With most mortgage related headlines focused on rates being back above 6 percent for the first time since 2008, it makes sense that 67 percent of millennials and Gen Zers who moved back home during the pandemic still live there. Lending Tree surveyed more than 1,300 U.S. parents and/or generation Zers/millennials to get their thoughts on pandemic parent-living arrangements and found that 85 percent of parents would let their children move back in as adults or have previously done so, and most (73 percent) wouldn’t charge them rent. That sounds “pretty sweet” as higher mortgage rates combined with still-high home prices are making it challenging for homebuyers as we head into what historically has been the best time of the year to find a home. According to economist Elliot Eisenberg, Ph.D., asking rents rose 0.4 percent in August this year. While that is historically very high (pre-Covid, rent hikes in August were about 0.2 percent), that figure is way down from the 1.9 percent rise in August of 2021. And home is a trendy place to be. Between 2019 and 2021, the number of people primarily working from home in the U.S. tripled from 5.7 percent (roughly 9 million people) to 17.9 percent (27.6 million people), according to the U.S. Census Bureau. Nearly half (48.3%) of workers in the District of Columbia worked from home, the highest percentage of home-based workers among states and state equivalents in 2021. Lots of MLOs are looking for economic information to pass along to their clients, and today at 3PM ET is the next edition of The Mortgage Collaborative’s Rundown with Rich and Robbie Chrisman. Today’s guest is Moody’s Mark Zandi, and the discussion will focus on the economy and the mortgage market for 45 minutes. Register at “The Rundown with Rich and Rob”! (Available here, this week’s podcast is sponsored by SimpleNexus an nCino company and award-winning developer of mobile-first technology for the modern mortgage lender.)
Vendor Services
Industry veterans speak out on how to achieve superior loan quality. Earlier this year, ACES Quality Management sat down with clients to ask about their experience using ACES Flexible Audit Technology. The insights gained from these interviews showcases why the company is the leading provider of quality management and control software for the financial industry. Find out how some of the industry’s top financial institutions use ACES to help them: Increase loan audit output by over 50 percent, review more audits with less staff and successfully pass a Fannie Mae MORA audit. Watch now.
Attending TMC in Chicago? Checkout these innovative sessions: Where to Start Your Automation Journey on 9/25 with Kyle Hubert from Capacity, and Michael Metz from VIP Mortgage, Case Study: Powerful Partnerships: Supercharging Your Company's Human Capital on 9/26 with Jen Peachman from Capacity, Scott Alexander and Katelyn Hodges from Assurance Financial, and Making Sense of Automation Tech/Tools & The Roadmap to ROI With Them on 9/27 with Josh Katz from Capacity, Andrew McElroy from American Federal Mortgage Corporation, and Stephanie Zinsmeister from AnnieMac. If you’ll be in Chicago September 24-27, we’d love to show you how Capacity can relieve your team of time-consuming tasks. Capacity reduces the time that LOs and brokers spend logging into a sea of endless systems to find information. If this sounds familiar, see how Capacity can save your team time and frustration. See how it works.
Don’t wait - it’s time to truly understand your MSR portfolio financial results, refine your MSR strategy and optimize the path forward through dynamic market conditions. At Richey May, we begin with a deep analysis of your MSR portfolio, a review of the overall servicing retained/released strategy plus a review of the production side of the business. Ongoing support with sale selections, Letters of Intent and Contracts, and periodic calls to discuss MSR conditions can also be included. Contact Seth Sprague, CMB at info@richeymay.com to learn more about Richey May’s Mortgage Banking Consulting Services.
Meet us in Music City for a sweet song to your profits — Planet Home Lending Correspondent is hitting Nashville. Planet will be at MBA Annual, Oct, 24-25, at the Margaritaville Hotel Nashville. Meet us in the Seagrass Meeting Room for a 30-minute conversation that could help build your business all year long. Get buyers out of the pipeline and to the closing table with renovation loans like Fannie Mae HomeStyle® and Freddie Mac CHOICERenovation®, manufactured housing loans to meet affordable housing demand and many more great loan products designed to boost your bottom line with no additional overhead. Reach out to SVP, Correspondent Sales, Jim Loving today: (414-270-0027). Put Planet to work for you!
