12.4.24 Government Deficit; Chris Whalen on Secondary Happenings; To Cut or Not to Cut

To stay competitive in this market, lenders need to find efficiencies and understand their operations in a much deeper way. Richey May’s consulting, cybersecurity, business intelligence, and automation services are designed by mortgage experts to help you continue to drive growth and increase profitability. Visit https://richeymay.com to learn more.

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My cat Myrtle never had to worry too much about things like… money. Elon Musk, however, can’t seem to catch a break and his $56 billion (yes, with a “b”) pay package didn’t fly. Attorney Brian Levy seems to have trouble taking the new Department of Government Efficiency (D.O.G.E.) to be headed by Elon Musk and Vivek Ramaswamy seriously. Find out why in his latest Mortgage Musings which you can also get delivered to your email box for free by subscribing here. Elon Musk’s name may be intertwined with that of the nominee for Secretary of Treasury (who will work closely with whoever heads up the FHFA, especially if Freddie and Fannie are, once again, sent down the path toward being released from conservatorship). Love Musk or hate Musk, whether dominating the roads with Tesla, space with Space X, the internet with Starlink, social media with X, or the brains of humans with Nuralink, apparently, his influence will impact the U.S. Government payroll. Valuations at Elon Musk’s SpaceX and xAI have soared since the election. The billionaire rocket builder plots a huge share sale while AI start-up closes in on $5 billion funding round. But Guy S. reminded me that the total payroll of the federal government is about $110 billion a year and Federal government spending is $6.1 trillion. You cannot meaningfully shrink the federal government by firing "unelected bureaucrats." Stay tuned! (Today’s podcast can be found here and Richey May is sponsoring this week’s. Richey May’s consulting, cybersecurity, business intelligence, and automation services are designed by mortgage experts to help you continue to drive growth and increase profitability. Hear an interview with the Institutional Risk Analyst’s Chris Whalen on competition for a (potentially) private Fannie and Freddie, when the Fed will be forced to restart quantitative easing (QE), the yield curve under President Trump, and the latest on capital requirements.)

Employment; exec available

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(As a reminder, anyone searching for employment can post their resume at no charge at www.lendernews.com, and potential employers can view all resumes for several months for only $75.)

Lender and broker software, services, and products

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Your accounting team holds the data your company needs to make confident decisions about the future, so how, what, and when they report to key stakeholders is critical. Join CWDL tomorrow, December 5th, for “The Accounting Department’s Guide to Communicating with Key Stakeholders,” a webinar tailored to accounting and finance professionals in the mortgage industry. Panelists Paul Hubbard and Trevor Reinhart, both former mortgage CFOs, will share their first-hand insight for reporting to management, owners, warehouse banks, and investors, and industry leaders Michael McAuley and Mark Wilson will provide their tips for proactive communication and collaboration. Register here to arm your accounting leaders and teams with actionable strategies to strengthen stakeholder relationships and improve financial reporting practices.

Production Managers, we’re talking to YOU! Heading into 2025, you’re probably wondering, “How can I get all my originators working more like my top producers?” You’ve been looking for the holy grail: habit replication. Usherpa has been researching habits of highly successful Loan Officers for 30 years and has helped literally thousands of LOs increase production using habit replication - through every conceivable market condition! How? Using data analytics and AI-powered alerts (and lengthy history in the industry), Usherpa identified the most powerful habits of successful producers. Leveraging those trends coupled with Usherpa’s new cutting-edge Pipeline technology and commitment to customized training, you can ensure your team is primed to operate like the big hitters. Make your life a little bit easier and give your LOs the tools to duplicate top producers’ habits, learn how here. While you’re at it download the Usherpa eGuide “3 Habits of Top Producing Loan Officers (You Can Duplicate).”

Today’s mortgage landscape is competitive, and mortgage lenders want to avoid spending money, time and resources on prospects who might eventually switch to another lender. Similarly, potential borrowers want the flexibility to shop for mortgages without impacting their credit. TransUnion is improving the mortgage underwriting process with TruVisionTM Trended Early Access Soft Check. This soft inquiry report, which pulls industry-leading TransUnion trended credit data, enables mortgage lenders to begin underwriting earlier, reducing unnecessary, upfront verifications and processing costs while helping protect pipelines. Best of all, lenders can reassure potential borrowers they can shop around without fearing their credit scores might be negatively impacted. Now that’s what we call a win-win! Learn more here.

