The United States is filled with historical and geographic trivia. Reno, Nevada, is farther west than San Diego, California. Johnson City, Tennessee is closer to Canada than it is to Memphis. General Robert E. Lee had a surveying role in “The Toledo War” between Ohio and Michigan, fought over a 450 square mile strip, which included the present-day city of Toledo. (The area was disputed by Ohio and Michigan Territory until Michigan agreed to a land settlement and was granted statehood in 1837 but a 1973 US Supreme Court decision was needed to finalize the actual boundary line.) Kansas and Missouri have a complicated history, but recently completed a truce over the Kansas City metropolitan area. For the past decade, the states have given out an estimated $335 million in giveaways to companies in attempts to persuade them to move from one side of town to the other, all for the purposes of wooing business and potential tax benefits from one state to the other, pretty much a zero-sum game. But the truce established tax incentives that are limited to the four Missouri counties and three Kansas counties that constitute the metro area. So simmer down!
CALCAP Lending, a private money direct lender based out of southern California, continues to expand its business and is seeking experienced wholesale account executives for the company’s new Phoenix, Arizona location as well as its production platforms in Irvine and Roseville California. “CALCAP offers competitive terms for proven producers who can drive business through an extensive array of bridge lending programs covering a variety of property types; from SFR and Residential 2-4 units to Multi-Family, and Small Balance commercial to SFR ground up construction. If you would like to learn more about career opportunities with CALCAP please email HR@calcapadvisors.com and attach your resume for confidential consideration! To obtain information on the flexible financing programs available, you are invited to meet with the team at the upcoming NAMB National Conference (Booth #1013), or by calling 855-372-0960 or visiting online.”
JOIN PRMG at the OMNIA Terrace following the mortgage event of the year, NAMB National on Saturday, September 14th from 7 PM – 10:30 PM! Enjoy an extraordinary view of the strip, exquisite drinks and never-ending camaraderie as we celebrate our 18th Anniversary! Make sure to RSVP HERE or pick up tickets at PRMG’s booth #506! This is an evening you don’t want to miss! After all, PRMG knows how to Party!
Lender products & services
In wholesale news, Nations Direct Mortgage celebrated its best Non-QM funding month in August. “I couldn’t be happier with the dramatic increase in our volume and even more excited about our recently released enhanced products. Our Non-QM volume has doubled since the release of DirectQual,” says Director of Lending, Martin Warren. “Our expansive proprietary products, coupled with our DirectQual AUS and dedicated Help Team, have solidified NDM as a Non-QM leader by providing immense support to our brokers.” Join us for a quick 30-minute webinar to showcase our new Non-QM products as well as our AUS, DirectQual. Click here to register for Thursday, 9/12 or Wednesday, 9/25.
At the recent Lenders One Summit in Seattle, the cooperative announced a new benefit exclusively for members that leverages the collective size of the cooperative to decrease and stabilize healthcare spending through a third-party provider. As one of the biggest expense items on a lender’s profit and loss statement, the cooperative’s executive team addressed the issue at the March Summit. Following a series of formal proposals, Lenders One found a solution with significant savings for members. One of the proposals that had 100 employees on the insurance showed a first-year savings of over $175,000 and annual savings of over $350,000 in the third year. Lenders One members are now able to learn more about next steps and obtain a quote. For more information on the solution or becoming a member of Lenders One, contact Justin Demola, CMB, Vice President of Sales.
How many times have you found out that a past client bought a house and got a new mortgage without your help? You don’t have to answer that. We know it stings. Best case scenario, you keep in touch with your clients, and they remember to call you when they need new loans. But, we know, that’s not always how things go: people are forgetful. Take the guesswork out of client follow-up with Jungo, the Salesforce-based, mortgage optimized CRM and its newest product: Listing Alerts, the 30-second pipeline filler. Listing Alerts provides you with instant notifications when anyone in your database lists a property on the MLS. You’ll be able to follow-up at just the right time to generate new business. To learn more, click here.
