Thank you to the California MBA who sponsored a tour yesterday of the Tesla Factory – the building has the 2nd largest footprint in the world (behind the flower auction house in the Netherlands). The engineering & technology on the assembly line was far ahead what a simple capital markets guy like me can understand. Builders are certainly keen on using technology, in this case virtual reality, to sell new homes. Here is something for LOs to pass along to their builder clients: The benefits of virtual reality systems go beyond the sales center, but are they worth the cost? Here is a story on using VR to sell houses.

Channel Changes

Isn't the first, won't be the last. "Effective immediately, Nationwide Bank is exiting the Correspondent Lending business" for "strategic reasons." Locks have already been cut off, and don't even try to lock in another loan. "You can still upload documents through our correspondent portal and retrieve lock confirmations for extension and lock change requests. We are going to honor all locked loans in our pipeline that have not expired. We will be withdrawing all loans that have exceeded their lock expiration date, and the closing package has not been uploaded. We are going to withdraw all loans that have been registered as float and not locked. Effectively immediately, we will not be accepting any float to lock requests. We will purchase our last loans on December 15th. New expiration dates from extension requests, will not exceed December 15th. If we receive a repurchase demand on a loan you sold to us, we will continue working with you to mitigate the risk to the best of our abilities."

On the flip side, headquartered in Texas, DEVAL LLC, a Hispanic woman-owned mortgage company, announced the launching of its new retail mortgage division called "Your Home Now Mortgage" and its Hispanic counterpart "Su Casa Ahora Mortgage." (Let me know if you need that translated.) "Su Casa Ahora Mortgage was designed specifically for the Spanish-speaking market enabling effective communication to better serve potential Hispanic homeowners. The launch of Your Home Now Mortgage and its Hispanic counterpart, means the company can participate in every part of the loan lifecycle, from origination to servicing. This division enhances the company's services and further assists consumers by offering a range of competitive loan products."

Capital Markets

Potentially impacting both primary and secondary market pricing, Ginnie Mae issued guidance for disaster pass-through assistance and delinquency ratio exemptions for qualifying portfolios. Ginnie Mae issued an All Participants Memorandum (APM) - APM 17-04 to Single-Family Issuers providing updates and further guidance on the availability of optional, special assistance for Hurricanes Harvey, Irma or Maria including associated eligibility requirements and the application process.

"Under revisions in Chapter 34-2 of the Ginnie Mae Mortgage-Backed Securities Guide, HUD Handbook 5500.3 Rev-1 ("MBS Guide") Ginnie Mae will accept Issuer applications under its Delinquency and Default Ratio Exclusion Program 34-2-C and its Pass-Through Assistance Program 34-2-D. Instructions are provided regarding the process for requesting relief from delinquency and default ratios for those Issuers with portfolios that have been significantly impacted by Hurricanes' Harvey, Irma and Maria."

The pass-through assistance has a "specific and limited purpose" and allows Issuers who, as a direct result of these recent disasters, face a temporary liquidity shortfall to receive the benefit of the Ginnie Mae guaranty. Assistance is not intended to provide long-term financing, or solutions to other solvency issues that an Issuer may face. In this case, it makes an adjustment to Ginnie's MBS guide's long-standing requirement that 5% of an issuers' book needs to be in a disaster affected area to qualify for short-term liquidity assistance from us. The change allows issuers to meet this 5% requirement using their collective exposures to Hurricanes Harvey, Irma, and Maria.

Ginnie Mae has estimated that roughly 9.7 percent of its portfolio - 1.066 million loans in total - are mortgages on homes in presidentially declared disaster areas in Florida, Georgia, Puerto Rico, Texas and the U.S. Virgin Islands.

Based on recent remarks, Federal Reserve policy makers are now more inclined to raise interest rates to contain the effects of record stock and asset prices. Central bankers have long argued that they weren't equipped to spot bubbles and the best approach was to let them burst and then clean up afterwards. The last two recessions (2001 tech stocks; 2007 housing) were due to financial imbalances rather than accelerating inflation, and officials have now admitted as much.

The four rate hikes over the last 22 months and specifically the three since December have not slowed record stock prices and a weakening dollar. This combination has eased financial conditions and helped spur growth, risking excess credit creation and causing many Fed officials to advocate for more rate increases to keep the economy in balance, even with low inflation. However, with inflation at 1.4 percent in August, continuing to raise rates would risk cementing expectations that price gains will stay permanently below the central bank's 2 percent target. Policy makers have penciled in one more rate hike for 2017 and three more for 2018.

With a taut labor market and low inflation, some policy makers like Fed Chair Janet Yellen, have advocated returning policy to a neutral setting of a fed funds rate around 2 percent that neither spurs nor inhibits economic growth, above the bank's current 1 percent to 1.25 percent target range.

We are far from certain, however, that Yellen will be around next year to gradually hike rates: Her four-year term atop the Fed expires on Feb. 3, and while President Donald Trump has said she could retain the job, he's also looking at formed Fed governor Kevin Warsh, who is urging the central bank to stop trying to fine-tune inflation and instead focus more on developments in finance, money and credit.

Yes, Trump could re-nominate Janet Yellen, but she is a liberal and supports stronger banking regulation. Gary Cohn is another possibility, as Trump prefers business people over academics. Jerome Powell's name has been mentioned, and he would be somewhat more hawkish than Yellen. Powell is supposedly the choice of Treasury Secretary Steve Mnuchin. Kevin Warsh is more hawkish than either Yellen or Powell and supports financial deregulation.

