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’s good to have you with us. It’s March 14th, 2022. I am at the ICE Mortgage Experience 2022 Conference in Las Vegas. I’m with Lender Toolkit, one of our sponsors. I’m very excited about that. Their event is starting, but you can go check out their booth at booth number 627. This show is created by mortgage professionals. It is for mortgage professionals, and we’re grateful to have you as our readers. Our commitment to you is to bring you timely information, and you’re going to be reading some real timely information because, in a Hot Topic segment, we have Joe Welu, the Founder and CEO of Total Expert, as our Hot Topic guest. I did this interview before I left for the conference. In the show, he announced a new release of their product.
You’ll not want to miss this upcoming interview in the Hot Topic segment. Special thank you goes out to Industry Syndicate. Check out all the episodes at IndustrySyndicate.com. They promote our show as well as some of the top leading podcasts in the nation. I want to say special thank you to our sponsors, the Mortgage Bankers Association of America, as well as Finastra, Fusion Mortgagebot Solution. Experience the power of a fully integrated approach to mortgage lending that simplifies the borrowing experience and streamlines the process for employees.
Read Karen Jenkins‘s interview that I did on October 4th, 2021, as well as the interview with Chris Zingo. It was a great interview, and I’m still thrilled to have them as sponsors. Also, Lenders One, we were just here at the Lenders One conference in Phoenix. It was great. It was well attended, and there was so much information. We’re going to be bringing the presenters there on an upcoming episode here in the future. There’s so much going on.
Also, we have The Mortgage Collaborative TMC, and we got TMC Miami Night Conference coming from up March 19th through the 22nd. I’ll be there. Go back and read the interview with Rich Swerbinsky on February 7th that I did. We’ll talk to you a little bit about the conference and what’s going on there. Also, we have Total Expert as a sponsor. Thank you. You’re going to learn more about them in the Hot Topic segment. That is an interesting interview. A shout out to Knowledge Coop is a sponsor. They did a great job as a learning management system. Check out their new release. It’s coming out on April 1st. To get on the announcements on when that is being released and the information about that, go to TryTheCoop.com. Comparing the team, we got some new stuff coming up. It is cool.
Also, Mobility MMI, Mortgage Market Intelligence and Modex. Both of these sponsors do a great job of helping you recruit top LOs and give you intelligence about what goes on in the market. Be sure to check these companies out. Also, we’re thrilled to have Snapdocs as a sponsor. They help lenders overcome obstacles to adopting eMortgage technology. Snapdocs is now offering the eMortgage Quick Start Program. Check them out on our sponsor page.
Also, SuccessKit. I love what Julian Lumpkin and the group are doing. Check out the interview we did with Julian on January 10th, 2022. Think about it. If people won’t buy a $5 dog toy on Amazon without reading reviews, why would prospects wanting a mortgage or buying mortgage technology reduce any less? They’re checking out reviews, and SuccessKit can help create reviews for you, and they do it in a fashion that is, I can’t begin to tell you how successful it has been for us. Check out SuccessKit.io.
I want to say a special thank you to the Lender Toolkit. Also, we want to thank sponsor PennyMac at TPO. Go back and read the interview with Kim Nichols on November 1st, 2021. Also, I want to say thank you to FormFree. I’m thrilled with their partnership. Go back and read the episode with Brent Chandler of FormFree and Kevin Kauffman with Freddie Mac. It was a very interesting interview, and you won’t want to miss that.
Finally, a special thank you goes out to Debbie Wemyss at the DW Consulting group, helping people with their LinkedIn profiles. Finally, I want to say a special thank you to Rob, Les, Alice, Allen, Matt, and my good buddy, Jack Nunnery, who’s going to take over the episode for me at this point. Thanks, Jack, for co-hosting this while I’m in Las Vegas driving some Ferrari around the track. Jack, it’s all yours. Take it away.
Thank you, David. Stay safe driving $400,000 automobiles around the racetrack. I don’t want to drag one of them down the guardrail. Our first segment is Rob Van Raaphorst and the MBA Mortgage Minute. Rob?
Welcome to the Mortgage Minute and the latest news from the Mortgage Bankers Association. Late last week, President Biden signed a $1.5 trillion the fiscal year 2022 Appropriation Bill. It includes robust funding for the US Department of HUD and several wins for the industry. Specifically, MBA prevented the inclusion of an FHA administrative fee by securing appropriated funds for FHA technology upgrades.
