Don C. shot me a note saying, “My New Year's Resolution is to stop being so condescending! (Rob, condescending means talking down to people.)” Thank you for that… The jungle drums have Amerifirst (the one in Arizona, not Michigan which was purchased by Guild) shutting its doors on 12/31, and rumors have American Pacific’s recruiters working through a wide swath of the company. (Remember that anyone can post their resume for free here for employers to view. People in our biz are always thinking about the future, and MCT had this to say about the 2023 housing market. Did you know that there are 1.6 million members of NAR? (No, I don’t know how many the NRA has, and it is probably best to not confuse the two despite the close names.) The typical REALTOR® is a 56-year-old white female who attended college and is a homeowner… Is there really enough business in 2023 to keep them busy? We’ll see. (Today’s podcast is sponsored by MCT and its Hedge Advisory. Comprehensive capital markets software and services that empower secondary marketing performance! Today’s features an interview with Jeff Allen of CubiCasa on the importance of digital floor plans in the Multiple Listing Service (MLS).)

Lender and Broker Software, Products, and Services

Mortgage brokers, this one’s for you. 2023 could be the year you supercharge your business… No New Year’s resolution required. There’s one tool that’s transforming the way brokers do business. It’s helping them navigate this current down market, and it will scale with them when volumes return. That tool is LoanCatcher®, Black Knight’s broker-focused mortgage loan origination system (LOS), which is a powerful, flexible, digital mortgage platform that helps brokers “catch” more loans. With LoanCatcher, mortgage brokers can find new customers and retain current ones by leveraging instantaneous response times to keep in touch with borrowers. LoanCatcher also seamlessly integrates your technology to streamline the origination process, and automatically markets to your existing customers to help turn them into clients for life. See how LoanCatcher can transform your business, and schedule a demo with Black Knight today.

Merchants Bank of Indiana is pleased to announce that it has added to its sales team with the hiring of John Douglas as Sales Executive, Northeast Region for the Correspondent Channel. Merchants offers Agency and Non-Agency programs with a focus on Non-Delegated Lenders. Merchants also offers a dedicated Financial Institution channel, BCU Mortgage Services, that provides fulfillment services to Banks and Credit Unions. With approximately $10 Billion in Assets, a strong warehouse financing platform, a diversified banking business and seasoned mortgage professionals in the C-Suite, Merchants approaches the Correspondent business from a position of strength and commitment. John joins Jeff Cothern – Central Region; Reija Eden – West Region; Dan Hastings – Midsouth Region; Bryan Neitzelt – West Region; and Bob Reinagel - Southeast Region.

In less than 60 days, the FHFA will require lenders to collect data about the borrower’s language preferences, as well as what they’ve done to educate themselves on homeownership. Click here to view the press release. “We’ve already seen a few industry giants launch Spanish-language homebuyer education tools in anticipation of this,” said Gibran Nicholas, CEO of Momentifi, a bi-lingual content marketing platform. “Why should smaller lenders and brokers get left behind?” Momentifi’s full content library contains over 150 personally branded bi-lingual resources that originators can use to market themselves and educate homebuyers. But wait, there’s more! Creating consistent content is the #1 challenge that social media marketers have according to Hubspot research. What if you could get done-for-you personally branded marketing content in two languages, and catch up with the industry giants in one smart move? Click here to learn more or sign up for Momentifi’s free 14-day trial.

NEW EBOOK: Launching Home Loans: How to Build a Profitable & Scalable Mortgage Operation in 2023. Want to build mortgage revenue this year? Now is an ideal time to capture market share in anticipation of the next inevitable upswing. By setting the infrastructure for mortgage operations now, entrants can successfully grab a piece of the pie as strong demand drives industry growth in coming years. If you’re considering taking a first step into mortgages—or introducing new loan options—your research has likely unearthed the substantial opportunities, as well as challenges, inherent to launching home loans. In this eBook, mortgage solutions provider Maxwell dives into the benefits mortgage operations offer and outlines the logistics, costs, and requirements you’ll want to consider. Click here to download Launching Home Loans: How to Build a Profitable & Scalable Mortgage Operation.

