Abraham Lincoln famously stated, “Don’t believe everything you read on the internet.” There are always rumors out there. The latest to cross my desk, given the student loan forgiveness news, is that Nancy Pelosi (very distantly related to California’s Gavin Newsom through a marriage of his aunt) is leading the charge for the Biden Administration to forgive bar tabs. Not true! But speaking of the partial student loan forgiveness, which critics say does nothing to stop the real culprit of skyrocketing college cost inflation, the credit community seems to think that we won’t see the “Settled for less than agreed” typically that is associated with Charge Off accounts, and probably won’t impact credit scores. But don’t quote me on that. What is more factual is lenders continuing to try to turn fixed costs into variable costs. And why not? The MBA tells us that total loan production expenses (commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations) increased to a study-high of $10,937 per loan in the second quarter, up from $10,637 per loan in the first quarter of 2022. From the third quarter of 2008 to last quarter, loan production expenses have averaged $6,902 per loan. Personnel expenses averaged $7,371 per loan in the second quarter, up from $7,113 per loan in the first quarter. And some companies are saying, “No mas.” More below. (Available here, this week’s podcast 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.

Lender and Broker Services, Software,

The year is 2053 and the mortgage industry is in peril. What started as a couple of fintech company acquisitions, soon became a massive conglomerate. Independent mortgage bankers are forced to choose between conformity and exile. Luckily, this same year a robotic dog, named Augie, traveled back in time with a mission. The mission was simple, help mortgage professionals take back their business. Augie is armed with years of knowledge from mortgage bankers; able to generate mortgage reviews, organize contacts, track important dates, create sales activities, produce reports, and so much more. Augie’s talents don’t stop at managing client relationships, though. Augie is also great at processing loans - achievable through step-by-step instructions and automation. Reimagine your workflow with an AI Assistant and Processor. Reimagine a future where you’re in control of your data. A revolution in mortgage banking isn’t coming, it already arrived. Are you ready to meet Augie?

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.

Are you ready for Q4 taxes? How well did last year’s tax season go? Many servicers with in-house tax operations were overwhelmed last year and ended up throwing “bodies” at the problem, adding cost and putting additional stress on overworked (often inexperienced) staff. It also potentially exposed companies to compliance and reputational risks as well as the prospect of writing “make-up” checks to cover errors. With more than 35 years in the tax business, LERETA is the industry’s most experienced tax service partner. Our flexible outsource solutions are designed to support diverse business rules and the unique nuances of your portfolio and processes. Experience the LERETA difference today, contact Kelly Hebert for more details.

Save Money. Free Up Time. Never Miss an ECOA/Reg B Deadline Ever Again. All this thanks to Connector by Velma, a trusted name in the mortgage industry. Connector is a workflow automation solution that makes staying compliant as easy as opening an email. As a bonus, you never even need to login to your LOS, everything is handled inside Connector’s user-friendly software! Connector has even shown to have an over 385% ROI and has saved users an average of 152 working hours in a year! Want to put those ECOA - Adverse Action headaches to rest? Then check out Connector by Velma today!

In today’s lending environment, almost every marketing team we’ve talked to is spread thin. We know how difficult it is to produce compliant marketing that is targeted, localized, and customizable, while meeting your Loan Officer’s deadlines. Partnering with Usherpa means your sales team not only gets excellent done-for-them automated marketing campaigns included in their memberships, but your marketing team gets all the tools they need to take the stress out of their job. Usherpa’s Launch Pad Custom Email Wizard was designed for corporate marketing teams and allows marketers to create materials that align with your unique company vision and brand strategies. Wouldn’t it be nice to have this type of local content deployed automatically for your loan officers? Check out the current issues of Local Housing Market Stats Video and LocalEyes eNewsletter. Schedule a demo today.

