Everyone’s above average, right? This morning I head to Chicago where residents have the dubious honor of being the worst when it comes to estimating home values. Homes are expensive… Who knew? Apparently not the vast majority of Americans, which reminds me of the saying, “Never underestimate the intelligence of the average person.” All Star Home surveyed Americans in the most populous U.S. cities, prompting them to guess home prices in their communities to determine where people have the best and worst home value intuition, and 86 percent of people were surprised at how high home prices are in their area. Boomers (91 percent) are most surprised by high home prices, followed by millennials (87 percent), Gen X (85 percent), and Gen Z (84 percent). San Francisco locals excel in home price intuition, but Chicago residents fare the worst. (Today’s podcast can be found here, and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades. Today’s has an Interview with Xactus' Greg Holmes and Shelley Leonard on advancing the modern mortgage through data-driven insights.)

Lender and Broker Products, Programs, and Services

Are you curious about the strategic insights that could shape a successful 2024 in the mortgage industry? As the holiday season unfolds, consider whether optimizing your tech stack could be the key to operational excellence in the coming year. Read the latest blog by Dark Matter Technologies for an in-depth look at addressing common tech stack pain points, identifying success indicators, and exploring solutions like the Empower® LOS. Take a moment amidst the holiday warmth to reflect on how a well-optimized tech stack may be the missing piece for a prosperous 2024. Ready to unlock these strategic secrets? Check out Empower and all Dark Matter Technologies has to offer.

Holiday fun fact: Santa's sleigh is actually led by female reindeer because they’re the only ones with antlers this time of year. Seemingly minor details like this can make a big difference, just like lender production trends revealed in MMI’s Benchmark Reports. The latest edition shows that lenders in the Prime (>$5B in production volume) and Capital tiers ($500M-$5B) experienced a nearly 9% decrease in production in October compared to September. However, lenders in the Select tier ($50-500M) only saw a 4.4% decline and gained an edge over the Capital tier regarding average deal size ($354.1K v. $352K). Sign up for the MMI Benchmark Report today to receive valuable industry insights like these in your inbox each month.

As we approach the final weeks of 2023, AmeriHome Correspondent would like thank clients and partners for supporting AmeriHome through its first 10 years and making it the #2 Correspondent Lender in the country! Looking ahead to 2024, AmeriHome, backed by the strength of Western Alliance Bank, wants to speak to you about how a relationship with AmeriHome will help you navigate the coming year. Combining Western Alliance’s Warehouse Lending, MSR Financing, and Treasury Management services with AmeriHome’s industry leading loan purchase platform, makes this is a “must-have” relationship for mortgage bankers of all sizes. Financial institutions, IMBs, and Emerging Bankers alike benefit from AmeriHome’s Delegated and Non-Delegated options, full suite of conventional and government products, and Bulk, Bulk/AOT, and Best-Efforts delivery options. Check out Upcoming Events for details on where they’ll be in 2024, find your sales rep here, or send them an email to learn more about partnering with AmeriHome! They wish a happy and healthy holiday season to all!

Tis’ the season of giving! Click n’ Close has been helping lenders and brokers deliver the gift of homeownership to borrowers through its down payment assistance (DPA) program faster than you can say ‘Happy Holidays’ all year long. With more than 1.5 billion dollars in DPA-related financing to over 6,000 borrowers through its SmartBuy suite of products, with an average of nearly $12,500 in assistance per transaction, Click n’ Close is feeling pretty good about being on the nice list this year. Unlike state or municipal DPA programs, SmartBuy isn’t subject to budgetary shortfalls and offers tremendous flexibility to accommodate a wider range of borrower scenarios, making it ready to help your borrowers achieve homeownership. Reach out to our wholesale (Adam Rieke, Kerry Webb and Soliman Martinez) or correspondent team (Julas Hollie) to learn more.