Also, the bill includes the MBA-supported LIBOR Act of 2021, which provides clear guidance and a consistent Federal standard for determining a replacement benchmark rate for the London Interbank offered rate, including for tough legacy contracts. MBA Technology Solutions Conference is happening from April 11th through the 14th in Las Vegas, Nevada. To register, go to MBA.org/conferences. That’s it. Thanks for joining me.
Thanks for the update, Rob. Everybody, the MBA is your voice on the hill. They’re an important lobbying group for our industry. The partnership is sorely needed, and we appreciate everything the MBA does for us. Next up is Les Parker’s segment. This should be interesting with the volatility that we see in the marketplace. Les, take it away.
“Who should have known? He bombed them farewell. There’s a lesson EU learned from this, and they learned it very well.” Two cleans up the avoidable Russian mess to avoid nukes and bioweapons. China, Germany, and France will strike a deal soon. At least, that’s the way oil and gold see it. Everyone pays the price for stupidity and hubris. Putin will get what he wants before the invasion. A NATO-free buffer from the West and more land. Meanwhile, the Fed no longer buys mortgage-backed securities except to replace runoff and soon raise rates, so the dueling dramas continue. Follow the bouncing ball at TMSpotlight.com.
This is Alice Alvey. I’m going to jump in real quick here to introduce Matt Graham with our mortgage update. Matt is the Founder and CEO of MBS Live. Take it away, Matt.
This is Matt Graham with the MBS Live market update. Bonds are not very happy over the past few weeks, and they continue to be stuck in a situation where no matter what the news is, it’s had negative implications. We talked a little bit about this with respect to oil prices specifically and the interconnection with the Ukraine War. Early in the war, when tensions flared, it was good for bonds and oil prices. That was the flight to safety. Oil doesn’t normally move up in a flight-to-safety, but with there being supply considerations surrounding Russia and Ukraine, specifically Russia and sanctions and whatnot, then, in this case, it did put upward pressure on oil prices. At first, that wasn’t too big of a deal for the bond market, but as of the beginning of last week, with the big spike up to temporarily $130 per barrel, it changed the narrative for bonds, or at least it evolved the narrative in such a way that oil price spikes were now too high to ignore from an inflation implication standpoint.
Ever since then, yields have moved higher in an incredibly linear fashion regardless of fluctuations in oil prices. There are a couple of reasons for this. They include a big supply in the bond market. This has come both from treasury issuance as well as corporate bond issuance. Also, it’s a matter of inflation implications playing out and the fact that that spike in oil prices is going to send shockwaves throughout the economy in terms of inflation. There are also other commodities that are in play, such as wheat and nickel and other precious metals, that have experienced a similar spike.
Even if the Russia-Ukraine War were to end now, those price spikes would still eventually end up hitting consumer prices. They’re definitely already hitting consumer prices at the gas pump. Doesn’t that put downward pressure on the domestic economy? Yes, to some extent, that is the case, and it isn’t enough to offset the inflation implication and the motivation it carries for the Federal Reserve.If the Russia-Ukraine War were to end now, oil price spikes would still eventually end up hitting consumer prices. Click To Tweet
Speaking of that, this brings the big Fed announcement where they will hike rates for the first time since COVID, since 2018. That is a foregone conclusion that it will be a 25-basis point hike. If they want rates at a 75-bit level or 0.5 to 0.75 level, they will do that by hiking both at this meeting and the next meeting as opposed to doing a 50-bit hike at this week’s meeting.
We also get an updated Dot Plot that will let us know what the outlook is like for Fed rate hikes from every Fed member, and we’ll get a press conference with Fed Chair Powell where he’ll get to address yet again as he did two weeks ago in the congressional testimony. How is the Fed reconciling the disparate impact of the global economic hit associated with the Ukraine War and the inflation impact associated with the Ukraine War? Fed funds futures are as bearish as they’ve been.
They have the highest rate hike outlook they’ve had in this cycle, and that happened on Friday and through this morning. When we look at Fed funds futures, they’re now suggesting a Fed funds rate of 1.75% by the end of the year. That is quite a few 25-basis point hikes between now and then, considering there are only eight meetings in a year. Those rate hike expectations weigh heavily across the entire yield curve, but especially on the front end of the yield curve, we are at our narrowest levels in quite some time with 2s versus 10s, only at 28.5 bits.
