Lykken on Lending

The Lykken on Lending program will feature our Weekly Mortgage Updates with Adam DeSanctis and his MBA Mortgage Minute, and then Les Parker’s TMSpotlight, a macroeconomic perspective on the economy with a music parody. That leads to Matt Graham of MBS Live providing you a rate and market update, followed by David Kittle, Chief Executive Officer at Cypress Mortgage Capital, to discuss mortgage originations. Then we have Alice Alvey of Union Home providing a regulatory and legislative update, then Allen Pollack giving us a Tech Report on the latest technology impacting our industry. Finally, we wrap up the first half of the program with Marc Helm, Senior Executive Partner at Transformational Mortgage Solutions, talking about Loan Servicing and the “Agencies.” All the while Jack Nunnery, who has a 38-year career in mortgage banking, and David will be expounding on each of the regular segments.

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Weekly Mortgage Updates With Adam, Les, Matt, David Kittle, Alice, Allen, Marc Helm, Jack, And David

We have got an exciting show now. We are adding two new regulars to the list. We have got David Kittle, CoFounder of TMC, The Mortgage Collaborative, who is a sponsor of ours, joining us to talk about originations. He’ll be giving an origination report here about that. We have Marc Helm joining us. If you googled Mortgage Loan Servicing, it would be Marc Helm. He ran the committee for servicing at the MBA for two years. He ran Washington Mutual, the largest servicing portfolio lot and we are going to be doing a number of interviews as we are with Mr. Kittle, letting our audience get to know them as well. We are thrilled to have them join as regulars. They will be a part of this and this is at the suggestion of Jack Nunnery.

We got things figured out. We are missing two parts of this industry that are huge and they will draw more readers. He suggested that. I didn’t know why I hadn’t thought of that myself, but we are thrilled that we’d be now covering loan originations by Mr. Kittle and loan servicing the other end of business from Marc Helm. We’ll be doing that and this show. Good to have you here. Let’s give a shout-out to our sponsors. Finastra Fusion Mortgagebot Solution does a great job of driving a fully integrated approach to mortgage lending that simplifies the borrowing experience and streamlines the process.

They renewed their advertising contract with us. We are thrilled to have them with us and we had Mike Haedrich. Good episode. Also, we have FormFree. I’m so grateful to have them. They have their patented auto check and passport products that opens the doors to more inclusive credit decisioning by revealing each customer’s true ability to pay the ATP.

You got to check this out. What is FormFree doing? What are Brent and the team doing there? A big shout-out to Christy Moss. What an amazing team they have there. We love Christy. She was on the show. Read that episode. Also, Lender Toolkit. Brett Emler and Mike Whitbeck were on. Michael is with BluePrint. Great interview.

Also, Snapdocs. Get the tools and support you need to implement the eMortgage technology effectively with Snapdocs eMortgage quick start program. Check it out, great company and great tools. As well as TotalExpert. They turn customers insights into actual information to increase loyalty and drive growth for banks, lenders, independent mortgage bankers, IMBs, credit unions, and other financial services. They do a great job. Check out the interview we did with Josh Lehr on May 19th, 2022. TotalExpert. They are best in class when it comes to the CRMs out there. We are so glad to have them.

Men’s SimpleNexus. The growth that is going on at SimpleNexus is over the top. Check out SimpleNexus. If you are not already with them, you need to get a demonstration of all that they can do for you. It’s pretty exciting. Also, we have the Mortgage Bankers Association of America, Lenders One, The Mortgage Collaborative, SuccessKit, Knowledge Coop, Mobility MMI, Modex, Mortgage Advisory Tools and DW Consulting.

I’m so excited that Candor is going to be our newest sponsor. They are starting in October 2022. We inked that deal. I’m so excited about that. Then a special thank you goes out to all of the regulars on here. Adam DeSanctis of the MBA, Les Parker, Matt Graham, David Kittle new to the show. Alice, Allen, Marc Helm also new the show and then Jack Nunnery. Good stuff. Let’s get started with the MBA Mortgage Minute with Adam DeSanctis. Here you go.

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I’m Adam DeSanctis. Welcome to the Mortgage Minute. The latest news from the Mortgage Bankers Association. The full US House of Representatives passed the US Senate’s amended substitute to HR 5376, now known as the Inflation Reduction Act. The measure was then sent to President Joe Biden’s desk for his signature to become law.

