2.4.25 Predictions and Eulogies; Outamation's Devang Kamdar on Data; Tariffs and Trade Wars

Thank you to Optimal Blue. Optimal Blue bridges the primary and secondary mortgage markets to deliver the industry’s only end-to-end capital markets platform, helping lenders maximize profitability and operate efficiently so they can help American borrowers achieve the dream of homeownership. 

Transcript

How’s your ability to predict the weather? Apparently not good if you’re a groundhog. It is not hard to predict how you’ll hear from the IRS, if you do: The IRS always communicates through the mail, never by email or text. (There’s a scam tip you can pass along to your clients.) And LOs have all seen people incorrectly predicting the direction of interest rates and incorrectly predicting a U.S. recession. President Trump is predicting he will improve housing affordability; Mark Cuban predicts the biggest hit to housing affordability in 2025 is homeowner’s insurance, regulated at the state level of course. That is a safe bet, as it is already a major expense in many areas. There’s a lot of news being thrown at our industry, and much of it was discussed at the MBA’s IMB conference last week. In fact, the subject of today’s Advisory Angle at 2PM ET, presented by STRATMOR Group, is “From the Conference Floor: Actionable Insights for Mortgage Lenders from IMB 2025” featuring Garth Graham, David Hrobon, and Sue Woodard discussing the highpoints and key takeaways from the IMB conference. (Today’s podcast can be found here and this week’s is sponsored by Optimal Blue. OB bridges the primary and secondary mortgage markets to deliver the industry’s only end-to-end capital markets platform, helping lenders maximize profitability and operate efficiently so they can help American borrowers achieve the dream of homeownership. Hear an interview with Outamation's Devang Kamdar on SOC and ISO accreditations and the future of data in the mortgage industry.)

Employment, transitions, entities wanted; VA’s office orders

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The beginning of 2025 appears to be a busy and diverse M&A market. STRATMOR expects to see several transactions close in the first half of the year, and there are some interesting licensed corporate entities available. These include GSE seller/servicer approvals and state licenses, so if you ready with capital to invest, then acquitting may be a good opportunity. If your company’s growth strategy includes investing or acquiring a licensed mortgage banking entity, you can reach out to Garth Graham to learn more.

“MAXEX welcomes Nancy Carter and Scott Hornick as Managing Directors on the Sales Team of its rapidly growing Non-Delegated division. Launching this month, originators can access greater liquidity for non-delegated Non-QM and DSCR through MAXEX’s multi-buyer exchange. Get fast pre-close underwriting, scenario reviews, and exceptions, with loan amounts up to $3 million at 90% LTV for various full-doc and alt-doc loan scenarios, and up to $2 million at 80% LTV for DSCR loan scenarios. Visit our website to learn how these new options can enhance your lending strategy.”

The mortgage industry is evolving, and Canopy Mortgage is leading the charge in growth! With a transparent P&L model, advanced LOS technology, and a streamlined approach that eliminates red tape, Canopy gives loan officers the tools to succeed in any market. Canopy is actively seeking producing Loan Officers to join its nationwide team. Are you interested in transparent low corporate margins with the freedom to run your business your way? Give us a call to see what's possible 385-273-0404 or email us here for a confidential P&L review today. Canopy Mortgage - Lower Rates. Better Tech. Real People.

The Department of Veterans Affairs (aka, VA) announced its return to in-person work policy: eligible employees must work full-time at their respective duty stations (agency worksites) unless excused due to a disability, qualifying medical condition or other compelling reason. The announcement follows President Trump’s Jan. 20, presidential memorandum on return to in-person work. “More than 20% of VA’s more than 479,000 employees currently have telework or remote work arrangements. As part of the new policy, political appointees, senior executive service members, SES equivalents, senior level and scientific and professional employees will no longer be eligible for remote work arrangements. By Feb. 24, 2025, their telework agreements will be terminated, except for ad hoc or situational telework…”

OCMBC Inc., dba LoanStream, has named former chief capital markets officer John Hamel as president and placed Serene Vernon on administrative leave after Vernon was arrested on suspicion of murder and driving under the influence (DUI) causing injury after a vehicle collision that killed an 88-year-old man.