Santa delivers presents to about 500 million households in 42 hours, leaving him with about .0003 seconds per house to deliver your gifts and eat all the cookies. Most eNote setups aren’t that fast yet, but NotaryCam’s Done For You eNote and eVault Solutions are redefining efficiency for title companies and lenders alike. Partnering seamlessly with title companies, NotaryCam handles it all from setup to eNote creation and eVault solutions, ensuring compliance with regulations, seamless system integrations, simplified eVault solutions, MERS registration assistance, ongoing training and support and faster go-live times. Let us handle the heavy lifting, so you can focus on closing loans faster and delivering an exceptional borrower experience. Ready to unwrap the possibilities? Email sales@notarycam.com to select the right package to put under your tree.

“Is a standing call with your servicer enough for proper oversight? What does proper oversight entail? Ultimately, you are responsible for overseeing your subservicer, so you must understand what is expected of you and the key actions you need to take to maintain oversight and comply with regulations. Proper oversight includes an annual review and testing of the subservicer’s processes and procedures. Tune in to this video, where the experts at Richey May answer the most frequently asked questions about subservicer oversight requirements. Whether you’re considering a subservicer or navigating the general complexities of oversight, Richey May’s mortgage compliance experts can help. To learn more about our review process, check our 2025 schedule, or to sign up, contact us today!”

Correspondent and wholesale products

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This year, Verus Mortgage Capital is celebrating the holiday season by extending heartfelt thanks to its clients for their ongoing business. Dedicated brokers and lender clients like you have enabled Verus to maintain its leadership position as one of the largest non-agency investors in the country. Since its inception in 2015, Verus has amassed an impressive track record having purchased over $30 billion in non-agency loans to date. It understands how to responsibly reduce risk so its partners can confidently close loans. With common sense underwriting, training, onboarding support, and personal assistance, Verus helps brokers and correspondents confidently move into the non-agency sector and succeed. Partner with a seasoned investor partner that knows how to buy non-QM loans, Verus, and offer your borrowers more options – which translate to more closings. For more information, contact Jeff Schaefer, EVP – National Sales (202-534-1821). 

Top LO Matt Weaver and Robbie Chrisman (Part 2 of 3)

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Recently Robbie Chrisman sat down with Cross Country’s Matt Weaver, ranked No. 1 for Most Loans Closed and No. 4 in Top Dollar Volume in 2023. Hearing his perspective is a must, given the election results, rates, and drooping MBA forecasts for 2025 for the industry. Matt dropped out of high school and happened to be waiting on a top real estate agent… and, well, you can guess the story. (More from Mr. Weaver tomorrow.)

“This is a lot for someone new entering the origination business who are trying to develop a network. The single best advice I can give to someone entering in the mortgage industry is to first understand who is the customer that you want to serve. If I had a genuine passion for refinances, I would be a refinance expert. I would be refinancing people left and right, regardless of interest rates and regardless of market cycles, because I'd find the opportunities in how to do it. That would be my singular purpose, my single focus. In this case, I don't have a passion for it which is why I don't focus on it.

“Now, of course, for our past clients who are in need of a refinance, should rates come down, or when they do come down, I do have a channel within the team structure that handles it, but I'm not focused on it. I mentioned divorce attorneys earlier. Some may have an affinity or a passion to help those that are going through that arduous process. Well, there's a lot of it out there, and if that's what you love to do, focus on that customer.

“If you really love to work with real estate agents, okay, then that's the customer you want to focus on. But if you're just doing it because you're told that's what to do, I don't think that works. Because it's almost like trying to force a child to play a sport that they don't really have their heart into. In order to succeed at the highest level of origination, in my opinion, you have to have passion for what you do. And that exudes through all aspects.

“The second thing I would say to a new originator coming into the business is that, once you understand who your customer is and who you want to serve, chart out your process. Chart it out. Consistency is everything, and I have to tell you, when I say ‘chart out the process,’ I'm referring to not only the actual process flow from the onset of, ‘Hi, I'd like to get pre-approved’ all the way through to funding, but also your scripts. When I say ‘script,’ most people jump because they think you sound like a robot. Say every single word, word by word. That's not what I mean.