The Inflation Reduction Act incorporates MBA-supported language that preserves the deferred timing of taxation on income derived from both residential and multi-family mortgage servicing rights through exclusion from a newly instituted 15% corporate minimum book tax. Importantly, the law does not include a host of harmful revenue razors proposed in earlier versions that would have been detrimental to member companies in real estate finance. MBA thanks members from the broad spectrum of capital sources, business models, and real estate finance industry segments who remain deeply engaged during this process to help with our association’s tax policy and advocacy efforts. That’s it for this update. Thank you for reading.

 

Good job, Adam. I’m going to ask every one of our readers you have not already downloaded it. Download the Mortgage Action Alliance app. It is essential that your voice be heard on the hill and you can do it so easily with this app. I recommend to each of you go out there. It’s MAA. Mortgage Action Alliance app. Download it from your favorite app store. You do not have to be a member of the MBA to use this app, but you should be a member of the MBA. We all need them and they are doing a great job representing our industry. Adam, thank you so much for that update. Let’s get over to Les Parker with the macro view of the markets and his TMSpotlight perspective. Les, what have you got for us?

The Fed keeps fighting inflation and with the doves beating the drums loudly in unison, a painful recession looks increasingly likely. The leader of the doves stated that cutting rates early next year is unrealistic bond bowls expect the Fed to keep its word and continue raising rates and selling bonds. As a result, expect GDP to keep falling and inflation to fall below 3% in less than one year. Feds still got a lot of fight left to see. These views are my own. See the fight at TMSpotlight.com.

They seem to fit right in with the market. Sign up for the TMSpotlight newsletter. You can do so by going to TMSpotlight.com. You can sign up for the paid version for free. All you have to do is putting in the word power when it comes to the code for signing up and you’ll get the paid version for free. I look at it every single day because there’s so much good information in the way he puts it together. I have been doing that for many years. I have been reading this for many years. It’s really good. Check it out. Matt Graham is here, who is the Founder and CEO of MBS Live with this market update. Matt, good to have you here.

Good to be here.

We’d love to tease you about your voice, but it’s good. What’s going on with the markets? Give an update. I have been so busy.

The setup for this update is that we were coming into it with a heavy duration-focused issuance week. All that mumbo jumbo to say that there were treasury auctions on deck and of the two different treasury auction cycles. This was the one that included the 10-year and the 30-year. That is the higher duration of the two durations. Something that traders care about when it comes to taking down bonds that primary dealers are forced to bid on treasury auctions.

It can create a little bit of an auction concession where the market avoids buying treasuries earlier in the week or even purposefully pushes prices lower in the hours leading up to an auction to make the bidding process easier. That was headwind number one. Headwind at number two was the technical landscape. It’s not necessarily something that’s going to predict the future, but all other things being equal. Bonds had been doing more buying than selling for more than a month or ever since the middle of June 2022 and had hit the lowest levels in several months as of the beginning of August 2022. At that time, it looked like we might be a little bit overbought and we could see some momentum heading back in the other direction purely for technical reasons.

Heading into the update, we were focused on the Consumer Price Index, CPI. The biggest inflation report that we get each month not necessarily the report that the Fed says it cares most about because the Fed will usually say that’s PCE, but CPI comes up before PCE, so it has more of an opportunity to move the bond market.

Coming into CPI, things were pretty quiet and pretty sideways. Not much had happened on the week up until that point. CPI came out in a way that a lot of people were hoping to see it come out. Much lower than expected, 0.3% versus 0.5% at the core level month over month and 0.0% at the headline level versus a forecast of 0.2%. That means there was no inflation in July 2022 as far as CPI measures when it includes food and energy prices. That has a lot to do with the drop in fuel prices, but even removing that 0.3% is a big victory after 0.7% month over month.

Not looking at the annual totals yet because those are going to be distorted by extremely high months over the past that is included in that calculation. Jack’s right. We are well on our way to sub 3% inflation in 2023 if this pace continues as one would expect, with inflation being such a big bad thing for rates in 2022. Lower-than-expected reading had an immediate positive effect on rates.

Paradoxically, miraculously, and strangely, things bounced back in the other direction and ended the day almost right where they began, without much of an improvement. That got some fingers scratching some heads and it didn’t last very long because there was even more consternation on Thursday when the producer price index did something similar coming in at -0.5% month over month versus a positive 1% in the previous months. A big swing in producer prices is also largely fuel-driven.

