12-27-2021 Weekly Updates With Alice, Allen, Matt, Les, And Rob

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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!

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Weekly Updates With Alice, Allen, Matt, Les, And Rob

It is Monday, December 27th, 2021. I hope all of you had a wonderful Christmas. We are glad to be back, which is a form of communication that is exploding. Our readership is exploding. We are so grateful for you helping to do that. This show is created by mortgage professionals and we are creating it for mortgage professionals. We are grateful to have you as our reader.

Our commitment is to bring you timely information that you can read anytime and anywhere. I got an exciting Hot Topic. We have Joe Rojas of RedSapiens joining us. He also has a new company called Start Grow Manage. This guy is helping entrepreneurs across the country, not necessarily in the mortgage space, but to start a company.

I was talking to him about another matter. I interviewed him and it clicked. I said, “Would you mind coming out of the show and sharing your story?” It’s like one of those Christmas stories where someone like this guy was born on the other side of the tracks and then something. Where he started out to where he’s at now, what he’s doing and the passion that he has. I’m excited to share this story with you.

We are thrilled to be a part of Industry Syndicate. Check out all episodes at the website IndustrySyndicate.com. I’m also grateful for our sponsors, The Mortgage Bankers Association of America, as well as Finastra, with their mortgagebot solution, Lenders One, The Mortgage Collaborative, and The Community Mortgage Lenders of America.

In Insellerate, Josh Friend and the group over there do a great job of helping you engage the borrowers and consumers more effectively. Also, Knowledge Coop, a great learning management system as well as Mobility MMI and Modex. Both of these companies help you select and find top-talent LOs and take them on board. You skip the laser target information that these two companies have is amazing. We had Ben Teerlink on December 20th, 2021. We also had Dale Larson III and Dale Larson Jr., father and son team, on November 22nd, 2021.

Also, one of our newer sponsors is Snapdocs. It is doing a great job with over three million mortgage closings done electronically for lenders. You got to check out what they are doing. It’s one of those sleeper companies that’s coming up and it’s going to take you and the industry by storm. Check out Snapdocs.com as well as SuccessKit. They do a great job of helping you tell your story and have your story told.

I like this one proverb. It says, “Let another man’s mouth praise you, not that of your own.” In other words, the most effective sales force is your existing customers and what they are saying about you, so check out SuccessKit.io. Also, Lender Toolkit. I had Brent Emler on November 29th, 2021. Check out that episode. We are going to be doing a lot more with Lender Toolkit in the coming months.

The most effective sales force is your existing customers and what they're saying about you. Share on X

We also have a number of new sponsors coming on. We are excited to announce this in the new year and so we should be with them in January 2022. It’s so good to have you with us. Rob Van Raaphorst is taking the week off for the MBA Mortgage Minute, so we’ll move over to Les Parker of the TM Spotlight in the macro view of the markets. Chat for us, Les.

Give trend up. Let yields down. After the reflation trade sputtered over the last few months, has it arrived? Notice how market-based inflation expectations keep climbing. At some point, the Fed will intervene in the new bear market to avoid choking off the recovery, but given the volume and new treasury issuance to fund expected stimulus, mortgages become the loser. The Fed feels the purchase market is healthy enough to survive without heavy support and does not want to fuel a housing bubble. Let’s hope the Fed does not turn around and hurt you. These views are my own. Do you want more? Go to TMSpotlight.com.

Purchase Market: The Fed feels the purchase market is healthy enough to survive without heavy support and does not want to fuel a housing bubble.

I love how Gary Catrambone and Les Parker team up each week to bring us some great information. Jack, I want to dive into some of that because you and I were talking a little bit ago. We have got a number of our regulars that are enjoying their week off. We have got a little extra time and we have got Jack Nunnery here. He dialed in. Jack, thank you as the co-host. It’s good to have you here. I appreciate you.

My pleasure, David.

You and I are talking about the housing market and where the median home price is. Talk a little bit about that. I have some questions and I want to get into a brief discussion because the last segment touched on parts of this. Go ahead.

