“How many millionaires do you know who have become wealthy by investing in savings accounts?” Lenders, and their underwriters, work with income, value, and wealth every day. But check this out reminder that owning property is a great way to build wealth: Baby Boomers are 9x wealthier than Millennials. That is quite a difference. “Wealth is the value of assets owned minus the liabilities (debts) owed. The new U.S. Census Bureau report, and detailed tables on household wealth in 2019, show similarly wide variations across demographic and socioeconomic groups but also detail generational wealth differences for the first time.” Home prices and rental rates are far outpacing income gains, meaning millennials must spend significantly more of their earnings on housing than previous generations. The average millennial spends 47% of their gross monthly income on housing, roughly 1.5x more than the 30% experts recommend for financial health. Millennial debt is a big deal as millennials are feeling the strain of rising housing costs on their finances: almost 1 in 3 (29%) say they can't afford their mortgage, and 1 in 5 (20%) say they can't afford their rent. In an emergency, 1 in 4 (25%) doubt they could pay a $500 expense out of pocket. It's no wonder 41% of millennials feel pessimistic about their finances. (Today’s podcast is available here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services in the mortgage industry and in banking. Today’s includes an interview with Morty’s Rob Heck on current market trends and what to expect in the second half of 2022 for the mortgage industry.)

Lender and Broker Services and Software

The Sixth Sense premiered 23 years ago today, giving M. Night Shyamalan his big break. Recently, Dave Savage of Sales Boomerang and Mortgage Coach and Kristin Messerli of Experience.com asked 25 mortgage industry leaders who have a “sixth sense” for success what they are doing to maintain growth in today’s market. Their overall consensus: the pie may be smaller, but opportunity is aplenty. Watch the interviews on the Mortgage Coach YouTube channel, which star the likes of Shant Banosian of Guaranteed Rate, Rob Chrisman and Sue Woodard of STRATMOR Group, Steve Jacobson of Fairway, and Austin Neimic of Rocket Mortgage. Or read a summary of their findings in the 2022 State of the Mortgage Industry Half-Time Report.

CubiCasa is now offering a free floor plan option for real estate and a lower priced appraisal-ready Gross Living Area (GLA) report as an add-on for mortgage professionals. The revolutionary GLA software is available in any of the 50 states and can be used by anyone with a smartphone to generate ANSI-aligned Floor Plans with GLA measurements and interior walls. The industry’s leading AMCs have integrated CubiCasa GLA technology to fulfill thousands of Desktop & Hybrid appraisals with ease and are ready for the newest Freddie Mac’s ACE+PDR program. Digital floor plan technology holds great promise for the mortgage industry. It creates efficiencies, standardizes outputs, and saves the most precious resource - time. With the new advancements, quick turnaround time, CubiCasa’s goal is to spread these benefits out to the industry on a much broader scale than ever before. Visit CubiCasa to learn more and try a scan for free yourself!

Set up your intelligent automation initiative for success. An intelligent automation solution has huge upside potential for a mortgage company. It can help your operation run more efficiently, more cost-effectively and more flexibly. But it can’t fulfill its promise unless you can ensure smooth implementation and organization-wide adoption. The Mortgage Automation Suite brought to you by Richey May Automate and Zoral Group provides the solution and support you need to succeed with your intelligent automation initiative. Hosted on Amazon Web Services (AWS) and designed to work through the cloud, it integrates into your existing tech stack easily and virtually. It’s also easy to adopt. Just a few hours of web-based training, and your loan originators and underwriters will be ready to roll. Soon they’ll wonder how they ever lived without it. Want to see it in action? Sign up for a demo today.

“Finance of America Mortgage TPO has been rolling out a lot of new products to provide you and your borrowers some of the best mortgage options around! Whether you’re looking for a lender that can offer Non-warrantable condos, have a borrower that’s a gig-worker looking to purchase, or just need to lock a loan on a TBD address – we’ve got you covered! To help keep you up to speed on new products and enhancements, FAM TPO has a weekly training schedule to keep you at the top of your game. Take a few minutes to attend a 15-minute webinar or watch a recording when you have time. Either way, it will help you find the best options for your borrowers. Interested in partnering with Finance of America Mortgage TPO? Reach out today to see how we can help take you to the next level!

Loan Program News

Yesterday Rocket Mortgage (part of Rocket Companies) announced the introduction of a home equity loan. And why not, given the amount of home equity that is out there. (The Federal Reserve tells us that there is $28 trillion; “At the same time, the country's total household debt stood at $15.84 trillion as of Q1 2022 – $1.7 trillion higher than at the end of 2019, before the COVID-19 pandemic per to a report from the Federal Reserve Bank of New York. The report also showed that credit card balances in Q1 were $71 billion higher than in 2021.” Through Rocket’s program, “Homeowners can access $45,000 to $350,000 of their home's equity in 10- or 20-year term, fixed-rate loans while maintaining at least 10% equity in their home. This new product fits well into the Rocket platform, providing a financial solution no matter the need. Consumers looking for smaller loan amounts can secure $2,000 to $45,000 from sister company Rocket Loans.”

