Who can think of September 21st without thinking about Earth, Wind, and Fire? Yesterday I was on a United Airlines flight out of San Francisco to Savannah, in Row 14. There was no row 13… but I knew what row I was really in! Speaking of numbers, obvious or otherwise, this article caught my eye: The Average American Spends This Much on a Mortgage.” Credit unions and banks have obviously seen their residential lending volume drop but are usually able to move personnel to other departments within the company rather than lay them off. Figuring out how to increase business is a big topic, and Black homeownership is being discussed. For some perspective I turned to the St. Louis Fed with its extensive library of graphs. In fact, if you want to look at the opportunity for growth, look no further than the disparity in homeownership between White, Black, Asian, and Hispanic populations. (Today’s podcast can be found here and this week’s is sponsored by the Trade-In Mortgage powered by Calque. Homeowners can buy before they sell, make non-contingent offers, and tap their home equity to fund the down payment on their next home. Lenders can help their clients negotiate a lower purchase price, reduce their interest payments, and eliminate PMI. Hear an interview with Planet Home’s James de Palma on the current servicing market and trends in asset management.)

Lender and Broker Software, Programs, and Services

More than 40 million people will resume making federal student loan payments in October following a three-year pause. The resumption of payments will drive up DTI for many prospective homebuyers, compounding current affordability challenges. With monthly payments for bachelor’s degree holders averaging $267, and master’s degree holders averaging $567, how do you plan on helping people with student loan debt make their dreams of homeownership come true? Join Catalina Kaiyoorawongs of LoanSense and Dave Savage of TrustEngine at 2 pm ET today for an ACUMA Inside Track webinar on loan strategies and federal programs that can help homebuyers with federal student loans. Register now to save your seat.

“Planet Management Group takes a proactive approach to managing residential and commercial assets. PMG drives optimal returns through market and portfolio monitoring, responsive asset strategies and flexible, custom workflows. Bespoke client reporting delivers in-the-moment insight allowing investors to navigate the changing markets. We offer a comprehensive suite of portfolio optimization and servicing solutions built to support, enhance, and drive performance of mortgage-based assets. Visit us, email us, or call (585) 512-1030.”

Breaking: QC Ally Acquires Premier Due Diligence and Third-Party Review Firm, IngletBlair. QC Ally, the leader in tech-enabled enterprise loan quality and audit services, today announced its acquisition of the respected third-party due diligence solutions company, Inglet Blair, LLC. “By bringing together two reputational powerhouses, this acquisition reflects QC Ally’s commitment to providing comprehensive loan review solutions to the market,” said Chief Executive Officer at QC Ally, Jeffrey Flory. “When we thought about joining forces with a due diligence company, Inglet Blair’s depth of expertise, which allows it to comply with regulatory, rating agency, and investor requirements, made the decision an easy one,” Flory concluded. Read more here.

Are you interested in learning more about the current market outlook and how to identify affordable lending and potential mortgage pricing for borrowers? Join Freddie Mac’s Ajita Atreya and Mia Jones, along with MCT’s Paul Yarbrough on October 5th at 10am PT for a webinar entitled “MCT and Freddie Mac Present: Current Economic and Housing Outlook, Affordable Lending Strategies and Technology Solutions”. In this webinar, panelists will provide a current economic outlook, discuss affordable lending solutions and explain how API integrations are utilized to help our mutual clients identify and price affordable mortgage loan opportunities for borrowers. Register for the webinar today or join MCT’s newsletter to receive timely updates.

First-time homebuyers report that the most important factor in choosing a lender is hearing someone else say the lender delivered an exceptional customer experience, according to McKinsey. That’s why in today's challenging housing market, you need the power of strong partnerships and the right tools to earn it in order to truly thrive. ICE can help you do that with the Surefire℠ CRM and mortgage marketing engine. Surefire comes loaded with award-winning content and automated workflows that help lenders build rapport with business partners. In this blog, discover the steps to build trust with business partners, target the right professionals and showcase your expertise. If you are ready to take your mortgage business to the next level, request a demo of Surefire today.

While most of the mortgage industry is contracting, Click n' Close is doing the exact opposite, thanks to the tremendous growth and success of its down payment assistance (DPA) programs. To date, the company has provided more than $1 billion in DPA-related financing to over 4,000 borrowers through its SmartBuy suite of products, with an average of nearly $10,000 in assistance per transaction. To ensure lenders and their borrowers continue reaping the benefits of its industry-leading DPA programs, Click n’ Close has hired Travis Sharpe as Correspondent Operations Manager and Ken Weislak as National TPO Business Development Manager. With no maximum income requirements and other innovative features, such as a repayable option with a 30-year amortization, a 2-1 buydown and options for manufactured homes, SmartBuy lives up to its name. Contact our wholesale (Adam Rieke, Kerry Webb and Soliman Martinez) or correspondent team (Julas Hollie) to learn more.

Capital Markets

Limited housing supply has been a problem for years. In 2019, before the onset of the pandemic, there was a shortage of approximately 4 million-to-5 million housing units across the U.S. That was due to population growth and job growth outpacing new-home construction and was exacerbated by historically low interest rates during the first year of the COVID-19 real estate boom.