I was doing a little bit of reading and research on the housing market in general, and a couple of data points stood out to me. That is that the median price of a single-family house sold in November 2021 was $416,900. I thought, “That number keeps going up.” I then looked at the median. That’s a single data point. Only 13% of the houses sold were worth $300,000 or less and 57% of the houses sold were greater than $416,900.

As I look at the market and think, “What does this translate into?” It translates to a constrained first-time home buyer market. You and I were talking about Millennials. Millennials have now become the largest single generational subpopulation out there, greater than Gen X and Boomers. Still, the Millennials are about three years away from hitting that median age of first-time home buyers. Will there be a robust inventory market available for first-time home buyers and Millennials when they start coming to market as they are now?

Purchase Market: Millennials have now become the largest single generational subpopulation out there, greater than Gen X and the boomers. Still, millennials are about three years away from hitting that median age of first-time home buyers.

I look at this challenge that is out there. First of all, I have a housing supply number, but the supply that is there is double-digit inflated. I think those numbers are still double digits at this point. There are some markets that have slowed down. That’s the national number, the $416,000. We are certainly seeing markets where the medium price is way above that.

In certain parts of California where it’s insane, how does someone enter into this market? The Feds, as what Les is talking about, is saying, “We are not going to worry about it. Let’s let the markets go where they are going and rates could be higher.” Les did predict that because of volatility. In 2022, we could see the ten-year treasury back under 1%. How long? We don’t know, but it’s going to create a lot of volatility, which I sense we are going to be experiencing. I love your thoughts on that, Jack.

I’m a little more bearish on interest rates than Les. For example, we are trading a little over 1.48% on the ten-year. We are less than a basis point off of the 200-day moving average in the 10-year. What do we know? We know the Fed is going to accelerate tapering. The Fed has come out and said, “We could see as many as 3% rate hikes next year.” When you stir all that into the mix, I would tell you my bias leans to a higher ten-year less Fed intervention and the probability of rates moving up in 2022.

There are always wildcards out there. We have got inflationary pressures, COVID-19 and how the market is digesting this latest variant of it. There are a number of event drivers out there that could take the market and move it in a different direction, but it seems like all the signals for 2022 are pointing towards a great hike and higher interest rates. The challenge with what we were talking about is affordability. With the median price being or on around $417,000 and rates moving up, when does affordability become a drag on the market?

I think we are there. In certain markets, when you start looking at wages, you are looking at where things are at and where that point is. If we are not there, we are very close to it. Would you agree with that statement?

I do. I’m going to dig more into housing inventory, affordability, and the challenges that builders are facing trying to turn their pipelines into completed homes. I hear that the latest biggest shortage out there now is windows. While there is a robust builder pipeline, it is marching slowly to completion because of labor shortages, costs and product availability. I’m going to take the next couple of weeks and I’m going to dive into this chain of completion for new starts in the builder community to look at their challenges and the pace that these new homes are coming to market. What we are going to see is a lot of home buyers that want to buy a new home or buy it earlier in the construction process. They are not buying spec homes that are completed because there aren’t that many out there.

While there is a robust builder pipeline, it is marching slowly to completion because of labor shortages, costs, and product availability. Share on X

We are looking at doing a remodel on our home. We keep going back. We have had to trim it back dramatically because the inflation and the prices are insane. Part of it is we chopped off a chunk of it. Now we are going back to the builder and saying, “What is this going to cost us?” I almost cringe because of what’s moved since the time it took the architect to redesign things. Is this something where you say, “Let’s set this down and we’ll do this later?” We don’t have to do this. At some point in time, where do things start taking off? Where’s inflation? If you look at 2022, we are anticipating inflation kicking in and the consequences of current spending. Those consequences are coming to roost on us. I suspect there are a number of factors.

2022 is going to be an interesting year. It’s potentially a very good year for the mortgage lenders that have positioned themselves in the purchase market. We are going to be talking more about that. Also, those that have done servicing. One of the sets of the show we are looking to come up with in a minute is servicing.