Here we have two back-to-back reports showing good things for inflation and consequently, that should be good for rates. CPI producer price index, not only was there no reaction in the positive direction to that, but bonds kept on selling and moving higher and, at times, rapidly on Thursday. That was the type of market movement where bond analysts say, “We are going to have to find a narrative to fit the movement because all the narratives we had ready to go don’t do anything to account for what we are seeing.

We can talk about the technical landscape and we can talk about that duration-heavy issuance thing, but we need another way to look at this, and Fed speakers helped to provide that. Several of them were out saying this is great, but one month of inflation reports that show a shift doesn’t do anything to change our course, especially in the short-term. This doesn’t have a material impact on September 2022’s rate hike outlook, and we are very far from even being close to done fighting inflation.

I don’t know if you’d call it a sobering reminder, but at the very least, it re-grounded the conversation surrounding the implications of lower inflation. From my point of view, with the last jobs report and ISM data, you have a positive shift in some of the economic data that is getting people thinking that if inflation is falling and the labor market’s strong and some of the other economic data is showing a rebound, the more inflation falls the better that would be for the economy. Maybe the economy does indeed engineer some soft landing or a very mild recession that then gives way to period of sustained growth and that is an environment that is not conducive to rates falling.

You slice it. Fed rate hike expectations did indeed stay very steady over the short term, and then when you look out to, say, June 2023 over the first two weeks of August 2023, those rate hike expectations moved back up to recent highs. Not quite as high as they were in mid-June 2022, but now they are in line with the levels from the end of 2022.

In other words, traders had been seeing the Fed cut rates at some point in 2023. By mid-2023, they no longer see that after the past weeks, and that’s the development of the past weeks. Rates moved up by the end of the week rather paradoxically. In the bigger picture, not doing too badly. Still in the middle of what we were talking about being the sideways range in May and June 2022. I think that the sideways range is a pretty safe bet in the bigger picture until and unless data pushes us out of it in a compelling way. The lesson was it’s going to take more than inflation data. It’s going to take economic data to cast a big vote on what we do with that range.

What’s your feel? What are you seeing out there? Is this still on a downward trend for the rest of the year? Generally, is that your hunch at this point? I know you don’t go into predicting. I respect that so much about you, but generally, is that the feel out there?

That it would be very easy for me to have said that and I probably did in the second half of June 2022. Especially early-July. That felt like a safer bet. I do think that it is data-dependent. I don’t know what’s going to happen with economic data right now. NFP and ISM data was great. Are they outliers? If they are outliers and those were dead cat balances for eCon data, then rates are going to keep going down.

If they were assigned that the economy was waiting to catch its breath to inflation and rising rates, then I don’t think that rates necessarily continue to go down, but those are big ifs. The uncertainty associated with that is something that you get a metaphor for in the housing market where you have some areas of the country where prices had gone high and then started to come down and now buyers are chomping at the bit to get offers in because prices have fallen a little bit and not necessarily even fallen in terms of home price indices but fallen from listing prices.

You have other areas of the country where people are saying. It’s slowed down here and even though prices have fallen, it hasn’t picked back up. Which version of reality are we going to get overall and on average and that’s the economic reality that’s going to inform the direction for rates? The safest thing to say is that rates almost certainly peaked in mid-June 2022and we are not rushing back up to those levels.

 

We have tested those levels a couple of times. We’ll come close to it. What is so encouraging about the general direction is we are going to stay here maybe. Bounce around on this range a little bit and then hopefully, we are going to see things continue to go down further. Interesting data that’s up on your website right now. I love your website. I love how it’s organized. I say that every single time on this show, but I get so many comments on this. Normally, we would be getting Jack in here and he pontificates what’s happening with rates and the way he comes in is always so insightful. Alice, you are always so kind to him. Any thoughts on Matt’s assessments?

As Matt said, what’s difficult to tell? I still am trying to get the visual of a dead cat bouncing, so I’m still stuck there, but once I get past that, I’m still curious where that came from. The MBA had a great chart that was related to one of the aspects that you are talking to from Redfin about the number of competing offers. The percentage of competing offers has dropped the percentage that, at first, offer prices are starting to come in lower than list prices. There is data out there, so we are not going, “My friend had this happen and this market seems to be feeling this.” I would recommend checking that chart and watching those stats because that’s the biggest indicator of what starts happening with the offer prices.

Let’s get over to Marc Helm. Your thoughts on the market.