Looking at the numbers that impact rate sheets, U.S. Treasuries saw some selling on Thursday, with the 10-year closing at 2.35% and agency MBS prices worsening .250 but all in all, the session was not particularly active. The S&P 500 traded higher by 0.5%, its sixth consecutive record close. After the release of the commentary yesterday, Factory orders increased 1.2% in August on the heels of an unrevised 3.3% decrease in July. Excluding transportation, orders increased 0.4% following a 0.5% increase in July. This report will bolster Q3 GDP expectations given the upward revision from the advanced durable goods orders report for shipments of nondefense capital goods orders excluding aircraft.

Turning to Fed speak, San Francisco Fed President John Williams said that the Fed will rely more on unconventional tools in the future and that inflation and bubbles could be spurred by "too much growth." Today we have four speakers - don't expect much new.

Don't forget that Monday is a holiday! Today, we have the U.S. Treasury announcing its auction schedule for next week: expect $24 billion in 3-yr notes and $20 billion in 10-yr notes will be sold on Wednesday while $12 billion in 30-yr bonds will be offered on Thursday. We've had the September employment situation, muddled by the hurricanes: Nonfarm Payrolls (-33k), Unemployment Rate (down to 4.2%), and Average Hourly Earnings (+.5%, strong). The Fed has made it clear what it is up to, and these numbers were already discounted, influence-wise, by the storms. We start the day with the 10-year yielding 2.38% and agency MBS prices worse .125-.250, so rates are higher than Thursday's close due to that strong wage number. So yes, the odds of a Fed increase in short term rates in December have increased.

Promotions and Jobs

Congratulations to Alight, Inc. for the recent new executive appointments to its executive team centered around supporting the growth of its mortgage banking and mining verticals! Alight executive Jared Huff has been named CFO of Alight. Most recently, Huff was Group Head of Alight Mortgage Solutions, Alight's first industry vertical, which he led from launch to its current position of market leadership. Michael McFadden has been hired to lead Alight Mortgage Solutions. Most recently, McFadden was SVP of Finance at Stonegate Mortgage, a full-service public mortgage banking firm where he was a senior member of the leadership team who took the company public in 2013 and led it through the recent sale to Home Point Financial. "I am excited to join one of the mortgage industry's most innovative companies," said McFadden. "I can say from firsthand experience that mortgage banking executives need a solution like Alight to improve their decision making and seize all the opportunities that this challenging and rewarding industry has to offer."

Focus Fulfillment, LLC is excited to announce the addition of Mary Simmons in the role of Business Development. Mary has been involved in all facets of the mortgage industry since 1986, having focused on processing, sales and sales management for mortgage banking/brokerage firms. Mary was Director of Client Relations for Shanks, Tritter and Associates from 1993 to 2000 and then went on to work for Black, Mann and Graham for 16 years before joining Focus Fulfillment. If your company is in the market for document preparation or fulfillment services, please contact Mary.

Have you ever wanted to learn more about how your clients can utilize a Home Equity Conversion Mortgage (HECM)? Or perhaps you'd like to learn more about how to build your referral business with realtors and financial planners? As an approved partner, American Advisors Group (NMLS# 9392) has a library of both B2C and B2B online training modules available to you 24/7. AAG produces a monthly training calendar of live webinars that change month to month based on industry hot topics and feedback from their partners. For larger groups, AAG offers fully customizable HECM certification programs to get your team up and running quickly. Contact AAG today to see how they can help you understand how HECMs can benefit your business and your clients and discover just how easy it is to get started!

Speaking of American Advisors Group (AAG), management invites you to a mixer to learn about the number one reverse mortgage lender in the U.S. "We will be having an open house on October 10, 2017, 6-8 PM at our newly opened Austin Office at 13620 N FM620, Austin, TX. AAG is looking for driven and ambitious professionals who want to advance their career in mortgage lending. Pre-register for the mixer today by contacting Manny Sanchez (657-236-5216).

PRMG Retail continues to expand its footprint nationwide by opening 5 new branch locations during the month of September! Along with the drive and ambition to bring the American Dream of Homeownership to all cities across the country, PRMG has now opened its doors in Downey, CA; Port Orange, FL; Macon, GA; Cape Giradeau, MO; and Woodbridge, NJ. PRMG is devoted to growing our retail platform and is always looking for Motivated Loan Originators to support our mission to being "Progressively Better in All that We Do". Voted in the Top 5 of the 50 Best Companies to Work for in America 2017, No. 1 Best in the Desert 2017, NMP Visionary Organization, CAMP Corporate Affiliate of the Year and TOP 25 of 100 Mortgage Companies in America! PRMG employs over 1,500 people! If you're ready to join a top-tier team and company then we need to talk! Contact Chris Sorensen at 909.262.0452.

In giving news, E Mortgage Management (EMM), has embarked on an unprecedented campaign to raise big money for the American Cancer Society's Cancer Awareness Month. Kevin Crichton, President and COO of E Mortgage Management, announced EMM's on-going support in the fight against *** cancer through their Raving Fans program. "This year, we have raised the bar", said Crichton, who provided a high-level overview of how the company enhanced its Cancer Awareness campaign for 2017. From October 1, through October 31, 2017, EMM will donate $100 for each loan that closes from applications taken during the month of October. Employees of E Mortgage Management are also planning a series of fun-filled office fundraising efforts set to kick-off on October 1, for the cause, culminating in the Making Strides Against Cancer walk of Pennsauken, NJ, where the company has committed to sponsorship of the event.