“Where can you always find money? In the dictionary.” Plenty of lenders and finding the money to buy other companies while smaller ones are looking for the right buyer. Eat or be eaten seems to be the name of the game as lenders hungry for production are courting other lenders. Some just get out of the game entirely. (See lender and investor section below.) Cutting costs and being efficient continue to be of paramount importance regardless of plans for the future. Is the credit process cost effective and efficient? Yesterday I mentioned changes in the credit world and received, “Rob, when will companies learn that there are ‘too many snouts in the credit trough’? There’s Fair Isaac, the Bureaus, and the credit resellers. It is not a level playing field, and now, like the old days of having different gfees for different lenders, lenders are slotted into ‘tiers’. In the next few years, we’ll be moving from a tri-merge environment to a bi-merge environment. Regardless of what comes our way, the overall construct of this portion of our business is shaky.” Editor’s note: “Shaky” is not good in this environment. (Today’s podcast can be found here and this week’s is sponsored by SimpleNexus, an nCino company and homeownership platform unites the people, systems, and stages of the mortgage process into one seamless, end-to-end solution that spans engagement, origination, closing, and business intelligence. I go on today’s podcast to talk with Robbie about the industry ramping up mortgage travels and how mortgage market cycles have historically played out.)

Lender and Broker Software, Products, and Services

“Are you on the road to seamless servicing success? Or are you stuck on the side of the road as others pass by? There is a tremendous opportunity for servicers who may lag behind in innovation and technical modernization. Don’t wait to be overtaken by increasing interest rates, delinquencies, disasters, and old habit workarounds. Prepare for whatever lies ahead, whether it be onboarding new products, new ways of doing business, operationalizing new CFPB servicer procedures, or appraisal bias regulation. Speed forward with easy-to-implement, modern process automation designed to meet your unique needs. Our latest blog shows how CLARIFIRE® puts the control in your hands with meaningful features that help you deliver real-time, 24/7 access to critical data, and complex decisioning available from any device at any time. Meet us at MBA Servicing Conference and Expo (booth #802) to see how CLARIFIRE offers seamless servicing, proven innovation, and truly BRIGHTER AUTOMATION®.”

Is your team smaller this year? What’s the best way to restructure your company in these changing times? Firstline Compliance will help you navigate the changes so you can do more with reduced staff in key operational roles and still be successful. We are a leading consultant in the mortgage industry, with a team that averages 25+ years of mortgage operations, compliance, and technology experience. In other words, we know mortgage. In addition, we keep our costs low to help you maximize your ROI. Contact us today to find out how we can provide you with the help you need.

Appraisal Management Companies are a commodity, right? Aren’t all AMCs basically the same? NOPE! With Triserv, you don’t just get a simple appraisal report. You also benefit from six different types of intelligence bundled into one company. Click to read more about our Six Types of Intelligence. Brought to you by Triserv, a 50-state AMC that has client-specific, dedicated teams on both coasts offering high-touch, personalized service. To find out more, contact Triserv Appraisal Management Solutions.

“Universal Component Lender Services (UCLS) will be attending the MBA Servicing Solutions Conference this month in Orlando. Improve the performance of your portfolio and retain more customers. With our component services, UCLS can enhance customer experience, improve customer retention, provide efficiencies to your workflows, and reduce costs. Our call center provides retention calls, servicing transfer calls, welcome calls and more. We provide collection services, loss mitigation, foreclosure, bankruptcy, and claims processing, all as individual components. Helping with as little or as much as you need, UCLS also provides advisory services for bringing servicing in-house, making a change to your current servicing strategy, and providing compliance oversight and QC services for our clients. UCLS was formed to bring these servicing solutions to banks, credit unions, mortgage bankers and portfolio managers. UCLS is changing the way companies are addressing and improving their mortgage servicing needs. Contact Joe Amoroso to schedule a meeting at the MBA Conference, or with any questions regarding our services. You can also visit us at booth #511 or online.”

Artificial intelligence and machine learning technology is ushering in a brand-new world for mortgage lending, and Black Knight is leading the way to redefine the mortgage origination process. Black Knight experts break down what lenders need to know to use AI/ML tech to its fullest. Plus, they look at what it takes to support compliance in an ever-changing field that regulators are still sizing up. Download Black Knight’s complimentary white paper and learn how you can put the future of mortgages to work for you.

