The first half of the Lykken on Lending program will feature our Weekly Updates….to read more info about our regulars and weekly updates go to our website!
Weekly Updates With Alice, Allen, Matt, Les, And Rob
It is Monday, March 7th, 2022. This show is created by mortgage professionals and for mortgage professionals, and we’re so grateful to have you as our reader. Our commitment is to bring you timely information that you can read anytime, anywhere. We’re in the Lenders One Winter Conference here in Scottsdale, Arizona. We’re at the JW Marriott. It’s a glorious facility. It’s cold here. We are warmed by your comments and many of you give us so much feedback about how this show has helped you stay on top of things, so thank you. We’re always looking for things we could do better. We’d love to hear from you. Let’s get into it.
On the Hot Topic segment is Chris Zingo. He is the General Manager of Americas Field Operation for Finastra. We’re going to be discussing mortgage lending in 2022 as well as the broader picture of what’s going on with technology and how it is being driven through ESG and the acceleration of digital technology in the mortgage world. I’m excited to share it with you. Finastra is such a major industry participant technology company and we’re so grateful to have them as a sponsor. Also, I want to say a special thank you to Industry Syndicate. We have a great partnership with them. They do a great job of promoting our show as well as other show. Check out IndustrySyndicate.com, and I encourage you to see all the shows there.
I will be in Las Vegas. Lender Toolkit has invited me to come in and we’re going to be doing a show from there. It’s an exciting event and it will be Monday, March 14th, 2022, at the ICE Experience. We’re going out to a racetrack and running around with Ferrari. This is tough work, guys. If you haven’t already got ahold of the folks at Lender Toolkit, it’s not too late. You too can participate in this, but also, I want to encourage anyone in Las Vegas at the ICE Experience or Intercontinental Exchange, which bought KensieMae. They’re doing a great job putting on their annual conference. Check out Lender Toolkit’s booth. I hope you can make it out to the racetrack. I’d love to see you there. We’re going to have some fun riding those cars.
I’m excited to have Jack Nunnery joining us again on this show. He’s co-hosting the show with me. As soon as I get done here, I’m going to go into the main session, and my good friend Casey Crawford is going to be speaking. I’ll be meeting up with him. We’re going to get through these introductions and then toss it to Jack and let him take it from here.
I want to say a special thank you to our sponsors, the Mortgage Bankers Association of America. We’re very thrilled to have them as part of us and their sponsorship as well as Finastra. Also, Lenders One and Mortgage Collaborative. We will be at Mortgage Collaborative’s TMC Miami Ninth Conference from March 19th through the 22nd, 2022. Be sure to go read the interview with Rich Swerbinsky on February 7th. Both these co-ops create great competitive advantages for both lenders and vendors.
Also, I encourage you to check out Total Expert. It turns customer insight into actions to increase loyalty and drive growth for banks, lenders, credit unions, and other financial firms. I went through a demo and was blown away by what Total Expert can do to help lenders and have meaningful relationships. Also, Knowledge Coop, we’re thrilled to have them here. I saw many of them here at this conference as well as Mobility MMI, which is the Mortgage Market Intelligence. They do a great job of helping recruit top loan officers as does Modex. It’s a mortgage recruiting technology tool that’s very effective.
Also, Snapdocs is a sponsor of ours, and we appreciate them. They help lenders overcome officers by adopting e-mortgage technology. Snapdocs is now offering an eMortgage Quick Start program. Check it out. Also, check out the interview I did with Vishal Rana on September 13th, 2021. Also, SuccessKit, I tell you so much about SuccessKit and what they can do for you and drawing in and holding onto customers. They help you tell your story. There’s an old proverb that says, “Let another man’s mouth praise you, not out of your own.” That’s what SuccessKit does. They help you as a lender interview previous customers and create a narrative that will be engaging and help you advance your business. Be sure to check them out.
Also, PennyMac TPO, they are third-party originations platform. Check out the interview with Kim Nichols on November 1st, 2021. Also, FormFree with Christy Moss. They sponsored the opening session here and was a great speaker. It’s so fun to see the FormFree crew here. Also, DW Consulting. Debbie Wemyss does a great job at helping you create an effective LinkedIn profile that will promote you and your business successfully.