Mortgage lenders could learn a thing or two from Southwest Airlines. The airline’s recent cancellations and delays directly result from their decision not to invest in technology. Gone are the days of “doing things the way we’ve always done them.” Instead, the lenders coming out on top this year will have a strategic, customer-centric tech budget. For example, they’ll automate their upfront fee collection because of the beautiful mobile experience they can offer borrowers and because they understand the value of automating a labor-intensive, non-revenue generating task. If this sounds like something worth exploring for your team, check out Fee Chaser by LenderLogix. “You won’t be sorry purchasing Fee Chaser,” a Centier Bank representative shares.

Thoughts on 2023

No one owns a crystal ball, and if they did, do you really think they’d spend their time telling you about the future rather than doing charity work or sitting on a beach relaxing? But owners and managers of lenders and vendors need to have a game plan for 2023, and here are some thoughts about this year. Keep in mind that people need a place to live, and usually financing to accomplish that, and someone has to give them those loans!

First, few expect much to change in the first quarter of 2023 versus the fourth quarter of 2022. Fannie Mae’s economics team expects that the housing market activity will continue to slow down in 2023, even though mortgage rates have declined recently. Fannie expects the real gross domestic product (GDP) to grow 0.4% in 2022 and drop 0.5% in 2023, a slight improvement from the previous forecast, which predicted a 0.6% decline next year.

“The economy caught its breath in the second half of 2022, but that doesn’t change our expectation that it will run out of air in early 2023 via a mild recession,” Doug Duncan, Fannie Mae’s SVP and chief economist, said in a statement. “While uncertainty still exists, a growing set of signs, including an inverted yield curve, weakness in the Conference Board’s Leading Economic Index, and a slowdown of manufacturing activity, support our ongoing contention that the economy is likely to contract next year.”

Real estate agents and lenders have their eyes on the housing markets around the nation. Fortunately, rates have come down, helping things. With long-term (read: 30-year mortgages) interest rates pulling back over the past month, the latest forecast projects total home sales to be 5.72 million units in 2022, up from 5.67 million in the prior forecast. But in 2023 total home sales are forecast to decrease to 4.57 million – up from 4.42 million previously projected by the economists.

And we’ve seen the MBA’s forecast for originations around $2 trillion. Total mortgage origination activity is expected to be at $2.35 trillion in 2022, declining to $1.70 trillion in 2023 per Fannie’s estimates, unchanged compared to the previous forecasts. The MBA reports that our biz originated $4.1 trillion in 2020 and $4.4 trillion in 2021. 2022 is down from those numbers, and 2023 is expected to be $1.5-$2ish trillion, depending on who you ask, certainly less than half of 2021.

Recent economic news paints a mixed picture, and economic news tends to do. House prices were flat in October, according to the FHFA House Price Index. They increased 9.8% on a YOY basis. “U.S. house prices have seen two consecutive months of near-zero appreciation,” said Nataliya Polkovnichenko, Ph.D., Supervisory Economist, in FHFA’s Division of Research and Statistics. “Higher mortgage rates continued to put downward pressure on demand, weakening house price growth. The U.S. house price index growth decelerated as it posted the first 12-month growth rate below 10 percent after 24 consecutive months of double-digit appreciation rates.” The Pacific Division had the lowest YOY home price appreciation, while New England had the highest.

But the Case-Shiller Home Price Index fell 0.3% in October and was up 9.2% on a YOY basis. “October 2022 marked the fourth consecutive month of declining home prices in the U.S.,” says Craig J. Lazzara, Managing Director at S&P DJI. “For example, the National Composite Index fell -0.5% for the month, reflecting a -3.0% decline since the market peaked in June 2022. We saw comparable patterns in our 10- and 20-City Composites, both of which stand -4.6% below their June peaks after October declines of -0.7% and -0.8%, respectively. These declines, of course, came after very strong price increases in late 2021 and the first half of 2022. Despite its recent weakness, on a year-over-year basis the National Composite gained 9.2%, which is in the top quintile of historical performance levels.

Still yet, the Census Bureau tells us that New Home Sales rose 5.8% to a seasonally-adjusted annual rate of 640,000. This was down about 16% compared to a year ago.

