Our Federal Reserve doesn’t control events around the world, like a ship being stuck in the Suez Canal, or the current Red Sea geopolitical aggression, or China raising chip prices, or OPEC raising gasoline prices, or… or… or. So, consumer and producer prices are always a bit of a wild card. Since they influence the Federal Reserve’s actions, and therefore, in turn, mortgage rates, inflation has certainly been in the news for some years now. (There’s even a joke about inflation at the bottom.) The Consumer Price Index (CPI) is designed to broadly capture changes in the prices of goods and services purchased by U.S. consumers. The largest component is housing, with a weight of 45 percent. Next is transportation at 17 percent, then food and beverages at 14 percent, medical care at 8 percent, education and communication are 6 percent, recreation is 5 percent, other goods and services 3 percent, and then apparel at 2.6 percent. (Today’s podcast can be found here, and this week’s is sponsored by Truework. By connecting every verification method into one platform, Truework helps lenders eliminate process disruptions, maintain a competitive borrower experience, and reduce the fiscal impact of verifying income.) Lender and Broker Services and Software “Start off the new year celebrating your independence by connecting with Optimal Blue at the MBA Independent Mortgage Bankers Conference, Jan. 22 – 24 in New Orleans. As a proud sponsor, our capital markets experts will be set up at Table #1 and ready to talk about your 2024 goals. Trying to operate more profitably? Interested in finding new efficiencies? Ready to work with a proven and respected technology partner? We’re ready to discuss these goals and more. Let us tell you what it means to work with Optimal Blue to leverage the industry’s only end-to-end capital markets platform. Pay us a visit at IMB24 or reach out to our team directly.”
All the stories that could be told, and so many that have yet to happen. And now 19 that never will be. It is very hard to go about one’s day, whether one has children or not, or a teacher in their family as I do, or not, given what happened in Uvalde, Texas, yesterday. Or to imagine what being in that classroom was like. And just like after every other mass shooting in the United States, fingers are pointed, lines are drawn, and rhetoric that we’ve all heard before is repeated until it happens again. Ban guns? Better background checks? Create fortresses out of elementary schools? Improve mental health care? We’ll go around and around on the reason(s) and the cure(s). Far be it from a daily commentary on residential lending to adequately address the evil that we witnessed yesterday. But we all do what we can. (Today’s podcast is available here and this week’s is sponsored by Matchbox LLC, igniting ideas for the mortgage industry. Expertise in assisting clients through transition periods with Technology, Capital Markets, and Education. Today’s features an interview with Mark Walser, President of Incenter Appraisal Management, on desktop appraisals.) Lender and Broker Software, Services, and Programs Since 2006, Mortgage Professionals Providing Hope (MPPH) has provided thousands of families and children worldwide with avenues out of poverty, such as safe housing and quality education. To honor this commendable work, the June installment of Sales Boomerang’s monthly Worthwhile Webinar series will support MPPH’s humanitarian relief programs. For a $10 donation, join Sales Boomerang’s Alex Kutsishin, Mortgage Champion’s Dale Vermillion, SDP Solutions’ Scott Payne, and Mortgage Coach’s Dave Savage on June 8 at 2PM ET to learn more. All proceeds from the event will go to MPPH, with Sales Boomerang, SDP Solutions and Vermillion Consulting, Inc. each matching up to $1,000 in ticket sales. Register and join this growing coalition for positive change!
Today is National Beer Day (beer humor below), which made last night Beer Day’s Eve. Here at the CMLA event the talk is not about all of the craft breweries in Denver, but instead a portion of the chatter in the hallways revolves around how lenders stack up on extensions and renegotiations. Compass/Black Knight has some stats for you. The talk also revolves around layoffs (including a new round from Better.com reported by the WSJ), and the stock prices of those companies that have “gone public” in the last few years. Whether it is Guild, UWM, Rocket, Finance of America, or loanDepot, some with distributed retail models, they are all near their all-time lows. Hopefully, no employees put all their retirement eggs in the one basket of their employer! The violent move higher in rates is a discussion topic, of course. Mortgage rates, usually based on a spread to Treasury securities, and with the talk of the Fed aggressively lightning its balance sheet (more in capital markets below) 30-year rates are suffering. And how ‘bout that flat yield curve? From maturities of 2-years out to 30-years, yields range from 2.48 percent to a high of 2.68 percent! (Today’s audio version of the commentary is available here and this week’s is sponsored by Optimal Blue, a division of Black Knight. Today’s has an interview with Mike Vough on how MSR valuation strategy is critical to the accuracy of the hedge model.) Lender and Broker Products and Services On this day in 2001, NASA launched the Mars Odyssey spacecraft. To this day, it maintains the record for the longest active spacecraft orbit around a planet other than Earth. Unlike launching the Odyssey, turning customer relationships into long-lasting financial friendships isn't rocket science. However, it does require a shift in approach that prioritizes building trust and long-term borrower retention. With the average American taking up to 11 mortgage loans in their lifetime, there is a great opportunity for mortgage advisors and borrowers to build enduring relationships that benefit them both. Sales Boomerang shares the five best tactics that mortgage professionals can use to earn borrowers’ loyalty in its new eBook: “Be Your Borrowers’ Best Financial Friend.” Download the free eBook for borrower retention strategies that are out of this world!
Today is about the day when you have to think twice about wishing anyone, “Happy New Year.” Okay, maybe tomorrow. There’s a lot of news out there to start 2022, including mortgage news. Moves by Freddie, Fannie, FHA, and VA have a ripple effect on the jumbo and non-Agency market as well. We were reminded of this yesterday when Freddie Mac and Fannie Mae, via their conservator FHFA, publicized April changes to their loan level price adjustments. Freddie announced “…changes to our Credit Fees in Price for super conforming mortgages and mortgages secured by second homes. We are making these updates in light of the significant increase in the 2022 loan limits and under the guidance of the Federal Housing Finance Agency (FHFA). These updated fees are effective for mortgages with settlement dates on and after April 1, 2022.” Freddie & Fannie’s change, although the industry has nearly three months to adapt pricing, is a huge adjustment. Jumbo loans (if the client has the required reserves) may be a (and probably will be) a better alternative. One seasoned vet wrote to me, saying, “This is a blunt way for Fannie to get rid of that business. The FHFA is probably hoping that the private label security (PLS) market will really step in and take second homes for good.” Today’s audio version of the commentary is available here and this week’s is sponsored by Real Estate Connection (REC), a boutique real estate brokerage that acts as a centralized and organized, fully-managed real estate fulfillment service, connecting buyers with local qualified Real Estate Agents and walking them through the entire home purchase and selling process with the lender partner.
I work hard to live a very glamorous life. I mention this because yesterday, when I sent the Commentary out from the road at a glamorous McDonalds in Northern California (free Wi-Fi!), I noticed that the price of my usual glamorous Egg McMuffin meal (with OJ) has skyrocketed to $10.06 from $7.60 earlier this year! Not only that, but it seems that the portion size of the tasty “hashbrowns” and sandwich have dropped. At the “other end” of things, does it seem like toilet paper prices have gone up while the size of the roll has shrunk, especially compared to how big the TP holder is which serves as a constant reminder of how big the roll was previously? Price and shortage news is everywhere. Bank of America is hiring up to 5,000 people this quarter. Taco Bell announced
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