I’m going to give you a little commentary. I’m living it personally myself. We are trying to sell a home in Houston, Texas and we miss the time by about a month when people were making outrageous offers over the list price to sell homes. In our subdivision right now, which is 850 houses or so, there are about 22 houses on the market. There has not been one offer made on any of those houses in a month. That tells you what’s happening.

The rates have pushed a lot of people that would normally qualify for loans out of contention and the value of the house and the sales price and the rates combined together are making it difficult for people at home ownership. We are in an upscale neighborhood, so there are still some property values, but my friends are telling me it’s happening all over. I got a friend that works for one of the major home builders and they are a sweet spot in homes valued at $220,000 to $240,000 and are using 3-bedroom, 2-bath houses. Our house is so cheap in Houston and they are also experiencing the same decline of people because the rates again are knocking the people out that normally qualify for those loans.

It’s going on all over the market and my brother was talking to me about his home that they sold it before this fell off and they had a $250,000 over the asking price offer that they accepted. It’s crazy. $250,000 over the asking price. It’s up in Bellevue. Wash it up in your deck of the woods. Let’s get Kittle in here. Mr. Kittle, any thoughts on any of the markets? I’m so glad to have you joining us, both you and Marc.

It’s great to be on here. That I would add a little bit different perspective to it certainly rates drive home purchases. I could give the same commentary almost verbatim that Marc did. There are six houses for sale within three streets of me here in my neighborhood, and I don’t know whether they may not have offers on them or none of them are negotiating, but they have been on the market now for weeks. Generally, earlier in the year, they have been gone 3 or 4 days.

It’s slowed here in Louisville, Kentucky. The volumes up or down certainly have everything to do with where you are geographically. I go back to all the commentary we had. I still think that whether rates even if they go down a little bit, people are still feeling it every place else. Whether or not we had zero inflation. Car sales are down because people are feeling it in other places. It costs more for gas. Even though gas is down substantially, you can get gas here in Louisville for $3.35 a gallon. That’s cheap compared to what you get, but it’s still up over $1.50 where it was years ago. Even though it’s come down, it’s still up.

One more thing in there, if I may. As cyclical as our business is, we got to remember what happened and what is happening across the country and there’s no real way to prove this, but kids are going back to school, so people aren’t looking for houses right now. Every year around the 1st of August, mid-August, it slows down and we tend to forget that sometimes. Back up a little bit. That’s before we get into Thanksgiving and the holidays and then it will slow back down again.

As cyclical as our business is, we have to remember what just happened and what is happening this week across the country. Click To Tweet

That’s a great point. I grew up in Minnesota and then also has lived up in Washington state for years and it’s Labor Day. We don’t go back to school until after Labor Day. That was the big signal. Now here in Texas, everyone’s going back to school. A lot of schools are going back at it. Mr. Kittle, thank you so much, Marc Helm, thank you for being here. Jack Nunnery, we miss you if you are reading this. I doubt you are reading this in the dental chair. You may read this after the fact, but we do miss you, Jack and I wish you a quick recovery from all that too that you are going through. You sounded pretty good on Friday when we were talking to you, but anyway.

If you have not signed up for Matt Grahams MBSLive.net service, you’d need to do so on. When you do so, you should use the LOL code and the sign of S signup code and it’ll give you extended trial with no need to input a credit card, but you should put it in a credit card and you should sign up. Everyone loves the service. One of the funniest things, Matt, I think I told you this when we were talking. David Kittle and I are on a podcast. He says, “Let me show you the market,” and he held up his cell phone behind him because I have this big screen behind me and he goes, “That looks so cool.” I’m going to compete with you. He holds his cell phone up for an iPad up behind him when he was talking going, “I, too, have this slide behind me.” It was so funny.

It’s a good service, Matt. Kudos to you. Thank you for being here each and every week. We blame you. Don’t go right. We give you all the credit when the markets are proven. You have nothing to do with it because all you do is report the facts, nothing but the facts. Thank you, Matt. I appreciate you so much.

Mr. Kittle is here. He is joining us and providing us now an insight onto what’s going on in the production. We got into it a little bit Mr. Kittle, but David Kittle is going to be joining us as one of the regulars going to be talking about the topic of loan originations. Now David was the past Chairman of the MBA. Unique insights. He can comment on virtually anything and everything we are talking about. We have asked him to come on each week to focus more on loan origination. Mr. Kittle, welcome to the show as a regular. I’m glad to have you here.

Thanks. I’m glad to be here.