(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.)

Broker and banker products, software, and services

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In today’s competitive mortgage landscape, operational efficiency is no longer optional… it's essential. To reduce costs and scale with demand, mortgage leaders need to act now. ICE’s eBook, “A lender’s guide to improving efficiency and reducing the cost of origination,” outlines six proven strategies to help you lower origination costs without sacrificing loan quality. Download your copy here to discover the financial benefits of leveraging automation across workflows and how you can maximize the value from your existing technology investments.

Don’t be koi: get on the list for Sagent’s sushi + sake party! It’s the only spot at MBA Servicing to connect with industry pros while sipping some refreshing Japanese-inspired cocktails + mocktails, enjoying decadent sushi rolls (or if you’re not into sushi you’ll find options for non-fish folks), and just for the halibut, an exclusive whiskey tasting. All of this and more can be found at Sagent’s Sushi + Sake event hosted on Wednesday, 2/5 at 7 PM located at TEN Sushi Cocktail Bar, but with limited space, you’ll miso out if you don’t reserve your spot ASAP. Click the link here for all the details and we’ll sea you there!

“Here’s a popular program. JMAC Lending’s FHA Down Payment Assistance program provides an FHA first with a 3.5% or 5.0% DPA that can go toward the down payment and/or closing costs. No income limits, lower credit scores and no Max DTI with AUS approval, manual underwriting available, and the borrower does not need to be a first-time home buyer. Watch our DPA Video to learn about this easy-to-use program which is available in every state JMAC is licensed. Need a fast turn? Our fastest closing with the DPA program, so far, has been 6 days! Get a Better Broker Experience with JMAC Lending. Watch JMAC’s video on all the new products and services available from your complete lender in business since 1998. Contact us and visit here.”

On February 3rd, 2025, TMS proudly became the Master Servicer for the Texas Department of Housing and Community Affairs (TDHCA). The TDHCA Down Payment Assistance (DPA) programs offer a vital pathway to homeownership for qualified buyers across Texas by providing flexible and affordable financing options. To participate in the TDHCA programs, lenders who are currently approved with TMS who are not yet approved with TDHCA need to submit a request for application by emailing TxHomebuyer@tdhca.texas.gov. Lenders approved with TDHCA who are not approved with TMS should contact TMS to receive an application. Additionally, TMS and TDHCA will host a training session on Monday, February 10, 2025, from 11:00 am to 12:00 pm CST. Click here to register for the upcoming training session.

“Save $1500 per loan with Maxwell Private Label Origination! Are high fixed costs eroding the profitability of your mortgage division? Rather than being at the mercy of the housing market's fluctuations, consider a cost-per-closed-loan structure that allows you to manage your expenses more flexibly. Maxwell Private Label Origination (PLO) offers everything you need to originate a mortgage, all at a simple, per-closed-loan cost. We integrate technology, personnel, and your mortgage products into a seamless, fully white-labeled experience. Schedule a call to learn how our cost structure can save the average PLO customer $1500 per loan and find out if this is the right fit for you.”

The Consumer Finance Protection Bureau

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Today, Tuesday at 11am PT, two veteran LOs discuss all things mortgage with Industry Leaders: Mortgage Pros 411 with Audrey Boissonou and Kevin Casey. Hear from Mark McArdle with the CFPB.

President Trump fired CFPB Director Chopra on February 1, 2025, and appointed Treasury Secretary Scott Bessent as Acting Director. But is this the end of the story? From the legal ranks, “Our Co-Managing Partner Richard Horn has authored a blog post on the firing, the interaction of the Dodd-Frank Act and the Federal Vacancies Reform Act, and what could happen next.”

