though still remains the most populous state (39,512,223 people). Nationally, net international migration continues to decrease, falling to below 600k between 2018 and 2019, a far cry from over 1 million people in 2016. Net international migration has decreased each year since then. Regardless, home ownership is still the American Dream.

Jobs, merger opportunities, & transitions

(A quick note to anyone at Radian who was displaced in yesterday’s cutbacks, you can post your resume for free at www.LenderNews.com, and employers can view them.)

AnnieMac’s B2B Division is looking for Account Executives to help promote its Correspondent & Private Label Solutions to Banks & Credit Unions nationwide. AnnieMac offers an array of solutions for Banks & Credit Unions that are looking for a turnkey Private Label platform to increase profitability OR a new investor who offers competitive pricing. “Our ideal candidate has extensive contacts in the Banking and/or Credit Union space and has residential lending experience either as a vendor or lender. To learn more or submit your resume, please contact Ryan Kube.

Guaranteed Rate is seeking acquisition opportunities with mortgage companies looking to maximize profitability. Guaranteed Rate, the 3rdlargest retail lender in the country, experienced record growth in 2019, thus creating a great opportunity to partner with like-minded leaders looking to take advantage of our expertise and economies of scale. If you are an owner or CEO of a mortgage company that is looking for better pricing, increased profitability, lower risk and much less stress and hassle, we urge you to e-mail Mark Filler to learn more about integrating your business into our platform.

“Move forward with Motto! Join your local Motto Mortgage office for robust product choice, industry-leading technologies, and the freedom to build your opportunity your way. We’ve teamed up with two of the industry’s most respected platforms: Encompass® and Total Expert® so your marketing and originating efforts are streamlined and top-notch. Plus, you get to use SmartFees® for each transaction. And it’s all on us! Add that to our impressive wholesaler connections and our dedicated support staff and you’ll have powerful career support for the growing business you deserve. Find out what happens when you combine your brain and our brawn today! Currently recruiting in AL, AZ, FL, HI, IN, MO, NM, OR, and TX.”

On the heels of a record breaking 2019, Castle & Cooke Mortgage is sprinting into 2020 with one goal in mind: Growth. That’s why we are so excited to announce the addition of Tim Lewis as VP of Consumer Direct. Tim is a veteran of both the US Army (Major, 22 years) as well as the mortgage industry. He has nearly 2 decades of industry experience and success building consumer direct channels using a proven growth and development model designed to take driven individuals with sales, mortgage, or banking experience and mentor them into becoming successful retail originators. Castle & Cooke Mortgage is currently licensed in 36 states and has a substantial servicing portfolio for our consumer direct team to work with. If you, or someone you know, are interested in learning how to become a top-producing Loan Officer while growing your own database at a family-oriented, customer-centric company, you need to contact Christi Fullerton today.

NEXA Mortgage is a pure mortgage broker with 403 Loan Officers and that is up from 341 just last month. NEXA was recently featured in HousingWire and GrowJo.com as the fastest growing mortgage broker in the country. Want to know why they are growing so fast as they move closer to their goal of 1000 producing Loan Officers? They are hosting a weekly webinar today, “Why NEXA with Mike Kortas“. The CEO dives into a deep conversation of what drives this growing channel. This webinar is today at 10am PST/1pm EST at www.NEXAmortgage.com/support. Just click on the link and join. Let them know you heard about it on Chrisman.

HUD is looking for a Deputy Director, Servicing and Loss Mitigation Division. Expect to review the performance of mortgagees in the administration of insured and direct loans for single-family dwellings against FHA servicing policies. Instruct and train housing counseling agencies on servicing procedures and FHA’s policies and procedures. Assess the ability of current counseling programs to perform comprehensive housing counseling programs, which includes financial management, mortgage default correction and understanding of FHA relief programs.

Blue Sage Solutions, developers of the Blue Sage Digital Lending Platform, announced that David Aach has joined the company as chief operating officer to focus on increasing the company’s relationships with industry partners, clients and prospects.

Non-QM’s Sprout Mortgage announced that Gregory Walker has joined the company as Chief Compliance Officer and General Counsel, reporting directly to Michael Strauss, President. (Gregory takes over the position from Shannon Leight, 45, who moves to the newly created position of Chief Compliance Officer and General Counsel for Sprout Lending LLC.)

Vendor & borrower news

Lenders, do you know the seven commandments to ensure delighted borrowers? In the just-released January issue of STRATMOR Group’s Insights Report, MortgageSAT Director Mike Seminari lays out the common-sense rules for achieving borrower satisfaction in his article, “The Seven Commandments for Optimizing the Customer Experience,” Seminari provides real-life examples and shares statistics on how to create a better borrower experience around the seven make-or-break aspects of the loan process that improve the likelihood of a borrower referring business your way. In a year where referrals will make a difference, this is a don’t miss article from STRATMOR in the January Insights Report.

Lenders completed more than 38,000 digital closings with Docutech’s Solex eClosing Platform. “Docutech, the leading provider of document, eSign, eClose and print fulfillment technology for the mortgage industry, on assisting lenders complete more than 38,000 digital closings with its Solex eClosing Platform. Approved by Freddie Mac and Fannie Mae for eClosing, eNote, and eVault functionality, the Solex eClosing platform provides lenders eSigning efficiencies from initial document generation through post-closing, integration with the MERS eRegistry for all eNote management transactions, and soon Remote Online Notarization (RON) through integration with NotaryCam.

Blend has launched a new loan officer app to fuel omnichannel experience. Blend Loan Officer, the new mobile app, offers LOs the gift of flexibility and functionality. This app allows LOs to

provide consumers with the flexibility to complete their mortgage application online, in person or over the phone. The co-pilot on desktop to help move a borrower along in their application (on mobile, they can instantly text, call, or email them). Borrower application progress is tracked in real-time and take immediate actions and send/edit pre-approval letters and counter-signing disclosures.

Optimal Blue discontinued support of Axos Bank’s Portfolio programs. Customers utilizing this content for proprietary products have six months from 1/6/20 to reconfigure eligibility/adjustment sourcing. The corresponding Expanded Guidelines version of the Portfolio programs will remain available.

As of January 1, Pavaso is supporting remote online notarization (RON) in Florida and Idaho. State commissioned remote electronic notaries (eNotaries) can select the Pavaso platform to complete RON eClosings, which gives home buyers and sellers the option to close real estate transactions remotely, from almost anywhere in the world. Both Florida House Bill 409 and Idaho Senate Bill 1111 were adopted in 2019 to expand eNotary privileges to include RON. In addition to the in-person electronic notarization (IPEN) of digital documents, eNotaries may now electronically notarize (eNotarize) documents from a different location than signers. The process utilizes a secure internet connection and two-way, audio-visual technology to facilitate, document and create a recording of each RON session. When conducting RON transactions, eNotaries must be physically present in the state where they are commissioned but signers can complete the closing from a location of their choice.

Black Knight launched Digital Point of Sale, an AI-Powered solution to streamline origination process. Seamlessly integrated with empower loan origination system, Digital Point of Sale can be used on mobile devices, bank apps or via responsive web design. Integration with Black Knight’s Empower loan origination system ensures data integrity and consistency from the very start of the origination process. The solution leverages AIVA, Black Knight’s artificial intelligence virtual assistant, to offer a smart, dynamic Q&A format that guides the consumer through the mortgage application process and uses existing functionalities within Empower to verify credit, income and assets. Features include the ability to upload and review documents, validate data and provide near-real-time feedback to consumers when documents are missing, or anomalies are found.

Capital markets

Economic data over the last week was mainly positive despite a miss in December’s payrolls report. December nonfarm payrolls increased by 145,000 and the unemployment rate remained near historic lows at 3.5 percent. Even though markets were expecting an increase of 160,000 a one-time small miss did not roil markets. Unemployment claims for the week ending January 4 fell to a still low 214,000. Elsewhere, the ISM Non-Manufacturing survey rebounded to 55.0 in December, providing a nice juxtaposition to the weakening manufacturing data. The data suggests that moderate growth will continue into 2020. Trade continues to make headlines and the trade gap narrowed to -$43.1 billion in November. For the prior twelve months, exports increased a mere 0.3 percent while imports fell 3.8 percent. The improvement in the gap is nice although overall trade was lower than the third quarter average due to the uncertainty surrounding trade policy and tariffs during the month.

U.S. Treasuries rallied for the second time this week yesterday as the cash market adjusted at the open to reflect an overnight advance in the futures market. Treasuries advanced to fresh highs after December producer prices decreased when they were expected to increase, though the reading won’t convince the Federal Reserve that it needs to raise its policy rate any time soon. The market found resistance shortly thereafter, and the 10-year yield closed the day -3 bps to 1.79 percent.

President Trump and China’s Vice Premier He signed the Phase One trade deal in Washington, which calls for China to buy an additional $32 billion worth of farm products and an additional $52 billion worth of energy products over the next two years. While American trade pacts traditionally leave the particulars of commerce to markets, this one includes a classified annex detailing $200 billion in Chinese purchases. It seems Phase Two will be to address foundational issues such as industrial subsidies.

Elsewhere internationally, Germany’s GDP expanded in 2019 at the weakest growth rate since 2013, the Bank of Japan lowered its economic assessment for three of its nine regions, and the Eurozone’s November Industrial Production missed expectations, as did the U.K.’s December CPI and Core CPI. Domestically, Philadelphia Fed President Harker said that the Fed isn’t ready to commit to a standing repo facility. And the Federal Reserve Bank of New York announced that regular repurchase operations will continue through February 13.

The Federal Reserve’s Beige Book for December noted that economic activity during the last six weeks of 2019 continued expanding at a modest pace. Growth in Dallas and Richmond districts was above average while growth in regions like Philadelphia, St. Louis, and Kansas City was below trend. Consumer spending expanded at a modest to moderate pace while vehicle sales expanded moderately with some exceptions. Manufacturing activity was little changed.

Of course loan officers are pleased that the big news on the day/year is that for the first time, a typical borrower in the U.S. can take out a home loan for over half a million dollars and still obtain the very best mortgage rates. Because of rising home prices, loan limits for government mortgage programs have been raised or even eliminated for 2020, meaning more borrowers can get mortgage deals, even if they live in pricey parts of the country.

Today’s calendar is already underway with December Retail Sales (+.3% as expected, ex-auto +.7%), January Philadelphia Fed Index, Weekly Initial Claims (204k), December Import Prices (+.3%), and December Export Prices ex-agriculture (-.2%). Later this morning brings November business inventories and the January NAHB Housing Market Index. Aside from some remarks from Fed Governor Bowman, Fed-related news has the Desk scheduled for a UMBS30 FedTrade operation targeting up to $918 million 2.5 percent ($417 million) and 3 percent ($501 million). We begin the day with Agency MBS prices down a few ticks and the 10-year yielding 1.79 percent after the spate of news.

My therapist told me my narcissism causes me to misread social situations, but I’m pretty sure she was just hitting on me.

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, “Home Ownership is Still Part of the American Dream” If you have the 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 hundreds of 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 2020 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.)

Jan. 15: AE, LO, sales jobs; retention, fraud prevention tools; events coast to coast and on your phone

We find ourselves at Wednesday already. How about some numbers for Hump Day? Years ago Arnold Schwarzenegger famously said, “Having more money doesn’t make you happier. I have $50 million dollars, but I’m just as happy as when I had $48 million.” JPMorgan Chase’s profit surged 21% in the fourth quarter, reaching $8.52 billion, while Wells Fargo reported a 53 percent year over year drop after setting aside $1.5 billion for litigation fees. The US budget deficit reached $1.02 trillion in 2019, according to the Treasury Department. This marks the first time the deficit has topped $1 trillion since 2012. And Atlas Van Lines tells us that California is simultaneously #1 in both people moving into the state and moving out of the state! (Texans can chant, “We’re #2! We’re #2!) But California has been seeing a net loss of population for a variety of reasons, including a maximum income tax of 13%, widespread power grid issues, and unaffordable housing.

Employment & possible transition

A national title Insurance agency in New York State is looking for a partner to increase its sales. The title & escrow agency has been around for over 15 years with a staff of 12 including two attorneys. The ideal partner is someone with many banking and real estate connections looking to either merge, joint venture or become partners with the sole principal of the title agency. This individual or company understands the profitability within the title industry and is looking to get involved on the title side. It’s a dream scenario for someone(s) to walk in here and use this national platform to get involved in the title industry. Interested principals should send a confidential note of interest to Chrisman LLC’s Anjelica Nixt to pass it along to the president of the company.