In other news coming up, we have producer prices tomorrow. Not as big of a market mover as consumer prices, but still a consideration. Retail sales on Wednesday, focused on that day, will be on the Fed. Retail sales don’t have as much importance as normal in this environment. Thursday, it brings the Bank of England announcement, and any major central bank announcement is in play as a market mover for the domestic bond market. Philly Fed at eight 30 jobless claims as well, and then on Friday, existing home sales at 10:00 AM. That’s expected to continue at over six million units a year, an annual pace but to decline from the previous reading of 6.5 million. That’s going to do it for this week. Back to you.
Thanks, Matt, for that great report. There are lots going on in the markets. For me, I’m going to be keeping things pretty short. You already heard from Rob that he brought up the $1.5 trillion Omnibus Appropriations Bill. That was good news for the industry, and we won’t be looking for any fee increase coming out of FHA since they got the money they need through this funding bill.
HUD definitely needs some funds to go towards its technology infrastructure upgrades, and we look forward to seeing how that money is going to get used going forward. Another point I want to make sure everyone’s reading a little bit. We’ve talked in the past about VantageScore. We’ve had folks from the company here. We’ve got some great things. You can go back and read the previous episode about the VantageScore. Back in 2014, there was a bill that required Fannie and Freddie to set up processes to review alternate credit score models.
This has been a long time in the making. How does this work? What does it look like? We all know how embedded the FICO score is in everything we do. For those of you who may not recall, the VantageScore is a joint effort between Experian, Equifax, and TransUnion. You can read all about it at VantageScore.com. VantageScore is advocating that lenders would get to choose which score they would use during the origination process at that early stage of the game.
They have some data that shows that for certain borrowers, their scoring model may help more borrowers become eligible for home ownership. That’s certainly something that we are all interested in as an industry, but it would be difficult to figure out when we would use that and how pricing would be impacted. If you think about everything from application all the way through secondary and investors who all currently have everything built to work around the FICO score, including everything down to pricing, we would have a big shift in the market to try and figure out how to fold in a second credit score model.Vantage Score's scoring model may help more borrowers become eligible for home ownership. Click To Tweet
This was a hearing that was held by FIFA to talk through how each of the main entities and stakeholders involved feels about this process, what concerns folks have, and what options they feel that should be considered. The National Association of Realtors, many top lenders, banks, credit unions, everybody’s represented at that table. It boils down to that. Many feel there needs to be a single score model that we start with the existing FICO, and perhaps there’s some type of a waterfall or alternative process where the Vantage credit score model could be used in the event that it might help more borrowers.
This was putting everything on the table, trying to figure out what are the next steps. There may be lots of work to be done before any real changes are made as it is. This is the agency trying to go, “We’ve put a stake in the ground that we’ve at least started the discussion, and we’re starting the review process as required by the legislation.” Nothing else at this time other than that. I will turn it back to Allen. He was able to get on the line.
I am here, Alice. Happy Monday.
Take it away.
As David would say, TGIM, Thank God It’s Monday, I’ve got a number of interesting things to talk about. We’re going to focus on cool technology and golf. We have the players, the TPC Sawgrass Players Championship, in my neighborhood. It was rained out the first day, and then we had crazy storms come in. It was delayed two times. We wound up having extreme cold and high winds.
They had to push everything out on the final day. Monday, they’re squeezing in part of round 3 and then all of round 4, which should have finished up yesterday. What’s amazing is the technology that they use for golf. If you had a chance to watch either this tournament or many others, there is some interesting technology that’s used to show where the balls are striking.
