Mortgage rates inch forward to 3.65%

This week, the average U.S. fixed rate for a 30-year mortgage averaged 3.65%. While this percentage is slightly above the previous week’s average, it’s still 80 basis points below the 4.45% of the same week last year, according to the Freddie Mac Primary Mortgage Market Survey.

“Mortgage rates inched up by one basis point this week with the 30-year fixed-rate mortgage averaging 3.65%,” said Sam Khater, Freddie Mac’s chief economist. “By all accounts, mortgage rates remain low and, along with a strong job market, are fueling the consumer-driven economy by boosting purchasing power, which will certainly support housing market activity in the coming months.”

Low mortgage rates boost the economy by cutting home financing costs, which puts more money in the wallets of consumers to put toward the purchases that account for about 70% of America’s GDP.

According to the survey, the 15-year FRM averaged 3.09% this week, inching forward from last week’s rate of 3.07%. This time last year, the 15-year FRM came in at 3.88%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.39% this week, rising from last week’s rate of 3.3%. Last year, the 5-year ARM averaged 3.87%.

The image below highlights this week’s changes:

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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.)

Zillow CEO tops list of most powerful people in real estate

Zillow CEO Rich Barton is the most powerful person in real estate this year, according to the Swanepoel Power 200, an annual ranking by consultants at T3 Sixty.

Barton co-founded Zillow in 2005 and served as its original CEO before stepping aside five years later to let co-founder Spencer Rascoff take the helm. Last year, he returned to the CEO role and began pouring resources into Zillow Offers, a real-estate flipping business.

In interviews last year, Barton spoke of his drive to create a “trade-in” experience for home sellers that eventually will use the website’s Zestimate as a standing offer for real estate.

“Barton ascends to the top of the 2020 list based on his full-force return to lead the company he co-founded,” T3 Sixty said in a statement. “He has brought a bold new vision and direction to Zillow focused on reengineering the real estate transaction around the iBuying business model.”

Gary Keller, co-founder and CEO of Keller Williams, was in the No. 2 spot and No. 3 was Ron Peltier, executive chairman of HomeServices of America, who last year was No. 1.

Realogy CEO Ryan Schneider was No. 4, followed by Redfin CEO Glenn Kelman.

The T3 Sixty report analyzes industry executives and C-suite leaders of all “significant, large and strategically important companies in the residential real estate brokerage industry,” the company said in the report. The process starts with over 3,000 executives and narrows the list down to 200.

Realogy, the largest U.S. residential brokerage, had 29 executives, agents and brokers on the list, the most from one company.

They included John Peyton, CEO of Realogy Franchise Group, Ryan Gorman, CEO of Coldwell Banker, and Sherry Chris, CEO of Realogy Expansion Brands.

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NerdWallet: Here are the top mortgage lenders of 2020

NerdWallet has announced the winners of its 2020 Best Mortgage Lenders list, which ranks the nation’s top mortgage lenders by their ability to best assist homebuyers with their financial decisions while purchasing a home.

The company reviewed the majority of the largest U.S. mortgage lenders by annual loan volume, ranking those that have at least a 1% market share. While the focus was on lenders that offered purchase, refinance, jumbo, FHA, VA and/or HELOCs, the companies selected were also recognized for their emerging platforms, as well as their online search volume.

Notably, some of the companies that appear on the list are NerdWallet partners while others are not. Each of the winners offers 3%-down-payment loans, target first-time homebuyers through national or proprietary loan programs on their website, have low origination fees and more, according to the company.

“Shopping for a mortgage is intimidating, because borrowers have hundreds of lenders to choose from and it’s hard to know which you can trust,” says Holden Lewis, NerdWallet’s home and market insights expert. “These awards are designed to provide clarity to home buyers and refinancers so they can make the financial decisions that are right for them.”

According to NerdWallet, these are the best mortgage lenders in the industry based on loan type:

Best Mortgage Lenders for First-Time Home Buyers: Bank of America and Citibank

Best Mortgage Lenders for Refinancing: Better.com and LenderFi

Best Mortgage Lender for Home Equity Lines of Credit: Citibank

Best Mortgage Lender for FHA Loans: Fairway Independent Mortgage

Best Mortgage Lenders for VA Loans: Veterans United and Navy Federal

Best Mortgage Lenders for Online Loans: NBKC and Bank of America

Check out the full list of 2020’s best mortgage lenders here.

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Reali adds new features to app, plans to continue expanding

Real estate technology company Reali announced Wednesday that it has made an update to its app, and now claims that the app is the “first in the real estate industry – and the app is the only one of its kind” that services homebuyers and sellers in a single app.