“Are you struggling to optimize your marketing automation efforts? If so, you are not alone. Only 21% of companies use their marketing automation system to its fullest potential. That’s why Seroka, a leading branding, digital and strategic communications agency for the mortgage industry, just launched its new Marketing Automation Optimizer. The program helps companies maximize their marketing automation technology with three levels of support that create more streamlined, targeted and personalized content for your marketing campaigns. To learn more, click here, email Seroka, or call 414-899-3536. Going to Digital Mortgage in Las Vegas Sept. 23-24? Schedule a meeting with us there.”
How can you stop your competition from taking new applicants and crippling your bottom line? One of the biggest concerns in the industry right now is losing applicants to competitors early in the loan process. And relationship is key. Failing to establish that lender-customer relationship at the beginning can make or break your yearend goals – and a lot of earnings can slip through your fingers. Start by getting a solution that will shield your leads from your competitors so your quality applicants can stay YOURS. By working with Informative Research and utilizing one of their key tools, you’ll buy yourself enough time to pre-qualify your applicants for a loan and start building that crucial customer relationship. Which means money will stay in your pocket. Reach out now and start building a strong defense for your top applicants.
Flagstar recently launched Loantrac 2.0, its enhanced proprietary LOS system, to broker and non-delegated correspondent customers. It’s faster and more user-friendly, while the redesigned system provides a more streamlined process for submitting and delivering loans. Loantrac 2.0 delivers an exceptional, customized user experience. The process for uploading and viewing multiple documents has been upgraded as well. Other enhancements include a new dashboard that offers a customizable aggregate view of the customers’ active pipeline, intuitive navigation throughout the site, and an updated sellers guide. Flagstar really pays close attention to the needs and problems brokers and correspondents face on a daily basis and have come up with a great solution in Loantrac 2.0. Learn more and sign up for Loantrac 2.0.
The question comes up, is the Fed still buying agency mortgage-backed securities (MBS) as part of its Quantitative Easing (QE) effort? The short answer is yes, QE is definitely alive and well, though volume has been scaled back in recent months. The Federal Open Market Committee (FOMC) trading desk (the desk) is based at the Federal Reserve Bank of New York, and the desk is authorized by the FOMC to buy and sell agency MBS securities to the extent necessary to carry out the most recent directive.
Purchases of agency MBS from primary dealers increase the quantity of reserve balances in the banking system, and principal payments from agency debt and agency MBS holdings are then reinvested in the portfolio through newly issued MBS securities backed by Fannie Mae, Freddie Mac, or Ginnie Mae. It does not purchase jumbo or non-QM securities. Agency MBS purchases are concentrated in newly issued agency MBS in the To-Be-Announced (TBA) market, as these securities have greater liquidity and are closely tied to primary mortgage rates.
The goal to put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. At the heyday, the desk was buying billions of dollars a week. Despite those purchase figures being markedly less currently, originators have been setting volume records this summer, and many of those sales are now going to private investors or foreign government to cover the gap.
With all that being said, here is what the desk has been up to lately, which should provide a sense of prevailing rates in the mortgage market. For reference, a 3.0 coupon fits securities anywhere from 3.25 percent up to 4.0 percent due to the servicing strip and buy-up buy-down grids. From August 15-21, the desk purchased $1.195 billion of 3.0 coupon 30-year and $328 million of 3.5 coupon 30-year FNMA uniform MBS TBA contracts settling in the month of September. Additionally, it purchased $440 million of 3.0 coupon 30-year GNMA2 (a much more prevalent security now than GNMA due to the wider range of coupons it can accommodate) and $242 million of 3.5 coupon 30-year GNMA2, all settling in September. As far as 15-year purchases, the desk purchased $148 million of 2.5 coupon FNMA settling in the month of September.
