“The older I get, the earlier it gets late.” It was early to bed last night for me, early to rise, since today we are heading to Austin, Texas for the Sales Rally at University Federal Credit Union. I am sure that a conversation topic will be the capital markets and why mortgage rates are doing what they’re doing (which will also be discussed on today’s Capital Markets Wrap at 3PM ET, presented by Polly). Another will be the regulatory environment in Trump II. How might Elon Musk, with Tesla’s headquarters near Austin, handle rules and regulations and approval processes? Some Musk watchers point to the tunnel his company is building under Las Vegas as an example. Time will tell. (Today’s podcast can be found here after 5:30AM PT and this week’s is sponsored by Calque. White-labeled buy-before-you-sell solutions powered by Calque help you increase purchase volume and increase realtor business by helping them differentiate with a better process. With coverage in the 48 contiguous states, what are you waiting for? Hear a chat between Robbie and me on what good originators are focusing on and what the beginning of conference season means for our respective travel schedules.)
Lender and Broker Services, Software, and Products
“Class Valuation, the nation’s largest AMC, announces the launch of its New Construction Expert Appraiser Panel. New construction appraisals require specialized expertise and precision, and this expert panel was created to meet those unique demands. Every appraiser on this panel has undergone a rigorous testing process and has demonstrated experience and expertise in new construction valuations. With ongoing training and a commitment to the latest standards, Class Valuation provides reliable results you can trust. With a proven track record and industry-leading credentials, Class Valuation’s New Construction Expert Appraiser Panel offers a comprehensive solution for builders and lenders. A nationwide network of certified appraisers, combined with robust quality assurance and 24/7 support, ensures timely valuations while mitigating risks and delays. Learn more about Class Valuation’s New Construction Expert Appraiser Panel and why the nation’s leading home builders and new construction lenders are using Class Valuation for their valuations.”
“Start 2025 strong with the only mortgage point of sale fully customized for your business. In today’s competitive mortgage marketplace, customizing workflows and borrower experience is crucial to differentiation. With the industry-first configurability of Maxwell Point of Sale, lenders can define workflows for any mortgage product, while configuring triggers and business rules to align the borrower experience to operational processes. Maxwell Point of Sale also features more than 60 third-party integrations, allowing lending teams to seamlessly connect with other vital pieces of their workflow, from credit and verifications to pricing and disclosures. It’s no wonder that Maxwell Point of Sale is the top ranked mortgage point of sale on Capterra with 4.8/5 stars. Want to learn more? Let us know and we’ll show you what Maxwell can do for you and your borrowers.”
“Flex HELOC: Empowering Borrowers with Financial Flexibility! Looking for a solution that offers your clients flexibility and financial freedom? Look no further than Kind Lending’s Flex HELOC! Whether it’s consolidating debt or funding home renovations, this program is designed to help borrowers achieve their goals with ease. Key highlights include max Loan Amount: Up to $350,000, CLTV: Up to 89%, Flexible Draw Periods with Interest-Only options, Min Credit Score: 640, available for Primary Residences and Second Homes, and 1st or 2nd Lien Options to meet diverse needs. This is the ideal solution for borrowers seeking a smart way to tap into their home’s equity while keeping their options open. Give them the flexibility they need to achieve their dreams! Connect with Kind Lending now and discover how we can elevate your business and your clients’ futures. Let’s make BIG things happen!”
Struggling to retain borrowers in today’s competitive market? LoanCare® can help. Its newest eBook, “UNLOCKING DIGITAL RECAPTURE: How LoanCare Drives Customer Retention and Growth,” explores the innovative strategies and technology behind the company’s industry-leading solutions. Discover how LoanCare keeps homeowners connected to your brand with proactive digital tools designed to boost customer engagement, improve borrower retention, and drive portfolio growth. Don’t let refinancing platforms take your customers… discover the key to extending homeowner relationships and thriving in a competitive rate environment. Download the eBook today and start unlocking your potential! Reach out to David Vida to learn more about LoanCare servicing solutions.
Mortgage applications are denied for all kinds of reasons, including a dip in the borrower’s credit score or increased debt. Whatever the reason, denials cost IMBs thousands and can result in a flurry of negative social media posts. The good news is down payment assistance (DPA) can lower an applicant's LTV by an average 6%, letting IMBs take control of this narrative. A recent study from the Urban Institute suggests 31% of denied loans could have been salvaged with DPA. “DPA lets IMBs do what they do best, put eligible buyers into homes,” says Brad Cardwell, VP of Sales and Business Development at Down Payment Resource, the OG of all things DPA. “That’s a lot of money saved, and happiness granted, a solid move for winning over today’s review-conscious homebuyers.” Interested IMBs can meet with Brad at the upcoming MBA IMB conference in Austin. Here’s his calendar.
Credit report fees are going up… No surprise there. But the real question is: how many of your pre-approvals never see the light of day? That’s the real revenue drain. If you’re looking to keep your prospects from wandering off, take a look at QuickQual from LenderLogix. Borrowers love it, and you will, too. Because in this line of work, “sticky” is a good thing, and QuickQual does the trick.
Who Owns a Lot of Rental Houses?
Periodically someone will suggest that the largest owners of single-family homes be motivated/nudged/forced to sell houses. That won’t happen, of course, in a free country. But there are financial considerations, including…
Here is the PESP statement on the Department of Justice action against private equity landlord Blackstone for alleged rental price-fixing scheme. (Amended complaint to antitrust suit against RealPage names six of the largest U.S. landlords, including companies owned by private equity landlords Blackstone, Greystar, and Cortland.)