Special thank you go out to Rob, Les, Alice, Allen, Matt, and Jack. I’m glad to have you here. Without further ado, I’m going to toss this over to Jack, and we’re going to launch it off and he’ll transition in after we hear the report from Rob Van Raaphorst. Rob, what do you have for the MBA Mortgage Minute?
Last week, FHFA announced that the Housing Trust Fund and Capital Magnet Fund would receive $1.138 billion in total from Fannie Mae and Freddie Mac for affordable housing initiatives. These funds are used for a variety of affordable housing activities, most notably property acquisition and improvement as well as new construction.
The funds are an approximately $45 million increase over the amounts that GSEs contributed to these programs in 2021. Be sure to register for MBA’s Technology Solutions Conference and Expo happening April 11th through the 14th of 2022 in Las Vegas, Nevada. To register, go to MBA.org/Conferences. That’s it for this week. Thanks for joining me.
Thanks for that update, Rob. It’s always good to hear about the movement in affordable housing and the increase of funds to help support that critical initiative, a lot of great info at Rob’s MBA Mortgage Minute. Now, we will hear Les Parker with TM Spotlight and this week’s macro view of the market.
Markets can’t tell the faults from the real. Who can they trust? What fear drove gold to its highest close since its all-time highs during the first summer of COVID? A nuclear accident or World War III with nuclear weapons? Maybe gold rose because the world lost confidence in diplomacy, democracy, or leadership at the EU, NATO, and the United States. Maybe gold approached all-time highs because it doubts inflation gets under 2% soon or central banks keep fiat currencies alive. With so much fear, everyone wants to turn to gold. These views are my own. Overcome fear with gold at TMSpotlight.com.
Thank you, Les. Again, go to TMSpotlight.com to subscribe for free to Les’s newsletter and use the word Power. Now, we go to Matt Graham with our Mortgage Rate Update.
Jack, thank you. A very wild couple of weeks in the markets obviously with Ukraine in focus, and that continues to be the dominant driver but it is not necessarily doing things in a logical way at every turn. Probably the most interesting thing that I’ve been seeing over the past few weeks is the relationship between oil and bond yield.
I spent quite a few years examining and arguing with people that talk to me about how oil always moves in the same direction as bond yields. There are logical reasons that it should because bond yields technically price in inflation and economic growth, among other things. If oil is a key indicator for inflation, it will stand to reason that there’s a correlation. Indeed, there is a correlation. It is broken down at times in the past when things have drastically affected current evaluations considering oil is dollar-denominated.Oil always moves in the same direction as bond yields because it's a key indicator of inflation. Click To Tweet
In general, since the pandemic happened and when markets bottomed out and started to move back toward higher rates in mid-2020, oil prices and bond yields have indeed been rising together in with a fairly decent correlation. The Ukraine situation, before things even flared up as much as they have now, there would be a spike in oil prices, and that could put paradoxical upward pressure on rates that would otherwise be experiencing downward pressure due to their role as a safe haven risk-off trade.
What we’ve ended up seeing is a weird hybrid of that where the bond market does get that safe haven bid, that risk-off momentum that we’re used to seeing in geopolitical flareups, but it is also getting pulled back in the other direction by spikes and oil prices. That makes it very hard to sort out what is happening at any given time unless we’re looking at something like treasury inflation-protected securities, which factors out inflation’s impact on bond yields. It allows us to look at “real bond yields.”
What we see in terms of real bond yields is fairly striking. They are very low and right in line with their lowest levels post-pandemic. The inflation implications have, on the other hand, spiked up to their highest levels during post-pandemic since the 1990s. Logical things are happening. It’s just that opposite forces are playing off against one another. That happened throughout the week. We were able to see a logical correlation between stocks and bonds for most of the week as well. That’s also what we’d expect when the market is focused on trading broad strokes of risk.
