8.23.23 Work Environment Changes; Brokered Out Compensation; Mortgage Applications Down

Thanks to today's podcast sponsor, PHH Mortgage. For over 30 years, PHH Mortgage has provided industry-leading mortgage services and helped countless homebuyers and homeowners find financing solutions to meet their needs. Their reputation is based on building and maintaining relationships that last long after you get the keys to your home or complete your refinance. Whether you are looking to purchase a new home or refinance your current mortgage, PHH Mortgage offers a wide variety of loan options, including conventional, VA and FHA. Learn more at phhmortgage.com.

Transcript

As the Western Secondary winds up, and weary capital markets staff & vendors head home from Orange County, perhaps humming “California Gurls,” working conditions and changes in the work environment are still a topic. For example, Goldman Sachs is making a concerted effort for its workforce to return to the office five days a week. I’ve concluded that I need a non-technical, high-paying, remote job that can be done with minimal effort. It turns out that there’s a term for it: “Lazy-girl job.” AEs and vendor sales staff have gradually returned to calling on offices and occasionally bringing those pink boxes filled with treats. While we wrap up with this state, pink boxes started appearing in Southern California courtesy of Cambodian refugee (and successful So-Cal donut shop owner) Ted Ngoy. Many other Cambodian and South Asian immigrants became donut shop owners after coming to the United States in the mid-1970s to escape the Khmer Rouge. Ngoy’s donut boxes were supplied by a paper company called Westco, and he was hoping to save a few bucks by using a cheaper box. According to the Los Angeles Times, 200 pink boxes cost $20… and 200 white boxes, $25. (Today’s podcast can be found here and this week’s is sponsored by PHH Mortgage. For over 30 years, PHH Mortgage has provided industry-leading mortgage services and helped countless homebuyers and homeowners find financing solutions to meet their needs.)

Employment, contract marketing help, and a promotion

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“Evergreen Home Loans™ proudly showcases The Buyer Booster Program, a dynamic tool for proactive loan officers dedicated to exceeding client service expectations. Our unique program provides a $2,500 lender credit for eligible refinances, augmenting your ability to deliver tailored financial solutions. The Buyer Booster caters to borrowers undertaking purchase contracts from July 1 to September 29, 2023, further strengthening our portfolio of customer-focused offerings. At Evergreen, we equip our loan officers with industry-leading tools and resources to simplify and enrich the financial journey for our clients. With the ability to cater to a diverse range of loan programs, we affirm our dedication to inclusivity and adaptability. We invite you to join our forward-thinking team, embrace the possibilities of The Buyer Booster Program, and elevate your client relationships. Discover a rewarding career journey with Evergreen: explore our current opportunities here.”

If anyone out there needs a little help with their marketing efforts, such as content creation, social media management, or branding strategy, let me know. An experienced marketing person and mortgage veteran is looking to help a small number of individuals and/or companies on a part-time basis. If you are a company with no marketing personnel, or an individual seeking to increase your scope, let me know and I will forward your email.

Don’t forget that private mortgage insurance companies are hiring: MGIC, National MI, Arch MI, Radian, Essent, and Enact (in no particular order). And while’s we’re at it, Fannie Mae and Freddie Mac. And my cat Myrtle’s friend the CFPB.

Mobility Market Intelligence (MMI) has promoted Heidi Iverson to Vice President of Strategic Partnerships. In this role, Iverson will lead sales and customer success efforts focused on strategic relationships in the mortgage and real estate sectors.

Lender and broker software and services

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“At Optimal Blue, secondary marketing is music to our ears! That’s why we’re so excited to visit Music City to attend TMC in Nashville in September. Put your business center stage by connecting with one of our experts. This is an opportunity to learn how you can fine-tune your strategies by incorporating automation, data and analytics into your lineup. Then, be sure to catch Optimal Blue President Kevin McMahon as he joins Rob Chrisman for a live Rundown episode with TMC President and COO Melissa Langdale on Sept. 12 from 12:20 – 1 p.m. We look forward to seeing you in Nashville!”