According to the real estate startup, the process of selling a home with Reali begins in the app by requesting a home valuation or listing appointment from a dedicated, local and licensed real estate agent with market expertise.

Once the home is live, sellers can track the sale of a home from valuation to escrow, working closely with their real estate agents.

“Until now, robust technology to help you sell a home was reserved for home buyers,” said Amit Haller, chief executive officer of Reali, in a statement.

“Today, Reali is changing that with key features for selling a home. The new app isn’t just a milestone for our company, it’s significant for the entire real estate industry,” Haller added. “For the first time, home sellers can experience full-service real estate powered by technology that simplifies their journey without charging a premium.”

The last time Reali made an update to its app was last July, when the company added insight to real estate agents, helping them efficiently complete their work on behalf of their clients with the help of technology and back-end proprietary software. This created a smoother end-to-end journey for homebuyers.

Key features of the improved app include “Sellers Journey,” where sellers get complete visibility into the home selling process to see where they are and get real-time alerts.

The in-app chat feature gives sellers access to their dedicated, local real estate agent and support team as they move along the process from evaluation through close.

Sellers can now easily request a home valuation to find out what their home is worth and understand the potential selling price and local market in less than 24 hours.

Buyers and sellers have the ability to request a listing presentation from a local, licensed agent and learn more about their track record in the app.

With Reali Trade-In, sellers can purchase their new home before the current one is sold. Sellers can now switch between buying and selling, which allows them to manage both transactions at the same time.

The busy company also launched its home trade-in program and escrow program shortly after its first update. Reali also expanded into mortgages last year when it bought Lenda, an online mortgage lender that launched in 2013.

And the company said that it has plans to continue expanding in the second half of this year.

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Former Fannie Mae employee gets 6 years in prison for making $1 million on shady foreclosure sales

A former Fannie Mae employee will spend more than the next six years in prison after being found guilty of accepting more than a million dollars in bribes and kickbacks in exchange for selling Fannie Mae-owned foreclosures for less than market value.

Back in January 2018, Shirene Hernandez was charged with accepting bribes for steering foreclosures to certain brokers and even allegedly buying some foreclosures herself at below market value.

And nearly a year ago, Hernandez was found guilty of two wire fraud counts that involved the deprivation of honest services as a result of the scheme.

Hernandez formerly worked at Fannie Mae in California as an REO foreclosure specialist and was tasked with the sale of properties foreclosed on by Fannie Mae.

As a sales representative, a position she held from 2010 through 2015, Hernandez would assign Fannie Mae-owned properties to certain real estate brokers and approve sales of the properties based on offers the brokers submitted.

But, court documents showed that Hernandez demanded and received bribes – mostly in the form of cash – in exchange for brokers getting the listings and commissions those brokers earned on real estate sales in question.

Hernandez also approved sales of Fannie Mae REOs at discounted prices to both herself and to brokers who paid her kickbacks.

As part of the scheme, Hernandez also received bribes for approving below-market sale prices of Fannie Mae properties to the brokers, all of which were violations of Fannie Mae rules and federal law.

Hernandez also helped several family members become Fannie Mae-approved brokers, and then steered nearly $80 million in Fannie Mae listings to them, resulting in nearly $2 million in commissions in less than three years.

According to court documents, Hernandez received more than $1 million in benefits from the scheme, including cash kickbacks and equity in a Fannie Mae property she bought using said kickbacks.

And, according to court documents, Hernandez paid for that property using a duffle bag filled with $286,450 in cash, which she gave to her sister-in-law to bring to the closing.

“The crime that [Hernandez] committed was egregious,” the prosecutors wrote in their sentencing memorandum. “Rather than act in the public’s best interests…she used her position to line her own pockets. [She] is unremorseful and unrepentant, and would seemingly do it all again if she could avoid being caught.”

In addition to the 76-month prison sentence, Hernandez was also ordered her to pay $982,516 in restitution to Fannie Mae.

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Want to live in a big city on a small budget?

With a lack of new construction plaguing the housing market, many people are left to rely on the rental market, which saw record-low vacancies in 2019.

Add that up and that means it’s getting more expensive to live in the city, but that doesn’t mean there aren’t affordable options.

To that end, realtor.com found some cities that have affordable surrounding neighborhoods.

“I expect affordability to very much remain a main challenge for the housing market in 2020 for both buyers and renters, partly because there’s very limited new-housing supply,” says George Ratiu, senior economist for realtor.com, in a release.

