Would you tie up your money for five years and earn 1.26 percent the whole time? That’s pretty much where the $57 billion 5-year Treasury note auction went off yesterday. (Keeping things almost misleadingly simple, think about an investor buying a 30-year MBS that yields 2.75 or 3.00 percent… would you do that?) Will the pandemic be over in five years? Ever? Variants will be the name of the game, each one spreading faster but causing less harm, per an ER doctor I was chatting with recently. Everyone, and their brother, knows that LOs are out there adding value and wealth to clients despite the health care news. Advertising from college football bowl games may suffer due to infections… can’t have that, right? Rates are still historically low, in part due to the continued hit to economies from the pandemic despite high inflation rates. New COVID cases have skyrocketed, deaths stand at 5.4 million, companies in our business are considering cutting travel plans ahead of the conference season starting back up in January. The CDC is updating recommendations for COVID-19 control, shortening isolation restrictions from ten to five days for all U.S. citizens who test positive for the virus who are asymptomatic, though they should still wear a mask around others for a further five days. (Six days for the NBA.) And the CDC has endorsed a shorter quarantine period for the close contacts exposed to the virus. (During this seasonal quiet time the daily podcast is having some downtime but will return Monday, January 3. Earlier versions of the audio are available here; questions about interviews and sponsorships should be directed to Robbie Chrisman.)

Lender and Broker Services and Products

Replace refi with renovation in 2022 and turn shrinking volume into growing profits. Reno solves real estate inventory challenges and delivers purchase volume despite rising interest rates. To succeed at reno, you need a dedicated partner with the knowledge and time-tested strategies to push volume in any market. Planet Home Lending is committed to renovation lending and offers a complete product lineup, including HomeStyle®, VA Alterations, and FHA 203(k). Planet’s deep loan product array also covers FHA, VA, USDA, FNMA, FHLMC, manufactured home loans, buydowns for builder clients, and more. Meet our Correspondent professionals Jim Bopp, VP National Renovation Lending (518-369-8242) and Danny Hughes, Regional Sales Manager, Correspondent (203-981-5743) at the New England Mortgage Expo, Jan 13-14, at the Mohegan Sun Resort & Casino in Uncasville, CT. Let us help you reach more borrowers and close more loans.

“A&D Mortgage releases improved Quick Pricer tool for Non-QM Loans, joins Telegram. A&D Mortgage has an enhanced Non-QM pricing tool that makes running your scenarios faster, easier, and more comprehensive than ever before. Our Quick Pricer allows you to input the borrower's information and receive multiple lending options that best fit their criteria with the lowest available rates. * What's changed? New and improved, intuitive interface for Non-QM scenarios. Show your client what their expected monthly payment and interest rate will be. Quicker selections by citizenship type, income types, occupancy, and transaction purpose. Easily identify visually if your client is eligible and get hints on how to fix it. Make immediate scenario adjustments. State-specific eligibility factors built-in. Allows for no FICO scenarios. Get the latest news and updates from A&D Mortgage delivered to their mobile device or tablet by subscribing to our new Telegram channel from Google Play or App Store.

“Speed and ease, that is what Truework has brought to our process.” Consolidate third-party billing and access over 40 million Day 1 Certainty eligible records with Truework. Truework was the only VOI/E provider to bring new and exclusive records into Fannie Mae’s Desktop Underwriter service in 2021. From credit unions to enterprise banks, Truework is streamlining verifications for all lenders, offering the only VOI/E product that offers instant, user-permissioned and manual verifications, at a much lower cost than legacy providers and all on one platform. Request a demo to get ready for next year. Or submit your next verification with Truework to try it for yourself.

As we head into the new year, do you have the business intelligence and comparative benchmarking to optimize your business in 2022 and beyond? Make 2022 the year to step up your game with Richey May’s RM Analyze, business intelligence designed by and for mortgage industry experts. Our platform consolidates data from every department and every piece of software you use. It provides just the right reporting from the C-suite to the front line, plus custom apps to build visually engaging reports on key indicators. Bonus: our analysts have deep mortgage experience, so you don’t need to train us on your business. Don’t wait any longer to set up the reports you needed yesterday. Cross-functional data. User-friendly dashboards. Real-time analysis. Contact us today for a walk-through and custom implementation plan.