GO Mortgage recently launched its Assigned Revenue Model for single originators and branch managers. The new compensation model will increase the revenue share for its participants while delivering a streamlined rate sheet execution—allowing for more compensation and superior rates. GO Mortgage’s innovative, best-in-breed technology and marketing stack, delivers a modern mortgage banking platform without increased branch overhead. If you are interested in learning more about GO Mortgage’s new retail platform, please contact Frank Papaleo.

To fuel its year-over-year growth, Union Home Mortgage Corp. is actively seeking experienced Account Executives nationwide, to penetrate new markets. With a focus on continuous expansion and responsible lending, President & CEO Bill Cosgrove is “committed to be ALL IN to grow UHM’s broker and non-delegated space on a national level.” “Union Home Mortgage supports both our NDC and Wholesale Business Partners by providing trigger leads, notification of possible refinance opportunities, and puts our TPO Partner’s company name and phone number on borrowers’ monthly mortgage statements. Ready to join a customer-centric organization dedicated to providing world-class service at competitive prices? Contact Jim Wickham, Vice President – Third Party Origination at (248) 318.8553.”

(Union Home Mortgage announced that 30+ year industry veteran Eddie Scott has joined the company and is responsible for managing growth, recruiting top talent and spreading brand awareness of UHM in Florida and Georgia.)

Prince Harry already has a job offer!

Lender products and services

Looking to grow in 2020? Monster Lead Group introduces The Monster Way, an unprecedented 8-week plan to radically change the future of your mortgage businessThe Monster Way is a formidable combination of a direct marketing system, a sales process and a custom playbook for growing your organization. It includes a dedicated Monster expert who works with you to create an 8-week direct marketing campaign that generates a consistent flow of the right leads to your inbound call team. We’ll train your MLOs how to turn more of those calls into apps using the same professional sales techniques as the highest producing originators in the country. Your reps will graduate with the secret sauce for generating record sales in any market, regardless of rates. Join our clients who originated more than $10 billion in 2019. Find out if your organization and The Monster Way are a good match: Apply. (Space is limited due to high demand.)

FundingShield finished 2019 with over 300% growth, became the first and only MISMO Certified wire fraud prevention & closing agent vetting tool & made its services accessible via a single click on Encompass by Ellie Mae. The HousingWire Tech100 2019 award recipient starts 2020 by adding consumer down-payment wire fraud protection for lenders to provide to their borrowers via B2B2C integrations with lenders and realtors and continue to grow their database of over 70,000 closing agents. For a few dollars a loan Fundingshield will protect closing proceeds to confirm funds are going to intended recipients, verify good standing of closing agents, check licensing & backgrounds & confirm the title insurer’s acceptance of risk on each closing lowering your operating and vendor diligence costs. Leverage their live FinTech solutions to confirm every loan is protected with up to $2mm per transaction coverage. Contact Sales@Fundingshield.com or meet them at MBA IMB in NOLA, MBA Tech LA or Ellie Mae Connect in San Diego.

Lenders like PRMG, Wallick & Volk, AnnieMac, Churchill Mortgage, American Pacific Mortgage, and Willow Bend Mortgage. What are these lenders doing differently? They’ve realized what over 70 other lenders have already discovered: what Sales Boomerang’s Automated Borrower Retention System will do for them when the market shifts completely. This is your recession buster. Schedule a demo and be prepared for whatever the market brings.

Events and training through February

Freedom Mortgage Wholesale’s No Down Payment VA Jumbo program enables eligible jumbo borrowers to exceed published FHFA county loan limits with no down payment requirement, jumbo overlays, or loan limits! 2020 VA Mortgage Marketing training on 1/15 and 1/17.

As part of the TMBA Education Webinar Series, MQMR invites you to login, listen and learn on January 15th as Dayna Silver, MQMR’s Director of Strategic Initiatives, discusses how to develop and implement successful vendor management programs. The Fine Art of Vendor Management.

National Mortgage Professional Magazine and Darin Brooks, Regional Director of Sales with Podium, offer up on Thursday, January 16 at 1PM ET, “How to Win Clients and Influence Word-of-Mouth.” “Learn how to give your clients a remarkable experience, how to kickstart a word-of-mouth engine for your firm, and simple steps and takeaways to take ‘give [your clients] somethin’ to talk about.”

This webinar on the transition from LIBOR to SOFR will examine a variety of issues including awareness, conversion, transition and challenges. It will appeal to small and mid-size banks, credit unions, non-bank lenders, student loan providers, municipalities, corporations, insurers, servicers, broker dealers, custodians, money managers, REITs, hedge funds, consumers and investors. January 16, 10-11AM PT.

XINNIX is hosting an event January 22 at noon ET that will help you answer that question to help you finetune your 2020 plan. XINNIX CEO and Founder Casey Cunningham and mortgage industry thought leader Nicole Yung, Senior Partner at STRATMOR Group will tackle the subject. Learn from 2019 to make 2020 great, the role that technology will play in next year’s success, what to do to stay productive WHEN (not if) the market turns, and more.

Get connected in 2020! Join the California MBA at one of its two free after-hours networking events this month and get the year (and decade) started off right! On January 23, Clear Capital will be hosting an event from 5-7 pm at its Roseville offices (click here to RSVP) and if you’re in Orange County on January 28, join the group at the offices of Womble Bond Dickinson in Irvine, also from 5-7 (click here to RSVP).

Register for Ellie Mae’s January 23rd Webinar: How to Boost LO Productivity and Loan Volumes by 25%. This webinar will provide a live product demonstration and overview of the most impactful ways for your loan officers to boost productivity and increase sales using LO Connect, including how to: Originate loans from anywhere. Compare loan scenarios for potential borrowers. Determine borrower eligibility and send eligibility letters. eSign disclosures.

Do you want to see were technology in 2020 and the latest trends in consumer engagement meet? If so, join Josh Friend, the CEO of Insellerate, for a webinar on January 28th at 10:30 PST and understand how Insellerate’s platform helps lenders engage with more than 50,000 new borrowers per month. You will learn how Insellerate’s all new stand-alone engagement platform automates communications through social media, text messages, email, phone calls, ringless voicemail, and direct mail.

On January 30th, join the Mortgage Bankers Association of Greater Philadelphia and Holland & Knight’s Philadelphia office for a free MBA event: Employment Law for Financial Institutions in the Post-Harvey Weinstein Era.

From February 3-6, MBA’s Independent Mortgage Bankers Conference will be in New Orleans where IMB leadership and their management teams will hear the latest industry happenings and get new perspectives to position themselves competitively for 2020 and beyond.

The Mortgage Bankers Association of New Jersey, in conjunction with the NJ Bankers Association and the NJ State Bar Association, will be having dinner with the Commissioner of Banking and Insurance, Marlene Caride, on February 6 at the Hyatt Regency in New Brunswick.

The FHA has free, on-site Credit Underwriting Training in Denver on February 11 from 8:00 AM to 4:30 PM. Receive an overview of FHA underwriting procedures and addresses various industry-related FAQs related to FHA’s Handbook 4000.1.

The Americatalyst Conference is scheduled for February 11th-12th in Dallas. The conference will look at the future of mortgage banking, non-bank lending, technology and its influence, government policy and more. Find out more information by viewing the agenda.

On Wednesday, February 12th, join CAMP South L.A. for a free 2-hour event. From 10:00 AM to 12:00 PM at the University of Phoenix to hear guest speaker Nancy West, the Housing Program Officer for HUD offering insightful information about FHA updates. Email to register.

Join NYAMB for a live webinar, February 13th, featuring legal counsel: Michael Barone, Partner, Abrams Garfinkel Margolis Bergson, LLP and highlighting the various issues surrounding loan originator compensation in a mortgage broker’s world, including the 1099/W-2 distinction, changing from borrower paid to lender paid compensation and vice-versa, setting compensation plans with lenders and the manner upon which you can vary compensation on lender paid and borrower paid transactions.

The Mortgage Collaborative will host its winter conference in New Orleans on February 16-18. TMC’s conferences boast the highest LTV (lender to vendor) ratio of any industry conferences and are an incredibly interactive and impactful experience for its lender members, whom TMC allows to dictate the content, format, and agenda for their events. For more information on TMC or the upcoming event in The Big Easy, contact their COO Rich Swerbinsky.

On February 19th, in the evening, the Charlotte Regional Mortgage Lenders Association is having its monthly meeting. Come on by and say hello!

The Federal Reserve Bank of Dallas and the Real Estate Center at Texas A&M University have organized Room to Grow: Housing for a New Economy. This one-day Conference in Dallas on February 21st provides industry analysts, economists and experts to learn about the latest trends affecting housing, and discover developments that promise to change home buying.

Capital markets

Tuesday saw U.S. Treasuries reverse Monday’s action to post lower yields by the close after a softer-than-expected core CPI report in the morning, and an afternoon report that existing U.S. tariffs on billions of dollars in Chinese goods would carry on until a Phase Two deal is struck. Core CPI year-over-year has now exceeded the Fed’s 2 percent target for three straight months, though the Fed seems to have adopted a willingness to let inflation run above its longer-run goal for a bit before moving on rates. Also, remember that the PCE price data is the Fed’s preferred inflation gauge, and the latest report showed core-PCE inflation sitting at less than 2 percent year-over-year. Despite today’s scheduled Phase One agreement signing, Bloomberg reported that tariffs on imports from China will remain in place through the November election, regardless of timing for the signing of a Phase Two deal.

The NY Fed announced it planned to buy a maximum of $5.4 billion in agency MBS, as expected, over the January 15 through February 13 period, based on December paydowns (that exceeded $20 billion). For the two-week period beginning today, the Desk is scheduled to buy up $2.6 billion MBS across five FedTrade operations (all closing at 11:45am ET) starting with tomorrow’s operation in which they will purchase up to $918 million UMBS30 2.5 percent ($417 million) and 3 percent ($501 million).

Today’s calendar is already underway with the Weekly MBA Mortgage Index. Mortgage applications last week increased 30 percent from one week earlier. Joel Kan, AVP of Economic and Industry Forecasting, sagely observed, “Refinances increased for both conventional and government loans, as lower rates provided a larger incentive for borrowers to act. It remains to be seen if this strong refinancing pace is sustainable, but even with the robust activity the last two weeks, the level is still below what occurred last fall.”

We’ve also received readings for December’s Producer Price Index (headline and core both +.1 percent, a non-event) and January Empire State Manufacturing (+1.3 to 4.8). In addition to a trio of Fed speakers, Philadelphia Fed President Harker, San Francisco’s Daly, and Dallas Fed President Kaplan, the January Fed Beige Book will be released in the afternoon. We begin today with Agency MBS prices better by a tick or two and the 10-year yielding 1.79 percent after closing yesterday yielding 1.82 percent.

(The arrival of China’s Vice Premier He in Washington over the weekend for the trade deal signing prompted Robbie C. to send over this play by play at the Phase One signing.)

Costello: Do you know the fellows’ names? The signers?

Abbott: Well, I should.

Costello: Well then who is speaking first?

Abbott: No, it’s He.

Costello: I mean the fellow’s name.

Abbott: He.

Costello: The guy up first.

Abbott: He.

Costello: The first speaker.

Abbott: He is.

Costello: The guy going first…

Abbott: He is up first!

Costello: I’m asking YOU who’s up first.

Abbott: That’s the man’s name.

Costello: That’s who’s name?

Abbott: He.

Costello: Him? Well go ahead and tell me.

Abbott: That’s it.

Costello: That’s who?

Abbott: No, it’s He.

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, “Home Ownership is Still Part of the American Dream” If you have the 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 hundreds of 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 2020 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.)

Jan. 14: Marketing, referral, pricing, sales tools; FHA, VA, Ginnie changes around the biz

There are some clever people out there creating abbreviations and acronyms. Megxit? Yes: Prince Harry and Meghan Markle exiting from certain royal duties. Remember when talking about the economic woes of PIGS (Portugal, Italy, Greece, and Spain) was all the rage? Here’s a new acronym to tuck away that has nothing to do with mortgages: FANG. Analysts are wondering if the FANG stocks (Facebook, Amazon, Netflix and Google parent Alphabet) will continue to lead the stock market in 2020. And there are some clever people, and computers, analyzing demographics. Every LO should know that owning a median-priced, three-bedroom home is more affordable than renting a three-bedroom property in 455, or 53%, of the 855 U.S. counties.

