As pricing battles rage in the wholesale channel, there has been plenty of news of layoffs in residential lending over the last six months industry-wide, due to reasons like becoming more efficient, lower volumes, or fewer delinquencies, the most recent being BB&T and Mr. Cooper (page 7). What would actually be newsworthy is if a well-known company had no change or layoffs in the last six months! You can bet land use has changed over the decades, and I received this question: “Rob, I have to give a presentation to a bunch of real estate agents. Have you seen anything on how land is used across the nation?” This is the last good piece I saw: Here you go.

Lender Products and Services

Manufactured home lending has been a challenge for lenders. Chattel lending is only being done by a handful of lenders today. Freddie Mac and Fannie Mae may have found a solution with their initiative to expand efforts in the affordable housing market. Freddie Mac and Fannie Mae are not the only ones expanding efforts MortgageFlex Systems has released a new customized version of its LOS, MortgageFlexONE for manufactured home lenders. The LOS is released with new integrations with NADA, Lereta (AFR) for tax certification, and Datacomp for appraisal. Other features include the ability to add retailers to the system and finance fees in the loan amount. The manufactured home LOS gives lenders a completely digital environment with a consumer portal built into the platform. MortgageFlex currently has one manufactured home lender live and more are implementing. They are helping others make manufactured home lending efficient.

SimpleNexus is hosting its inaugural User Group Conference Feb 10-12, 2018 at Utah’s picturesque Snowbird Ski Resort. This conference provides a great opportunity for mortgage executives to learn from industry leaders on how to stay profitable in a down market. Conference sessions will cover topics including ‘Competing with Online Lenders,’ ‘Using Technology to Recruit/Retain Top LO Talent,’ ‘Mastering Referral Partner Opportunities,’ and more. Attendees cap off the conference experience with a free ski excursion at Snowbird Resort. Rob Chrisman readers can receive a $150 registration discount by using the code CHRISMAN at checkout. Additional conference info can be found at SimpleNexus User Group 2019. If you are a mortgage executive wanting to thrive and succeed despite tough market conditions, you should seriously consider the SimpleNexus platform. With 20,000+ loan officers and 15 of the Top 25 retail lenders using SimpleNexus, the company is the industry leader in digital mortgage solution technology.

“Stop losing money in 2019! With the mortgage industry becoming increasingly difficult to survive let alone thrive, companies are in search of new marketing strategies to compete in this new era of credit. The Decision Science team at BBM has created an advanced suite of propensity data models that help professional origination marketers identify homeowners who are actively in the market for FHA, VA, Jumbo and Non-Agency loan options. Our average loan amount for active FHA/VA and Non-Agency applications exceed $350K and gross top line revenue of nearly $15,000. If you’re marketing is not reaching these levels of performance than let BBM show you how a targeted marketing strategy focused on propensity modeling and targeted revenue opportunity can change the trajectory of your company. For more information about BBM Marketing Services and about becoming an approved origination partner; please contact Bill Senteno.”

Mr. Cooper was extremely pleased to close out a banner year in 2018 by announcing the launch of eNotes and Hybrid AOT offerings. “Over the year, we executed and delivered on our Strategic Road Map which included the availability of No FICO, Manufactured Homes and Modified Construction to Perm Loan Notes and an expanded Co-issue program to include FNMA Servicing Marketplace. Looking to 2019, we will complete the acquisition of Pacific Union in early Q1, expanding our product and program suite to include Non-Delegated Authority, Jumbo, Non-QM, and have already released an enhanced credit box which allows FICOs to 500 on Government loans. Soon to follow is the release of Temporary Buydowns. We are excited about the coming year and the strong solutions and capabilities we are able to offer to our clients. Mr. Cooper is a premier Correspondent and Co-Issue investor and the largest non-bank servicer with a servicing portfolio of ~ $500B.”

Caliber Home Loans, Inc. would like to thank its brokers who partnered with its wholesale lending channel in 2018. The #2 wholesale lender in the country (according to IMF) had a record-breaking month last October for non-Agency volume, which was due in part to the launch of Caliber Elite Access in June. In 2019 Caliber Wholesale plans to leverage the strength of its product portfolio to provide its broker partners with government, conventional, and jumbo options – as well as the suite of non-Agency loans. The Wholesale channel will continue to focus on supporting brokers’ purchase volume, which as of December is 80% of Caliber’s wholesale business. After an exciting year of launching a mobile app, breaking sales records, and introducing new products, Caliber Wholesale and its SVP John Gibson have a lot to offer their broker partners in 2019.

Capital Markets

One of the difficulties of implementing new technology is integrating it with current software and business processes. While future time savings through technology is an obvious benefit, set up can be a real challenge. Choosing a company that will consistently be there to support you during and after implementation is the key to success. As an example, new technology like the Bid Auction Manager (BAM) from MCT introduces the ability to significantly improve processing speed of an organization’s best execution loan sales. The software includes rapid market-adjusted pricing, commitment data write-back to avoid data entry errors, and security enhancements such as borrower address geocoding, all from a dedicated team of capital markets experts. Whenever you’re considering new technology: schedule a demo, think about the amount of time saved, the difficulty of implementation, and ongoing support offered to help inform your decision.

Looking at the economy, halfway through January, by most accounts, US economic conditions remain favorable for continued expansion although many believe the world economies are tired. Economic data, including labor data, paint the picture of a robust market with increasing jobs, wages, low unemployment and subdued inflation. So naturally, there is plenty of concern about how a downturn is just around the corner. While there continues to be plenty of positive data, it is mostly backwards looking and in some cases the lag is more than one month behind.