The following week, August 22-28, saw fewer purchases ahead of the Labor Day weekend. The $363 million total for the week was all GNMA2 September settle, $120 million concentrated in the 3.0 coupon and $243 million concentrated in the 3.5 coupon. This past week, things picked back up, with $1.530 billion of gross purchases. FNMA MBS ($696 million 3.0 coupon; $225 million 3.5 coupon) were all for a September settle, while GNMA2 MBS ($220 million 3.0 coupon; $214 million 3.5 coupon) was all scheduled for an October settle. The desk also purchased $175 million of 2.5 coupon 15-year GNMA2 for an October settle.
Keeping on with the bond markets, Friday brought a mixed payrolls report, an expansion-supporting Fed Chair Powell, and the People’s Bank of China confirming recent rumors of a 50 bps upcoming reserve requirement ratio cut on September 15, all of which let Treasuries to close the week on a slight rally, including the 10-year closing yielding 1.55 percent. For those who still put their recession prediction faith in the shape of the yield curve, the 10-year currently sits +3 bps above the 2-year. Sighs of relief abound.
Fed Chair Powell’s appearance to close the week may have been the most interesting piece of news for markets, as the Fed Chairman noted that an imminent recession is not expected while inflation measures are moving toward the Fed’s target. He added that U.S. consumers and the overall economy are in a good place, though the fed funds futures market remains priced for a near certainty of a 25-bps rate cut on September 18, followed by another cut in December. Chair Powell indicated the Fed was ready and willing to ease when he said that the Fed would act “as appropriate” to sustain the current expansion while highlighting risks that could lower their forecast of moderate growth. No Fed speakers are scheduled this week as the Fed enters its blackout period.
Speaking of this week, kicking off today’s calendar is the Employment Trends Index for August later this morning. Next up will be a FedTrade purchase operation in TIPS ($1.625 billion max 0 to 7.5-years) followed by $45 billion 3- and $42 billion 6-month T-bill auctions, before July consumer credit later this afternoon. Tomorrow brings August NFIB Small Business Optimism Index, the July Job Openings and Labor Turnover Survey, and the results of a $38 billion 3-year Treasury note auction. The midweek session sees August PPI and Core PPI in addition to July Wholesale Inventories, before Thursday reveals August CPI and Core CPI. The week’s lone central bank decision comes on Thursday when the ECB is expected to deliver further accommodation while ECB head Draghi will conduct his second to last press conference. The week closes with August Retail Sales, August Import/Export Prices, July Business Inventories, and preliminary September Michigan Consumer Sentiment Survey.
With regards to MBS, the NY Fed will conduct FedTrade operations today and Thursday when they purchase up to $917 million UMBS30 2.5 percent ($220 million) and 3 percent ($697 million) then $438 million GNII 3 percent ($224 million) and 3.5 percent ($214 million). Class A and B 48-hours are tomorrow and Friday, while the NY Fed will announce tentative four-week MBS reinvestments along with a new two-week FedTrade schedule both for Friday release. We begin the day with rates up a tad: Agency MBS prices are worse .125 and the 10-year is yielding 1.60%.
Part 1 of 5 of “Books Never Written.” (Yes, my mind spends a lot of time in 3rd grade. Warning: Rated PG for bawdy humor.)
The Yellow River by I.P. Daily
The Numbers Game by Cal Q. Later
Under the Bleachers by Seymour Butts
Rusty Bed Springs by I.P. Freeley
Twenty Yards to the Outhouse by Willie Makit, illustrated by Betty Wont and published by Andy Dint
Spots on the Wall by Hugh Flung Poo
Falling Off a Cliff by Eileen Dover
The Complete Proctologist’s Handbook by Ben Dover
The Joys of Drinking by Al Coholic
My Life with Igor by Frank N. Stein
Supporting Athletes by Jacques Strappe
Things That Itch by Mike Rotch
I Was Prepared by Justin Case
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 Rates: Thinking the Unthinkable.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.
(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 2019 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.)