Guild Mortgage announced a new program that offers an alternative method to measure credit risk for borrowers. A more inclusive path to homeownership addressing needs of minority homebuyers, Guild’s Complete Rate program, powered by FormFree, evaluates rent and other consistent payment history in place of traditional credit reports for home loans. Guild’s Complete Rate program was created to help first-time homebuyers with no credit score and is available for FHA, USDA, and VA home loans.

Guaranteed Rate launched fully digital Personal Loans. The company's new Personal Loans “provide a frictionless digital solution to personal loans, with an application that takes just 10 minutes to complete and funds up to $50,000 received within hours. The launch of Guaranteed Rate's Personal Loans comes after a wave of recent strategic hirings and product announcements, such as its recently launched HELOCs.”

Capital Markets

“In today’s volatile rate environment, how confident are you with those important risk metrics provided by your hedge advisor? Is your duration profile being adjusted in an appropriate and timely fashion to keep up with the instability and radical changes the market has recently endured? Any capital markets expert will tell you that having a robust duration calibration process is critical to your hedge performance. Whether it’s consistent updates to market assumptions, incorporating color from the broker-dealer community, or having your hedge model account for the many different rate paths, there are numerous requirements to sustain peak hedge performance in an unpredictable market. Failing to maintain an accurate duration profile can compromise important hedge decisions and result in erroneous unrealized gain/loss and increased cost. At Optimal Blue, we make the proper adjustments and fine-tune our duration model daily. Reach out to our capital markets specialists to learn more.”

Looking back to last week, initial unemployment claims for the week ending July 23rd fell to 256k, slightly higher than market expectations, but still at levels that suggest the labor market remains tight. Given the slowing in economic output, the labor market is expected to cool as we move through the remainder of the year. Despite rises in personal income and disposable income in June, when accounting for inflation real incomes declined 0.3 percent which will weigh on consumer spending in the coming months. Consumer spending has slowed but it has not yet declined.

And we learned that inflation-adjusted spending rose 0.1 percent in June and retailers have reported shifting spending preferences towards essentials as many consumers have begun to cut back. June’s consumption reports highlighted slowing consumer spending and retailers have reached a point where they cannot simply pass on higher costs and some have begun discounting as product sits on shelves. Many hope the recent trend of lower gas prices is a sign that June’s inflation was the peak and things are starting to correct, however there is still a long way to go before inflation is back near the Fed’s preferred target.

Looking at yesterday’s and this week’s bond market, and therefore interest rates, rates continue lower. Why? Expectations of a recession, although the Fed is hoping for the rare “soft landing.” Certainly it doesn’t want stagflation. Yesterday we saw a deceleration in the ISM Manufacturing Index for July and a slight softening in the final Manufacturing PMI reading for July. The clear slowdown in manufacturing activity was highlighted by the contraction in new order activity, employment, and the biggest monthly drop in the prices index since June 2010. We receive some important employment indicators this week, including job openings and the employment situation report, and the bond market treaded water to open the week.

Today’s economic calendar begins later this morning with Redbook same store sales and will be followed by JOLTS job openings. With the Fed no longer in a black out period, two Fed presidents are scheduled to speak starting with Chicago's Evans, who will be followed by St. Louis’ Bullard. Today's schedule sees the Desk in GNIIs for up to $497 million 4 percent through 5 percent. We begin Tuesday with Agency MBS prices better a few ticks (32nds) and the 10-year yielding 2.55 after closing yesterday at 2.61 percent due to thoughts of the economy slowing and the potential ramification of the Taiwan/China turmoil.

Retail Opportunities

Hallmark Home Mortgage Owner & CEO, Deborah Sturges, was named 2022 Leukemia & Lymphoma Society National Visionary of the Year, raising an incredible $302,528. Sturges has positioned Hallmark to be the best community lender engaged in making a difference, and when nominated for LLS, she couldn’t turn down the opportunity. “From the beginning, Hallmark has always committed to giving back to the communities we serve,” said Sturges. “With the funds we were able to raise, we are one step closer to ending blood cancers, and this is certainly one of my proudest achievements.” Sturges was unwavering in motivating donors to help obtain needed funds for research. "Being the National Visionary of the Year displays the generosity and care of our community. Northeast Indiana stepped up to this cause and has proven its commitment and desire to cement a legacy in fighting leukemia and lymphoma," said Sturges.

Are you a seasoned Loan Officer ready to make a change? Your Home Financial, part of the Newrez family of companies, is looking for Senior Loan Officers in West Lake, OH. This unique opportunity is perfect for passionate professionals who want to be supported in meeting and exceeding their goals while truly working and advocating for the homeowner. With Your Home Financial, you won’t need to sacrifice one or the other. “At Your Home Financial, you will be part of a local family-owned company that makes a difference in our communities. Our real estate partners collaborate with our loan officers to experience shared success,” said Paul McKelvey, President of Your Home Financial. What are you waiting for? Apply now or contact Paul McKelvey, or our recruiting team today!