It pushed almost everything else to the sidelines, including the jobs report on Friday. The only exception would probably have been congressional testimony. That was a two-day event. It was on the calendar and wasn’t scheduled for any special reason. The market was looking for Powell to be maybe a little bit more conciliatory about all of the drama that was going on. He did say that the Ukraine situation could affect monetary policy, but firmly promised that first rate hike in March and said, “The Russian economy doesn’t affect the US economy very much.”
I’ll leave it to the audience and anyone else to determine if they think he’s right or wrong about that. The market was maybe wanting Powell to be a little bit more concerned about the situation and not say one particular thing he said, which is the Fed certainly could hike at 50 bits for a certain meeting or two, but he was not saying that in reference to the March meeting.
Nonetheless, Wednesday was ugly for the bond market. It’s one of the sharpest spikes in yields that we’ve seen in a long time, but notably only made possible because Monday and Tuesday combined to equal the biggest 48-hour drop in yields since the start of the pandemic and one of the biggest 48-hour drops in decades. It’s in a class with maybe 10 other 48-hour blocks of time that have moved that much. It’s the same story with mortgage rates.
There’s a lot of volatility in mortgage rates. There are big changes in rate sheets from day to day. That is probably the rule instead of the exception for the time being. This week we are starting out a bit weaker but pretty close to last week’s better levels. Rate sheets don’t reflect that right now because we were a bit weaker. From here on out, we’re waiting for developments on the geopolitical side. We don’t have any major economic data until Thursday, which brings CPI. We’re focused on the core component and it was a big market mover last time. We could do the same thing this time around.
Consumer sentiment on Friday does have inflation expectations as a part of that report, but those aren’t something that the market has been trading very aggressively. We look for more volatility ahead and for the market to continue to be dictated by the situation in Ukraine and then for a long confusing process of determining how that’s all going to shake out in terms of the global economy and the inflation implications of rising commodity prices.
As I look at this, it certainly makes Powell’s job of a smooth landing very difficult with oil at $118 to $120 a barrel. Oil is such a pervasive component in our economy. Food has to get delivered to grocery stores. Certainly, we wouldn’t want to be in Powell’s shoes right now as he’s trying to weigh the fragility of the economy. With all these sanctions that have been placed and the impact of rising oil prices on inflation through so many aspects of the consumer’s life, how does he manage this?
Interestingly enough, I’m hearing a lot more of that than I did in previous weeks. The word stagflation has come up quite a bit, but it hadn’t come up in my preferred circle. It still wasn’t an idea that had taken root as a legitimate risk based on what we’ve seen so far. As oil is getting up to $130 a barrel overnight and is still at $120 right now, there’s more legitimate consideration about stagflation, especially in Europe and Germany. I’ve seen good arguments against it, but more people are starting to talk about it. That may be the end game to some extent, at least or maybe not, as it was in the past, but a diet Coke version.
I haven’t heard of stagflation being used since Jimmy Carter’s administration. It hearkens me back to the late ‘70s and early ‘80s. You hit it on the head when you said volatility. The equity markets have certainly suffered greatly since the beginning of 2022. No relief in sight there. Assuming that the war in Ukraine doesn’t escalate any further from a weapon standpoint than what it is now. Jerome, you got to earn your money now. It’s funny that I was watching a YouTube video of airplanes landing with crosswinds greater than 40 miles an hour. That’s the approach that Jerome’s got to take to this economy that brings it sideways.
I agree 100% with that. He’s going to have to thread the needle.
For our readers, Matt Graham is the Founder and CEO of MBS Live with his market updates. You can learn more about Matt’s great services at MBSLive.net and use LOL as the sign-up code to get an extended trial and no credit card is required. Thanks, Matt, for being part of the show.
Thank you, Jack.
Alice Alvey couldn’t be with us. She had some business commitments that she had to fulfill. We always like Alice’s legislative updates. We appreciate so much Union Home Mortgage for lending us Alice on a weekly basis. Thank you, Union Home, for that. Allen Pollack, do you have your tech update and hopefully something to make us laugh?