Lender services and products

Imagine receiving your borrower’s entire underwriting package within minutes (instead of days) of a submitted loan application. With Maxwell’s digital mortgage platform, lenders are getting documents 73% faster with their FileFetch technology which connects to over 1,300 financial institutions for increased efficiency and a better borrower experience. This, matched with Maxwell’s already impressive, customizable loan app, borrower portal, task list, and integrations, drive real performance. Loans in Maxwell close more than 45% faster than the national average. To learn more and start using Maxwell today, visit www.himaxwell.com and request a demo today.

Volly awarded A.I.’s Most Innovative Marketing Automation Platform for Banking in 2020. “We are honored to be recognized with yet another distinguished award of the Volly technology” says Jerry Halbrook, CEO of Volly. “While the Volly Marketing Automation platform is only a single component of the available Volly fully integrated suite of technology products, we feel privileged to receive so great a distinction for the results we deliver to our clients every day.” Volly is the mortgage and banking industries most innovative component-based platform that seamlessly integrates marketing and customer engagement strategies with robust lending technologies for Marketing Automation, CRM, Point of Sale, portfolio retention and marketing, and is renowned for delivering exceptionally high lead conversion rates as well as providing fully customized customer journeys to personalize the customer experience and dramatically increase ROI. Click here to learn more about the Volly and schedule a demo today.

Single-family Rental or vacation rental? Visio Lending is the nation’s leader in Non-QM loans for buy and hold SFR rentals. A proven lender with over 6,000 closed loans. With direct access to Wall Street, having just completed our fifth securitization, we offer the most attractive terms and the fastest, simplest and most dependable process in the country. Check us out today and learn why thousands of satisfied customers and brokers choose Visio for all of their SFR rental needs.

Total Expert, the leading marketing and customer engagement technology platform for banks, lenders, and financial services, today announced a dramatic improvement in lead-to-application conversion rates for early adopters of a new feature designed to bridge the gap between marketing and sales teams and become more productive. The new sales enablement feature, “Focused View,” automatically identifies and surfaces the highest value opportunities to customer-facing advisors; allowing them to spend less time configuring their CRM and more time building relationships with prospects and customers. Learn more about Focused View and how it can change the game for your sales team.

Recently, Seroka Brand Development, PR specialists in the mortgage industry, shared information with a group of mortgage b2b companies about emerging trends in public relations. Amy Hansen, Seroka’s VP of Public Relations, revealed a number of ways her staff uses technology to develop creative story ideas that resonate with target audiences to build awareness and new business opportunities for its clients. Hansen stated, “Integrating PR activities with social and digital channels is critical combined with creating thought leadership content that makes readers want to learn more about your company and how you could become a resource for them.” She further pointed out that technology will continue to drive PR forward to create more efficiency and effectiveness in targeting and producing results. Want to learn more? Email Amy to discuss PR trends with any of our readers. Be sure to ask her about Seroka’s exclusive new Marketing Automation OptimizerSM service or visit Seroka Marketing Automation Optimizer.

Join National Mortgage Professional Magazine and Darin Brooks, Regional Director of Sales with Podium on Thursday, January 16 at 1:00 PM Eastern/10:00 AM Pacific, to learn “How to Win Clients and Influence Word-of-Mouth” Any mortgage broker knows instinctively that they live and die by word-of-mouth. A recent study found that a staggering 90 percent of purchases are influenced by word-of-mouth. But how can you get people to talk spontaneously about your mortgage brokerage like this? The answer is surprisingly simple, yet profound: be remarkable. Come join this webinar and learn how to give your clients a remarkable experience, how to kickstart a word-of-mouth engine for your firm, and Simple steps and takeaways to take “give [your clients] somethin’ to talk about.” Click here to register.   

What will it take to be successful in 2020? XINNIX is hosting an event next week that will help you answer that question to help you finetune your 2020 plan. XINNIX CEO and Founder Casey Cunningham and mortgage industry thought leader Nicole Yung, Senior Partner at STRATMOR Group will tackle the subject in a live webinar next Wednesday, January 22 at NOON ETRegister today to hear these two industry leaders discuss what we need to learn from 2019 to make 2020 great, the role that technology will play in next year’s success, what to do to stay productive WHEN (not if) the market turns and MORE. Register now. Seating is limited.

With the ReadyPrice Mortgage.Exchange Non-Delegated Correspondents can deliver the product flexibility of mortgage broker while maintaining the independence and control of the mortgage banker. It’s the first and only platform designed specifically for NDC lenders equipped with all the tools to complete essential mortgage banking functions on a single platform. Whether you’re a veteran in the Non-Del space or just starting out, Mortgage.Exchange offers you the independence, control, compliance, & optionality with the simplicity of a success-based pricing structure. Getting started is easy! Schedule a demo today to learn more.

SimpleNexus retains over 99% of clients year after year. When asked how they do it, they say the key to their success is putting client profitability first. As one lender tells it, by speeding up the loan process, SimpleNexus helps lenders win more business from referral partners. SimpleNexus recently enabled the lender to complete a loan transaction in 4 days and then wait out the 10-day legal requirements to close compared to a standard 21- or 30-day close. The Realtor for the transaction, who normally worked with another lender, was beyond impressed. “We won that Realtor,” said the lender.  “She calls us first every time now.” Request a demo here. If you’re interested in achieving similar results, SimpleNexus would love to see you at its second annual SimpleNexus User Group (SNUG), which convenes February 9-12 at the Snowbird Ski Resort just outside Salt Lake City (current snow depth: 106”).

FHA, VA, and Ginnie changes

FHA has implemented its Defect Taxonomy Version 2, effective for loan reviews beginning Wednesday, January 1, 2020. The new version includes various updates to the Defect Taxonomy originally implemented through the Loan Review System (LRS) in 2017. The posting of Defect Taxonomy Version 2 on the Loan Review System webpage is one of several important milestone achievements in FHA’s efforts to provide greater clarity and consistency for lenders. Additionally, recent changes to LRS now allow lenders to submit optional responses to Tier 3 and 4 deficient findings, as well as Tier 1 and 2 findings that FHA has mitigated or remediated. FHA’s Defect Taxonomy Version 2 and an updated LRS User Manual can be accessed on the Loan Review System webpage.

Ginnie Mae has added “MyGinnieMae roll-out continues with January 14 webcast for Users”.

VA lenders know that the “Blue Water Act“, signed into law in 2019 and effective starting in January of 2020, created relief for veterans with medical conditions presumed to have been caused by Agent Orange or “herbicide exposure” during service in Vietnam. The Act makes significant changes to the VA home loan program. Some are alterations to help pay the measures required by the act, others are procedural changes, while still others are fundamental alterations to the basic structure of VA loans. The changes include: No upper loan limit on VA mortgages as of 1 January 2020*. An increase in the VA Loan Funding Fee for all non-exempt borrowers. Purple Heart recipients are now exempt from paying the VA loan funding fee the same as those who receive or are entitled to receive VA compensation.

FHA and VA Loan Limit Increase for 2020 is addressed by PennyMac Correspondent in Announcement 19-69

Effective January 15, 2020 Minimum Credit Score for Land Home Financial Services’ FHA Within Reach TM Program will be 640*. Contact your Account Executive and learn about its NEW Down Payment Assistance Programs allowing up to a 6% FHA Loans.

Click here to view Lakeview Correspondent announcement for updates to Fannie Mae, Freddie Mac and VA guidelines and an important bailee letter reminder for the Lakeview No MI With Community Second program.

Lakeview Wholesale announcement W2020-01 announces updates to FHLMC and VA.

PRMG’s Product Profile Update 20-01 includes information on the addition of a link to access TCF Taxpayer Consent Form and updated 2020 max loan limits on CHFA FHA and Conventional Products.

Veterans United published its 2020 funding fee calculator, making “life a lot easier for service members that are wanting to calculate the new funding fee that went into effect January 1, 2020. The Blue Water Navy Vietnam Veterans Act of 2019 makes several key changes to the VA Funding Fee, some temporary and others permanent. The VA Funding Fee jumped from 2.15% to 2.30 percent for first use and from 3.30 to 3.60 percent for subsequent use, followed by a return to the new equalized rates for almost eight years.”

Plaza has revised its Department of Veterans Affairs (VA) program guidelines to incorporate the Blue Water Navy Vietnam Veterans Act of 2019, which includes changes that are effective for VA loans closed on or after January 1, 2020. Plaza’s updated guidelines will be effective on January 1, 2020. For more information, refer to Plaza’s January 1 effective VA program guidelines.

Don’t forget that Plaza’s FHA Limited 203(k) program now allows for increased renovation amounts in Qualified Opportunity Zones (QOZs). Refer to Plaza’s updated FHA 203(k) program guidelines and FHA Mortgagee Letter 2019-18 for more information.

Land Home Financial Services, Inc is now offering FHA Within Reach™ 2.0 Down Payment Assistance Program (DAP). This product is a competitively priced government loan program that does not require a borrower minimum down payment. Exclusively offered by Land Home Financial Services, Inc., Within Reach™ 2.0 provides a choice of a 3%, 4% 5% or 6% Down Payment Assistance. Manual Underwriting is allowed. Must meet FHA Manual Underwriting Requirements along with Land Home Financial Services, Inc guidelines.

Did you know that the FHA’s recent announcement about single unit condo approvals also applies to reverse mortgages? Now, even if your borrower’s condominium is not in an FHA-approved project they may still qualify for FHA-backed financing, like a HECM. Additionally, the 2020 lending limit for federally backed reverse mortgages has been increased to $765,600 in all US counties. If you have a borrower looking for a HECM for their condominium or want to learn more about the new reverse lending limits, Contact the Plaza Home Mortgage reverse mortgage division.

Capital markets

AmeriHome requires that when submitting bid tapes, Sellers identify all Fannie Mae and Freddie Mac loans utilizing an appraisal waiver. Effective with new Bulk Trade and Bulk Assignment of Trade bid tapes submitted on and after Wednesday, January 15, loans utilizing an appraisal waiver (e.g. Fannie Mae Appraisal Waiver, or Freddie Mac Automated Collateral Evaluation (ACE)) that are not identified as such on the bid tape may be subject to a 25 basis points loan price adjustment.

Looking at bond prices, which create interest rates, U.S. Treasuries began the week pulling back slightly +2 bps across the curve after the weekend did not see a further escalation in tension between the U.S. and Iran. Aiding sentiment was the White House reporting it will end the designation of China as a currency manipulator, removing an obstacle to an overall deal that will partially end the trade war begun by President Trump. The Phase One trade deal is expected to be signed tomorrow, as China’s Vice Premier He arrived in Washington over the weekend.

 

Today’s calendar is already underway with the NFIB Small Business Activity Index for December (dropping, but the takeaway is that the 4th quarter matched the 3rd quarter), the December CPI report (+.2%, core +.1%), and real average weekly earnings (-.1% after being +.1% in November). Out later in the day will be Redbook same store sales for the week ending Jan 11. We also have some Fed speak, with NY Fed President Williams and Kansas City’s George both opining on the podium. We begin today with Agency MBS prices better a tick or two and the 10-year sitting around 1.84 percent (1.85 close yesterday) after the tame inflation numbers.

When I worked in the post office, a lady barged in and started complaining that she’d got home to find a note from the postman – he’d tried to deliver a package but nobody was in.

“My husband was home all day!” she fumed.

After I gave her the package, she said, “Oh, I’m so excited – it’s my husband’s new hearing aid!”

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, “Politics do Indeed Impact Interest Rates and Borrowers” If you have the 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 hundreds of 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 2020 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.)

Jan. 13: AE jobs; compliance, LO, BI tools; deep dive into W-2 vs. 1099 and the SAFE Act

Lenders, and all financial sector firms, continue to ruminate on the privacy law in California that now gives people the right to access and delete personal data companies have collected. LOs are ready and willing to delete all client information from their database, right? The law applies to any firm that has clients in the state. SIFMA provided comments on the policy, and other groups have plenty of warnings for financial firms. Pay attention, lest your state enact something similar. Susan Milazzo, the CEO of the California MBA, wrote, “The CCPA gives consumers the right to ask businesses, that fit certain criteria, to provide them all of the personal information that business has on them and/or ask the business to delete that information.”