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“One Year. One Tool. $10B in Additional Loan Applications. We’ve spent the past year trying to explain everything Total Expert Customer Intelligence can do and all the ways it’s changing the game for modern financial institutions. But there’s one thing that doesn’t need an explanation: results. Lenders, banks, and credit unions across the country are generating incredible ROI for their businesses while building deeper, lifelong relationships with borrowers by using Customer Intelligence to enrich their contact profiles and engage them at the moments that matter. Let us show you how to stop playing hide and seek with high-quality loan opportunities and start driving exponential growth. Explore Customer Intelligence.“

ACES Q2 2023 Mortgage QC Trends Report finds Critical Defect Rate declines for the third consecutive quarter! Summary of findings include the overall critical defect rate declined 3.37% ending the quarter at 1.72 percent, defects in Credit & Liabilities categories increased for the 2nd straight quarter, FHA defect increased significantly, and the majority of defect categories experienced improvement this quarter. “Q2 2023 proved to be better than expected, as the critical defect rate continued to decline in the face of a surge in origination volume over the previous quarter. However, deteriorating quality in the core underwriting categories remains of concern and should be an area in which lenders increase their focus in the coming months. We implore all lenders to keep quality at the center of their operations to ensure a safe, sound, and prosperous new year.” – Nick Volpe, EVP of ACES Quality Management. Read the report.

Do you have a servicing portfolio? Do you understand how it is being valued? With the decline in overall production in 2023, the MSR asset has become more critical than ever and effectively managing that asset demands ongoing oversight. MCT offers portfolio valuations that are accurate and easy to understand, with built-in safeguards focused on client and borrower data security. MCT’s fair value analysis and reports are customized to support servicer’s internal requirements and objectives. Their extensive number of clients and MSR market knowledge keep your valuations timely, accurate, and reliable. Schedule a phone call with the MCT MSR experts to discuss a customized approach for valuing your MSR portfolio.

'Twas the holiday season, just two weeks to go, loan officers in town faced a challenging low. But behold, in the distance, a solution did gleam, Velma CRM appeared like a holiday dream. Tailor-made for small lenders, banks, and credit unions, no more complexity, no more costly intrusions. Automated drip emails are sent in a flash, customized flyers for your next open house bash! Plug-n-play convenience, a breeze to employ, with all tools in one place, your business primed to deploy! Loan officers can thrive, their work takes flight, with Velma's assistance, everything's right. So, join the Velma revolution, don't delay, transform your lending business this holiday!

STRATMOR on Strategies for 2024

What’s the moral of the story for the mortgage industry in 2023? In STRATMOR Group’s December Insights Report, STRATMOR reviews the plot and moral of each InFocus article from the year and summarizes them to provide key takeaways that will help lenders think outside the box, evaluate new strategies, take risks and survive the downturn that is likely to continue into the first quarter of 2024. Lenders, and vendors who serve the mortgage industry, if you need guidance in developing your business strategies for 2024, contact STRATMOR, and don’t miss “The Moral of the 2023 Mortgage Industry Story” in the December Insights Report.

Mergers and Acquisitions

Out of Texas and Ohio comes news that Thrive Mortgage, LLC and Lower, LLC have plans to merge the two brands, Thrive Mortgage and Lower.com. Thrive CEO Selene Kellam and production head for Thrive Mortgage, Randell Gillespie, will join the combined executive team with Lower under the leadership of Lower CEO and Co-Founder Dan Snyder, expected in the first quarter of 2024. The STRATMOR Group acted as transaction advisor to Lower.

Lower CEO Dan Snyder stated “we’re building a better approach to mortgage with Lower’s streamlined tech powering multiple channels. Thrive is an award-winning, national lender with the same belief and we’re excited to bring them onto our platform.”

“The commitment of Thrive to our team and our customers has always been to deliver the best mortgage experience with the highest quality resources” said Thrive Mortgage Chairman Roy Jones. “This has driven us to focus on having the best people with the most forward-thinking technology in the industry, all of which is propelled forward with this partnership with Lower.”

Thrive CEO Selene Kellam added, “last year, we acquired AMSCo, a storied Midwest company that added incredible talent to our model. We are now excited to share another amazing opportunity that has presented itself to join Lower.com.” Thrive, licensed in 42 states, was the first company in Texas to close a fully electronic note with a remote notary.