They show percentages and numbers. There’s a company that does that. It’s called 2K21, and they have mapping technology, and it takes them many weeks, if not months, to be able to get the Teradata for the ground and satellite imagery. To map on top of that, all of this other technology they have. If you’re interested to learn more about it, you can google 2K21 PGA Golf. The stats, and the analytics, those are the types of things that we should be doing in our industry. I’m going to come back to stats and analytics in a moment when we talk about what’s going on at Wells Fargo, a report that says that they’ve denied nearly half of all Black refinance applications in 2020.Wells Fargo denied nearly half of all Black refinance applications in 2020. Click To Tweet
Before I do, let’s talk cool tech for a second. There’s an electric bike craze. The point about it is that the Millennials looking at their interests and the things that drive our customers in this market, are into these things. They’re into electric bikes. The electric bike craze has taken off at such this unbelievable rocket ship type of numbers. One company alone, this company called Lectric, had over 500% to 1,000% growth in the last 12 to 24 months. They had over 20,000 orders for electric bikes in the last twelve months. I mentioned this because as you look at ways in this market to capture customers, it may be that electric bikes are part of your marketing efforts and marketing campaign. Check it out. That’s cool tech.
The other thing is a website. It’s called ImportYeti.com. This website will show you all of the manufacturers that a company uses. If you were to go and take a look at a product and you can search thousands and thousands of products on this website, it will immediately come and tell you who all the manufacturers are that made up that product that was able to be sold. Depending on your interest, you may want to check that out, but it is quite interesting nonetheless.
Let’s talk about what’s going on at Wells Fargo. There’s a report, and you can see it in HousingWire. I call it Data to the Rescue? because that’s the topic of why I’m bringing this up. They’re saying Wells denied nearly half of all Black refinance applications in 2020. Bloomberg is the article, but it was mentioned in HousingWire. They’re saying that almost three-quarters of all of those applicants were sent in by White people, and they’re showing that Wells was below industry averages of 47% when it came to refinance applications by Black homeowners, which were approved at 71% of the time by other lenders.
Wells clearly is extremely below the trend, and they’re saying at other demographic groups, the analysis also showed that they approved 67% of requests by Asian homeowners and 53% by Hispanic. What’s interesting about this is how can you avoid being in this situation. It’s not simple, but conversationally, it’s simple because you need to make sure that you’re looking at the data. You have to look at the areas that you’re lending.
You have to look at the demographics. You have to look at your trend. You have to benchmark the industry. This is where data folks come into play. This is where data scientists come into play. You don’t have to have those folks on your own staff. You can have them at partner companies. There are other ways to look at these analytics, but that’s the information you want to be looking at. You always want to look at your fair lending risk.
For those of you building web applications on the front end for borrowers, think about it. You’re focused on, “Are you taking all the components of data to make this application a RESPA event? Are you looking at the data to understand who you’re lending to, and are you lending fairly to those folks?” Anyways, Wells is a big name. They’re going to be in the news.
It doesn’t mean that you won’t have the same type of question come up but use data, leverage analytics, and put that information together. There are a lot of partners in our industry that are out there that want to help with that data and a lot of folks out there that have the expertise, the data scientists that you can bring on board on a contract or a full-time basis to start looking at your data.
I wanted to mention that. Make sure you take a look at that. Next episode, Alice and Jack, I am going to talk about this craze called Wordle that the New York Times bought from one little software engineer in Brooklyn, New York. It is the absolute simplest website. It’s a game. It’s a craze that the Millennials are driving, but it talks about how to Keep It Simple and Stupid, KISS, our technology can be moving forward. For those of you at the ICE Experience 2022, have fun partnering. Have fun selling your technology. Have fun buying technology. We will also talk about inflation-resistant technology next episode. Thanks for reading, and looking forward to the hot topic. Alice, are you still with us?
Yes, I’m here, but we’re good to go.
Thank you for reading. Good to have you with us, everybody.
I would say special thank you to all of our sponsors for National Lenders One, Mobility MMI, Modex, the MBA, Knowledge Coop, The Mortgage Collaborative, SnapDocs, SuccessKit, Lender Toolkit, PennyMac, Total Expert, and FormFree. Have a great week, everybody. We are looking forward to seeing you back here next episode.
- Lender Toolkit
- Total Expert
- Mortgage Bankers Association of America
- Karen Jenkins – Past Episode
- Chris Zingo – Past Episode
- Lenders One
- The Mortgage Collaborative
- Rich Swerbinsky – Past Episode
- Mobility MMI
- eMortgage Quick Start Program
- Julian Lumpkin – Past Episode
- Kim Nichols – Past Episode
- Freddie Mac AIM for Income Using Direct Deposit Data – Past Episode
- DW Consulting
- MBS Live
- 2K21 PGA Golf
- HousingWire – Article