The last four weeks for me have included spending time with lenders in Montana, Southern & Northern California, Nevada, Arizona, and Illinois. Yes, they know that the traditionally slow 4th and 1st quarters are ahead and that rates are expected to head higher, but CEOs are also focused on helping their clients, and keeping & recruiting key employees. Bank Director asked executives for the perks their banks provide to at least some of their employees: External training/career development (80%); in-house training program (74%); social events/outings (64%); active employee volunteer program (61%); maternity leave (55%); health perks (49%); collaborative work environment (38%); and telecommuting (29%). According to Bank Director, bank executives stated their top three compensation challenges for 2018 are: managing compensation and benefit costs (44%); tying compensation to performance (40%) and succession planning for CEO/executives (37%).

Lender Products and Services

Are you taking advantage of the most advanced 1003 mortgage application in the industry? If not, what are you waiting for? Floify, the leading point-of-sale solution, earlier this year launched the most advanced 1003 ever, and it has seriously disrupted the mortgage automation world! Floify dramatically improved the origination experience via their intuitive "interview-style" application that walks borrowers through their application, step-by-step, leveraging easily-identifiable visual cues that effortlessly keeps the loan process moving forward. Configurable fields and business rules are just a handful of the powerful features you can enjoy with this fully embeddable 1003 – and this is all in addition to the other incredible automation features that tech-savvy LOs love about Floify, including streamlined document collection, automated reminders, and more! Now, if you’ve been considering Floify for your lending operation, this is the perfect time to take advantage of this incredible solution. Request a live demo to learn more!

Are we out of step with the needs of today’s borrowers? With an increasingly diverse borrower base that includes millennials, self-employed, investors, and foreign nationals, conventional lending sometimes falls short. Responsible non-QM programs can help millions of creditworthy borrowers who don’t fit the traditional credit box – and help lenders find growth even as traditional lending slows. If you’re feeling the squeeze of rising rates, vanishing refis and compressed margins, it’s time to learn how non-QM can help expand your business. Verus Mortgage Capital is a correspondent investor committed to helping lenders grow their businesses with responsible non-QM lending. Email Jeff Schaefer today or schedule a meeting with him at the MBA Annual in Washington, DC.

Deephaven Mortgage recently announced the launch of its 95% No MI Jumbo Non-QM product. This new Near-Prime product was created to help clients seeking flexible down-payment options who have historically demonstrated an effective ability to manage their credit. The product is offered on purchase loans with primary occupancy, loan amounts > $453,100, and with debt ratios less than or equal to 43%. This is just one of the many exciting programs that Deephaven offers in the Non-QM lending space. To find out more about their Non-QM products, pricing, and technology, and how to grow your business contact Wholesale or Correspondent.

Capital Markets

Mel Watt, Director of the FHFA which oversees Freddie and Fannie, is scheduled to testify on his sexual misconduct case tomorrow.

The Incenter Mortgage Trading Group is moving to RAMS Mortgage Capital, “active in all sectors of residential mortgage loans (Non-Agency Jumbos, Non-QM, CRA, Agency Eligible, Scratch and Dent and orphaned VA IRRLs, Re-Performers & Non-Performing, GNMA EBOs, Single Family Rentals, Multi-Family, Fix & Flip, 2nd liens and HELOCs, Reverse Mortgages and HECMs). Contact Tad Dahlke or Hal Hermelee with questions.

MAXEX, LLC, a residential mortgage loan exchange provider, announced that it has successfully closed a $38 million new funding round led by Moore Asset Backed Fund, LP, an investment fund managed by Erik Siegel of Moore Capital Management, LP. GreenLedge Capital Markets LLC was the sole placement agent. “MAXEX's prior Series A rounds brought in over $35 million from private equity and venture investors, including Ellis Capital, Fenway Summer Ventures and Bienville Ventures, bringing aggregate capital raised to date to more than $73 million. Additionally, J.P. Morgan has been a strategic commercial partner in MAXEX since late 2017.”

AmeriHome announced that Bulk AOT Commitments will be available beginning Monday, 10/1/2018. “Bulk AOT Commitments provide Sellers with the ability to obtain competitive pricing on a specific set (specified pool) of identified Mortgage Loans: Multiple eligible products and multiple interest rates can be commingled into a single Bulk AOT Trade. TBA Hedges may be assigned against Loans in the Bulk Commitment that conform to certain requirements. Minimum TBA trade assignment is $500,000. AmeriHome accepts (only) the assignment of TBA securities. The undelivered portion of a Trade can be extended (rolled) up to two times for 1-30 days each roll. Delivery of the identified Loans and the assignment of TBA Hedges is mandatory and failure to deliver under the terms of the Commitment Confirmation will result in the assessment of a Pair-off Fee. Bulk AOT will be offered for all available products in the following fixed-rate programs: Fannie Mae, Freddie Mac, FHA, VA, and USDA. (Bulk AOT is not available for ARMs or Core Jumbo transactions.)