Henri Pescarolo competed in the 24 Hours of Le Mans a record 33 times. He didn’t win all 33 of his races, but with Down Payment Resource you can win back 33% of your declined loan applications with homebuyer assistance programs. In a market where lenders need to hang on to every fundable loan, Down Payment Resource’s DPA directory of over 2,000 homebuyer assistance programs is an essential tool to help qualified borrowers build wealth through homeownership. Request a personalized Declined Loan Analysis today and help more of your borrowers across the finish line.

“Prep now for MBA Annual in Phila, PA Oct 15-18. Get your meeting booked with Service 1st. S1 meeting and reception space is immediately across the street from the convention center. Let’s discuss outsourcing, bi-merge credit reporting (changes coming Q1 24’), portfolio review, cascades (credit, VOE), income analysis/verification and workflow optimization. Not working with S1? Our entire on-boarding process was re-engineered and released this month. Spring 24’ volume could pop and with back-office staff reductions over the last 18 months, we’ll have you best prepared. Book your MBA meeting with S1 today. Welcome to PHILLY, our backyard ;)”

“Elevate your mortgage game with our groundbreaking eBook: “Adapt to Market Challenges by Tightening up Your Mortgage Tech Stack.” Are current market shifts and instability keeping you up at night? Embrace the future by optimizing your mortgage tech stack. Our FREE eBook is designed exclusively for mortgage professionals seeking a competitive edge. Discover how to streamline loan processing for lightning-fast closings, Harness AI for smarter credit assessments and risk management, enhance the customer experience with digital platforms, and navigate regulatory hurdles seamlessly with compliant solutions. Stay steps ahead in the mortgage industry by fortifying your tech arsenal. Let our eBook be your guide to tackling challenges head-on and seizing new opportunities. Don’t miss out! Download our eBook now and revolutionize your mortgage business today! Ready to evaluate a better solution for your credit reporting and verifications needs? Contact Birchwood Credit Services today and let us show what a true credit and verifications partnership really looks like!

Summer is winding down, and conference season is revving up! Computershare Loan Services (CLS) is a third-party provider that offers peace of mind across your business, from originations to subservicing. Catch up with the CLS team at IMN’s NPL, Notes & Default Servicing Forum on September 7 – 8, NEMBC on September 13 – 14, NAMMBA Connect on September 14 – 16, and ACUMA on October 1 – 4, and learn how Computershare can help your business stay one step ahead. Contact the CLS team today to schedule a meeting!”

If you’re not leveraging the best possible digital tools, loan opportunities, and easy money, are slipping through the cracks. Some of your highest-quality opportunities are hiding in your database, but without Total Expert Customer Intelligence, you won’t discover them until it’s too late. Prospective borrowers might be talking to multiple lenders and past customers aren’t guaranteed to let you know when they plan to buy, sell, or refinance. For every 1,000 contacts monitored in your database, we can uncover 90 new loan opportunities and alert you in real time so you can engage borrowers at critical moments in their lending journey. See how many new opportunities—and how much more revenue—you could drive with our ROI calculator.

SitusAMC is the leading provider of brokerage, transaction management, and advisory services. In 2022 the firm traded over $330 billion in MSR UPB over 70 transactions and $3.2 billion in whole loan UPB over 400 transactions. SitusAMC supports more than 500 accounts across all asset classes, featuring relationships with leading investments banks, PE funds, insurance companies, GSEs, money managers and alternative investment managers. The brokerage team has an in-depth understanding of market dynamics and can identify “first mover” opportunities and source products to match the market’s evolution. Schedule a phone call with the team the industry goes to for brokerage and transaction advisory.

Advocate for our industry: it’s free!

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September is MBA Advocacy Month, a campaign dedicated to raising awareness about the importance of making an impact and influencing positive policy outcomes on a national level. MBA Advocacy Month is to be packed with virtual events led by MBA’s Legislative and Political Affairs (LPA) team, including separate Residential and Commercial/Multifamily Legislative “Townhalls” and two MORPAC Speaker Series events featuring House Financial Services Committee Members Congresswoman Brittany Pettersen (D-CO) and Congressman Bryan Steil (R-WI). These events are free for active Mortgage Action Alliance (MAA) members, current MORPAC supporters and member organizations participating in MORPAC Action Week, September 18-22. Sign up or renew your MAA membership before or on #MAAMonday, September 25. Add your company to the growing participation list to help strengthen MBA’s federal, bi-partisan political action committee (PAC), MORPAC, and grassroots network, MAA. If you want to learn more about how to get involved, please contact MBA’s Associate PAC Director, Jamey Lynch, AMP or call 202-557-2818.