My cat Myrtle was never a fan of the CFPB, and say what you want about it, but the CFPB has “returned over $21 billion to consumers harmed by corporations and financial institutions since its establishment in the wake of the 2008 financial crisis.” Although the Supreme Court handed the CFPB a major victory last year by reaffirming the Bureau's funding structure, prominent Trump surrogate Elon Musk has called to “Delete CFPB” and Project 2025 calls for the agency’s abolishment. 

Horacio Méndez, President and CEO of Woodstock Institute, said, “Director Chopra’s tenure saw significant progress to rein in bad actors who exploit American families for profit. His successor comes at a critical moment when the rapid rise of new and alternative forms of financial services, including crypto and other fintech products, raise pressing consumer financial protection questions. We hope to work with his successor on these issues with the best interests of everyday Americans in mind.”

“If the new leadership is not interested in continuing this work, we in Illinois are exploring what it will take to keep Illinoisans protected from harmful financial practices, including an Illinois state-level Consumer Financial Protection Bureau to fill the gaps left by the federal CFPB.”

“’The financial safety of Illinois residents should not be left to the whims of federal politics, which is why we are taking steps towards the creation of a potential Illinois CFPB,’ said Illinois State Senator Mark Walker. ‘This is an opportunity to reaffirm the State's leadership in protecting our people from fraud and abuse, as the Federal Administration abandons its responsibilities.’

“The CFPB had taken action on more than 160,000 complaints from Illinois consumers as of September 2023, largely in response to issues with credit reporting and debt collection. At the state level, Illinois lawmakers have enacted strong consumer protection laws in recent years, including a 36% rate cap on consumer loans and a program that eliminated medical debt for over 52,000 Illinoisans so far.

“Under Director Chopra, the federal CFPB doubled down on its mission with a particular focus on lowering costs for consumers through new rules eliminating excessive junk fees, including significant reductions in both credit card late fees and overdraft fees. The Bureau also finalized a new rule banning medical debt from credit reports in the final days of the Biden Administration. The future of these policies is unclear.”

MSAs, social media, and AI in ‘25

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The latest piece from Onward & Upward Consulting’s Rich Swerbinsky highlights how forward-thinking lenders are thriving in today’s challenging market by abandoning outdated strategies and embracing innovation. Instead of waiting for rates to drop, successful lenders are leveraging Marketing Services Agreements (MSAs), partnering with social media influencers to reach first-time buyers, and coaching loan officers to enhance their personal brands on LinkedIn. They’re also doubling down on local market knowledge, offering in-house buyer’s agent services, and diversifying with niche loan products like non-QM and construction-to-perm loans. By integrating AI tools to improve lead conversion and borrower engagement, these lenders are staying ahead of the curve and capturing market share while others play defense.

Tariffs: reactions and a warning

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Reaction to the tariffs, and the pause in them, was swift among readers of the Commentary and ranged from:

“How awesome was it of Trump to use his undeniably great business skills and use tariffs to get Mexico to help us stop the human trafficking that happens at the border? Of course, the tariffs were put on hold and Mexico agreed to do what any good neighbor (or decent person) would do and help us stop the drugs and human smugglers from coming over our border - and no tariffs were imposed. No wonder why the majority of Americans voted for him.” (Editor’s note: Trump won 77,284,118 votes, or 49.8 percent of the votes cast for president.)

To

“Trump heard reports of the boos during the NHL hockey game, saw the stock market tanking with the tariff proposal, how much money his friends were losing, and decided to cave in and offer a deal. What Mexico agreed to, troop-wise, was already agreed to by Mexico four years ago under Biden. It is amazing to me that one person, known to change his mind repeatedly, can have this impact on stock and bond markets around the world.”