Maxwell is now offering lenders complimentary access to its powerful mortgage analytics solution for a limited time. This product replaces complex spreadsheets, expensive business intelligence tools, and other data-wrangling tasks to help executives manage their P&Ls and forecast more efficiently. By securely connecting with your LOS, Maxwell unlocks real-time dashboards around team performance, pull-through, closed volume, product mix, team capacity, and more. These visual dashboards provide actionable insight, no data analyst required, and were built with input from dozens of mortgage business leaders who use data to effectively manage market changes and P&L initiatives. Ready to improve quality, cut costs, and arm your decision-making with eye-opening data points? Request your free access here or contact us.

U.S. Bank Correspondent Lending now offers eMortgage options as part of its ongoing commitment to providing innovative solutions that transform the lending experience. By offering eMortgage solutions lenders can increase efficiencies and streamline the loan delivery process. Whether your MERS eRegistry approved or looking to become approved, U.S. Bank can help. If you’re interested in hearing more about U.S. Bank’s eMortgage offering, contact a Correspondent Lending Account Executive today.

“Keeping sensitive information out of the hands of cyber criminals has become more challenging in recent years. According to NewsWeek, we are now in a “cyber-pandemic” and many of us are unaware of how vast this problem is. Every day of the year, hackers unleash a stream of major attacks against government agencies, companies, and individuals. If you don’t feel prepared for a cyber incident, our cybersecurity experts are here to help. Richey May’s team of cybersecurity experts delivers services designed to help lenders identify and mitigate the risks presented by their people, processes, and technology. Read our blog on Cybersecurity in the Mortgage Workplace to learn 4 steps that lenders can take to better protect themselves against cyber-attacks. Contact us today for help assessing and defining your cybersecurity program for greater visibility and resilience.”

Today's mortgage environment is tough even for journeyman LOs with decades of experience. Two things come to mind when looking for strategies to help LOs today. First, understand home buyers in the context of uncertainty in the market today. Get back to basics of why home ownership still makes sense: pride of ownership, building equity for the future, and a better environment for their family to live and grow. Next, be able to articulate good solid strategies to make home buying more affordable, both down payment strategies and ARMs to lower payments. It’s also important to understand buyer's bias against ARMs and counter with common sense arguments. Usherpa, the number one-ranked mortgage CRM in customer satisfaction and loyalty, is offering informative and educational downloads to any loan officer who could use a hand in this challenging market.

VIPs get the best seats, the best service, and the best tech. From securitization to servicing, Wolters Kluwer gives you the VIP experience with integrated eMortgage technology solutions. Wolters Kluwer’s eMortgage solutions provide you with expert solutions to increase your lending efficiencies and support regulatory compliance efforts, at the right size and level of service for your business. From document preparation with eSign technology to eVault and eRecordation, Wolters Kluwer’s integrated suite of digital mortgage solutions is supported by decades of compliance expertise. Arrange a brief meeting with an expert today to learn more and become a Wolters Kluwer VIP.

Lender and Investor News: Mergers, Acquisitions

Lenders and vendors have been going through some interesting times last year and this year. Older, and younger, owners are asking themselves if they want to continue in the business given continued lower volumes, margins, and revenues. And how to carry out their decision once it is made. Some just quietly go out of business. Heck, some leave the business and try to come back despite accusations of fraud, as this HousingWire article on Sprout’s Michael Strauss points out.

Some large companies have gained a reputation for scooping up valuable originators from smaller lenders whose balance sheet or product offering has been cut. Others are buying smaller lenders who have created an exit strategy. There is a rumor that OnQ Mortgage has purchased the shell of Celebrity Mortgage. The latest example of actual announced news is publicly held Guild Mortgage announcing its acquisition of New Mexico’s Legacy Mortgage. Owned by Jack Thompson since 2006, Legacy will become part of Guild’s Southwest region.

On a larger scale, we’re seeing a shifting in the correspondent channel. Wells Fargo is not the only correspondent to change gears. Many believe that we’ll see more banks staying out of, or exiting, the correspondent channel, following Wells Fargo and Bank of America. Banks must take a hard look at using capital to purchase mortgage servicing rights (MSRs) or being in a low margin business like correspondent or wholesale lending.