Realtor.com uncovered the highest city to rent in is San Francisco, where a one-bedroom goes for $3,473. In the San Francisco metro, the Sunset District, located just about five miles outside of town, it was found to be the most affordable surrounding city, with one-bedroom rent going at $2,380.

Fellow California city Los Angeles was also ranked among the top of the list. With median one-bedroom rent at $2,199, the neighboring city of Windsor Hills had median one-bedroom rent at $1,657.

And the lowest? Median one-bedroom rent in Houston is at $1,035. Meanwhile in its most affordable neighborhood, in Mission Bend, located about 20 miles West of the Texas metro, the median one-bedroom rent is $700.

Another Texas metro, Dallas, also sits on the lower end of the list. There, the median one-bedroom rent is $1,180. In its most affordable neighborhood, Northwest Dallas, the median one-bedroom rent is $747.

“For young professionals looking for a place to rent, the major trade-offs center around location, proximity to public transit and amenities, as well as building features,” Ratiu said.

From New York to San Francisco, here are more affordable neighborhoods to live outside of the country’s largest cities:

Philadelphia, PA
Median one-bedroom rent: $1,495
Most affordable neighborhood: Somerton
Median one-bedroom rent in Somerton: $800

Atlanta, GA
Median one-bedroom rent: $1,425
Most affordable neighborhood: Dunwoody
Median one-bedroom rent in Dunwoody: $871

Chicago, IL
Median one-bedroom rent: $1,450
Most affordable neighborhood: Elmwood Park
Median one-bedroom rent: $1,150

Miami, FL
Median one-bedroom rent: $1,700
Most affordable neighborhood: Kendall West
Median one-bedroom rent in Kendall West: $1,251

New York, NY
Median one-bedroom rent: $2,960
Most affordable neighborhood: East Elmhurst
Median one-bedroom rent in East Elmhurst: $1,755

Washington, DC
Median one-bedroom rent: $2,200
Most affordable neighborhood: Chevy Chase
Median one-bedroom rent: $1,838

Boston, MA
Median one-bedroom rent: $2,500
Most affordable neighborhood: West Roxbury
Median one-bedroom rent in West Roxbury: $2,186

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Big banks did big mortgage business in the fourth quarter

While the tallying up isn’t quite done yet, all indications are that 2019 will end up being a very good year for the mortgage business.

Thanks to mortgage rates that were consistently a full percentage point below 2018’s rates for much of the year, last year saw a significant rise in mortgage originations.

That was clearly seen at Wells FargoJPMorgan Chase, Bank of America, and Citigroup, which all saw their respective mortgage originations rise in each quarter of 2019.

Originations first began to pick up at each of those big banks in the second quarter, which isn’t that unusual as spring homebuying season typically leads to an increase in the mortgage originations in the second quarter.

Originations continued rising in the third quarter as low interest rates drove increases at each bank.

But bucking the traditional seasonal slowdown that occurs towards the end of the year, each bank saw originations continue to increase in the fourth quarter as well.

Each of those banks reported their fourth quarter earnings in the last two days, and examinations of each bank’s earnings materials show that originations were up at each bank due to low mortgage rates.

Wells Fargo

Wells Fargo originated $60 billion in mortgages in the fourth quarter, up slightly from the bank’s third quarter total of $58 billion.

But that figure was but up significantly from the year before. In the fourth quarter of 2018, Wells Fargo originated $38 billion in mortgages.

Wells Fargo also received $72 billion in mortgage applications during the fourth quarter, although that figure is down from the bank’s totals in the second and third quarter. During the second quarter, Wells Fargo received $90 billion in mortgage applications. That figure dropped slightly to $85 billion in the third quarter.

And while the fourth quarter saw the lowest dollar figure of mortgage applications since the first quarter, the fourth quarter saw Wells Fargo originate its highest volume of mortgages of any quarter in 2019.

Beyond that, Wells Fargo also disclosed that a full 50% of its mortgage originations in the fourth quarter were for refinances. That’s the highest that share was in any quarter in 2019.

For comparison, in the fourth quarter of 2018, 78% of Wells Fargo’s mortgages were purchase mortgages. But in the fourth quarter of 2019, it was an even 50-50 split.

Chase

Chase also saw its highest origination volume of the year in the fourth quarter. According to that bank’s earnings materials, Chase originated $33.3 billion in mortgages in the fourth quarter.