In a somewhat unique public stance yesterday, Reuters reported that two Federal Reserve officials warned the large-scale tariffs now being pursued by the Trump Administration come with inflation risks, even as they stopped short of saying how that's affecting their thinking about monetary policy in a climate of notable uncertainty.

"’The kind of broad-based tariffs that were announced over the weekend, one would expect to have an impact on prices,’ Federal Reserve Bank of Boston President Collins said in an interview with CNBC, adding that ‘with broad-based tariffs, you actually would not only see increases in prices of final goods, but also a number of intermediate goods.’

“Collins, however, noted there's not a lot of experience on how mega tariffs impact the economy in the modern age, which makes it hard for the Fed to know exactly how things will play out. She noted it’s possible that the Fed could even shrug off a one-time increase in inflation tied to the tariffs, although even that was uncertain.

“Speaking separately, Atlanta Fed President Raphael Bostic warned his business contacts were planning to pass through any rising costs related to the tariffs. ‘The ultimate question about whether that is significantly inflationary depends on exactly how it plays out,’ as there are scenarios where the Fed may be able to shrug off these increases and ones where it might not be able to. ‘To the extent that were to impact things like inflation expectations then you'd have to,’ Bostic told reporters after a speech.

“Economists broadly expect the tariffs will push up inflation and depress growth, but are struggling to measure to what extent, given the fluidity of the situation. Analysts at the Peterson Institute for International Economics said Monday that the full suite of tariffs on the three nations will cost the typical American household an additional $1,200 a year in higher costs. Meanwhile, ING chief international economist James Knightley highlighted the uneven nature of who will bear the impact of tariffs, which are effectively tax increases on American citizens, as tariffs are paid by the citizens of importing nations… the burden will fall disproportionally on low-income households who spend more of their income on physical goods relative to higher income households." (Reporting by Michael S. Derby and Howard Schneider; Editing by Paul Simao and Nick Zieminski.)

Capital markets: Chinese tariffs remain

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Monday’s main headline was the announcement that tariffs on imports from Mexico and Canada would be suspended for a month, although a “trade war” with China has officially begun. Looking ahead, the week’s focus will shift to Friday’s jobs report, along with additional ISM data and numerous speeches from Federal Reserve officials. January’s ISM Manufacturing Index came in stronger than expected at 50.9 percent, indicating expansion.

Lenders are interested in construction spending which closed out 2024 on a positive note, rising 0.5 percent in December, driven largely by private single-family construction and home improvement expenditures. While private non-residential spending saw a modest gain, investment in traditional office, warehouse, and retail spaces remained weak due to high interest rates. However, the ongoing expansion of data centers provided a bright spot. Elevated rates and shifting trade and immigration policies are expected to weigh on construction activity in 2025.

Meanwhile, employment costs rose 0.9 percent in Q4, bringing the year-over-year Employment Cost Index to 3.8 percent, a level near what the Fed considers consistent with its 2 percent inflation target when factoring in productivity growth. Despite strong consumer spending in December, the Fed’s preferred inflation gauge ticked up only slightly, holding at 2.8 percent year-over-year, underscoring the challenge of maintaining economic momentum while ensuring inflation continues its descent.

Today’s economic calendar kicks off later this morning with Redbook same store sales and will be followed by JOLTS job openings and factory orders, both for December, some short duration Treasury auctions, and remarks from Atlanta Fed President Bostic, San Francisco’s Daly, and Vice Chair Jefferson. We begin the day with Agency MBS prices worse about .125 from Monday’s close, the 2-year yielding 4.26, and the 10-year yielding 4.58 after closing yesterday at 4.54 percent.

Companies are paying $8 million for a 30-second commercial slot this year in the Super Bowl. Obviously, you can watch them for free. This week, instead of the usual jokes or trivia, how ‘bout a short ad. Some this week are from Super Bowls and some not, some from the U.S. and some not, some in the past and some in the future.

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. STRATMOR’s current blog is “Leaders Don’t Wait for Markets”. The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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