Jobs & transitions

Quontic is expanding its wholesale division throughout the country and is currently seeking seasoned professionals with experience in the Portfolio /Non-QM space! If you are looking for an exciting fast-growing opportunity not limited to an oversaturated territory, Quontic may be your answer. Quontic is a federally chartered bank specializing in portfolio lending products, offering an Owner Occupied No Income No Ratio for one! If you would like to learn more, please reach out to Lee Ann Casanova, VP of TPO Sales at Quontic Bank.

Solidifi Title & Closing, LLC announced that Suzanne Singer joined as SVP, Capital Markets Sales, responsible for supporting due diligence firms, asset managers, GSEs, servicers, and other institutional clients. She will report to Bob Smith, President.

And SimpleNexus has announced it has filled roles in five senior leadership positions: Chuck Staib (Chief Sales Officer), John Aslanian (SVP of Sales), Anna Ratanawan (VP of People Operations), Pam Faulkner (Director, Mortgage Solutions), and Sol Klein (Director of Implementation).

Lender products and services

 

Ready to learn about and market new VA mortgage opportunities in 2020? The recently implemented Blue Water Navy Vietnam Veterans Act of 2019 has provided new mortgage benefits for jumbo borrowers, active duty Purple Heart recipients and more. As a leading VA lender, Freedom Mortgage Wholesale’s No Down Payment VA Jumbo program enables eligible jumbo borrowers to exceed published FHFA county loan limits without a down payment requirement! No jumbo overlays or loan limits! Sign up for 2020 VA Mortgage Marketing training on 1/15 and 1/17.

 

Everyone wants to know what to do post-close. Client relationships need to be maintained but drip campaigns end up in junk mail. HomeBinder gives originators a way to ensure they aren’t forgotten. Show borrowers how to care for their greatest asset. Give them a reason to remember you with a complete home management suite of tools. The relationship doesn’t end with a closed loan for you or Agents you work with. Don’t get forgotten by your mutual clients. Co-brand and share the wealth! Call 800-377-6915 to learn more or visit HomeBinder to learn more. Integrations with both Encompass and Calyx Point available. If you are interested in a 3-minute demo video, click here!

 

Tired of conflicting systems with no clear reporting? Tired of manual data export and import processes? 2020 is the year to assess and plan a clear, strategic road map to streamlined processes, efficient systems and powerful business intelligence. Each department in your company relies on processes and software systems for everyday productivity. The Richey May Technology Solutions team works with your internal stakeholders to build a plan to augment, re-implement, or replace your current systems and implement the best BI platform for mortgage companies, RM Analyze. Learn More and get started today.

Conquering Shifts is a must read. Authors Cindy Douglas and Kathleen Heck interviewed some of the mortgage industries most prolific originators. This is their recommendations for 2020. “I would definitely have an Instagram page to post daily little ditties – rates to regulations to open house information. Be prepared for uncertainty. If you’re not using technology – get familiar with it and use it.” Jeff Lake Guaranteed Rate. “My advice to new LOs, shadow as many mentors as permitted. After each visit, ask yourself ‘why would I do (or not do) business with this person?’ Take these nuggets and develop your own style. Learning from those who’s style you do not particularly like is equally important. Never stop observing and learning.” Mark Raskin PrimeLending. For loan officers and senior management looking to boost production take advantage of the discount before it ends 01/24/2020. Purchase your copies today.

Earlier this month, I characterized the California Consumer Privacy Act (CCPA) as “state news.” A few readers wrote in to point out that CCPA affects businesses with customers in California, not just those based here in the Golden State. Fortunately, mortgage tech providers have their eyes on the ball. Top of Mind announced its Surefire CRM is ready to make CCPA compliance easy for mortgage lenders. The platform’s latest updates give lenders the flexibility to provide consumer marketing information when required and to delete it upon request. Says CEO Bill Hayes, “We have upped our already formidable compliance game to ensure Top of Mind clients are CCPA-ready. Lenders can feel confident that the Surefire support team will handle CCPA requests with diligence and care.” The company’s CCPA Guide outlines key processes affected by CCPA and how to submit a ticket.

W-2 versus 1099

We’ve just wrapped up the calendar year, and by most accounts decent originators had a good year in 2019. And now… what about paying taxes? Lenders pay their mortgage loan originators (MLOs, or LOs) W-2 or 1099: is one or the other “against the law”? Is a payroll method a recruiting tactic? What happens when DRE Brokers hire independent contractor mortgage loan originators? Do state laws differ from federal laws, and do those differ from Agency rules (HUD, for example), and where does the SAFE Act fit in? Let me say this up front: an informal, non-scientific poll conducted by yours truly shows that W-2 dominates.

Of course MLOs should remember that their compensation should not result in the steering of borrowers toward one program or another. This is a very tangled hypothetical—especially with people still sorting through California’s AB5 fallout. Many do not know the difference legally between an MLO, a mortgage brokerage, and a net branch. An MLO is not a mortgage broker.

Those in the business should know that the issue of W-2 vs. 1099 depends on the facts and circumstances of the job, not what license you hold. An MLO license from DBO, or a real estate license with an MLO endorsement from DRE, it still depends on the job. Recall back some years when the industry looked to the CFPB for payroll guidance. The CFPB MLO comp rule squelched 1099, and focused on W-2. (And state laws do not supersede a Federal MLO Comp law.)

Some believe that the CFPB rule writers were anti small business and this was exemplified in the MLO comp rule. They point to lenders still running some form of net branch operation, which most regulators agree is illegal, and the individual branches are being 1099’d. Why? Because they are free to charge 4+ points and regulators don’t want to lose companies? Possibly.

The W2 vs. 1099 question involves CFPB and HUD rules regarding loan officers, state and federal labor laws, definitions of broker versus banker versus loan officer, SAFE Act/state licensing laws, etc. As I understand it, the reason Realtors can still be paid on a 1099 is because their strong support in numbers when they went to lobby for an exception. In California there is a new law defining independent contractors that applies to everyone in the state, including mortgage brokers (realtors have a special exemption). Employees (and employers) are all subject to federal and state wage hour rules. The CFPB refers to Mortgagee Letter 2006-30 and affirms it will follow HUD’s rule, which is to say that Mortgage Brokers and Mortgage lenders must pay their loan officers W-2 and that 1099 is illegal under HUD/CFPB Guidelines.

From California Melissa Richards, CMB, a Partner of Financial Services Regulation & Enforcement with Mayer Brown, has thoughts on the topic of DRE Brokers hiring independent contractor mortgage loan originators, taken largely from Section I of the draft letter she prepared for the California MBA to the California Department of Real Estate. Below is Ms. Richards’s notes.

The federal SAFE Act and its implementing Regulation H (12 CFR Part 1008) requires states to impose state licensing on individual loan officers referred to as “mortgage loan originators” or “MLOs.” [12 CFR §1008.103.] The SAFE Act further directs states to require individual loan officers to meet minimum eligibility criteria for MLO licensure that includes a requirement for the loan officer to be employed by a single sponsoring employer that holds state mortgage lender and/or mortgage broker licensing. Alternatively, if the individual is self-employed, they must hold both MLO licensure and state mortgage lender/broker licensure. [12 CFR §1008.103, supplemented by NMLS Resource Center including “Creating Relationships and Sponsorships” resource page.] In fact, the only reference made in Regulation H to allowed independent contractors is in the context of loan underwriters and loan processors in Section 1008.103(d).] Of note, there is no distinction in MLO license eligibility criteria presented in the federal SAFE Act and its Regulation H between MLOs working for mortgage lenders vs mortgage brokers.  

(Some will say that) the SAFE Act, and its regulations, does not give definition to the term “employee.” That statement is taken directly from CFPB’s SAFE Act 2012 Examination Manual in reference to the other SAFE Act Regulation G for financial institution MLO registrants. The SAFE Act’s Regulation H for state licensed MLO’s does give definition to the term “employee:” an individual (i) whose manner and means of performance of work are subject to the right of control of, or are controlled by, a person, and (ii) whose compensation for Federal income tax purposes is reported or required to be reported, on a W-2 form issued by the controlling person. [12 CFR §1008.23.]

Applying this SAFE Act defining rule to DRE licensing of MLOs means that licensed real estate brokers and salespersons having MLO endorsement must be W-2 employed by a sponsoring DRE licensed real estate broker engaging in residential mortgage business, or be self-employed and operating under the authority of a DRE real estate broker license to conduct residential mortgage business. Due to the SAFE Act’s single sponsor restriction, the individual cannot serve in both roles simultaneously and conduct residential mortgage business in California.

I further note that while the SAFE Act’s Regulation H does grant limited exemption from state MLO licensing for individuals who perform real estate brokerage activities, that exemption does not extend to CA DRE licensed real estate brokers and their loan officers engaging in residential mortgage business. Regulation H’s exemption from state licensing is removed once “the individual is compensated directly or indirectly by a lender, mortgage broker, or other loan originator or by an agent of such lender, mortgage broker or other loan originator.” [12 CFR §1008.103(e)(1).]

Thank you, Melissa!

The Knowledge Coop’s President/Founder Ken Perry opined, “This 1099 question continues to persist. I am not an attorney but I can tell you there is no way in the world I would ever pay, or be paid, 1099 as a loan originator. Go check out the wage and hour laws in addition to HUD’s requirements, federal and state licensing laws. I cannot find one area that allows for this. It is true that the Realtor lobby carved out a sweet exemption for them but there isn’t one for mortgage originators. It just isn’t safe.”

Running the risk of potential conflict with Federal rules, or agreeing with those rules, states also address the issue. For example, in Georgia, “The only way to be paid on a 1099 is for a licensed company to get paid on a 1099 in the company’s name, or an individual licensed as a broker or lender to get paid on a 1099 in the individual’s name. All other work as an “independent contractor” is prohibited from being compensated via 1099.”

The FDIC tells us that “Employee” is not defined in the SAFE Act or SAFE Act regulation. However, the original regulation’s preamble explains that the meaning of “employee” under the SAFE Act regulation is consistent with the common law right-to-control test. For example, the results of this test generally determine whether an institution files an Internal Revenue Service Form W-2 or Form 1099 for an individual.

Every lender that cares, and every one should, should consult a lawyer on anything centering on independent contractor issues (especially in California where the law has recently changed). But as noted above, it would seem the vast majority of lenders pay using a W-2, and if any don’t, well, they should be aware of the risks at the federal and state levels of that policy.

Capital markets

U.S. Treasuries ended last week on rallying in slight curve-flattening fashion after an underwhelming release of the Employment Situation report for December. It wasn’t a terrible report, but nonfarm payrolls missed expectations, as did average hourly earnings growth.

This week includes a relatively heavy Fed speaker circuit ahead of next week’s blackout period with the FOMC meeting on January 28-29. Seven Fed presidents in addition to Board members Quarles and Bowman are currently scheduled to speak, including Boston Fed President Rosengren and Atlanta Fed President Bostic today. In addition, kicking off the weekly calendar later this morning is the Employment Trends Index for December.

That will be the only economic news of note before things pick up tomorrow with the December NFIB Small Business Optimism Index, December CPI, and December Core CPI. Wednesday brings PPI figures, January Empire State Manufacturing, and the January Fed Beige Book before Thursday’s heavy calendar includes December Retail Sales, January Philadelphia Fed Index, December import/export prices, November Business Inventories, and January NAHB Housing Market Index. The week closes with December Housing Starts and Building Permits, December Industrial Production and Capacity Utilization, and Preliminary January Michigan Consumer Sentiment. With regards to MBS, respective Classes B and C 48-hour notifications are tomorrow and Thursday while the Desk will release the four-week MBS reinvestment estimate along with a new two-week FedTrade schedule tomorrow. We begin today with Agency MBS prices worse nearly .125 but the 10-year unchanged yielding 1.83 percent.

Today, Monday, we start Diarrhea Awareness Week.

Runs until Friday.

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, “Politics do Indeed Impact Interest Rates and Borrowers” If you have the 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 hundreds of 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 2020 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.)

Jan. 11: The importance of training in culture & retention; how a merger or acquisition works

What seems to be on the minds of readers around the nation? M&A and retaining/training personnel are among the topics. Who’s saying what?

In a previous commentary, STRATMOR’s Jeff Babcock discussed the strategic benefits of two Independents merging into a single entity.  Below is the second installment that describes the challenges of making such a merger work.

“From STRATMOR’s perspective, the likely merger parties are both successful mortgage banks with similar track records of solid financial performance, growing production volume, proven management teams and excellent counterparty reputations. There are at least dozens, if not more, of independent mortgage banks that would meet the above performance criteria to qualify as prospective merger candidates. Conversely, we do not believe that it would make sense for two weak companies to combine to solve their respective operating or management deficiencies. In such cases, bigger is not likely to be better.