That’s up from $32.4 billion in the third quarter, $24.5 billion in the second quarter, $15 billion in the first quarter, and $17.2 billion in the fourth quarter of 2018.

The bank saw originations increase from its retail segment in each quarter of 2019, climbing from $7.9 billion in the first quarter to $16.4 billion in the fourth quarter.

Meanwhile, the bank’s correspondent lending channel actually dropped in the fourth quarter, falling from $18.2 billion in the third quarter to $16.9 billion in the fourth quarter.

Despite that drop, the bank’s correspondent lending channel doubled its production from the previous year’s fourth quarter, when the bank originated $8.2 billion in correspondent lending.

Bank of America

Bank of America, meanwhile, also turned in its best quarter of the year in the last quarter of 2019.

Overall, Bank of America originated $22.11 billion in mortgages in the fourth quarter. Of that, $14.65 billion came from the bank’s consumer banking segment, while the remaining amount came from the bank’s Global Wealth and Investment Management segment, which includes Merrill Lynch.

As stated above, the bank’s lending total in the fourth quarter was its highest of the year. In the third quarter, Bank of America originated $20.66 billion in mortgages. In the second quarter, that figure was $18.23 billion. And in the first quarter, the bank originated $11.46 billion.

In the fourth quarter of 2018, the bank originated $9.42 billion, meaning the bank more than doubled its fourth quarter originations from 2018 to 2019.

Citi

Citi also more than doubled its fourth quarter originations. In the fourth quarter of 2018, Citi originated just $2.3 billion in mortgages. Compare that to the fourth quarter of 2019, when the bank originated $6 billion in mortgages.

As with the other banks, Citi increased its originations in each quarter of 2019. In the first quarter, the bank originated $2 billion in mortgages. That figure increased to $3.9 billion in the second quarter. And in the third quarter, that figure rose to $5 billion.

That continues a recent trend at the bank, which scaled back its lending operations a few years ago, but began to ramp those back up in 2018.

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UBS: Fed may cut rate three times in 2020

Conventional wisdom says the Federal Reserve won’t cut rates during an election year, to avoid looking like it’s favoring one candidate over another – unless there’s an economic shock so severe, it’s forced to act.

However, we don’t live in conventional times.

UBS, one of the world’s biggest investment banks, is predicting the Fed could lower interest rates three times in 2020, an outlook at variance with other forecasters that are calling for no change or just one rate cut this year. If it’s correct, it would put downward pressure on mortgage rates.

Damage from tariffs not covered under the Phase One trade deal signed by President Donald Trump on Wednesday will force the Fed to ease monetary policy, Arend Kapteyn, global head of economic research at UBS, said at the UBS Greater China Conference in Shanghai, China, on Tuesday.

Kapteyn is not saying there will be a financial shock to the system. Rather, Kapteyn is saying the slowdown already predicted by the Fed will be worse than expected. The central bank forecast at its December meeting that GDP growth will drop to 2% in 2020 from 2.2% in 2019.

Kapteyn said the first of the three Fed rate cut could come in March.

“We think this tariff damage is going to push U.S. growth down,” Kapteyn said in an interview with CNBC. “That’s actually going to trigger three Fed cuts, which is way off consensus, right? No one believes that. And of course when the Fed starts cutting, everyone else starts cutting.”

While the Fed doesn’t directly control mortgage rates, its decisions and forecasts influence the bond investors who do. If investors are willing to accept lower yields, that translates into lower mortgage rates.

The Phase One trade deal with China gives partial relief for about a third of existing tariffs and didn’t touch the most punishing ones.

It rolled back tariffs on about $120 billion of goods, mainly consumer items and agricultural products, to 7.5% from 15% enacted in September and it canceled additional tariffs threatened by Trump. However, the 25% tariffs on $250 billion of goods that were put in place in the first 18 months of the trade war remain in place.

Those are the ones that are costing the average U.S. household $831 a year as companies pass on the added costs to consumers, according to a Federal Reserve Bank of New York report. None of the tariffs included in that study were touched in the Phase One trade agreement.

Tariffs have already pushed the U.S. manufacturing sector into recession, Kapteyn said. The question is, what comes next for retail and for the consumer spending that accounts for about 70% of the U.S. economy.

“The issue is what happens with the retail sector, which is where the September tariffs – you’re going to get some relief from those, but those are still feeding their way into the data, and so we think you’re going to see accelerated store closures.”

