The mortgage industry has come a long way from March of 2020, when the Federal Reserve pledged to buy “unlimited” amounts of Treasuries and MBS to stabilize the credit markets. The Fed started to shrink its balance sheet earlier this summer, and at the start of this month ramped up to a reduction rate of $95 billion per month ($60 billion of Treasuries and $35 billion of MBS) with plans to end its purchases of MBS from early payoff proceeds next week. The Fed’s actions in March of 2020 helped stave off margin calls for many lenders, though several European countries are now providing billions of euros in margin call support to European energy companies that need at least $1.5 trillion to cover the cost of their exposure to soaring gas prices. Margin calls eat into companies’ capital, and mortgage companies need all the cash they can get in this higher interest rate environment that has shocked borrower demand and subdued sales. Time on the market for homes i
This morning, at the beginning of the third quarter of 2022, I learned about this morsel: The most common national holiday around the world is independence from the British! That aside, this morning I decided to start the 2nd half of 2022 with a healthy, low-cal breakfast: oatmeal. So I found the Quaker Oats, and began boiling. Then I gathered up the butter, pecans, chocolate chips, milk, maple syrup, banana, shredded coconut… where was I going with this? Oh yeah, food and learning. Real estate agent relationships are vital in the mortgage industry, especially for purchase-heavy shops. In hot markets, agents tend to already have established relationships with brokers or lenders, so some LOs are using food and learning. They are offering either breakfast treats with a baker, or happy hour wine tasting with a local wine expert, to local real estate agents, financial planners, contractors, divorce attorneys, whoever, with 20-30 minutes of mingling and then a 10–15-minute pre
With the yield on the risk-free 10-year Treasury note hitting 3 percent for the first time since 2018, you deserve some cutting-edge humor. Two hats were hanging on a hat rack in the hallway. One hat said to the other, “You stay here; I'll go on ahead.” In our lending biz, some companies are thinking it is best to “go on ahead” with someone else. Garth Graham, Senior Partner at STRATMOR, fresh off the Planet Home Lending Home Point deal, fired off this note to me. “In a market like this, we expect to see industry consolidation. Planet Home Lending is being opportunistic as being one of the first to seize scale benefits in the TPO space. Planet could double its market share in correspondent, and likely be a top 5 or top 10 player this year. Management is taking advantage of the market dynamics in a way I expect to see others follow. The M&A market is very hot, similar to the numbers from 2018. In 2018, there were 33 deals, then it s
Change is mandatory. Progress is optional. Are signing bonuses a sign of progress? Perhaps not, and more a continued sign of the competitive times. “A $1 Million Salesperson Signing Bonus is Not a Growth Strategy” is worth a skim. Today’s podcast interview is with me discussing the current rough environment, and as our brethren trail off home from the Texas MBA to the airport in Austin (and actually recognize each other without masks), the talk is about volume and cutbacks. Vendors are being beaten up on price. Long, long gone are the days of padding margins to slow things down as mortgage applications tumble week after week. Refinance volumes have fallen dramatically and are now heavily skewed toward cash-out transactions. Lenders also continue to indicate margins have been cut as much as possible, forcing reductions in capacity to try and control costs as volumes fall. Mid-level management is threatened (do you need district, regional, and divisional managers?) P
As the nation ruminates on the court ruling on the mandatory mask mandate, remember, “You do not need a parachute to skydive. You only need a parachute to skydive twice.” It is a safe bet that the Federal Reserve will raise short term rates more than twice before summer. This month’s STRATMOR blog is titled, “A Primer on the Federal Reserve and Mortgage Rates.” Here in Atlanta, in the MBA-STRATMOR Peer Group Roundtable meetings, much of the conversation revolves around interest rates, as one can imagine. The Federal Reserve is going to have a hard time bringing down inflation without triggering a recession, according to Goldman Sachs Group who believes that there is about a 35 percent chance the U.S. will fall into a recession over the next two years. Another topic is the population migrating due to tax reasons. Property taxes aren’t good, but fall into the “interesting” category as some states’ taxes have been rising while