Jack, congrats. This is a big deal. You’re doing a great job so far, and I’m sure our readers love you. No one will ever replace David Lykken, and we love the banter between the both of you. I’ve got some great stuff. This one’s great. It’s called MyFridgeFood.com. You can go to this website and put in whatever you have in your fridge or whatever you’d like to use to make something, and then it tells you all the options that you can have with it, whether it’s a peanut butter and jelly sandwich or pasta with ketchup. It sounds very Millennial, but it’s not. It has some pretty cool recipes. That’s my interesting technology tip of the day. You may want to check it out later. You never know what you can find.
The other thing that I wanted to focus on and talk about was Axis Lending Academy, how much we need to help educate the next generation to get into this industry and how hard it is for mortgage technology. It’s because you need to access many train tracks to drive your train down those tracks. If you think about how do we help other folks get into our industry or open positions to allow people to move up that we may have brought in, one is Codecademy. I’m talking about technology. We talked in the past that Google’s got a program where many folks or institutional lenders in our industry are hiring right out of Google. Codecademy.com is an online learning center that you and your staff can go to. It was very inexpensive. If you want to provide them with corporate sponsorship for them to do that, you can. They can learn all types of things about coding.
What’s big right now is data science. It is able to determine how the data work and the story that data can tell. If you relate that to everything we’re doing, whether it’s the falloff rights from origination or from CRM touchpoint to application, operations, and closing, what is the data you’re going to look at? If you were to put some folks possibly through this program, think about all the analytics that you could have. That’s one area, but that’s the Codecademy.Data science is big right now. You can use it to determine how data works and the story it can tell. Click To Tweet
The next thing I want to talk about is exciting. Every year, we’ve got the HousingWire TECH100. In 2022, there is a huge group of amazing technology solutions in our industry. OpenClose, where I work, are one of them, and other companies like LoanLogics, Loanstar, ICE Mortgage Technology, Homebot, FormFree, another one of our sponsors, Finicity, FinLocker, and Doma. You can Google HousingWire 2022 TECH100 and you’ll see a list of these 100 fantastic technology companies. Take a look at some of the solutions they have. The links go directly to their websites if you want to learn more.
I want to also talk a little bit about fraud. Fraud seems to be a big thing, and the reason I bring this up is I wound up having a very unique fraud situation happen to me. I got a text message from one of the banks I use, Citibank. It is disguised as a Citibank phone number. If I clicked it, it said Citibank and it called them, but the text message said, “We’ve noticed fraud on your account. Reply yes or no to confirm if you want us to block this.” I said, “Yes, please block it.” I then got a phone call and they said, “I’m so and so from Citibank,” and started asking me for information.
My risk radar’s always up and I quickly caught on, but they basically started saying that someone logged into my online account and tried to send a Zelle money wire, which is P2P. They started asking me to confirm social and other information, which I stopped doing. I immediately called the bank. What they said is that it was a typical fraud call and if you had given them too much information, they could have called us to pretend that they were you and get access to your account and then send it to Zelle.
Certain banks have certain access and limits to that, but I mentioned this because, as a lender, you may want to have a communication that you send out like if you’re staying at a hotel and you get a reminder that says, “I hope your stay is going great. Don’t forget that we’ve got these different amenities for you.” As a lender, you should almost think about due diligence as a relationship and a good way to remind your borrowers that they’re in a very unique time of their lives, working on the largest transactions they’ve ever had.As a lender, you should think about due diligence as a relationship. Click To Tweet
Technology has advanced so much that please be aware that your bank will usually never do this. We’ll never ask you to wire money this way. Keep them on their toes. That may be one good suggestion. The other thing I wanted to mention about fraud, as you think about that communication plan, the FBI has an entire section called Financial Institution and Mortgage Fraud. They focus on all the different areas where fraud occurs. You want to Google this and check it out. It’s on the FBI website. Frauds like foreclosure rescue schemes, loan mod schemes, illegal property flipping, equity skimming, Home Equity Conversion Mortgage or HECM fraud, and even air loans.