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Direct mail marketing data gets a much-needed infusion of technology

Consumers today are accustomed to personalized experiences across the board – even in advertising – and mortgage lenders need to keep pace with those expectations to gain business. By applying proprietary technology to the same data used by all mortgage lenders for direct mail marketing, Monster Lead Group helps its clients get more specific with their marketing efforts, resulting in increased lift. In fact, Monster Lead Group was able to bring in $10 billion in originations for its clients in 2019 alone.  

Monster Lead Group aims to help its clients maintain a scalable response and keep their acquisition costs within an acceptable range. Chief Visionary Officer Ken Bartz said that the company realized that in order to market effectively in the mortgage space, lenders need to have a deeper insight into their consumers. To provide that insight, Monster Lead Group has built technology that applies multiple algorithms to look at data and understand the relationship between data and response mechanisms inside of pieces of mail.

“What we’ve actually done is taken the mail and put metadata behind it,” Bartz said. “What you see as a piece of paper with some writing on it, we see as a whole bunch of different fields that have information in them, and we can monitor that information against response – then take that and break down a property database and make it a relational database.”

Monster employs a full-time team of data scientists, analysts, programmers and technicians that do nothing but manipulate and manage the data for clients. The resulting quality of targeted data is how Monster achieves the response rates it does. 

This approach to mail campaigns differs from the traditional method, where if you planned to send mail to 10,000 people, “you take your best guess at the message that goes to those 10,000 people,” Bartz said. The best-guess approach can use variable data, but it would be one field inside the same template for everyone – it could drop in a different address, loan amount or lender, but every consumer in that 10,000-person campaign would receive mail that otherwise looks exactly the same and contains exactly the same type of offer.

Instead, Monster Lead Group has taken its cue from digital marketing, which can leverage consumer data for highly customized messaging, and is using metadata to deliver hyper-specific messages in direct-mail marketing.

“One of the things that we’ve developed at Monster is an algorithm that lets us select a template down to the individual record,” Bartz said. “With our database and five years of history and the metadata that we have, we’ve been able to build what we call profiles. We understand what those people have seen and when they’ve seen it.  Have they ever responded? What did they respond to?”

Based on this information, Monster Lead Group can build a propensity model to see what messaging is most likely to reach their client’s customer, allowing marketers to deliver a very specific message targeted to each consumer’s needs.

To return to the 10,000-person mail campaign example: “Instead of sending the same template with the same offer with just your specific information, we can actually send a very specific message that’s completely different than the person next door who’s getting a piece of mail from us, too,” Bartz said. “One person, you get a cash-out message; another person could get a template that looks completely different, ‘lower your amortization.’ So you’re not hemmed into one particular message with those people.”

Delivering the right message to the right consumer helps with lift, he said.

“Let’s say we do a great job, but we’re still stuck in a simple template scenario – let’s say 50% of those people needed to see the message you’re sending them and the other 50% it wasn’t relevant to, and you were able to get a 1% response,” Bartz said. “What you’re doing is getting a 2% response to 50% of the campaign, so overall, you’re getting 1%, but you’re getting 2% of the people that the message was right for.”

If instead, lenders were able to deliver the right message to every single person in the campaign, they would get a 2% response to the entire campaign. “If you double your lift, even if your conversion rate stays exactly the same, your cost per closed loan should be cut in half,” he said.

Monster Lead Group’s data application to direct mail campaigns helps its lenders by solving the up-and-down movement that can occur in marketing and make it difficult to scale a business. “If I knew that I could get a 1% response rate all the time, week in and week out, I could build a business around that and scale that in any manner that I wanted to,” Bartz said.

Ultimately, mortgage marketers need these data insights in order to stay ahead of the game and stay appropriately scaled for shifts in the market. If lenders don’t know who their best consumer targets are and how to market to them, their cost per closed loan is going to increase to an unsustainable point.

Without insights from consumer data and behavior, marketers are taking a best-guess-and-hope approach, which is not feasible, Bartz said, especially in a changing-rate environment.

“In 2018, a lot of lenders contracted, and then it took them a little while to scale up when the rates actually dropped again,” Bartz said. “But many of our clients actually grew. If you think about markets as cyclical, these opportunities are going to come, and the people that are still at scale when that opportunity comes have a first-mover advantage; everybody else has to scale up.”

“It’s like dropping a fishing line into a small lake – you have a pretty good chance of catching a fish. When the market contracts, it’s going to be like dropping your line into the Pacific Ocean and hoping to catch a fish; it’s much more difficult.”

Using Monster’s propensity modeling, cyclical markets have a less dramatic impact because “it’s like having an experienced captain with a fish finder to navigate that ocean,” Bartz explained.

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