Inflation has not been a problem in the United States for decades – but it is still a concern for bond investors. Owning a security paying 2% while inflation is 3% is a problem. But recent summer inflation data has been muted on a monthly basis but continued to larger gains on a year-over-year basis. The Consumer Price Index increased 0.2 percent in July after a 0.1 percent increase in June. The core measure of the index, which excludes food and fuel, was also up 0.2 percent in July. It was, however, up 2.84 percent over the previous twelve months, the largest increase since September 2018. Given the lower readings over the last couple months, the expectation is that the headline annual number may level out or ease slightly in the upcoming months. The Producer Price Index was unchanged in July and, like the CPI, saw a larger year-over-year gain at 3.3 percent.

Conversely the job market is on fire. Recall that initial unemployment claims remain exceptionally low and labor market conditions remain strong. The Job Opening and Labor Turnover Survey (JOLTS) showed the job opening rate remained at 4.3 percent, just below all-time highs and the quit rate was an elevated 2.3 percent. A higher quit rate is viewed as sign of confidence from workers about job prospects.

And U.S. household net worth neared $107 trillion in the second quarter. Household wealth in the stock market increased by about $848.3 billion in the quarter. The value of households’ real estate rose by $558.9 billion in 2Q, nearing $107 trillion overall and reflecting the fact that home prices are rising at time when demand for housing is high. The value of owner-occupied housing climbed to more than $25 trillion in 2Q, against roughly $10 trillion in mortgages. This comes at a time when U.S. home prices rose 1.1% in 2Q, and a 6.5% YoY.

Turning to rates, a flood of Fed speakers indicate the following for rates: Boston Fed President Rosengren (gradually raising rates over the course of this year makes sense and still have a ways to go); New York Fed President Williams (currently seeing a Goldilocks economy and does not need to raise rates more quickly than signaled); Atlanta Fed President Bostic (economy is very solid, outlook is balanced and policy should move to neutral); St. Louis Fed President Bullard (rate hike plan is too hawkish for the current environment).

Rates crept back up Tuesday, including the U.S. 10-year real yield hitting its highest level since 2011. Any movement will be rendered inconsequential after the release of the FOMC decision and accompanying press conference. Though the rate increase is essentially a formality, the median 2018 and 2019 growth projections are likely to be revised higher to 3.0% and 2.6% from 2.8% and 2.4%. Internationally, Germany's economic institutes are expected to lower Germany's GDP growth forecast for 2018 (by 0.5%) and 2019. Speaking of GDP, yesterday we saw the Conference Board's Consumer Confidence Index reach its highest level in 18 years, meaning we should see high consumer spending activity this fall and winter, driving GDP growth.

Ahead of the Fed, markets will have a couple other data points to digest. We have had the weekly mortgage applications from the MBA for the week ending September 21 (+2.9%). August new home sales are due for release at 10:00am and are expected to tick up slightly. The only other release outside of the FOMC rate decision is weekly crude inventories at 10:30 ET. Wednesday begins with the 10-year yielding 3.09% and agency MBSs prices a shade better versus Tuesday’s close.

Jobs and Business Opportunities

A Fannie Mae and Freddie Mac Seller/Servicer and Ginnie Mae issuer, approved in 46 states, 11 MORTGAGE offers a full line of products which include VA, Co-Ops, Non-QM, CalHFA, Jumbo, to name a few. “11 MORTGAGE is taking mortgage brokers/bankers experience to a whole new level! No agency Overlays... NONE! 4hours CTC to Docs... GUARANTEED! 11 minutes funding turn time...NO JOKE! We also manage our own appraisal panels (no AMCs). We are looking for champion AEs ready to accelerate their growth. We offer: wide open territories, wholesale and emerging banker channels, direct access to assigned underwriters, after hours rate lock protection, aggressive compensation, and much more... If you want to double your production and your territory with an exclusive organization that provides the industry's best customer service contact 11 MORTGAGE EVP of wholesale's Thomas Michel. Sales managers with successful teams are also encouraged to reach out.”

3W Partners is leading client efforts to market a national title agency that is a custom-built centralized transaction platform, including purchase money transactions, and is completely digital, end-to-end. The agency is in growth mode, and because of the digitization and variable cost infrastructure, margins increase exponentially as volume grows. Has capability to scale services on-demand without making significant staffing changes, and is SOC2 Type II certified, the ultimate in information security. This is a great opportunity for the right buyer that will be deemed as a “good shepherd” of the business and its people, especially for a lender looking to control costs and the borrower experience. Serious inquiries only, to be vetted before sharing any information. No fishing expeditions here. To learn more, contact Scott Roller.

Axia Home Loans is proud to announce the opening of 3 new branches in the Minneapolis/St. Paul market. Regional Manager Erin Leck sent “Will Kasel (Area Production Manager), Kathy Lawler (Woodbury Branch Manager), and Chris Jensen (St. Paul Branch Manager) really embody the culture and spirit here at Axia. I’m really looking forward to partnering with such experienced market leaders to continue our path of thoughtful growth. As a company, we’ve seen year over year production grow over 15%. We’re excited to continue that momentum.” As Will puts it, “Culture is the one thing that we can control in our industry. If we work as a family and put the client first, anything is possible.” Jon Lewis, SVP of Production added “I am overly excited to have Will Kasel, Kathy Lawler, Chris Jensen and their teams join us as we continue to add best in class talent. They fit into our employee owned model perfectly”. Axia Home Loans continues to look for new employee owners. For details on a new opportunity, Branch Managers and Loan Officers in the Midwest/Texas should contact Erin Leck or click Axia for more information.