One of the biggest challenges faced by business owners today is attracting and retaining great people. Millennials and those with diverse ethnic backgrounds make up an enormous part of today's workforce, at this point larger than the Baby Boomers, and survey after survey finds that this generation values flexibility as much and sometimes more than compensation Here's a piece about this group and their effect...not on housing but on food! But there is more below about the generation's impact on housing.

Vendor news continues to come out, impacting lenders. There has been a huge shift toward outsourcing segments of the residential lending process to individuals or companies that specialize in certain tasks: ol' Betsy just can't manage post-closing QC, shipping, and investor relations all by herself anymore. Of course that means that lenders must hire personnel to manage those third party relationships, and can even hire companies that specialize in vendor management!

Clayton Holdings LLC announced that it has developed an end-to-end underwriting, valuation and due diligence solution for the growing "fix and flip" lending market. Jeff Tennyson, president of Clayton stated "We have designed an integrated, one-stop solution for warehouse and hard-money lenders that draws on Clayton's deep experience in underwriting and the unique skill sets in valuing and monitoring single-family rental properties that reside within our Green River Capital and Red Bell Real Estate subsidiaries."

Ellie Mae launched a new version of Encompass, its all-in-one mortgage management solution. Encompass 16.2 offers new and enhanced integrations with Freddie Mac tools, and enhancements to the Total Quality Loan (TQL) program, including strengthened strategic partnerships and updates to Encompass Product and Pricing Service (EPPS). Encompass will offer Loan Product Advisor, the replacement for Freddie Mac's automated underwriting system, Loan Prospector^®,and the cornerstone tool of Freddie Mac's Loan Advisor Suite. Loan Product Advisor is the next generation in the evolution of automated underwriting with a focus on further streamlining the underwriting process for greater efficiency. In addition, Encompass will offer integration with Freddie Mac's Loan Quality Advisor, available to Freddie Mac sellers. The integration of Loan Quality Advisor, Freddie Mac's risk and loan eligibility assessment tool, into Ellie Mae's Encompass allows its customers to originate loans within Freddie Mac guidelines more easily and with greater certainty, taking immediate advantage of the new features Freddie Mac is bringing to market.

FirstClose announced that United Heritage Credit Union has chosen The FirstClose Report to support all of its Home Equity Lines of Credit (HELOCs) and Home Equity Loans. The patent-pending FirstClose Report provides credit union lending operations with instantaneous title search, flood certification, valuation and property information with $500,000 of lien protection insurance. Headquartered in Austin, Texas, United Heritage Credit Union serves communities in Austin, Tyler and Central Texas, and is the next in a long list of financial institutions who view The FirstClose Report as a way to gain a competitive edge. "Because The FirstClose Report delivers everything that it needs to approve these loans instantly, United Heritage Credit Union can dramatically reduce closing times from 40+ days to less than 10 days. At the same time, The FirstClose Report helps cut costs by an average of 40% and reduces risk with $500,000 of A+ XIII rated lien protection insurance per loan."

A Bank of America survey of Millennials finds their biggest financial concerns are: cost of living (61%), ability to save (58%), cost of housing (56%), finding new job (49%), taxes (43%) and losing their job (31%).

Household formation was depressed during the Great Recession and has been coming back. Housing starts are still lagging, however. Throw in obsolescence and you have a housing shortage, which is driving up prices. That pent-up demand is going to get released as the Millennials age, and that is going to push housing starts up to where they should be, around 2 million units a year. Of interest to those who like numbers, Harvard University research finds the median size of a newly built single-family house has reached a record of 2,467 square feet. This compares to the median size of a unit in a new multifamily building which has declined to 1,074 square feet.

Plenty of minorities, Millennials or not, are interested in owning their own home. According to a survey by Fannie Mae's Economic and Strategic Research Group, many consumers think it's difficult to get a mortgage in today's market. And forty-five percent of those respondents cite too much existing debt as a top reason. Yet, in that same group, more than half don't actually know the maximum debt-to-income ratio (DTI) required by lenders. The result -- potential buyers may be wrongly disqualifying themselves before they even apply for a mortgage. That's why it's key to provide information, resources, and tools to educate consumers on the mortgage process, and any perceived barriers, including DTI. Download more insight on DTI and learn about the overall study here.

Just take a look at recent home sales stats. June's pace of sales was the fastest since February 2007. Supply was down 5.8% y/y, reflecting a continuing problem with inventory. Dwindling supply helped push prices up 4.8% y/y to $247,700. But first-time home-buyers rose to 33%, a four-year high!

The problem is there isn't much on the market first-time buyers can "actually afford" - that's the single greatest challenge identified by 49% of the agents. New listings are in price ranges that have moved beyond the reach of many first-time buyers in most markets. Here is a story from 2015, still very relevant, & chart of the top seven reasons, as identified by realtors, as the greatest challenges facing first time home buyers.