The shortage intensified in the last few years, after mortgage rates rose, due to homeowners unwilling to list and thus give away their locked-in low rates. An economic downturn does not necessarily come in tandem with falling prices (e.g., the 1970s), but some calming in the economy and inflation will lead to modestly lower mortgage rates and more buyers entering the market. Future home price changes will depend on supply entering the market, and the hope is that homebuilders will ramp up production and empty commercial buildings will continue to be repurposed into residential units.

Certainly, housing affordability is a problem in the U.S. and is transforming the market in ways that could be difficult for homebuyers and homebuilders alike. Tuesday's economic calendar saw housing starts plunge by 11 percent month over month in August to 1.283M, marking the lowest level since June 2020. On a Y/Y basis, housing starts fell a further 15 percent, and well below the 1.435M units expected by economists. LOs know that high mortgage rates are clearly taking a toll on builder confidence and consumer demand, as a growing number of buyers are electing to defer a home purchase until long-term rates move lower. Homebuilder sentiment dropped for the second consecutive month and fell below the key break-even measure of 50.

What about the near future? Lenders helped millions of homeowners with 30-year fixed rate loans in the 3’s or lower, and few are in a rush to exit their current properties. At the same time, builders are concerned about constructing new houses that buyers may not be able to afford, which has pushed many of them to the sidelines. Student loan repayments are also about to restart, which can be another big setback for millennials who are looking to break into the market. A lack of homes for sale will keep prices high because it means buyers are competing for a limited supply of houses.

Turning to rates, bonds ended yesterday on a mixed note in reaction to the Federal Open Market Committee Statement for September. As expected, the FOMC did not change its benchmark rate range and maintained its projections on the dot plot for one more 25 basis point hike this year. The Committee did lower its rate cut projections from 1.00 percent to 0.50 percent for 2024, which coincides with the higher for longer narrative. The 2026 projected rate is 2.9 percent versus the 2.5 percent longer run rate. The GDP outlook increased to 1.5 percent from 1.1 percent for 2024, and core inflation estimates moved down slightly to 3.7 percent for next year.

Today’s economic calendar is busy in terms of data, and we’ve already had the Q2 current account, jobless claims (down to 201k from 221k, much lower than expected, 1.662 million continuing claims), and Philadelphia Fed manufacturing (-13.5, down from 12). We’ve already received, and bond markets are digesting, the latest rate decisions from Sweden’s Riksbank (up 25 basis points to 4.00 percent), the SNB (up 25 basis points to 1.75 percent), Norges Bank (up 25 basis points to 4.25 percent) and the BoE (unchanged, but signaled further tightening will be required if inflation persists). Later this morning brings the releases of August existing home sales, leading indicators for August, Treasury announcing month-end supply consisting of 2-, 5- and 7-year notes before auctioning $15 billion reopened 10-year TIPS, and Freddie Mac’s latest Primary Mortgage Market Survey. We begin the day with Agency MBS prices worse .250-.375 and the 10-year yielding 4.48 after closing yesterday at 4.35 percent. The 2-year is up to 5.20.

Employment; Company Wanted

As we approach the last few months of the year, SWBC Mortgage remains committed to empowering our Loan Officers with innovative support strategies. Through initiatives such as HELP, our new down payment assistance program for first-time homebuyers, and monthly Marketing Playbooks that include the latest tools and best practices, SWBC Mortgage is fostering an environment where Loan Officers can thrive and continue to provide exceptional service to their clients and referral partners. SWBC Mortgage is rehumanizing the lending experience, leveraging technology, but maintaining the human connection of mortgage lending. We have big goals and are looking for those who can help us reach them. We combine innovation with personal interaction, empowering our loan officers to serve the communities where they live and lend. To learn more about how our unique setup helps maintain LO compensation and pricing, contact James Clark, Director of Strategic Growth or visit us here.

“At PrimeLending, our commitment to loan originators is more than just a promise, it's a way of life. Introducing MO Concierge, our unparalleled, hands-on approach designed exclusively to surround our loan officers with personal support that anticipates their needs, streamlines processes and is always within reach. With MO Concierge, we’ve got our LO’s backs from day one. Our team transfers NMLS#s, creates LO websites, and sets up one-on-one training so they can start originating loans immediately. We stay by our LOs side throughout every transaction, acting quickly to remove obstacles and find ways to say "yes" more often. ‘This is a place where we can grow our business using the many tools provided, where Sales and Operations work in unison, and where I feel best equipped to deliver the level of service our customers deserve,’ said Saul Kittelson (NMLS# 1205600), Production Manager in Kansas, MO who rejoined PrimeLending in 2023. Contact Nic Hartke to learn how PrimeLending can help you succeed.”

The market is very active with capital formation and M&A activities. Some transactions are asset sales, leaving behind the corporate entity that becomes available as a ‘shell’ for buyers who wish to enter the space or expand their platform by obtaining agency approvals and multiple state licenses. Under the right circumstances these shells are transferable, especially if the selling entity has been well-run, originating low risk product with extremely low tail liability risks associated with legacy production. This ideal shell has Fannie, Freddie, and Ginnie seller/servicer approvals, 20 state licenses, and a small servicing portfolio. If you are interested, please send me an email for forwarding to the principal. All inquiries will remain confidential.