“Having a scripted process will help you know and learn what works and what doesn't work. Every industry has a scripted process. Flight attendants, pilots, religious organizations, customer service divisions, all have them. An originator just kind of ‘winging it’ and trying to figure out what they’re going to say next doesn’t work. Think of your opening lines. Think about the basic elevator.

“Think of it this way. If it is a real estate agent that you're looking to serve, imagine if they sat right across from you and they asked, ‘Why would I use your services over the loan officer down the street?’ You need to eloquently deliver the reasons why they should choose you over that loan officer or you're going to battle your way through the process. Understanding who your customer is, charting out your process, knowing your value propositions, and knowing your presentation and your scripts are important because a strong presentation makes the sale a lot easier.” (Part 3 tomorrow.)

Capital markets: is the economy weak enough for lower rates?

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Aside from geopolitical rumblings mostly emanating from China and France, bond market attention yesterday was focused on Federal Reserve rhetoric: San Francisco Fed President Daly signaled uncertainty about an interest rate cut this month (market odds currently sit around 60 percent for a 25-basis points cut), but suggested that the Fed stick to a cautious approach in its ongoing efforts to manage inflation without derailing the economy. Fed Governor Waller laid out his case for a December rate cut earlier this week, stating that he believes rates are sufficiently restrictive and that there is a lot of work to be done to get Fed Funds back to a neutral stance.

The Fed’s most recent meeting minutes deemed economic activity as “largely stronger than anticipated.” Policymakers judged “it would likely be appropriate to move gradually toward a more neutral stance of policy over time.” Odds currently sit around 60 percent for a 25-basis points rate cut later this month, though the Fed seems open to a pause should economic data over the next two weeks come in stronger than expected.

Economic data yesterday suggested a possible stabilization in the labor market. October saw a rise in job openings to 7.74 million from a downwardly revised 7.372 million in September and a decline in layoffs to the lowest level since June. Workers appear more confident, as evidenced by an increase in resignations, possibly signaling improved job prospects. Although high-profile companies like Boeing and General Motors have announced layoffs, we are yet to see widespread job cuts, which supports the narrative of a soft landing for the U.S. economy despite uncertainties (e.g., trade policies under the incoming administration). Listen to today’s podcast for Chris Whalen’s take on what the bond market will look like under Trump 2.0.

As mortgage rates fell to their lowest level in over a month last week, mortgage applications increased 2.8 percent from one week earlier, according to data from the Mortgage Bankers Association. Keep in mind that those figures included an adjustment for the Thanksgiving holiday. That kicked off today’s economic calendar, alongside our second labor market indicator this week: ADP Employment Change (private sector employment increased by 146,000 jobs in November and annual pay was up 4.8 percent year-over-year). With impacts of hurricanes Helene and Milton in the rearview mirror, hiring was expected to have rebounded in November. Later today brings the November ISM Non-Manufacturing Index, which does carry some weight for investor sentiment. We begin Hump Day with Agency MBS prices slightly worse from Tuesday, thus slightly worse from Monday, the 2-year at 4.20, and the 10-year yielding 4.26 after closing yesterday at 4.27 percent.

We’re coming up on the holiday travel season, so let’s skip the usual humor or trivia and put out some advice from a retired flight attendant who flew for 35 years. Weather delays, equipment or crew issues, and computer glitches seem to have become the norm. (Part 3 of 5.)

9. Avoid connecting in Newark (or any New York airport for that matter). It is literal hell. You have a 50/50 chance your flight will cancel or of missing your connection. They have been cancelling flights at their starting points just to keep the planes out, because there just aren’t enough people to manage the planes, so the gates stay full. Also, the restaurants are expensive, so it is not a great place to be stuck.

10. Be nice. Many flight attendants are overworked and tired. We will not help you if you are mean. No one cares that you are going to miss your cruise if you are a jerk. So even if we can help, we will save our help for someone nice. Tensions are high. Our patience is gone. If you make us mad, you will not be flying on our planes. We will leave you behind without a second thought and laugh about it later.

11. Being drunk on an airplane is a federal offense, so don’t overdo it. If you drink too much at the bar waiting for your delayed flight, you risk not being allowed to fly at all. We are too tired to deal with your drunkard self when we have legitimate issues to deal with.

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 STRATMOR blog is “A Lender’s Personal Touch Can Help After a Disaster.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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