“So why have mergers not been a factor in the mortgage industry M&A space? Perhaps one reason is that mortgage banking executives have simply not considered a merger as a viable strategic option. But the more compelling answer is an absolute requirement to structure the combined organization for the greater good, thereby eliminating ego-driven and self-serving considerations… e.g., no sacred cows. And the entrepreneurial nature of the typical mortgage company ownership makes this a monumental challenge.

“STRATMOR’s experience confirms that mortgage company CEO/owners are highly independent operators with a risk-taking mentality and strongly held personal viewpoints about the viability of their own business model. Their management styles have evolved from hands-on involvement in all aspects of the mortgage origination value chain… more trial and error than formal ‘business school’ education. The result is a level of self-confidence and pride of ownership which can make collaboration with peers more difficult and compromise even more elusive.

“The feasibility analysis of a merger begins with a deep detailed assessment of the cultural compatibility between the two potential merging organizations. We are not suggesting that the cultures must be the same, but they have to be driven off compatible corporate values and management styles. The obvious risk of incompatible cultures is Loan Officer defections and the departure of key fulfillment staff.

“For a merger to be truly successful, there can be only one leader, one capital markets function, one Loan Origination System and typically, only one company name. Merging companies should resist the temptation to maintain two brands, thereby mitigating the marketing efficiencies of a single more powerful player. Of course, one lender must be merged into the other to bring across the state licensing and Federal agency approvals. A holding company with two branded origination platforms and two back offices is a possible compromise, but the inefficiencies would dilute the economic benefits.

“Even though the go-forward organization will be a much more powerful and competitive player, the merger process means that there will be perceived winners and losers across both organizations. So, the challenges of reconciling such ego-related issues probably explain why actual mergers are a rare occurrence.

“For this commentary, let’s assume that the ownership of two lenders are motivated and committed to working through the above organizational issues because the resulting strategic opportunity is so compelling. What are the fundamental tasks which must be undertaken to negotiate such a merger?

“The first step is to prepare parallel company valuations to determine the Enterprise Value of each lender. To assure objectivity, this task should be delegated to an independent experienced analyst with deep mortgage banking industry knowledge and M&A valuation skills. This valuation exercise should include a comparative assessment of each lender’s basic business model including production organization, product mix trends, quality and loyalty of the field sales force, staff productivity metrics, management effectiveness, financial performance, financial strength and industry reputation. The relative production franchise premium — the economic value over and above Balance Sheet Net Worth — will be key to determining the pro-rata ownership share of the merged mortgage bank. As a by-product, the valuation assessment will provide valuable insights on the functional integration discussed in the next paragraph.

“The second step is the most subjective and potentially most contentious: crafting the new organization chart with the selected managers assigned to the key leadership positions. If the two CEOs have not already identified the ‘anointed leader,’ then that decision must be made before proceeding with selecting the go-forward management team. While this assessment is best undertaken by the two owner/CEOs, the retention of an independent third party capable of rendering objective recommendations, may be the most expeditious process to help the owners make informed decisions regarding the key functional heads. Elimination of redundant functions is critical step in achieving the scale economies through consolidation cost savings, but it can be the most painful process in that some good and loyal people will lose their jobs.

“One of the possible complicating factors in creating the new organization might be geography wherein certain key managers would be required to relocate to the Home Office of the surviving entity. Although some functions can be managed at remote locations from the Headquarters, there are certain executive positions which should be located at the Home Office. For example, the Senior Production Executive, Chief Information Officer, Operations Manager and Head of Human Resources are examples of activities which require frequent interactions up and down the organization chart. Capital Markets and Compliance could be handled remotely at least for an interim period.

“The final step will largely determine the outcome of a contemplated merger: collaboration between both organizations to develop the transition/assimilation plan to integrate the two organizations into a single powerhouse competitor which has successfully captured the best of both companies. The attitude and spirit by which this integration is executed will establish the go-forward corporate culture.

“In many respects, a merger entails many of the same difficult personnel and organizational decisions as an acquisition. But for those owners who are not ready to sell their Company, a merger offers several attractive benefits and strategic positioning without giving up ownership.” Thank you, Jeff!

Easier & cheaper to retain versus bringing in someone new

In December Bob Masur wrote, “Why do so many people seem to think training is the best or (sometimes) the only solution to a performance problem? What about management’s responsibilities to set performance expectations, provide feedback, ensure needed tools and resources are available, and institute rewards and consequences?

“Training certainly has its place and value. It loses much value, however, if people don’t understand what’s expected of them, know how they’re performing against those expectations, have the tools and resources they need to do the job, and experience personal measures of success or failure. One man’s opinion that a number of factors influence performance even more than good training does.”

Jeff Babcock agreed on “management’s responsibilities to provide basic sales management: a missing commitment in most mortgage companies. (There is a) powerful strategic impact of effective sales management (‘effective’ being the operative word here) on raising Loan Officer productivity, but I’m sorry to report that only a few clients have made such a commitment.

“(If one has) a $1 billion mortgage company with an average loan balance of $230,000 and an average monthly sales productivity is 3.5 closed loans per originator, it will employ 104 loan originators. By increasing sales productivity by an average of one loan per month, production volume would increase by 29% to $1.29 billion. To accomplish the same volume increase by just adding originators, that lender would have to recruit 40 new Loan Officers (assuming the 35% average turnover) who close an average of 3.5 loans monthly during their first year at the company. While improving average sales productivity is not an easy initiative, recruiting and retaining 40 new Loan Officers is probably even harder.”

And Eric Levin, Head of Client Development and Co-Founder of Model Match, sent, “After nearly 20 years working with local, regional, and national leadership of mortgage companies of all shapes and sizes (small, mid, large, depository, non-depository, broker, etc.), I’ve learned from those on the street that our industry includes more companies that ‘wing it’ when it comes to their strategic growth than those who follow consistent, predictable, and evolving processes.

“We hear from companies all the time that say they are ready to invest in their growth, yet not only have no consistent messaging into who they are as an organization and how they create value for the loan officer and their referral partners, but don’t even have a clue how many empty desks they have across current cost centers. It takes work to dive into the numbers that relate to the success or failure of company and individual metrics but that work is way easier today than it was years ago with the development of technology solutions and available data. Our focus has been on supporting strategic growth with an emphasis on recruiting and retention (it’s part of the same formula/process) and although I have never personally written a loan, our team becomes experts by default as we get feedback from the street everyday relative to what is working and what isn’t operationally and otherwise.

“Jeff’s thoughts on sales management and LO productivity are spot on regarding the outcomes of increasing productivity but what is often missed is that this same ‘muscle’ directly relates to increased recruiting and RETENTION success. Our clients at Model Match, for the most part, have not only implemented sales management strategies to increase LO production but use similar strategies in their marketing, recruiting, on-boarding, acclimation, and retention processes as well…but they seem to be the outliers. The outcome(s) are not only increased LO volume but also DECREASED attrition.

“The companies that are the best at sales management processes are also typically the best at recruiting and retention in that they invest in the tools and time necessary to simply make it part of who they are. And to echo Bob Masur’s comments from the same newsletter, those processes have outcomes that include consequences. The difference is those consequences can exist as data points and metrics that make it easier to determine what needs to be improved upon…versus managing by emotion and feel.

“To tie together Jeff’s comments — like Crash said in Bull Durham, ‘You know what the difference between hitting .250 and .300 is? It’s 25 hits. Twenty-five hits in 500 at-bats is 50 points, OK? There’s six months in a season. That’s about 25 weeks. That means if you get just one extra flare a week, just one, a gork, a ground ball, a ground ball with eyes, you get a dying quail, just one more dying quail a week and you’re in Yankee Stadium.”

 

XINNIX’s Casey Cunningham wrote, “XINNIX just celebrated our 18th year anniversary and although our industry has changed and advanced in many ways, ‘old’ truths and less than ideal best practices remain with us. These ‘old’ truths are limiting lenders’ potential growth and profitability.

“Bob’s comments about management is 100% accurate. Leaders should set the vision and priorities for their organizations. With the majority of our industry’s sales managers also being tasked with personal production, it makes perfect sense that ‘training only,’ without continuous accountability, enablement, and rewards/consequences, becomes our default position. We believe the fusion of training, accountability and coaching, on a continuous basis, is the ideal solution managers must adopt to enhance sales performance and retention in our industry.

“The ‘hard skills’ essential to loan production excellence are quite different that the ‘soft skills’ essential to teaching, mentoring, coaching and equipping the multiple personality styles that make up our sales force. Unfortunately, our industry tasks the majority of our sales managers with personal production, training, recruiting, coaching and operations. Task saturation and lack of manager upskilling remains an ‘old truth’ our industry hasn’t adequately addressed. The lenders who create a true learning journey with measurable competencies will have recruits lined up. The professional development of your people has proven to be one of the greatest retention tools in the market!

 

“Jeff’s assessment is 100% accurate as well. We interact with hundreds of lenders every year, and we witness the undeniable evidence that recruiting and retention of sales talent is FAR more difficult, elusive and expensive, than elevating LO productivity by one unit per month. You are ‘preaching our religion,’ and the reason we exist. Increasing sales productivity by an average of one loan per month is a viable business objective, and we’ve helped countless companies and producers accomplish this very goal. When industry executives drive, ‘buy-in’ and prioritize the never-ending need for sales enablement, our ‘old school,’ expensive practice of recirculating mediocrity will be behind us. Imagine the future.”

A man was being tailgated by a stressed-out woman on a busy boulevard. Suddenly, the light turned yellow, just in front of him.

He did the right thing, stopping at the crosswalk, even though he could have beaten the red light by accelerating through the intersection.

The tailgating woman hit the roof, and the horn, screaming in frustration as she missed her chance to get through the intersection.

As she was still in mid-rant, she heard a tap on her window and looked up into the face of a very serious police officer. The officer ordered her to exit her car with her hands up. He took her to the police station where she was searched, fingerprinted, photographed, and placed in a holding cell.

After a couple of hours, a policeman approached the cell and opened the door. She was escorted back to the booking desk where the arresting officer was waiting with her personal effects.

He said, “I’m very sorry for this mistake. You see, I pulled up behind your car while you were blowing your horn, flipping off the guy in front of you, and cussing a blue streak at him. “I noticed the ‘Choose Life’ license plate holder, the ‘What Would Jesus Do’ bumper sticker, the ‘Follow Me to Sunday-School’ bumper sticker, and the chrome-plated Christian fish emblem on the trunk. Naturally, I assumed you had stolen the car.”

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, “Politics do Indeed Impact Interest Rates and Borrowers” If you have the 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 hundreds of 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 2020 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.)

 

Jan. 10: MLO jobs; LOS, pricing, VA products; Agency direction & future back in the news

Markets have taken the view that brief military conflicts have little long-term impact on economic trends. Gold, oil and the Japanese yen jumped after Iranian missiles hit US bases in Iraq, but capital left “safe haven” assets (like bonds) and returned to equities when it appeared the conflict would not escalate. It didn’t take long after the holidays for Freddie and Fannie to be in the news again. What may escalate, or at least continue with many opinions being thrown our way in 2020, is chatter about Freddie Mac and Fannie Mae. As a reminder, they are able to retain capital now, a step out of being in conservatorship. And now comes news that Federal Housing Finance Agency Director Mark Calabria has suggested F&F could operate under a consent decree, usually thought of regarding legal settlements. A consent decree would technically relieve the companies of government control, albeit with regulatory safeguards, while they raise capital and work toward full independence. More analysis below.

Employment

Gateway First Bank achieved record growth in 2019, enabling the company to significantly expand its products and services. Following the merger of Gateway Mortgage Group with a 100-year old bank, Gateway emerged as a leading financial institution that provides digital banking and mortgage services for consumers and commercial customers. To support the company’s new developments, Gateway has created several new executive positions to expand the senior leadership team. New to the team are Peter Moenickheim (Chief Risk Officer), Steve Staid (Chief Servicing Officer), Tony Taveekanjana (EVP/Chief Production Officer), Deirdre Cherry (Chief Credit Officer), Charles Emley (SVP, Operations), Greg Hargis (SVP, Correspondent Banking), Greg Wagner (Retail Banking Executive), Joell Maddox (VP, Treasury Management Services), Nick Gulick (SVP, Marketing), and Melissa Bogle (VP, Corporate Communications). Join the Gateway team! Contact Sherry Gray or visit www.GatewayFirst.com.