We are going to be zeroing in on that in a multi-session series of shows and it’s going to be fun to do. Those that have servicing that are doing it and handling it wisely are going to have an advantage over those that don’t. I’m going to pause at that point and say, “That was made as a statement, but I should almost make it as a question.” In your opinion, do you have an opinion who should be holding servicing? Do you want to wager on that? Give a little teaser for the series that we are going to be doing in the future.

You hit the nail on the head when you said those servicers are servicers of record or master servicers that are doing this efficiently and in a compliant manner. We know the CFPB is back and forth, so you’ve got to keep your eye on the compliance side of it, but how well do you think your cost structure is around servicing?

Servicing is one of those things that always makes me smack my forehead because you hear so many mortgage bankers say, “I want to build a servicing for downturns in the origination volume.” As my origination income goes down, I have got this nest egg over here. The income flowing off of servicing replaces the drop in my origination income. What do they do? Mortgage bankers sell the servicing for the cash liquidity.

Purchase Market: Mortgage bankers sell the servicing for cash liquidity.

I think this will be an interesting episode. You and I have a dynamic person that we are going to have on the show to talk about. Are you efficient and cost-conscious in your cost of service? Is this an asset that’s giving you the returns that you want, or is this an asset that you should liquidate in the coming market? We have got a good guess that has a lot of knowledge about this.

I’m going to be excited about that series. A number of years ago, we did a series, and we interviewed a lot of people on the topic. It was one of the most downloaded series we have ever done because it drew in an interesting crowd. We drew in investors and everyone that’s in that whole servicing ecosystem. It’s significant in size. We are going to get that, start to get that and launch sometime.

What’s interesting is we have so many people wanting to come on the show and talk about certain topics. Readers, we want to hear from you. We want to know what you want to read. What are the things that are most important to you as we head into 2022? We have always implemented and found guests around the topics. If you have a guest that you want to recommend for us, we’d be happy to talk to them.

Jack, thanks for your commentary on all that. I appreciate that. As we are in a holiday episode, we are missing a couple of our key people. Of course, Matt Graham would normally be in here commenting about that. He’s taking time off enjoying his family. Do check out MBSLive.net. Put in the code LOL when you are asked to. You’ll get an extended trial period without the need to put in a credit card.

Also, Alice Alvey is enjoying her family and we are very grateful for her and her family. I know them so well. We have been close friends for many years and have enjoyed a lot of time with her amazing family. I don’t think we have Allen on here, so we are going to wrap up this part of the first half of the episode a bit early.

We got our regulars. They will all be back next episode and we’ll be back next episode. I’m looking forward to sharing so much of what’s going on. In the next episode, we are going to be having as our special guests. We have got Shayna Arrington of The Money Source, and we are going to be talking about an exciting topic that you all will enjoy reading to.

Be sure to come back next episode. We want to say a special thank you to our sponsors, Finastra, CMLA, Lenders One, Insellerate, Mobility MMI, Modex, The MBA, Knowledge Coop, The Mortgage Collaborative, Snapdocs, SuccessKit, and Lender Toolkit. Check out all of our sponsors in the sponsorship page. We are grateful to have you. Jack. I’m thankful that you took the time to join us on this holiday episode. I want to wish you a very Happy New year along with all of our readers. Thank you so much.

I had a good time discussing the concept of entrepreneurship and our space. I would like to wish all of the readers out there a very safe and Happy New Year’s and a great start to 2022.

I’m looking forward to it. Thank you, Jack. Readers, thank you so much. You are the best part of this show. We love hearing from you so please get out there and send us some emails. Send it to David@TMS-Advisors.com. We look forward to hearing from you. Folks, have a great rest of your holiday week in between the two holidays and have a happy and blessed New Year. Be safe out there, and we’ll look forward to having you back here next episode.

12-27-2021 Weekly Updates With Alice, Allen, Matt, Les, And Rob

Weekly Updates With Alice, Allen, Matt, Les, And Rob

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