TPO Products

Homeownership has long been a cornerstone of the American dream and the Correspondent Channel of Citibank N.A. is dedicated to helping homeowners turn dreams into reality. Over the past 6 months, we have expanded our Non-Delegated platform to provide enhanced capabilities and increased capacity to support origination growth in underserved markets. Paired with a robust set of Community Reinvestment Act (CRA) pricing incentives that can be brought point of sale through Optimal Blue and ICE’s EPPS pricing engines, Citibank N.A. continues to lean in on Correspondent, regardless of the overall market landscape. With further expansion of products and programs in flight, Citibank N.A. is looking to expand our seller base, especially for those Non-Delegated, Best-Efforts lenders with a passion to support consumers in underserved markets. Learn more about how we can support your growth by contacting our National Client Services Team at 800-967-2205 or completing the Prospective Correspondent Questionnaire.

“Due to the overwhelming demand and having over 300 participants on the last webinar. We will be scheduling additional webinars in September. Join Deephaven Mortgage for our Non-QM expert educational Webinar Series. Deephaven has over 10 years of Non-QM lending expertise and invites you to our monthly Non-QM webinar series. Our Deephaven Non-QM webinars will assist loan officers and their referral partners in becoming the Non-QM experts in their markets. Learn more about the must-have products that you need to reach more borrowers. Register today on our website where all of our webinars will be listed, and registering is a breeze. Scheduling conflict? We’re happy to schedule individual customizable webinars for your team. Reach out for your Non-QM training needs. If you are interested in being approved with Deephaven Mortgage, contact Tom Davis.

Are you considering non-delegated correspondent lending or want to explore new fulfillment options for your platform? Sign up today to join our Partners who are already leveraging Rocket technology for all their disclosure needs including closing documents! Contact Rocket Pro TPO today to learn more. Led by Don Chiesa, SVP, a 30+ year industry veteran, our industry-leading platform delivers elite services to non-delegated correspondents. Our vision delivers the control, speed, and simplicity you need, starting with your dedicated Crew team, offering personalized responsiveness in operations/underwriting. PathfinderSM by Rocket is powerful technology that delivers answers you need while using our complete mortgage product menu. Our partners purchase loans are clear to close within an industry-leading 20 business days plus we’ll clear your warehouse lines with average purchase times of 3-5 days. documents. Want to learn more about our new solutions? Contact Rocket Pro TPO today.

Going, Going, Gone…

Lenders have different channels that they can enter, or exit, depending on circumstances. Yesterday California’s Mountain West announced a decision to focus on its growing retail division, expanding in California, Oregon, Arizona, Nevada, Colorado, New Mexico, Texas, and Minnesota.

“Mountain West Financial has made the difficult decision to take a step back from Wholesale lending. We appreciate and are grateful for the partnerships forged and the opportunity to have served you and your borrowers throughout the years. Through this transition, we are committed to remaining transparent and honoring all loans in your BOLT pipeline that have been submitted. You and your clients can expect the same high level of service that you have received from Mountain West since day one, and as such, all submitted loans must be locked by Friday, August 26th, and all loans must close by September 30th.”

And the question often comes up about “IT” companies taking over residential lending or real estate transactions in general. Here, Reali admits to an “unfavorable capital-raising environment” despite Reali providing a “one-stop shop” for home buying and selling, including mortgage origination, title and escrow, and power buying. Where did that $100 million go?

Real estate startup Reali has joined the list of companies shutting down for various reasons. Based in San Francisco, the “fintech” company said it will cease operating and start laying off most of its workforce on September 9. Recall that earlier this year Reali announced plans to expand outside California and into other states by the end of 2022. But that was then, and this is now, and we have “challenging real estate and financial market conditions” and an “unfavorable capital-raising environment.”

The 6-year-old company determined the best course of action was to close. “Active real estate transactions will continue to be supported through the end of the year by a small team of employees,” Reali said in a statement, which also mentions that Reali is in talks with companies that have expressed interest in acquiring these specific parts of its business.

Reali co-founder and chairman of the board Amit Haller commented: “Reali was one of the pioneering companies to offer the ‘buy before you sell’ and ‘cash offer’ programs to homeowners. We believed deeply in benefiting the consumer foremost in every transaction. The six years Reali spent evolving the prop tech market in California helped elevate and transform the industry.” “We had an incredible six-year run delighting homeowners,” said Reali CEO Tyler Baldwin. “We want to extend our deepest gratitude to the thousands of homeowners who trusted Reali with their homeownership journeys, the Reali team, our investors, and those who rooted for us from the sidelines. It has been a pleasure to serve our communities.”