I’ve never heard of air loans. I don’t know if you’ve heard of this, but it’s basically a loan where there’s usually no collateral. These are all ways that borrowers are being tricked into doing something when there are sometimes in a desperate situation or there are a lot of clouds with the way that the market and everything is, and they’re looking for someone to help guide them. Technology is fantastic. Operationally, there are all these great tech solutions, but let’s communicate with our borrowers and tech vendors. Let’s manage expectations. That goes a long way.
That’s interesting, Allen. All of us have gotten that text alert that focuses on a potential transaction and please reply yes or no. To hear that text alert is the fraudster that’s trying to perpetrate fraud is pretty scary. You bring up a very important point. These borrowers are going through, for the large majority, the most important financial transaction that they will do during the course of their life, and that is buying a home or refinancing. That makes them a target for fraudsters.
To have a conversation with each and every borrower about being alert and vigilant. “Here’s how we are going to behave during this process.” If you see behavior that is outside of this box, be wary and pick the phone up, call your loan officer or designated point of contact at the origination company and check it out before acting on it.
I don’t know many mortgage companies that do that, but in this day and age where cybercrime is so prevalent and consumers are so vulnerable at this critical financing event that they’re going through, now is not the time to drop your guard. Being wary as you progress through any transaction of this size is an important message.
Thanks for accentuating that. I would agree. Here’s something that’s interesting, and I can send this to David and get this posted. It’s called The Time It Takes a Hacker to Brute Force Your Password. You could share something like this with your borrowers, but it also goes for your organization. These hackers get into your account, whether it’s Google or iCloud account, and track it. You don’t know they’re in it. They watch for different financial transactions.
If you were to have a password that was eight characters long, which is pretty big, That’s more than usually your first name or last name and has a whole set of numbers, hackers can brute force your password instantly. If you were to mix it up and do uppercase letters and lowercase letters at eight characters, they can brute force your password with the script that runs in two minutes. If you were to have numbers, uppercase and lowercase letters, and symbols, and it was only eight characters long, they can brute force your password in 39 minutes.
Technology is great but we need to be reminded. Part of that message is to remind your borrowers they’re in a very unique time in their lives and there is a sensitivity to these financial transactions. Maybe it’s good to remind them to change their password. Here are some steps if you don’t have a strong password. I’m more than happy to chat with anyone if you have any questions. If anyone is looking for employment in the industry, David and myself get in contact with people they’re looking to hire so please reach out to us.
Thank you very much, Allen. My password is thirteen characters with numbers and special signs. How long does it take them to brute force that?
Your thirteen characters with numbers and symbols will take 202,000 years. You were in a great situation, but if you take exactly what you have and lower that to 10 characters from 13, they can brute force it in five months. If you haven’t changed your password in five months and you’ve got ten characters with numbers, symbols, uppercase, and lowercase, somebody potentially, in the last five months, could have hacked your password.
Readers, thirteen is the number. To contact Allen, you can reach him at [email protected]. Allen, thank you very much for the weekly tech update. This is the end of our weekly mortgage updates on this section of the show. If you’re reading this on a downloaded basis, you can check out the next episode for our Hot Topic segment.
Special thank you to all of our sponsors for Finastra, Lenders One, Mobility MMI, Modex, the MBA, Knowledge Coop, The Mortgage Cooperative, Snapdocs, SuccessKit, Lender Toolkit, Penny Mac, Total Expert, and FormFree. Have a great week, everybody. I look forward to seeing you back here next time.
- Lender Toolkit
- Casey Crawford – LinkedIn
- Mortgage Bankers Association of America
- Lenders One
- Mortgage Collaborative
- Rich Swerbinsky – Past Episode
- Total Expert
- Knowledge Coop
- Mobility MMI
- Vishal Rana – Past Episode
- PennyMac TPO
- Kim Nichols – Past Episode
- DW Consulting
- Rob Van Raaphorst
- Les Parker – LinkedIn
- TM Spotlight
- Matt Graham – LinkedIn
- Union Home Mortgage
- Allen Pollack – LinkedIn
- Axis Lending Academy
- HousingWire TECH100
- The Time It Takes a Hacker to Brute Force Your Password
- [email protected]