July 11: Supply & demand on bananas, hard seltzer, and… wood prices!? Saturday Spotlight: PrimeLending

“History is not there for you to like or dislike. It is there for you to learn from it. And if it offends you, even better. Because then you are less likely to repeat it. It is not yours to erase. It belongs to all of us.” Contrast that versus, “We should not teach history. You hear the stories of the victors from their own point of view and then you want to start your own violence and wars to do your own good part. We don’t learn how to avoid wars, but how good they are.” And given that our business touches and helps millions of lives every day, our industry, and the people in it, are smack dab in the middle of it.

Dixie flags, tearing down statues, politics, and renaming things aside, everyone should remember that we are living in historic times right now. It certainly isn’t glamorous to eat Grape Nuts five days in a row, and only wash your every-day sweatpants once every two weeks, but scientists, political scientists, sociologists, and psychologists will be studying us for centuries. Every lender is busy being waist deep in volume, but some will argue that the mortgage industry hasn’t considered the long-term economic consequences from COVID. What will mortgages look like post COVID? It’s all reactionary at the moment. But this time next year is going to be challenging, as not only will most borrowers have 30-year rates at 3 percent or lower, but the impact of forbearance will be truly seen. As well as the job market, as some economists see the unemployment rate continuing to rise based on recent re-openings closing back up. Lots more below on some of the non-mortgage economic signals the nation is giving us.

Saturday Company Spotlight

This week we highlight PrimeLending’s focus on the founding, growth, employee mentoring in a work from home environment, entrepreneurship and charity work.

In 3-5 sentences, describe PrimeLending (when was it founded and why, what it does, where, recent growth, and plans for near-term future growth). A perennial powerhouse in the industry for more than 30 years, PrimeLending’s sole focus is delivering the ultimate mortgage experience for both borrowers and business partners alike. That’s why we introduced the Modern Originator, our forward-looking initiative to empower and equip our loan officers to deliver an extraordinary customer experience. As a company, we are committed to providing every member of our team with the tools, technology and training needed to originate more loans and grow their business in today’s digital marketplace. For example, this spring we successfully completed two huge technology implementations: Blue Sage, our state-of-the-art LOS, and Total Expert, the industry-leading digital marketing platform. With the addition of both Blue Sage and Total Expert, we’ve never been better positioned to not only compete, but win in the marketplace.

 

Tell us about company culture and what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why. Simply stated, our Core Purpose is to make a profound and positive impact on the lives of all we serve. That’s why PrimeLending recently allotted $250,000 for our branches to make charitable donations to local charities. We’ve been able to assist food banks, medical centers, community response funds, youth programs, educational scholarships, and other nonprofits all across the country. Our employees’ efforts aren’t limited to financial contributions. We’ve also seen an outstanding response through volunteer work, feeding essential workers, hosting drives, and providing frontline assistance.

 

What does your company do to help elevate your employees’ growth? Describe any mentoring programs, outside classes or training, in-house training. How does the company help people develop?

 

PrimeLending success has been built around one simple belief: investing in our talented, dedicated employees. It’s the secret to PrimeLending’s longevity and success, and the reason so many home buyers trust us to guide them through the mortgage process. Our award-winning onboarding and training programs not only prepare new team members to begin originating loans on day one, but continually provide valuable resources and learning opportunities to help loan officers build their business and achieve their goals. Each year, we host Sales Rally, a world-class, can’t-miss experience that brings together loan officers from across the country to discover best practices from top producers, learn new tools to grow their business and get inspired by company leaders and top-rated industry speakers.

 

Tell us how your company maintains its culture in the office, or in a work-from-home environment if applicable. Putting people first defines the PrimeLending culture, and we see it every day in the way our team works together and supports each other. We know having a passionate, motivated team that cares about our customers, business partners and each other is our greatest asset.

As other businesses found themselves grappling with appropriate responses to the COVID-19 pandemic, PrimeLending swiftly acted to ensure our highest priority remains the safety and the well-being of our co-workers, customers, and communities. While most of our team is working from home during these unprecedented times, we’ve increased the number of communications from our leadership team, added eCulture activities and provided manager tips, all in an effort to maintain team unity. It’s thanks to our team-oriented culture and resilient employees that we were able to adjust so quickly, and without skipping a beat. (We’re actively hiring builders, doers, visionaries, and entrepreneurs. If you’re a mortgage superstar and you’re interested in being a part of our award-winning organization, contact Nic Hartke.)

(For more information on having your firm featured, contact Chrisman LLC’s Anjelica Nixt.)

Mortgage banking touches many areas

I received this email. “We may be in for some tough times as the economic fallout will last long after COVID. My concern is the rate at which people are not making their credit card payments. It’s the first thing people stop making payments on. It’s unsecured debt, and there is little recourse credit card companies have to collect. There is going to be a lot of ‘dinked up’ credit this time next year. How will the mortgage industry accommodate this when they come in to apply for a home loan? Also, I’m already seeing people with loans in forbearance trying to refi out of it. Very few will be able to pay the balloon payment at the end and if they can’t refi out of it then you will see the loan mods rolling in. This has a direct impact on the mortgage industry and the economy. People who can’t obtain credit don’t spend money on items that are considered economic drivers, such as cars, housing, travel, etc.”