“Last week, the Department of Justice announced it had filed an amended complaint to its antitrust lawsuit against RealPage in order to sue six of the largest U.S. landlords for their alleged participation in a nationwide rental price-fixing scheme. According to the complaint, the six landlords allegedly coordinated their rents with each other through use of RealPage’s pricing algorithms and direct communication with competitors about rents and occupancy, among other tactics. Of those six landlords, three are owned by private equity firms: Blackstone, Greystar Real Estate Partners, and Cortland Management.
“Blackstone, the nation’s largest landlord, with around 350,000 rental units, has faced years of scrutiny from advocates for its poor treatment of tenants. In August, the nonprofit Private Equity Stakeholder Project (PESP) and the Alliance of Californians for Community Empowerment (ACCE) published a report examining how Blackstone has profited from rent hikes and ramped up evictions in California. In 2021, Blackstone acquired 5,800 rental units in the San Diego area.
“Since then, the report showed, Blackstone has increased the rent at these properties 38%, almost double the 20% average rent increase for all apartments in the San Diego market during this period. The rent increase at some Blackstone-owned buildings was especially high, up to 79%. The report also noted how Blackstone touted to investors multiple times how the firm’s real estate investments benefit from declining new supply of housing, a key driver of the affordable housing crisis.
“’As more and more Americans struggle with the cost of putting a roof over their heads, corporate landlords were allegedly colluding to raise rents ever higher,’ said Jordan Ash, Director of Housing at PESP. ‘Everyday Americans can’t keep up with the cost of rent. Homelessness is skyrocketing. Folks are choosing between medicine and a place to live. We applaud the Department of Justice for taking decisive action to hold profiteers like Blackstone accountable.’”
The IRS and Los Angeles County
IRS grants disaster filing and payment postponements to Los Angeles County wildfire victims (01-10-24)! “Taxpayers in Los Angeles County have until October 15, 2025, to meet filing and payment deadlines that normally fall within the January 7, 2025, through October 15, 2025, time period. (IR-2025-10) This includes, but is not limited to: 2024 quarterly estimated income tax payments normally due on January 15, 2025, and estimated tax payments normally due on April 15, June 16, and September 15, 2025; Quarterly payroll and excise tax returns are normally due on January 31, April 30, and July 31, 2025; Individual income tax returns and payments are normally due on April 15, 2025; 2024 contributions to IRAs and health savings accounts for eligible taxpayers; Calendar-year partnership and S corporation returns normally due on March 17, 2025; Calendar-year corporation and fiduciary returns and payments are normally due on April 15, 2025; and calendar-year tax-exempt organization returns are normally due on May 15, 2025.
“In addition, penalties for failing to make payroll and excise tax deposits due on or after January 7, 2025, and before January 22, 2025, will be abated as long as the deposits are made by January 22, 2025. “Ventura County is not currently listed in the FEMA disaster declaration, so the IRS cannot currently grant automatic postponement relief to taxpayers in that county. However, the IRS has indicated that the same relief will be provided to other counties added later to the disaster area. “Taxpayers who have an address of record in Los Angeles County will automatically qualify for relief. Taxpayers who live outside of Los Angeles County whose records are located in Los Angeles County, such as taxpayers with tax preparers in Los Angeles County or who own businesses located in Los Angeles County, also qualify for relief but must contact the IRS disaster hotline at (866) 562-5227 to obtain relief.
“Disaster area tax preparers with clients located outside the disaster area can choose to file bulk requests. Information about bulk requests is available here.
Capital Markets
Turning to rates, bond yields continued their inexorable rise yesterday, following Friday's stronger-than-expected employment report (+256k for December), which fueled speculation that the Federal Reserve may pause its interest rate cuts for the foreseeable future (read: the majority of 2025). The U.S. 10-year Treasury yield climbed to 4.8 percent, its highest level since late 2023, marking a 1 percent rise from mid-September. Similarly, the 30-year U.S. Treasury yield approached 5 percent, after briefly surpassing that threshold on Friday for the first time in over a year. Further selling pressure came after the New York Fed's December Survey of Consumer Expectations revealed unchanged year-ahead inflation expectations at 3.0 percent, but an increase in the three-year outlook to 3.0 percent from 2.6 percent. Five-year expectations dipped slightly to 2.7 percent.
While it may be a new year, economic data released last week continued to tell the same story as 2024. The ISM services survey showed continued expansion in the services sector as well as the largest monthly increase in costs since February 2023. The minutes from the Fed’s December meeting were also released last week and they reiterated their philosophy that if inflation remains elevated and the labor market is not deteriorating, they are comfortable leaving the policy rate unchanged.
This week’s focus will be on inflation, with the Consumer Price Index (CPI) for December expected to rise due to higher energy prices, while core CPI is likely to remain steady. Producer prices are also forecast to have increased. As inflation gauges remain stubbornly high, the question of why the Fed continues its rate cuts looms larger. With the Fed now slowing its cuts, earnings from Wall Street will likely play a more pivotal role in investor moves going forward. December’s household spending likely surged, while housing data is expected to show mixed results. Small business optimism likely improved in December, reflecting post-election optimism.
NFIB small business optimism for December led off today’s economic calendar, hitting a six-year high. Also on the calendar is December’s Producer Price Index. Forecasts were for increases of 0.4 percent and 0.3 percent month-over-month in the headline and ex-food/energy, respectively, and 3.4 percent and 3.7 percent year-over-year versus 3.0 percent and 3.4 percent previously. Later today brings Redbook same store sales and remarks from a couple of Fed presidents. In the very early going Agency MBS prices are roughly unchanged from Monday evening, the 2-year is yielding 4.39, and the 10-year is yielding 4.79 after closing yesterday at 4.80 percent.
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