Although, as Ashley Lockaby, Director of Warehouse Lending at Northpointe Bank reminded me, its warehouse business is alive and growing, Northpointe Bank announced that it is exiting correspondent lending. “The last day to lock or relock a loan is on February 17, 2023, by 5:00 ET. The last day to fund a loan on April 28, 2023. No exceptions other than a previously locked loans with an original expiration date beyond April 28, 2023. Effective immediately, the maximum lock term for a new lock is 60 days. All terms of the Loan Purchase Agreement and Correspondent Lending Guide remain in full force, including but not limited to, billings and repurchase demands. “Northpointe Bank remains committed to retail lending and warehouse lending. If you have any questions, please reach out to clientrelations@northpointe.com. It has been a pleasure to bring tailored solutions to your business over the past decade.”

And a regional account manager sent out, “I am sending this email with news that One American Bank has made the decision to exit the residential mortgage lending space. With the challenges over the past several months OAB priced themselves out of the market hoping to do a “re-launch” and unfortunately the bank decided now is not the right time to stay in the mortgage space. I know many of you put a lot of time and effort into getting approved with us, training and creating ways to get our pricing out to your MLOs…”

Capital Markets

How much volume are Mortgage-Backed Security (MBS) trading desks seeing these days? An informal poll shows about $2.5-3.5 billion a day in hedging. If you multiply that by 250 working days, it is about $750 billion for the year. Volume is expected to pick up, of course, and we move toward the spring and summer home purchase season, and the MBA is still forecasting about $2 trillion for the year. 5 percent security hedges continue to see the most volume, but all coupons between 4.5–6 percent are seeing notable participation. Increases in loan locks during a day, or over a weekend, impact daily trading volumes. January prepayment volumes were released this week and for the most part slowed, in line with expectations, due to seasonal factors, higher rates at the end of the year, and lower day count.

Turning to the overall economy, as Federal Reserve officials continued their hawkish rhetoric yesterday, we saw increased volatility with investors likely building in expectations for a more hawkish Fed. Last week, the Fed raised its benchmark to a range of 4.5 percent to 4.75 percent.

Minneapolis Fed President Neel Kashkari said yesterday that January’s strong labor-market report shows the U.S. central bank would need to keep raising rates to as much as 5.4 percent. Fed Chair Powell also stuck to the message that interest rates need to keep rising as “the labor market is extraordinarily strong.” He said that getting inflation down to 2.0 percent will take into next year and added that it will be a couple years before the central bank nears the end of balance sheet reduction and a specific target has not been set.

Mortgage rates continue to tick down. As a result, mortgage applications increased 7.4 percent from one week earlier, according to data from the MBA’s Weekly Mortgage Applications Survey. Later this morning brings December wholesale inventories and sales and a Treasury auction of $35 billion 10-year notes. Today is also packed with Fed speakers starting with New York’s Williams, who will be followed by Governor Cook, Atlanta’s Bostic, Vice Chair for Supervision Barr, Minneapolis’ Kashkari, and finally Governor Waller. We begin the day with Agency MBS prices are roughly unchanged and the 10-year yielding 3.66 after closing yesterday at 3.67 percent.

Careers

There’s a place you want to be in life. A place where the journey is as much fun as the destination. Evergreen Home LoansTM calls it living WOW. They have the advantages to help you get to that place, including an efficient technology stack, a robust portfolio of innovative products, and a culture embraced by associates who are driven by empowerment. “We’re planting seeds for the next market, for the next year, for the next year after that. It’s all about looking forward and vision and getting the right people on the team today to build the winning platform for the future,” said Robert Lipston, EVP, Loan Production. If you are looking for a company that has an award-winning culture, a place where the human spirit meets inspired technology and innovative products, check out Evergreen’s Careers Page and start your journey to living WOW.

Exciting things are happening in the Northeast and Mid-America Regions for PrimeLending. The company is thrilled to announce some recent promotions: Kelly McGuinness has been promoted to SVP, Regional Manager over production activities in the Northeast, including New York, New Jersey, Connecticut, Rhode Island, Massachusetts, New Hampshire, Vermont, and Maine. Since joining PrimeLending in 2013 as Branch Manager, Kelly has distinguished herself as a perennial top performer and an excellent servant leader, industry educator and mentor. In the Mid-America region, Kim Dybvad has been promoted to VP, Area Manager with responsibility over Ohio, Indiana, Illinois, Michigan and Wisconsin. At PrimeLending since 2013, Kim has earned an outstanding reputation as a selfless leader, team builder and a top performing branch manager. If you’re looking for a place to grow your career in an environment that recognizes achievement, contact Nic Hartke for more information.