Capital Markets: Fed in Focus

We learned yesterday from Freddie Mac that U.S. mortgage rates soared to 5.55 percent last week. Rates reaching the highest levels since June. Why? “Hawkish” Fed speak has renewed the squeeze on homebuyers. Rising rates have also steepened the 2s/10s curve and widened MBS spreads.

But there was some relief yesterday as bond yields fell with traders awaiting Fed Chair Powell’s speech today for clues on how much further the Federal Reserve will pump the brakes on the economy to bring inflation back under control. Federal Reserve officials have stressed the need to keep raising interest rates even as they reserve judgment on how big of a hike to implement at the September FOMC meeting. Ahead of today's aforementioned highly anticipated speech from Fed Chairman Powell, the market yesterday received comments from several Fed officials. Kansas City Fed President George said that the fed funds rate is not at a restrictive level at this time and that the Fed could hold the rate above 4.00 percent. St. Louis Fed President Bullard said in the afternoon that rates are not high enough now and that he is targeting a fed funds rate range between 3.75 percent and 4.00 percent for the end of the year.

The NY Fed released a new purchase schedule yesterday covering the August 26 to September 14 period that totaled $4.4 billion, as expected. The schedule is expected to be the last for some time with paydowns expected to be below the $35 billion tapering cap. There are no changes to the coupons from the prior schedule for 30-year operations that cover 4 percent through 5 percent, though of the two UMBS15 operations, one will target 3.5 percent and 4 percent (like the prior schedule) with one targeting 4 percent and 4.5 percent. Current coupon production.

As noted above, today brings the much-awaited speech from Fed Chair Powell on the economic outlook before the KC Fed’s Jackson Hole Economic Policy Symposium "Reassessing Constraints on the Economy and Policy." Ahead of that we’ve already seen July personal income and spending (up 0.2 percent and 0.1 percent, respectively), the Core PCE Price Index (up 4.7 percent for the year and 0.1 percent month-over-month), Advanced economic indicators for July, and later this morning brings final August Michigan sentiment. We begin the day with Agency MBS prices down .250 and the 10-year yielding 3.06 after closing yesterday at 3.03 percent after this initial salvo of numbers.

Employment

Berkshire Bank, headquartered in Boston, MA is looking for a Capital Markets Pricing Analytics and Strategy Senior Analyst- FVP. Individual is responsible for development of pricing analytics, driving strategic decision-making, and supporting Mortgage (Retail & Correspondent) and HELOC. Provides financial and competitive analysis to aid decision making. Deliver guidance to leadership team on functional KPIs, risk & controls monitoring, developing business cases for strategy/policy changes. Provides risk support by ensuring adequate controls, risk reporting and analysis processes are in place. The candidate should have 5+ years of Financial Services experience & 3+ years of relevant Mortgage Secondary/Capital Markets experience, a bachelor’s degree in Mathematics, Economics, Finance, or like discipline, proficiency in financial analysis and ability to present to senior leaders, experience communicating complex concepts, Strong MS Excel, BI Tools, SQL skills, and Encompass, Meridian Link, Optimal Blue experience. If you are interested in this remote position, reach out to Douglas Redmond.

One of the nation’s top mortgage companies (Source: Scotsman Guide), 100% employee-owned USA Mortgage, continues to expand its national footprint and strengthen its executive team despite recent market shifts. Latest to join USA is Ryan Todd, new Chief Operating Officer. Ryan comes to USA as a highly-regarded industry executive with over 20 years’ experience. Additionally, Dani Ploch has been promoted to the newly created position of Chief Administrative Officer. Dani came on board in 2001 as an intern and has shined ever since, mirroring the success of the St. Louis, Mo.-based firm which in 2021 booked $4.8 billion in home loans, an all-time high. Taking it to the bottom line: USA’s employee-owners have seen the value of their ESOP stock soar 521% since its inception just 4 years ago. For a closer look at USA Mortgage, which employs 1,014 people at 176 locations in 49 states and the District of Columbia, click here.