Caliber Home Loans, Inc., the nation’s third largest nonbank mortgage lender and one of the fastest growing mortgage companies in the U.S., is pleased to announce David Schroeder as our Executive Vice President, Third Party Originations. He’ll focus on improving Caliber’s use of data and analytics to advance TPO production capabilities while partnering with Operations to enhance fulfilment. David joins us from ServiceMac where he was EVP of Marketing and Retention to create the foundation of their overall brand communication and retention capabilities. Prior to that he led TPO at Quicken Loans. Our CEO Sanjiv Das said, ‘We continue to grow aggressively in the Correspondent and Wholesale channels where we are among the top 10 and top 3 lenders, respectively. David’s experience and wealth of knowledge will be invaluable as we focus on our commitment to speed, the best price and best execution through leading edge technology and our delivery model’.”

It was a record-breaking year in so many respects for, Thrive Mortgage. In 2019, the top originators at Thrive saw a YoY increase of greater than 42% in their production volume. More impressive still is the fact that many within the next tier of production teams saw an even greater percentage increase in their total business. “When you combine the best coaching, the best support, and the best tech… and put it in the hands of highly motivated individuals, great things will happen,” stated Randell Gillespie, National Sales Director at Thrive. “Our people are our biggest differentiator. They are the secret to our success; therefore, it makes the most sense for us to strategically invest in their growth,” added Michael Jones, Thrive Mortgage’s Chief Financial Officer. “I’m extremely excited about our opportunities to continue expanding in 2020.” How will you Thrive in 2020? Visit join.thrivemortgage.com to find out more.

Lender products & services

Ready to learn about and market new VA mortgage opportunities in 2020? The recently implemented Blue Water Navy Vietnam Veterans Act of 2019 has provided new mortgage benefits for jumbo borrowers, active duty Purple Heart recipients and more.   As a leading VA lender, Freedom Mortgage Wholesale’s No Down Payment VA Jumbo program enables eligible jumbo borrowers to exceed published FHFA county loan limits without a down payment requirement! No jumbo overlays or loan limits! Sign up for 2020 VA Mortgage Marketing training on 1/15 and 1/17.

Check out Data Facts’ new eBook, How to Tackle 2020: A Loan Officer’s Plan. In this eBook, we’ll help you set better goals, increase your productivity, and maximize your closings in 2020. It’s a new year and a new decade. Plan it right. Download the free eBook hereVerify your borrowers’ financial information with Data Facts VOA. Data Facts removes the hassle for them to download, copy, and deliver financial information, so you get a clear picture of the borrower, faster. Talk with a live person and take advantage of our personalized support. Our 100% US based customer support team can help you close more loans, faster and easier.

Have you heard? ReadyPrice has launched its Mortgage.Exchange platform designed specifically for Non-Dels, giving them far more transparency and control than ever before. It’s the cloud-based ecosystem where NDC lenders can Rate-Shop, Lock, Disclose, Underwrite, Doc and Fund with all the top investors and warehouse lenders. The platform is rounded out with the MX Community, a network of top document prep & fulfillment providers integrated on the platform, eager to serve Non-Dels and assist with some of the more unique challenges that they face. Bottom line: Mortgage.Exchange offers NDC’s true independence, control, compliance & optionality with no set-up, training or seat fees ever. It’s also the easiest and fastest way for brokers to start banking. Schedule a demo today to learn more.

New from Calyx! Path Express is now available for lenders looking for a cloud-based, enterprise-level LOS with a quick and efficient implementation process. Path Express is pre-configured with standard settings based on industry best practices. Path Express is a sister product to the popular Calyx LOS – Path Enterprise, the multi-channel, fully configurable cloud-based LOS designed from the ground up for financial institutions and Mortgage Bankers. Path is designed to truly simplify the loan process and provide the flexibility, visibility and controls lenders need to monitor and run their business their way. With guaranteed 99.95% consistent uptimes, Agile Compliance™ and the fastest implementation times in the industry, Path is dedicated to ensuring lenders’ long-term success. Contact Michele Warren to schedule a meeting and learn more!

Freddie, Fannie, conventional conforming news around the biz

In an election year, with impeachment proceedings being in whatever condition the impeachment proceedings are in, good luck having any substantive changes with F&F being driven from the halls of Congress. So the Agencies, companies, and regulators are taking things into their own hands, as they’ve done for quite some time.

How do the Agencies’ rates fit in to industry volume? According to Informa Financial Intelligence December 2019 Mortgage Originations Data, rate-lock volume has increased 44% YoY and fallen 18% MoM across all channels, while funded volume has increased 21% YoY and remained flat MoM. In the Retail channel, lock volume has increased 76% YoY and fallen 18% MoM, while funded volume has increased 83% YoY and remained flat MoM. Compared to 2018, YTD Purchase lock volume is up 5% and funded volume is flat, while YTD Refinance (R/T & C/O) lock volume is up 136% and funded volume is up 112% YoY. Average 30-year Conforming FRM funded loan note rates have fallen 53bps YTD from 2018, with refinance rates lower by 60bps and purchase rates lower by 50bps. Informa sources a statistically significant data set directly from lenders to produce these benchmark figures.

We are about a year away from the “QM patch” going away. I’ve heard, surprisingly, that many MLOs don’t know that losing the agency DTI exemptions is set for a year from now. Will all loans with a 44% DTI become non-QM? That would be a staggering move, although non-QM loans don’t see a gfee hit. Many conforming loans are approved as QM with DTIs above 43%. The industry is working with regulators on alternatives, like incorporating reserves, instead of using a line drawn in the sand at a 43% DTI.

People wonder, every once in a while, does Fannie Mae require its Seller/Servicers to perform an independent audit of the Post-Closing QC Process? Yes. In an August 7, 2019 announcement, FNMA added further guidance to its Lender Post-Closing QC Review requirements (Chapter D1-3-06 of the Selling Guide) by specifically calling for an independent audit of the Lender’s QC processes and procedures. The lender must have an independent audit process to ensure the following: its post-closing QC process and procedures are followed by the QC staff; assessments and conclusions are recorded and consistently applied; and findings must be accurately recorded and consistent with the defects noted in the lender’s system of record. Results of the QC audit must be distributed to senior management and must include an affirmative statement that no influence from other business units or bias in the QC conclusions was apparent. Management must distribute the results to the appropriate areas within the organization and an action plan must be established for remediation or changes to policies or processes, if appropriate. The lender must provide a copy of the QC audits and the audit of the QC process to Fannie Mae upon request. Requirements related to QC independence must be incorporated into the lender’s QC plan and implemented by January 1, 2020.

Freddie Mac also issued a Quality Control Best Practices manual chockfull of useful information.

MWF updated Section 6.4.4 of its Conventional Guidelines regarding Co-Borrowers without Credit Scores. Updates include AUS approvals only and no manual underwriting allowed.

Refer to its Underwriting Guidelines for complete details.

Caliber Home Loans issued a reminder that pursuant to FNMA HomeStyle guidelines, an appropriate Renovation Loan Rider should be attached to the security instrument and a Renovation Loan Agreement is required. In addition, in compliance with the Taxpayer First Act, Caliber is requiring a consent form to be included in the file for all loans delivered for purchased by Caliber. The Mortgage Industry Standards Maintenance Organization (MISMO®) drafted a sample Taxpayer Consent Form designed to allow lenders to share tax return information with other loan participants. Lenders may prepare their own taxpayer consent form, however, providing it establishes express permission from the taxpayer to share tax return information in accordance with the law.

What would you think if your company hired a “financial advisor?” Well, FHFA (overseer of Fannie and Freddie) Director Mark Calabria told an audience that it is very close to announcing hiring one. That could be for a variety of reasons, but the odds are good that it has to do with an initial public offering at some point to raise more money. Analysts wonder if F&F, in their current state, have the ability to do an IPO while in conservatorship.

“Because we don’t have a financial advisor on board, we really have not done sufficient due diligence to figure out whether that’s an obstacle or not. One possibility is if there’s no way to raise sufficient equity in a conservatorship, once you’ve gotten to a certain point in retained earnings where you’re no longer critically undercapitalized, would you want to look at a potential consent order where they’re out of conservatorship but you’ve still got a lot of prudential safeguards because they’re not fully capitalized yet.”

Compass Point Research and Trading LLC’s Isaac Boltansky’s take is that, “First, hiring a financial advisor is an important step and stating that it was ‘very close’ is a noteworthy timing update. Second, the comment reinforced our long-standing belief that consent decrees could be used to bridge the gap between statutory and regulatory capital. Third, this is to the best of our recollection the first time that Director Calabria has specifically referenced the ‘critically undercapitalized’ threshold in the context of conservatorship and consent decrees.

What about Federal Home Loan Bank membership? Director Calabria restated that there will be a request for input (RFI) in the weeks ahead and said that there is a “high likelihood” that there will be a rule proposal this year broadly addressing membership issues. Director Calabria then stated that he will view the membership issue through (1) safety and soundness and (2) mission. Mr. Boltansky opined, “We firmly believe the ‘five-year captives’ will not have their grandfathered status expanded beyond the 1Q21 expiration. Beyond that, there will be a review of the FHLB membership framework that will begin with an RFI in 1Q20. That RFI and the subsequent comments will inform our view on the issue. We have been bearish on the prospects of a more expansive FHLB membership structure given failed legislative attempts and our assessment of the broader policy conversation, but the forthcoming RFI signals a renewed conceptual willingness to consider the matter.

Of course regulators have a lot of attention focused on nonbank lenders and servicers. Do they have enough cash to withstand buybacks or hard times? Director Calabria said, “We will be looking very closely at their activities to make sure the entities I regulate, but also the entities that are regulated by FSOC members, are able to withstand problems. One of the reasons I looked closely at the Ditech bankruptcy is that in a time of stress I expect to get four or five of those.”

Isaac believes, and few would disagree, “Prudent oversight of all market participants, including nonbank originators/servicers, is imperative. Furthermore, the uniqueness of the nonbank model and the growth of that market segment in recent years warrants a thoughtful dialogue. We note that Ginnie Mae is already in the process of enhancing its counterparty risk framework and the most recent FHFA scorecard included a goal to “[i]mplement Servicer Eligibility Requirements 2.0” and “[a]ssess readiness of servicers and servicing policies and processes for an economically-stressed environment.”

Capital markets

U.S. Treasuries ended Thursday rallying due in large part to strong demand during the day’s $16 billion 30-year Treasury bond reopening. It wasn’t much movement by the close, but the trade of the day was to pare down risk ahead of today’s payrolls report. Helping the rally were intelligence reports that the Ukrainian jet that crashed in Tehran was hit by anti-aircraft missiles. In other international news, China’s December CPI and PPI both failed to meet expectations, World Bank lowered both its 2019 global GDP growth forecast and its 2020 GDP prediction, and the U.K.’s House of Commons voted in favor of the withdrawal bill. European Commission President von der Leyen is reportedly lobbying British Prime Minister Johnson to reconsider extending the transition period past the end of 2020. Finally, the most notable remark from a full slate of Fed speakers was Fed Vice Chair Clarida saying that some repurchase operations will be needed through the April tax season.

As the press continues to focus on stocks rallying as things in the Middle East simmer down, if anyone cares about jobs anymore, this morning we’ve had the U.S. employment data: Nonfarm Payrolls (145k, below forecasts), the Unemployment Rate (3.5%), and Hourly Earnings (+.1%). The weekly economic calendar concludes later this morning with November Wholesale Inventories. Additionally, the Desk of the NY Fed will conduct the last operation on the current FedTrade schedule when they purchase up to $802 million GNII 3 percent ($601 million) and 3.5 percent ($201 million). We begin the day with Agency MBS prices better .125 and the 10-year yielding 1.83 percent on the slightly weak payrolls number after closing yesterday at 1.86 percent.

A termite walks into a bar and asks, “Is the bar tender here?”

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, “Politics do Indeed Impact Interest Rates and Borrowers” If you have the 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 hundreds of 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 2020 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.)