Capital Markets

With inflation peaking at 9.1% in June and sliding since, a recession is now the #1 economic concern going into 2023. Of course, a) the “experts” have been talking about a recession for over a year, and b) recessions lead to lower rates. When businesses make less money due to lower consumer spending (triggered by dwindling reserves, price pressures, and an aggressive Fed), companies lay off workers and more people are hesitant to spend. Weak expectations or prior over-investing also factor into the equation, with many firms feeling that large swaths of the economy could, or are already, experiencing worsening macro forces and a series of unknown variables (war, pandemic, energy prices, etc.).

There are signs that the three big world economies (U.S., EU, and China) are all slowing down simultaneously. Even countries that are not in recession, it would feel like recession for hundreds of millions of people. But the argument against a major recession is strong. Gross Domestic Product is not negative. Many corporations haven't cut their profit forecasts, hiring remains surprisingly robust, and the unemployment rate is sitting near historical lows at 3.7 percent. If that resilience holds up and inflation continues to cool down, a soft landing could be in the making. The Fed also won't hike interest rates to the moon (and has even begun to take its foot off the accelerator), which could mean that somewhat of a slowdown is in store, but not one that slams the brakes on the economy. And the rise in real income is likely to be the stronger force in 2023 along with supply chains being normal.

We started off 2023 with a drop in rates, though the main drivers of sentiment and rates this week will be the ISM data and the jobs report on Friday. We are getting to the point where bad news (e.g., slowing manufacturing and falling job numbers) can be interpreted as good news because it may eventually sway the Fed to not remain so hawkish with its monetary policy. Trading to open the year still faces heavy volatility amid economic uncertainty in the face of more central bank hikes.

We learned yesterday that total construction spending increased 0.2 percent in November when it was expected to decline 0.4 percent, bolstered by soaring investment in electric vehicle and semiconductor manufacturing. However, residential investment declined for the sixth straight month as home builders struggle with higher financing costs and falling buyer demand. Higher interest rates are making construction projects more expensive to finance while also hampering broader economic activity. On a year-over-year basis, total construction spending was up 8.5 percent.

Today's session features the December ISM Manufacturing Index, the JOLTS - Job Openings Report for November, and the release of the FOMC Minutes for the December 13-14 meeting, all of which will impact expectations about the future path of the Fed's monetary policy. Today’s economic calendar got going with two weeks’ worth of mortgage applications from MBA. Mortgage applications decreased 13.2 percent from two weeks earlier, though the results include adjustments to account for the holidays. Later this morning brings Redbook chain store sales. We begin the day with Agency MBS prices better by .250-.375 and the 10-year yielding 3.67 after closing yesterday at 3.78 percent.

Jobs and Transitions

“With over 30 years in the mortgage industry, SWBC Mortgage is committed to maintaining our legacy as a financially strong organization. When you become a part of the SWBC Mortgage family, rest assured that you are joining one of the strongest mortgage companies in the U.S. As a privately owned organization, we don’t face the same challenges that our competitors do in a fluctuating market. We stand behind our solid foundation and believe it will lead to an even stronger future. Join us and thrive in confidence. To learn more about our current opportunities, contact Scott Brown.”

“Are you looking for an opportunity that addresses the nation’s affordable housing crisis while also offering differentiating products? Credit Human Federal Credit Union specializes in manufactured home lending and an opportunity for a Loan Processing Manager in our Federal Way, WA office. Our Loan Processing Manager is responsible for building/maintaining a team producing high quality loans and excellent customer service. Preferred candidates have proven leadership and are collaborative. Credit Human has an award-winning culture of excellent service and unique portfolio products. In fact, we have won Manufactured Housing Institute’s Regional Lender of the Year award 5 times. For more information about this career opportunity, send inquiries to Jessica Janowski.”

Deephaven Mortgage has tapped long-time business development leader Tyler Bohn to take on the role of Managing Director, National Accounts charged with helping national mortgage brokers and correspondents accelerate and scale their Non-QM business by leveraging Deephaven’s extensive platform of products, tools, training and support.