Interest rates may move higher if China/U.S. issues are resolved, and when the shutdown ends. Some housing markets are underperforming in the wake of affordability and supply concerns. Overseas, growth in China and Europe eased at the end of 2018 and that easing is expected to continue into the beginning of 2019. Should input costs and corporate balance sheets come under pressure due to uncertain trade policies, price increases will ultimately have to be passed through to end consumers adding to inflationary and interest rate pressures. Higher rates and wages will also impact corporate profits, which when weak, are a catalyst for restructuring and layoffs. Add to this contentious political climate which continues to provide markets with plenty of uncertainty.

Federal Reserve Chairman Jerome Powell has emphasized the central bank has flexibility to be patient about when and whether to raise interest rates again. In a wide-ranging interview, Powell said it is a mistake to believe the Fed has an official forecast or plan for interest-rate increases. He also said the Fed will work to make its portfolio of bonds "substantially smaller" and expressed serious concern over the growing amount of US debt.

In the bond markets yesterday, volatility continued to drop – a good thing – and the U.S. 10-year closed Tuesday unchanged at 2.71% despite marked Brexit developments. The Brexit vote in the House of Commons in British parliament overwhelmingly reject the withdrawal bill negotiated by Prime Minister Theresa May, so it is unclear if the UK will be able to present a new Brexit proposal with just over two months left before the official withdrawal date on March 29. And European Central Bank President Mario Draghi said the economy is weaker than expected.

On the Chinese trade front, U.S. Trade Representative Robert Lighthizer said he saw little progress in last week's talks on structural issues and intellectual property protections with representatives from China, per Senator Chuck Grassley. But markets perceive as an easing of U.S.-China trade tensions this week. That, paired with dovish commentary from the Federal Reserve, like Kansas City Fed President Esther George saying yesterday that while rates are not at a neutral level yet, they are getting close, giving the Fed the ability to be "cautious and patient," has spurred rallies in risk assets. Still, it is a two-sided coin depending on how you look at things, and this week has brought releases showing slowing bank earnings growth, underwhelming Producer Price Index figures that should be a precursor to muted Consumer Price Inflation readings over the next few months, and negativity surrounding the ongoing partial U.S. government shutdown, all of which threaten to spook both consumers and markets.

This morning we learned that mortgage applications increased 13.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 11, hitting its highest level since last February! “Purchase applications hit their highest numbers since 2010, and refinance applications up to their highest level since last spring,” said Mike Fratantoni, MBA SVP and Chief Economist. The refinance share of mortgage activity increased to its highest level since January 2018, 46.8 percent of total applications.

The scheduled December retail sales, November business inventories, and November TIC data are postponed due to the partial government shutdown. December import / export prices were -1%/-.6%. The NAHB Housing Market Index for January will be released at 10:00am with expectations for a slight increase. The latest Fed Beige Book is due at 2PM ET, a couple hours before the lone Fed speaker of the day, Minneapolis Fed President Kashkari. Wednesday starts with rates slightly higher than Tuesday’s close: the 10-year’s yielding 2.73% and Agency MBS prices down/worse a couple ticks.

Employment

At the start of this New Year, Academy Mortgage is pleased to announce several new leaders who have recently joined the independent mortgage lender. A recognized industry name in Colorado, Justin Harris is now a Regional Sales Leader at Academy. Harris brings to the company 16 years of valuable experience, including nine years as an Area Manager for Guild Mortgage. Harris’s expertise will be a key asset in overseeing Academy’s production, market expansion, and business development in Colorado. Looking to Texas, new Branch Manager Jason Browning will utilize his 20 years of management experience to lead the company’s growth in the Dallas/Fort Worth area. In the nation’s northeastern corner, new Branch Manager Tamika Donahue, an established top producer with 19 years of experience, will lead a strong team of seasoned mortgage professionals in South Portland, Maine. If you are interested in joining the Academy team, contact Chad Melin, Vice President of National Business Development.

“Every year the powerful numbers grow at PrimeLending — and 2018 was no different. We added 31 new locations across the country, welcomed 307 new producers and gained #1 market share in 14 markets and top 10 market share in 100 markets. By continuing to grow and empower our team, we were able to help serve more than 56,000 homeowners and fund over $13.7 billion while maintaining our 96% customer satisfaction rating and topping 10,000 5-star Zillow reviews. We not only positively impacted the lives of our clients and teammates, we also continued to cultivate our award-winning culture among our employees, ranking as a top workplace for finance and insurance, women, diversity and Generation X. PrimeLending was also named the 3rd Best Mortgage Company to Work For by National Mortgage News. The PrimeLending Difference is real, and you can experience it for yourself by contacting Brian Miller today. The first step is a casual conversation. The next? That’s up to you.”

M&A in the MI World

Radian Group Inc. announced that it has acquired Five Bridges Advisors, LLC, a developer of proprietary software, data analytics and predictive models leveraging artificial intelligence, machine learning and traditional econometric techniques. “Five Bridges is a thought leader in mortgage, consumer and real estate analytics and its cloud-based portal utilizes deep analytics to provide customers with valuation and risk management tools that span the entire loan lifecycle, from underwriting and origination to servicing, secondary market purchase, and securitization.

Yesterday’s 4th quarter earnings reports showed that mortgage lending at Wells Fargo, Chase and Citi plunged. Mortgage lending just keeps plunging. In the fourth quarter, mortgage originations at Citi were down 23% compared to a year ago. At Wells Fargo they were 28% lower, and at JPMorgan Chase they were down 30%. All were driven by lower net reduction revenue, lower industry volume, high competition, inventory issues (there aren’t enough houses for people to buy to sustain a healthy housing market), rising rates in the 4th quarter, and a shift in market share to nonbanks like Quicken, loanDepot, Freedom (who, along with thousands of other lenders are currently doing roughly 60% of residential biz). Some nonbank lenders, such as Fairway Independent, have actually seen an increase in locks over this period in 2018.