Jan. 9: Marketing, Ops, sales jobs; broker, marketing, secondary mkt. products; misc. vendor news

Nobody, that I recall, predicted that 2019 would be a banner year for mortgage originators. And how about that stock market! My 401k’s balance certainly improved in 2019, yet a new report from the National Bureau of Economic Research says the cost of the trade war has been paid almost entirely by American businesses and consumers, not China. Experts and economists from the Federal Reserve Bank of New York, Columbia University and Princeton said analysis of tax levies found “approximately 100 percent” of import taxes fell on Americans, despite the President’s assertion the country was “taxing the hell out of China.” Some of the implemented tariffs on Chinese goods are as high as 25 percent. We can certainly expect the rhetoric to increase. And we still have ten months until the election!

Jobs & transitions

A well-established San Francisco Bay Area retail lender is looking for an experienced, well-rounded, tactical marketer to own, enhance, and drive marketing excellence. You will be responsible for all aspects of the marketing stack with a focus on strategy, implementing, and goal execution. The Lender is looking for someone that wants to roll up their sleeves and be a change creator in the mortgage industry. Experience in managing marketing design, content and social media presence is required. Resumes should be sent to Chrisman LLC’s Anjelica Nixt for forwarding.

AmeriHome is the 4th largest correspondent investor in the country and its clients include independent mortgage bankers, community and regional banks and credit unions of all sizes as their product menu continues to expand! AmeriHome offers both delegated and non-delegated underwriting options, and recently expanded their Non-Agency offerings, including their Non-QM Income Flex program. AmeriHome has big plans for 2020 and has a number of key positions available at their corporate headquarters in Westlake Village, CA as well as their offices in Dallas, TX. The investor is looking for leadership in Operations and Credit Operations (Underwriting, Account Management, and Training) as well as Non-Delegated Sales and Non-Agency Business Development. Visit AmeriHome’s Careers Page for more information.

Want to make $118,202 to $153,659 per year? Me too! The FHA needs to fill the role of Director, Quality Assurance Division within its Office of Single Family Housing: 20-HUD-329-P (open to the public) or 20-HUD-328 (open to specific groups). Among many things, the job includes directing and supervising three Branch Chiefs and supporting employees who are responsible for carrying out the Department’s risk management program for single family housing program participants.

Plaza Home Mortgage, Inc. announced that Michelle Richardson has joined the company as SVP of Treasury and Finance, responsible for Plaza’s Treasury department, including warehouse relationships, cash management and the company’s Corporate Funding department. She will report to Mike Fontaine, Plaza’s COO & CFO. Congratulations!

Guaranteed Rate has named Marc Demetriou as a VP of Mortgage Lending for the northern New Jersey area.

Lender products & services

Episode 002 of “Clear to Close” Podcast from Maxwell released recently and features an impactful discussion on marketing in the mortgage industry. They discuss what lenders do well, where they have opportunities to improve, and present a scorecard of the average marketing process today as a consumer. From digital to branding, it’s an entertaining and valuable listen. Highly recommend for all lending managers and teams. Download and subscribe from your favorite podcast platform: AppleSpotifyGoogle PlaySoundcloud or listen in your browser here.

For REMN Wholesale, Platinum means brokers no longer have to choose between price, speed, and customer service for government loans. With REMN’s Platinum product, brokers have access to top tier pricing on both FHA and VA loans, coupled with the same industry-leading 24-hour turn times that matter in our increasingly high paced industry. The industry’s top brokers have always known they can depend on REMN Wholesale for quality. Now they can rely on REMN to compete on price as well. Brokers interested in finding out more about REMN’s Platinum program can email their account executive directly, or connect with a REMN regional manager online through its website.

After a year of eye-popping growth at QLMS, it is celebrating the partners who helped QLMS beat record after record with its Super Bowl LIV Sweepstakes. QLMS is offering two partners a once-in-a-lifetime Super Bowl experience. Partners have the chance to win the grand prize of a TICKET TO SUPER BOWL LIV in Miami, Fl, along with flight and hotel accommodations! The partner’s AE, who has been helping them build their business, will accompany them to the game. Click here to enter into the sweepstakes and start practicing your touchdown dance. Partners who use QLMS’ portal often may want to keep up that trend. You will earn bonus entries by visiting The Answer, liking and following QLMS on their social channels, updating your contact info with your AE and opting in to QLMS marketing communication. Good luck!

“2019 was another monumental year for Finance of America Mortgage. Whether it was the new proprietary Two-X Flex loan products we rolled out or the investments made into your Two-X Platform, 2019 will be a year we never forget. But we’re only getting started. 2020 is already shaping up to be even bigger. With even more new products, marketing tools, and advisor technology, we can’t wait. Want to see what all the fuss is about? Click here for a brief recap video. And to learn how you can be part of Finance of America Mortgage’s 2020, click here.”

NEXA Mortgage is one of the largest mortgage brokers with a goal to top 1000 producing Loan Officers. in 2020 NEXA was recently featured in HousingWire and GrowJo.com as the fastest growing mortgage broker in the country. Want to know why it is growing so fast? NEXA is hosting a weekly webinar today, “Why NEXA with Mike Kortas“. The CEO dives into a deep conversation of what drives this growing channel. This webinar is today at 10am PST/1pm EST at www.NEXAmortgage.com/support. Just click on the link and join. Let them know you heard about it on Chrisman.

Calling all Marketing Managers: How difficult is it to produce compliant marketing that is targeted, localized, and customizable, while meeting your Loan Officer’s deadlines? Usherpa’s Launch Pad Custom Email Wizard and branded Marketing Portal were designed for corporate marketing teams so you can create materials that align with your unique company vision and brand strategies. Why switch between multiple systems to build content on demand when you can seamlessly design email campaigns within Usherpa CRM? Launch Pad is your one-stop shop to getting the right messages out at the right time. Effortlessly build a library of collateral that is directly linked to all your Loan Officers’ databases and Loan Origination System. Don’t hesitate, learn how Usherpa can leverage your efforts while saving you an impressive amount of time.

Vendor activity

Do you know if your top originators are leaving at a faster pace than originators working for your peers? Many lenders maintain that they keep their core group and turnover is limited to lower producing quintiles. Is this true? According to STRATMOR’s Originator Census, originator turnover in 2018 for the Retail channel was 35.2 percent, and the rate varied dramatically for the top 20 percent versus the bottom 20 percent. What is your originator turnover, overall? Find out the answer to this question and more by participating in the 2020 STRATMOR Originator Census Study. This study covers the Retail and Consumer Direct channels and participants receive a customized summary report comparing their company data industry averages. Register today.

Insellerate’s engagement platform helped the company grow by over 100% in 2019 and has furthered its commitment to helping its lenders close more loans. Insellerate now serves both retail and consumer direct loan officers by helping lenders engage better with their borrowers and build customers for life. Insellerate will also be offering its engagement platform to wholesale lenders who are wanting to build better relationships with their brokers and provide them more value.

Secure Insight announced that it added 10,441 new closing agent profiles to its nationwide database in 2019. The company now maintains and monitors risk and performance profiles on over 70,000 professionals in all 50 states.  SI President Andrew Liput noted that now the company has reached a critical mass of quality data it expects to close several key deals to deliver data to the industry through various reseller relationships in addition offering a solution readily integrated into lender LOS systems.

Promontory MortgagePath LLC has consolidated its family of companies into one entity with a singular focus on driving down the cost and time required to originate mortgages. “The move blends three distinct teams with complementary skills and strengths, uniting Promontory Fulfillment Services LLC (PFS) and PromonTech LLC under their former parent-company banner, Promontory MortgagePath. Since their founding in 2015, the three companies have worked collaboratively to provide technology-driven mortgage fulfillment solutions with PromonTech developing proprietary point-of-sale mortgage technology, PFS providing comprehensive third-party mortgage fulfillment services, and Promontory MortgagePath concentrating on leadership and strategy.”

Since January 2019, TMC has welcomed 49 new lender members and 15 new preferred partners. 2019 marked the greatest year of new member growth for TMC and the third straight year that we have added over 40 new members! Overall attendance at the TMC 2019 Winter and Summer conferences was up 26% from the 2018 events, and nearly all that growth was from lender attendees, giving our events the highest “LTV” (lender to vendor) ratio of any notable industry conferences.

Radian announced the launch of its new historical home price index (HPI). The Radian HPI uses a wealth of housing market data and property valuation expertise to value nearly all of the housing inventory across the country, offering an unrivalled view on conditions and trends in the U.S. housing market. Click the link for more information about Radian HPI.

NotaryCam® announced it has been approved by the Michigan Department of State to provide both eNotary and remote online notarization (RON) services to the more than 113,000 notaries public registered in the state.

Pavaso is among the first vendors approved and authorized by the Michigan Secretary of State to support electronic notarization (eNotarization) and remote online notarization (RON) in Michigan. The announcement of approved vendors signals that eligible notaries are now free to act on 2018 legislation that permits digital notary services in the Great Lakes State.

Origence™, a leading provider of lending technology and solutions to the financial services industry, announced the launch of the Origence mortgage lending platform. Designed from the ground up to handle all a company’s digital mortgage needs, the highly automated platform enables lenders to streamline the mortgage process, improve efficiency, increase sales opportunities and deliver a better borrower experience.

Capital markets

It’s a new year, and there are new loan sale executions to help you increase efficiency and achieve best execution. The popularity of bid tape AOT continues to grow, as lenders realize the savings and convenience available through a whole loan trading platform like MCT’s BAM. Since MCT rolled out the first bid tape AOT executions in May 2018, clients have saved an average of $63,000 each on transaction costs. If you haven’t been using these executions, you’ve been leaving money on the table. Learn more about the advantages and economics of these executions. Beyond bid tape AOT, advancements in agency technology facilitate live loan-level pricing with no manual data entry. Lenders can price and commit loans into Freddie Mac’s Loan Selling Advisor and Fannie Mae’s Pricing & Execution – Whole Loan® system, without leaving BAM, for loan populations of any size with a single click. Schedule a demo to learn more.

Turning from execution to interest rates, I’d rather be talking about U.S. Treasuries and MBS retreating yesterday due to a strong ADP Employment Change report for December that included an upwardly revised November reading, or even weak demand for a $24 billion 10-year Treasury note reopening, but the news de la semaine revolves around Iran. The pullback in Treasuries was largely due to both Iran’s foreign minister saying, “We do not seek escalation or war,” and President Trump retreating from war rhetoric, offering Iran a diplomatic opening. The de-escalation was helped by the Pentagon’s contention the Iranian missile barrage toward bases in Iraq that were housing U.S. troops wasn’t intended to cause casualties.

Today’s calendar is underway with weekly jobless claims for the week ending January 4 (214k, a five week low). That is it for scheduled releases but markets will also receive a full slate of Fed speakers with Vice Chair, Minneapolis’ Kashkari, New York’s Williams, Richmond’s Barkin, Chicago’s Evans, and St. Louis’ Bullard all appearing throughout the day. And the final leg of this week’s mini-Refunding takes place when the Treasury auctions $16 billion reopened 30-year bonds. We begin the day with Agency MBS prices unchanged, as is the 10-year at a 1.87 percent yield.

I like to imagine the guy who invented the umbrella was going to call it the ‘brella.’ But he hesitated.

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, “Politics do Indeed Impact Interest Rates and Borrowers” If you have the 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 hundreds of 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 2020 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.)

Jan. 8: Call center jobs; people moving; pricing, broker, sales products; missiles/oil/tariffs/Brexit and mortgage rates

Hey, I want to buy my own house without the “nuisances” of a large down payment, difficult credit standards, massive debt, or long-term commitments. Out of California comes Fleq, which tells me that I can do exactly that. All I have to do is lease the property and buy/share my equity through an “Alliance.” Shared equity, rent to own, and leasing aren’t new concepts, but it is always interesting to see how these companies do, and what consumers think. (Speaking of consumers and their reviews, here’s the latest in settlement news: a Northern California lender settling with the FTC regarding allegations of posting personal information on borrowers that gave bad reviews.) Tariffs aren’t new either, nor are trade problems and deficits, and geopolitical tension & strife. The press and financial markets have been focused on them for many months, almost forgetting about the U.S. economy. Much more in the capital markets section.

Jobs

A well-known household name, with a spectacular reputation of consumer trust, is looking for Call Center Loan Officers (federal registration) for its St Petersburg, Florida location. Warm leads are generated internally from existing consumer relationships across multiple states within their area of operation. Candidates should be familiar with Encompass and both conventional and government originations and demonstrate superior customer communication skills that reinforce the company’s commitment to an on-going relationship across multiple product lines. Excellent compensation including base plus incentive and benefits. Interested parties should send their resumes to Chrisman LLC’s Anjelica Nixt.