Instead of looking to 2022, let's pretend the year is 2025. A borrower stands in a home they just fell in love with. They pull out their phone and run a couple of payment scenarios. They know exactly what their payment will be for the offer they want to make, how much cash they'll need, and how it will change if the seller counteroffers. They generate a pre-approval letter on their iPhone for that exact offer and AirDrop it to their Realtor and tell the agent that they can generate a new letter on their device immediately if they need to increase the offer. Across town, that borrower's loan officer is out to dinner with her family and sees the stream of activity on her phone but doesn't need to leave the table because her company has the technology that allows the borrower to self-serve. She knows that the contract will be in her inbox Monday morning. In 2025 everyone will do business like this, but only the lenders using QuickQual can do that today. Are you still issuing PDF pre-qual letters? Why? Check out QuickQual by LenderLogix, and they'll send a sample to your phone, so you can experience what that borrower would see.

COVID and the Workplace

Lenders and vendors continue to grapple with working from the office, working from home, or a hybrid model. The caseload and restrictions are causing huge disruptions to the aviation and hospitality industries in particular, triggering new pandemic-management ideas. Thousands of flights were canceled in the last week. The drag on the economy is keeping rates low.

But the Center for Disease Control and Prevention has now halved the recommended isolation time for asymptomatic individuals who test positive for the coronavirus. Cool. Airlines rejoiced, as did the individuals that fall into that category. The NBA and NFL are happy. The CDC is updating recommendations for COVID-19 control, shortening isolation restrictions from ten to five days for all U.S. citizens who test positive for the virus who are asymptomatic, though they should still wear a mask around others for a further five days. The newly-issued guidance is in line with the growing evidence suggesting that people infected with COVID-19 are most infectious 1–2 days before and 2–3 days after the onset of symptoms.

And the CDC has endorsed a shorter quarantine period for the close contacts exposed to the virus. "For people who are unvaccinated or are more than six months out from their second mRNA dose [from Pfizer (PFE) or Moderna (MRNA)] - or more than 2 months after the J&J (JNJ) vaccine - and not yet boosted, CDC now recommends quarantine for 5 days followed by strict mask use for an additional 5 days. Individuals who have received their booster shot do not need to quarantine following exposure, but should wear a mask for 10 days after the exposure."

What are financial service companies doing? Goldman Sachs, not a fan of remote work, is requiring all staff in its U.S. offices to get vaccination booster shots. The new rules will mean that any employee going into work, as well as clients and visitors, must get a booster by Feb. 1 (if they're eligible for the injections at that date). In addition, the bank plans to double mandatory testing to twice weekly, beginning on Jan. 10. Recall that Goldman has been one of Wall Street's biggest supporters of returning employees to the office. It required vaccines for all staff and visitors entering its offices in the U.S., while workers received COVID tests onsite once a week. The company also required mask-wearing in all common areas like lobbies, hallways, gyms, and cafeterias, except when seated and eating or drinking.

Citigroup has told staffers in NYC that they could work from home again through the holidays, while Wells Fargo recently postponed its "return to the office" plans indefinitely. Jefferies also asked employees to work remotely and Morgan Stanley told its workforce to limit large in-person meetings and to wear face coverings when not at their desks. JPMorgan, another staunch advocate of the office, pulled back on those plans, announcing that staff could work from home for the last two weeks of December. In our biz, Fairway Independent put corporate travel on hold for 60 days.

Jeremy Potter writes, “Change is here to stay. Not permanent work from home for everyone for all time but certainly a fundamental shift in what people want & what is allowable. There are a few ways to look at this. There’s what’s likely next year, where we’ll be in 5 years, and where we’ll be in 10. Over the next year, work-from-home will become more an expectation of new hires and flexibility of companies. Hybrid work today seems to refer to 2-3 days from home and the other 2-3 days in the office. This year made us all comfortable seeing each other in hoodies, in our homes, and in blurry Zoom backgrounds. Though it does not seem leaders of many companies, especially the largest companies, have figured out a comfortable balance between what most knowledge workers want and what feels like the company can measure.

“Measuring will improve. Communication tools will improve. Delivering work product will improve. With it, leaders will need to manage through all the new arrangements and flexibilities. Between next year and over the next few years, working from home will last for longer stretches punctuated by visits to an office or a collaborative space.