Leadership at Thrive were specifically attracted to Lower’s future-forward path, including five key pillars of differentiation: progressive leadership and vision, cutting-edge marketing strategy, a standout private-label platform, unified technology stack, and the venture capital funding to pioneer new paths.

Lower, LLC is a multi-channel, digital lender ranking as the 30th largest home lender in the country. Backed by top VC firm Accel, Lower operates an online consumer-direct channel, offline retail channel, and third-party origination platform servicing both brokers and other fintechs like Opendoor.

M&A is not confined to lenders. Out of Arlington, VA, news came out that Titleworks, Inc., founded in 1995 and led by industry veteran Becky Taylor, and Cobalt Settlements, LLC founded in 2014 and led by Jeff Nowak, Esq., have announced a strategic merger. “This union will carry the name of Cobalt Settlements, LLC and marks a pivotal moment, combining Cobalt’s innovative resources and attorney-backed capabilities with the deep-rooted client relationships and industry expertise of Titleworks.”

Capital Markets

Renegotiations and early pay off penalties will now occupy capital markets staffs as those hoping for a holiday gift from the Fed in the form of projected rate cuts in 2024 finally found something in their stocking. In a unanimous decision, the FOMC agreed to leave the target range for benchmark federal funds rate at 5.25 percent to 5.5 percent yesterday, and while the door was left for additional tightening beyond what is currently the highest federal funds rate since 2001, the updated forecast projects at least three rate cuts over the next 12 months. After a period of nearly two years of rapid monetary policy tightening, and pauses at the most recent three FOMC meetings, a pivot to cuts next year filled investors with joy and caused a massive rally in the bond markets. Fed Chair Powell also acknowledged that the FOMC discussed when it will become appropriate to begin dialing back its policy restraint.

While the Fed kept rates unchanged, something entirely expected, it was the shift from a hawkish pause, one with a rate hike bias, as was the case after the last two meetings, to a dovish pause, a pause with a future rate reduction bias due to the declining inflation rate, that led to a record Dow Jones close. Discussion will now focus on the date of the first cut.

The Fed has spent recent months attempting to dampen expectations that it is about to reverse course and lower rates. Changes in the policy statement from this meeting, however, made clear that the pace of rate reductions in 2024 is now the focus as inflation concerns continue to fade. Fed Chair Powell had previously said that pain, traditionally in the form of millions of lost jobs, would be necessary to quell inflation. But at 3.7 percent, the unemployment rate is about where it was when the Fed began raising rates in March 2022. Meanwhile, the pace of inflation’s decline leaves it only one percentage point above the central bank’s 2 percent target. An updated Summary of Economic Projections also featured an improved growth outlook for 2023, and a lowered inflation outlook for 2023 and 2024.

In addition to any ongoing response to the FOMC today, markets will also be dealing with monetary policy decisions from the SNB, Norges Bank, the BoE (still fearing inflation), and the ECB with the post-meeting press conference from President Lagarde. No changes were expected nor delivered. Domestically, yesterday’s Fed news overshadowed this morning’s import and export prices for November, jobless claims, and retail sales for November. Later today brings Business inventories for October follows, Treasury announcing sizes for next week’s reopened 20-year bonds and 5-year TIPS auctions, and Freddie Mac’s latest Primary Mortgage Market Survey. We begin the day with Agency MBS prices better by a solid .250 than Wednesday’s close as prepayment fears continue to creep into the market. The 10-year is yielding 3.94 after closing yesterday at 4.02 percent; the 2-year is down to 4.30.

Employment

It’s clear that new construction homes will be a primary driver of originations in 2024. Picture yourself as a Planet Home Lending MLO with this product lineup: Purchase Edge, a game-changer with benefits for borrowers looking to move; One Time Close construction loans, the traditional powerhouse; and purchase and renovation loans for Accessory Dwelling Unit (ADUs). As you move into this niche, an experienced construction lending team supports you by unlocking the secrets of construction lending success. The path to your 2024 breakthrough begins when you contact Talent VP Peter Briggs or 435-709-6287; all inquiries will be held in strict confidence.