Transitions

National MI announced that Norm Fitzgerald has been promoted to chief sales officer. He joined National MI in 2014 as SVP of national field sales and will be overseeing National MI’s entire sales organization, including national and field sales, marketing and business development strategy. “Norm Fitzgerald has a proven ability to successfully lead and motivate a nationwide sales team, and I am excited to have him take on this expanded role for National MI,” said CEO Claudia Merkle. “Norm’s experience in the mortgage industry and his leadership skills make him well-suited to serve as National MI’s chief sales officer,” Fitzgerald has over 28 years of experience in sales and operations within the mortgage and banking industry. Prior to joining National MI, he held the position of senior vice president at Mr. Cooper (formerly Nationstar Mortgage), where he built and launched a top correspondent lending channel. His prior experience includes serving as president of Correspondent Lending at PHH, as well as leadership positions with CitiMortgage, PMI Mortgage Insurance Co., and Citizens Bank.

Texas Capital Bank, N.A. is proud to announce that Becky Lottridge will be joining the Warehouse Lending team, serving as Relationship Manager for clients in the Midwest region. Becky is a 25+ year veteran of the mortgage industry and previously served as a Regional Sales Executive in the bank’s Correspondent Lending group. Becky possesses extensive knowledge in the areas of accounting, sales, secondary marketing, warehouse lending, correspondent lending and the utilization of supporting technologies, and is glad to serve as a resource as you position your business for the future. Reach out to Becky to see what she can do for your business.

Congratulations to Michael Jones, CFO of Thrive Mortgage, who will be the new Chairman of The Community Mortgage Lenders of America. Michael has been a member of the Board since 2017 and has served as the Treasurer prior to his election as the new Chair. He will be focusing his agenda on topics which are key to the viability and continuation of midsize and small lenders throughout the country, that they “have a voice when it comes to the CFPB, TRID, and the GSEs.”

Ohio’s CrossCountry Mortgage, LLC (CCM) has added Beth Lewis as SVP of Mortgage Lending. CCM is a nationwide mortgage lender founded in 2003 by CEO Ron Leonhardt and has nearly 3,000 employees and licenses in all 50 states.

Sprout Mortgage announced that Ron Krueger has joined the company as SVP, Correspondent Lending to deepen relationships with its Correspondent clients on the non-delegated and delegated side and will be reporting to Shea Pallante, EVP. Sprout Mortgage is a leading nationwide non-QM lender “whose innovative products, flexible qualifying criteria, and common-sense underwriting provide tailored lending solutions for residential real estate investors, self-employed borrowers, and those with recent credit events.”

And congratulations to Alina Galan, hired as an AVP for Multi-Bank Securities, Inc. (MBS), a veteran-owned broker-dealer specializing in the sales and trading of fixed-income securities and serving clients in all 50 states. Galan will be working with Sara Weber and Gail Schaumann to provide customer service to secondary marketing professionals for trading of TBA hedges, specified pool and related activities. Galan has an MBA with a concentration in finance from Nova Southeastern University. Prior to joining MBS, Galan worked in the mortgage industry as a trade desk manager and also worked as a Director of Capital Markets with an expertise in trading, hedging, financial reporting and risk management. Galan will be working out of the firm’s Fort Lauderdale, Fla. office. (For more information, please call 1-888-278-5448.)

Lender products & services

ReadyPrice has announced investor integrations with Stearns Lending and PRMG Wholesale. This sort of deep investor integration provides Non-Delegated Correspondent Lenders with a cloud-based tool to shop / lock rates, disclose, underwrite, deliver docs and fund directly with top investors, all through ReadyPrice’s Mortgage.Exchange. The investor integration gives NDC lenders even more independence by allowing them to control the entire loan process through a single platform. Ready to learn more? Schedule a demo of ReadyPrice’s Mortgage.Exchange today.


Looking to grow in 2020? 
MonsterLead Group introduces The Monster Wayan unprecedented 8-week plan to radically change the future of your mortgage business. The Monster Way is a formidable combination of a direct marketing system, a sales process and a custom playbook for growing your organization. It includes a dedicated Monster expert who works with you to create an 8-week direct marketing campaign that generates a consistent flow of the right leads to your inbound call team. We’ll train your MLOs how to turn more of those calls into apps using the same professional sales techniques as the highest producing originators in the country. Your reps will graduate with the secret sauce for generating record sales in any market, regardless of rates. Join our clients who originated more than $10 billion in 2019. Find out if your organization and The Monster Way are a good match: Apply. (Space is limited due to high demand.)

Ready to learn about and market new VA mortgage opportunities in 2020? The recently implemented Blue Water Navy Vietnam Veterans Act of 2019 has provided new mortgage benefits for jumbo borrowers, active duty Purple Heart recipients and more. As a leading VA lender, Freedom Mortgage Wholesale’s No Down Payment VA Jumbo program enables eligible jumbo borrowers to exceed published FHFA county loan limits without a down payment requirement! No jumbo overlays or loan limits! Sign up for 2020 VA Mortgage Marketing training on 1/15 and 1/17.

“In today’s competitive wholesale lending marketplace, it’s tougher than ever to maintain your relationships with your customers. That’s why Franklin American Mortgage, a division of Citizens Bank, N.A., is committed to not soliciting our active partners’ customers with any mortgage-related marketing or sales messaging. Not only does this help your customers stay your customers, but it also allows us to maintain our relationship as your lending partner for any further needs they may have. Our non-solicitation commitment is just part of how Franklin American Mortgage is reimagining wholesale with PowerLX – a powerful new lending experience. Learn more at Power-LX.com.”

89% of new home shoppers start their search online: which means if you can’t create your own single property website with comarketing and lead capture, you’ll be paying for leads you should already own. But, unless you went to coding school, creating an MLS integrated website is likely a pipe dream. Don’t worry though, Jungo, the Salesforce-based, mortgage and real estate optimized CRM, just pumped some serious steroids into its product with a new feature, The Property Listing. You can build single property co-branded websites, from their CRM, with just an MLS number, no coding necessary. With the shareable website link you generate, you can promote your property and have leads funnel right back to you and your co-marketing partner.  Like having your cake and eating it too. So, jump in: there’s no time like the present.

“Studies show that learning a new skill is good for the brain and can improve memory and cognitive decline. That being said, here’s an idea of a new skill for you: Focus on niche products that you don’t do every day, not only can it help your borrower and realtor relationships, but it could contribute to your well-being. And, to make sure it isn’t too taxing, partnering with Deephaven Mortgage along with their IDENTI-FI technology suites, you can have an experience that most resembles your conforming loan process. Deephaven’s technology tools help originators “IDENTI-FI” whether their clients are eligible for Non-QM financing, 24/7. To find our AUS, scenario calculator, and bank statement calculator is easy: visit Deephaven Wholesale. Or, reach out to an Account Executive today to build your Non-QM business via email at brokerinfo@deephavenmortgage.com (Wholesale) or sales@deephavenmortgage.com (Correspondent).

Capital markets

Attacks in the Middle East have not moved bonds dramatically. Headline fatigue? The belief that things will quickly be resolved? There was no easing into the new year as markets had two geopolitical headlines to digest as the calendar turned to 2020. First, the Phase I trade deal with China will officially be signed on January 15, which will see both countries stepping back on tariffs as well as an increase in purchases by China of American products and services. While the deal was officially announced earlier in the month, the announcement of the signing was seen as more than a mere formality given the back on forth over the last year. While the deal is not expected to lead to a resurgence in business activity it does at least bring some certainty to the trade environment.

The second headline facing markets was the US airstrike in Iraq that killed one of Iran’s top military generals. The market concern (aside from geopolitical unrest) will be the long-term impact on oil prices, which jumped following the strike. Additionally, geopolitical unrest tends to lead to lower bond yields as investors seek safe havens. Geopolitical tension! Always great for rates. Recall that last week U.S. Treasuries, and agency MBS, rallied, pushing yields to their lowest levels since early December. The rally was primarily over concerns about the inflammation of a long-standing conflict with Iran after U.S. forces killed top Iranian general Soleimani. The whole world (read: LOs and AEs everywhere) awaits how, and where, Iranian Supreme Leader Khamenei will deliver his grave promise of “severe retaliation” after the three-day period of public mourning ends.

 

Since America’s 2003 invasion of Iraq, Soleimani had challenged U.S. power with proxy militias in Iraq, Lebanon, Syria and Yemen, conducting a hybrid war against America without triggering a direct response from Washington. Congress, with the exception of one Republican senator who was with President Trump at his Florida resort, wasn’t consulted beforehand. Oil prices spiked and stocks fell.

There are “normal” economic headlines. U.S. Treasuries pulled back slightly yesterday after the release of a stronger than expected ISM Non-Manufacturing Index for December, which registered the fastest pace since August 2019 but the pace of new orders, new export orders, and employment all slowed, while the backlog of orders contracted at a faster rate than November. Other good news included the trade deficit narrowing beyond expectations in November, which will be a positive input for Q4 GDP growth forecasts. And Factory Orders declined, representing soft conditions in the manufacturing sector, but not as much as expected. After all those prints came out, Treasury sold $38 billion in 3-year notes to lukewarm demand, helping the 10-year close +2 bps to 1.83 percent.

Here’s some (peaceful) international news. The UK parliament reconvened yesterday after its winter recess, as Prime Minister Johnson now looks to push Britain’s departure from the EU through as quickly as possible with his large parliamentary majority. As far as economic readings went, Eurozone’s November Retail Sales beat expectations to nearly double the predicted year-over-year increase, Italy’s December Consumer Confidence rose beyond expectations, and Spain’s December Consumer Confidence ticked upwards. It wasn’t as rosy for investors hoping for good news out of Asia. Hong Kong’s Chief Executive Lam said that the economic recession is expected to intensify in 2020 and that some businesses will close after the Lunar New Year. And Japan’s December Services PMI decreased into contractionary territory, hitting its lowest level since late 2016.

 

Now, let’s turn to the non-peaceful news. The Pentagon said more than a dozen missiles were launched from “Iran and targeted at least two Iraqi military bases hosting U.S. military and coalition personnel at Al-Assad and Irbil,” occurring at 1:30am local time (5:30pm ET). U.S. officials are working to determine the damage. Secretary of Defense Esper said that the U.S. has no plans to withdraw troops from Iraq despite reports to the contrary.

 

Investors instinctively turn to oil prices whenever tensions in the Middle East flare, and indeed oil prices are up since General Soleimani’s death on Friday. Oil prices more than doubled after the OPEC oil embargo in late 1973 and again following the Iranian revolution in early 1979. But while consumer purchases of “gasoline and other energy goods” accounted for roughly 4 percent of total personal consumption expenditures (PCE) in the 1970s, those goods now account for only 2 percent of modern PCE. In addition, higher oil prices currently have more of a stimulative effect on the U.S. economy, encouraging more investment in the energy sector. And other industries are not as dependent on oil as an energy source as they were in the 1970s. Oil prices would need to climb well past its current levels to have a meaningful effect on consumer purchases of other goods and services.

 

While higher oil prices do not have as much of a slowing effect on the U.S. economy as decades ago, the uncertainty surrounding the crisis could potentially be more meaningful. Stock markets have weakened since Soleimani’s death, and credit spreads have moved out a bit, both representing a modest tightening in financial market conditions. Tighter conditions, if sustained, could deliver some headwinds on the economy. In addition, American consumers and businesses could potentially turn cautious if a cycle of violence were to take hold. In terms of rates, the Fed is widely expected to keep rates on hold for the foreseeable future, and the uncertainty that the Iranian crisis brings corroborates the view that the FOMC will not be hiking rates anytime soon.

 

Today’s calendar began with two-weeks’ worth of mortgage applications from the MBA for the week ending December 27 and the week ending January 3. Mortgage applications decreased 1.5 percent from two weeks earlier. We’ve also had ADP employment (202k, very strong). Later this morning will bring remarks from Fed Governor Brainard, The Desk conducting a UMBS30 FedTrade operation consisting of purchasing up to $891 million 3 percent ($537 million) and 3.5 percent ($354 million), and Treasury conducting the second leg of this week’s mini-Refunding with the auction of $24 billion in reopened 10-year notes. We begin the day with Agency MBS prices worse a few ticks and the 10-year yielding 1.82 percent.

I have two boys, 5 and 6. We’re no good at naming things in our house.

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, “Politics do Indeed Impact Interest Rates and Borrowers” If you have the 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 hundreds of 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 2020 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.)