“I believe companies will see opportunity in regional or temporary offices that spring up as needed for periodic (quarterly?) meetings that host companies all subscribing to the same strategy. Weirdly, I’ve wondered if it’s actually the next iteration of WeWork. Companies allowing or arranging team members to meet up to work together and then returning home. Needing only workspace 4-5x a year, companies can be more intentional about who and where work happens.”

Capital Markets

Turning to economic stats, the key takeaway from the new home sales last week, besides being less than expected, numbers is that the gains were concentrated in higher-priced homes, as inflation pressures, exacerbated by supply constraints, and labor shortages are curtailing the building of lower-priced homes and pinching affordability for lower-income buyers. The median price gained 18.8% y/y to $416.9k, while the number of months’ supply eased to 6.5 from 7.1. So new home sales rose in mid-2020 from a pace of 700k/year to 975k/year but fully returned to their 700k/year pre-Covid pace by May. Existing home sales did the same thing, hitting 6.75 million/year in mid-2020 during COVID from 5.4 million/year pre-pandemic but bottomed in May at 5.78 million/year pace. Now existing home sales are running at a 6.5 million/year pace despite all the chatter about inventory and price speedbumps. Yesterday we learned that the FHFA Housing Price Index rose 1.1% in October after increasing 0.9% in September. And the S&P Case-Shiller Home Price Index rose 18.4% in October (Briefing.com consensus 18.7%) after increasing 19.1% in September.

Looking at the bond market, Tuesday: a little up, a little down, different maturities doing slightly different things price-wise little of which had any impact on rate sheets. But overall, not much happened aside from analysts and economists wondering about the impact from the CDC halving the recommended isolation time for asymptomatic individuals who test positive for the coronavirus will be on the U.S economy.

The $57 billion 5-year Treasury note auction went off yesterday at a yield of 1.26 percent. The NY Fed Desk bought its share of Treasuries and MBS, and will no doubt do the same today. (Since the restart of asset purchases in March 2020, the Desk has purchased $2.8 trillion MBS.) The FHFA Housing Price Index and S&P Case-Shiller Home Price Index (noted above) came in about as expected.

The usual weekly MBA mortgage applications number was not released, but next week will include two weeks’ worth of app data. We’ve had November advance international trade in goods (+17.5 percent to $97.8 billion), advance Retail & Wholesale Inventories (+2.0 and +1.2 percent, respectively). Later today we’ll see November Pending Home Sales and a $56 billion 7-yr Treasury note auction… if you have some extra cash, buy some! Yesterday the 10-year T-note closed yielding 1.48 percent, unchanged from Monday, and this morning it is up to 1.52, and Agency MBS prices are worse .125 from Tuesday’s close on the CDC’s shift in quarantine policy.

Jobs and New Hires

“Retail branches: Looking to grow your income, improve your pricing, and expand your product line as you head into the challenging, new year ahead? We are an established and motivated mortgage banker that is interested in recruiting producing branches or teams. Join a company that has competitive pricing, 24 hours around the clock operations and processing that makes decisions every day for the benefit and improvement of the sales team. If your numbers are stale due to the lack of competitiveness, and support, while experiencing anxiety from an unorganized group before closing, or are in need of solid processing support, then we are the right organization for you. Branches that produce $5-30 million monthly, are looking to become more competitive, increase margins, and have a full suite of loan products, including an aggressively expanded Non-QM product line, should reach out. If interested, please send your confidential note resume to Chrisman LLC’s Anjelica Nixt for forwarding.”

Flagstar Bank Home Loans just welcomed Phil Deol as Home Lending Divisional Manager, Southwest. Deol has been consistently recognized as a successful leader in the mortgage industry, with a proven track record for growth in new territories. “I chose Flagstar Bank Home Loans because their best-in-class retail platform had all of the qualities that matter to professionals,” Deol said. “Depth and breadth of product, service-focused fulfillment, advanced technology and a 50-state lending solution… It’s the formula for an outstanding customer experience and sustainability in these volatile market cycles.” “It’s our privilege to welcome Phil to the team,” said Susan McHan, President of Distributed Retail Mortgage. “I appreciate the expertise and energy Phil brings, providing the leadership and growth that will enable us to bring our exemplary level of satisfaction to loan advisors and their customers in many more communities.“ Learn more about Flagstar Bank Home Loans here.