There just isn't much going on with rates, which is fine by most capital markets folks as well as originators who are more focused on closing their pipelines than on dealing with rate volatility. Tuesday's bond market barely budged, aside from some minor price/spread changes between securities and coupons. The risk-free 10-year Treasury-note improved about .125 in price and closed yielding 1.56%; the 5-year T-Note and agency MBS prices were unchanged from Monday's closing levels.

On the West Coast plenty of capital markets personnel are attending the California MBA's yearly Western Secondary conference, where most of the talk revolves around the disappearing bid for FHA/VA servicing and the write down of servicing portfolio values.

This morning we've already had the MBA's report on last week's application data. Applications plummeted 11%, but overall volume is up 42 percent compared from the same week one year ago, when rates were higher. Refis fell 15% and purchases dropped 3%.

We've also had June Durable Goods Orders (-4%, worse than expected; ex-transportation -.5%). Coming up is June Pending Home Sales, a $15 billion 2-year auction, and the Federal Reserve's Open Market Committee meeting results: no one expects no change in monetary policy though forward guidance could be tweaked, in light of recent improvement in economic data to increase the odds of a September or December 25bp hike in the fed funds range.

In the early going rates are down slightly. The 10-year is at 1.55% and agency MBS prices better by a couple ticks - hardly noticeable.

Jobs and Announcements

In job news AnnieMac is expanding in the Southwest. "We are a rapidly growing direct agency lender and Ginnie Mae issuer building an operations and sales team in the Greater Phoenix area. We are looking for account managers, underwriters, closers and account executives to join a family dedicated to the mortgage industry. Our wholesale and correspondent platform benefits from a strong retail presence, no legacy issues and a stellar management team committed to their employees and providing the tools needed to excel. Additionally, sales executives will benefit from the ability to offer wholesale, non-delegated and delegated correspondent to their customer base. If you are interested contact Jay Patel, VP of Wholesale Correspondent and Strategic Alliance (703-582-3773), or David Margulies (856-821-6680). We have the ability for operations members to work from home and for AEs to come in on the ground floor with an incredible opportunity to retain the customers they want.

A 20-year old nationwide residential lender is seeking an experienced SVP of Operations. The company is a Ginnie, Fannie, and Freddie approved lender, issuer and servicer with a large servicing portfolio. 100% of all loans are servicing retained and the company is currently funding $1 billion per month in loan originations through correspondent, third party origination and retail channels. The Candidate should have experience with all aspects of loan origination. Position can be remote or in one of our centers. If you are interested, please forward your resume to me and specify the opportunity.

AmeriHome Mortgage, a top 5 Correspondent Investor, is developing a Consumer Direct platform out of Orange County, CA. It is looking for experienced underwriters, funders, processors, compliance officer and an Encompass administrator. "AmeriHome has earned a reputation for delivering customer based solutions, doing what they set out to do and treating employees, clients, and vendors with respect and appreciation. If you are interested in joining this outstanding company, please visit AmeriHome's career page to apply."

In personnel news Virginia's First Guaranty Mortgage Corporation announced Joaquin Torre has joined the company as Senior Director - Capital Markets. Congrats Joaquin! FGMC also spread the word that mortgage industry veterans, David Sorsabal and Marty Richardson, have joined the company as AEs for the Correspondent Division - Western Region. And Invitation Homes, the nation's leading provider of single family rental homes, announced the appointment of G. Irwin Gordon as executive vice president and chief revenue officer.

In company news Republic First Bancorp, Inc., parent company of Republic Bank, announced that it has entered into an agreement to acquire Oak Mortgage Company, LLC, a residential mortgage company headquartered in Marlton, NJ. Oak Mortgage will maintain its current business model and operate as a wholly owned subsidiary of the Bank. Apparently the lender is a "natural fit" for Republic's growth strategy in the southeastern Pennsylvania and southern New Jersey market. Oak Mortgage currently has 64 employees that specialize in the origination of residential mortgage products. In 2015, Oak closed more than $330 million in mortgage loans - about $30 million a month. "Anyone that visits a Republic Bank store will now have direct and immediate access to an experienced residential mortgage lender and all customers of Oak mortgage will have full access to the products and services of one of the fastest growing financial institutions in the Philadelphia region."

In the last week or two things have been pretty quiet in terms of announced bank mergers - the dog days of summer. Equity Bancshares, Inc. Announces Merger Agreement with Community First Bancshares, Inc. First National Bank of Pennsylvania ($20B, PA) will acquire Yadkin Bank ($7.5B, NC) for about $1.4B in stock. In Michigan Bank of Ann Arbor ($1.2B) will acquire Bank of Birmingham ($274mm) for about $33mm in cash.