Has 2022 worn you down? Are the new regulations, high interest rates, margin calls and lack of production volume making you rethink your strategy? There is a Community Bank in Central Texas looking for retail purchase and lift out options in the Texas area market.
One-stop shopping: who doesn’t love it? It’s even better when your loan partner is Flagstar Bank, because you’re partnering with the acknowledged leader in the space. Flagstar is well-equipped to handle your mortgage warehouse line, MSR and servicing advance financing -- even your business operating account and treasury management needs. They can fund your MSR purchases to maximize value over time, regardless of portfolio size. And ease the burden of servicing advances in your portfolio and manage your liquidity with servicing advance financing. Stability throughout the process is a given, because Flagstar is a well-capitalized bank with a robust risk and compliance infrastructure. Personalized attention comes standard too. All this lets Flagstar compete on much more than just price. And it’s why Flagstar is the nation’s second-largest warehouse lender, with five times more warehouse clients than the industry average. Consider consolidating your warehouse lines of credit. Contact Patti Robins or Jeff Neufeld today.
CPI Takeaways
August’s CPI surprised economists as inflation was hotter than many expected despite a significant pullback in gasoline prices. Core CPI, which removes volatile food and energy prices, has increased at a 6.5 percent annualized rate over the last three months which is higher than the 6.3 percent annualized rate over the last twelve months. Consumers continue to spend on household goods, apparel, medical, and recreational goods which all saw price increases during the month. On the services side, personal care, medical care, insurance, and tuition continue to get more expensive while there is a glimmer of hope that rent increases may be near their peak. The Federal Reserve and Chair Powell will now feel justified in taking even bigger steps with interest rates to tamp down prices. The data immediately changed market expectations for future Fed policy with a 75-basis point rate hike now expected for September and the potential for higher than expected rate hikes through the end of the year. It is more likely that inflation will remain elevated for some time leading to a prolonged period of higher interest rates than those to which we have grown accustomed.
Capital Markets
Rates rose again yesterday, assisted by the release of the day's big batch of data. Weekly jobless claims fell to historic lows which keeps pressure on the Fed to keep hiking rates as the Fed wants to see the unemployment number tick up to slow down wage growth. The Empire State Manufacturing survey was better than expected while Industrial Production and the Philadelphia Fed survey missed estimates. Business conditions are slowing overall, but more importantly we are seeing declines in the prices paid and prices received indices. These are more anecdotal measures of inflation, but are encouraging data points for the Fed. The August Retail Sales report was mixed, beating (0.3 percent) headline expectations, but missing (-0.3 percent) when excluding auto sales. Miscellaneous store retailers rose 1.6 percent month-over-month while department stores rose 0.9 percent, boding well for the back-to-school shopping season and eventual holiday shopping season.
As mentioned above, mortgage rates surpassed 6 percent this week to reach their highest level since 2008. According to Freddie Mac, the 30-year fixed mortgage rate rose to 6.02 percent from 5.89 percent the previous week as inflation continues to push up mortgage rates. As a result, the monthly mortgage payment has increased about 60 percent compared to a year ago. Although first-time buyers need to spend about $100 more for their monthly mortgage payment than their rent, first-time home buyers should consider that their monthly mortgage payment is not adjusted to inflation and remains the same during the course of the loan period.
Today’s lone economic data point is preliminary September Michigan sentiment, due out later this morning. The Fed reinvestment operations schedule released Wednesday states there are no MBS operations scheduled at this time. We begin the day with Agency MBS prices worse .250 and the 10-year yielding 3.45 after closing yesterday at 3.46 percent.
Job Movement
We wanted to let you know that WFG has officially launched our new Builder Services division, and industry veteran Shaun Gonzales has been appointed as president. The news release announcing the launch and Shaun’s appointment is attached, along with Shaun’s headshot, and may also be viewed on our news page here.
Fannie Mae has appointed Anthony Moon as EVP and Chief Risk Officer (CRO), effective fourth quarter 2022, and will be responsible for Fannie Mae’s Enterprise Risk Management which oversees the company’s governance and strategy for global risk management.
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