So what you will about them through the history of the United States, immigrants have made a huge contribution to our society. The Federal Reserve Bank of Dallas recently published a paper about the effect of immigration on business dynamics and unemployment. The study combined U.S. data on immigrant inflows from the Current Population Survey with data on business formation and survival and job creation and destruction from the National Establishment Time Series (NETS) database for the period 1997 to 2013. The hypothesis was that immigration, as a positive labor supply shock, should increase the return to capital and spur business investment, particularly in areas that receive large immigrant inflows. The results indicated that immigration increases the business growth rate by boosting business survival and raises employment by reducing job destruction, largely driven by less-educated immigrants. As a result of lower labor and search costs, this spurs to capital investment and economic growth in the medium to long term.

Lenders and vendors are grappling with office space, and office space needs, if and when they bring people back to working together. WFH versus WTF: know the difference! Millions around the nation are now working from home (WFH) according to an MIT report, 34 percent or more of Americans who had previously commuted to work said that they were working from home. According to a University of Chicago estimate that 34 percent of people have the capacity to work from home based on the nature of their occupation, that means we’re pretty much at the point where everyone who can, is. Previously, only about 4 percent of the U.S. workforce worked from home half the time or more. Even as early April the smart money is saying that this will get a lot of the people trying it out to come out and say that they want to do this more, and there may be a significant shift ahead for how companies handle their office environments. The consulting firm Global Workplace Analytics projects 30 percent of people will work from home multiple days per week within a few years, and that this unexpected situation is releasing some pretty pent-up demand for such flexibility.

Prices for lumber and plywood are skyrocketing thanks to a boom time in improvised expanded outdoor seating in restaurants, as well as a surge in do-it-yourself projects. On July 8, the spot price per thousand board feet of lumber was $469.40, up from the lows seen in early April when the same amount of lumber was going for a low of $264.10. That 80 percent increase is above the pre-pandemic high of $463.00, a price hit during a hot home-building market. With restaurants building outdoor decks on the fly around the world, orders are up 40 percent at a Pittsburgh company that makes the chemicals to treat wood for decks.

Of course sports are in shambles. The Ivy League cancelled its football programs for the autumn. The XFL was a start-up football league that played all of five games in its most recent first season, but was forced to fold because of widespread shutdowns and also a curse on the concept of the XFL. The company outlined plans to sell the league, using a $3.5 million loan offered by founder and WWE Chairman Vince McMahon to sell the IP by July 15. If you’re in the market, it’s not often that a sports league goes up for sale; the XFL’s name, trademarks, slogan, and eight teams (all owned by the league directly, including their merch, equipment and individual IP rights) are up for grabs. The XFL had roughly $5.6 million cash on hand, and may need to burn some of that before hitting up Vince for a loan. XFL season tickets, costing $100 to $600 each, need to be refunded, but one can only assume they knew the risks of buying season tickets to the XFL, essentially the sporting equivalent of buying the stud rights to a mayfly.

Remember mortgage conferences, and hotel breakfasts, where there would be bananas? The Philippines produced about 20 percent of the world’s banana shipments in 2019, and in Asia the country accounts for 90 percent of banana export volumes. The problem? The main island, Luzon, has been locked down since mid-March, and bananas need to be harvested every day or else they’ll spoil on the tree. Right now, projections are that exports will be down 40 percent this year, down to 2.5 million tons of bananas from 4 million last year. Know that banana bread has trounced its competitors as comfort food during quarantining.

In 2015, U.S. sales of hard seltzer were roughly $6 million. By 2019, those wrapped at nearly $1.7 billion, having cemented their place in the beverage landscape by appealing to young people who wanted to drink, but not drink a ton of calories. Overall, they’re still maintaining a 215 percent growth, and part of that is the various beer colossi roaming the countryside that see their market share diminishing and desire some of the action: Bud Light Seltzer joined the market, as has Pabst Blue Ribbon’s Stronger Seltzer. As far back as April reporters saw the developments starting.

And plenty of people in our residential lending business play golf. It turns out that there are fewer every year, and many of those in business have temporarily closed. Dartmouth closed their golf programs yesterday. According to an industry survey, early in the pandemic a majority of golf courses in the United States remained open for business. Indeed, online bookings of tee times in the first quarter were up 10 percent from last year, and only a few states in the Midwest, Northeast and Pacific coast have statewide enforced closures. As of April 10, just 45.2 percent of 5,350 U.S. courses surveyed by GolfNow had closed up shop, and as recently as late March that was in the mid-20s percent.

His request approved, the CNN News photographer quickly used a cell phone to call the local airport to charter a flight.

He was told a twin-engine plane would be waiting for him at the airport.

Arriving at the airfield, he spotted a plane warming up outside a hanger.

He jumped in with his bag, slammed the door shut, and shouted, “Let’s go!”

The pilot taxied out, swung the plane into the wind and took off.

Once in the air, the photographer instructed the pilot, “Fly over the valley and make low passes so I can take pictures of the fires on the hillsides.”

“Why?” asked the pilot.

“Because I’m a photographer for CNN,” he responded, “and I need to get some close-up shots.”

The pilot was strangely silent for a moment.

Finally he stammered, “So, what you’re telling me, is…You’re NOT my flight instructor?”

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, “Mortgage Outlook: What if it is Cloudy?”, focused on the current political climate. 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. This newsletter is designed for sophisticated mortgage professionals only. There are no paid endorsements by me. 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 & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)