Compensation: still questions about brokered-out biz

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Even though this is a capital markets conference, LO comp is an issue, especially as it impacts loan pricing to borrowers. “In its Summer 2023 Supervisory Highlights report, the Consumer Financial Protection Bureau suggests that institutions paying different amounts for brokered transactions and in-house transactions violates the Loan Originator Compensation Rule (“LO Comp Rule”) in Regulation Z. Or did it?”

There are still questions, but one thing is sure. “Companies paying differently for brokered versus in-house loans should analyze the impact of these statements to ensure their structures fall within their risk tolerances and determine how best to mitigate risks in this messier world.”

For the full read, check out this piece titled, “Different LO Compensation for Brokered-Out vs. In-House Loans Prohibited? Maybe, says CFPB.”

Attorney Brian Levy, in his August 11 Musings “Quacks like a Duck”, addressed brokered loan compensation. “Speaking of LO Comp and brokered loans, those of you who think ignorance is bliss and safety in numbers might want to reconsider blindly compensating your originators differently for brokered loans after the most recent CFPB Supervisory Highlights seemed to make that a clear violation.”

What do underwriters and processors and LOs make? STRATMOR has the information, spelled out in a recent Perspectives piece.

With budget season rapidly approaching, make sure you have comprehensive compensation data you need to drive your planning for next year. STRATMOR Group’s Compensation Connection® Study provides valuable insight into compensation components, incentive plan structures, role specifics and more, aggregated by company type, annual volume, and region. Prior three-year trending is also included on most metrics. Get the compensation data you need: sign up for the Fall 2023 Compensation Connection® Study today!

Capital markets: mortgage applications continue to fall

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Ahead of Friday’s speech from Fed Chair Powell, the market has been reminded about the questionable health of the banking sector, as Standard & Poor's downgraded several banks. Investors are jittery ahead of Jerome Powell's speech but have finally succumbed to the Fed’s higher rates for longer policy stance. Fed funds futures prices are now implying a nearly 40 percent chance that the Fed will ratchet rates higher by an additional 25 basis points prior to year-end, up from just over 25 percent one month ago. The fear amongst investors is that the neutral interest rate will need to be higher than it was pre-pandemic, even if inflation returns to 2 percent, which could force policy makers to delay their first rate cut.

Today we have the new home sales report, but yesterday we learned that existing-home sales fell 2.2 percent in July to a seasonally adjusted annual rate of 4.07 million. Sales receded 16.6 percent from one year ago as the inventory of existing homes for sale remains tight and affordability continues to be adversely impacted by rising prices and higher mortgage rates.

Those factors are also acting as moving deterrents for existing homeowners. The median existing-home sales price rose 1.9 percent from one year ago to $406,700. The inventory of unsold existing homes increased 3.7 percent from the previous month to 1.11 million at the end of July, or the equivalent of 3.3 months’ supply at the current monthly sales pace.

Are there any deals out there? It seems that the lion’s share of business is going to those LOs and companies that had relationships with referral sources before the pandemic’s huge rush of refis. As an indication, today’s economic calendar kicked off with mortgage applications from MBA, which unsurprisingly decreased 4.2 percent from one week earlier, largely due to the highest mortgage rates in 20 years. Later today brings preliminary August S&P Global PMIs, the aforementioned July new home sales, and a Treasury auction of$ 24 billion reopened 2-year Floating Rate Note (FRNs) and $16 billion 20-year bonds. (FRNs are relatively short-term investments that mature in two years and pay interest four times each year.) We begin the day with Agency MBS prices are better by .375-.5, the 10-year yielding 4.27 after closing yesterday at 4.33 percent, and the 2-year is at 5.00 percent.

Don C. writes:

There were four mortgage professionals heading out from the California MBA when the car suddenly sputtered and died, so they pulled over.

As first, the salesperson asks, “Who forgot to get gas?!?”

The processor said there was gas and then exclaimed, “It’s the battery!”

Next, the underwriter chimed in with, “No, the battery wouldn’t stop the car. It must be the water pump.”

After a moment, the IT manager says, “Maybe we should all get out then get back in.”