I don’t know why we didn’t think of it sooner. Tell us a little bit about what you are going to be doing each and every week. Give our readers a little bit of a flavor of the things you are going to be focusing on.

Since we have gone way away from a refinance market to a purchase market and inventories are low, cost are high. It’s difficult for loan originators out there to bring in deals and you’ve got to be able to pivot these days. You and I and the group we were talking on and I brought something up, so I want to mention it now and say as a lender out there, not a fixed rate and everything else, you should look at doing something out there or call the DSCR loan.

It stands for Debt Service Coverage Ratio, and it’s a key measure of a company’s ability to repay its loans and it’s based on the income on the rental property. It’s not based on your income. Approvals are a lot easier and people ought to look into that as a way to pivot and add some volume to your pipeline. The margins are a little higher on them and it can help you make a buck going through the rest of a year.

 

You can make a good income. These are very proper loans. When this came up, Jack goes, “I heard something about this.” He went in there and did some research on it and he goes, “This could make so much money for so many companies and give them another tool in their toolkit.” I thought that was good that you brought this out. Marc is the reverse mortgage expert. His last mortgage company was that. Reverse mortgages are, but a lot of people struggle with that a little bit, but this one is a bit unique. It turns out, if I understand correctly, it is a non-QM type loan.

There is a non-QM aspect about it, but there is so much that you could do with this product and it adds another product to your product mix. That’s excellent, David. Very good. Also, we are going to have you, Howard, and Steven on in a separate episode and a hot-topic interview. We are going to be doing that and going to be talking about what you guys are coming together to do. If you could mention that briefly, give a teaser for that upcoming hot topic episode that we are going to be releasing.

Stephen Chapman, Howard Nathan, and myself. This came out a talk that I gave and there’s a need for it. We call it operational health and it’s a way to talk to companies and come in and to counsel them on how to downsize and do it the correct way and grow your business while you are downsized. We are getting great feedback on it and getting a lot of calls on it.

We prefer the word rightsized. We are helping people to rightsize their company and David is leading this charge and I’m excited about it. We are going to be talking about that in the hot topic segment. David, welcome to the show. Very excited and also not only your segment but your commentary on each one of these segments as we go through it. It’s so good to have you here and I’m excited. Let’s get over to Alice. Alvey, Alice is CMB Vice President of Education training at Union Home Mortgage and she’s got the legislative update. Alice, how are you doing?

I am well. If we can have David Kittle stay on for a second. I’m familiar with the debt service coverage ratio loans and the non-QM aspect of them and they can be a benefit. I have a quick question. Are there multiple lenders offering this product now? The non-QM space people dip their toeing their water and then have a tendency to sometimes jump out and a lot of lenders like to have multiple places to be able to deliver those loans with consistent guidelines. Are you finding some consistency developing in the market on this product?

They are beginning to, Alice, but to your point, you are exactly right. As this grows and as more people need to pivot and diversify in their origination products offering, you are going to see more investors come into the market. It’s not going to be a high volume for you, but if you are doing non-QM and you add the DSCR loan to it along through normal builder and realtor loans, it can certainly help sustain you into next years.

I heard Howard Nathan’s mentioned. If that’s the Howard Nathan I know, that is a great match up for that operational health.

There’s only one Howard Nathan that I know.

He’s a bit of a legend. He is. We are pleased to have Howard join our consulting firm and meet Stephen Chapman. We have had them already on as a guest on here one time and he brings it out. We are looking forward to releasing that episode. Alice, let’s get into the legislative update.

I have got a quick update here. USDA has issued a proposal to take themselves out of the loop on the USDA product, which we love that idea. Less government always makes things a better place. They have put themselves out there in a proposed rule. It’s going straight to proposed rule, which I like because if they do a request for comment, that can start to drag things out. Although, this has been dragged out a little bit. USDA has put out a single-family housing guarantee loan program changes that came out August 4th, 2022. The comments are due by October 1st, 2022.

USDA has issued a proposal to take themselves out of the loop on the USDA product, which is a lovely idea. Less government always makes things a better place. Click To Tweet

They were given the authority to have that lenders make the loan decisions and lenders basically put the guarantee on the loan like you would within FHA. Picture USDA wants to make the move to be like FHA for delegated authority for the entire business process and give that over to the lenders through a bit of a qualification process in the first place.

They have had the authority to do this since 2016. They are going as fast as they can. Here we are in 2022, getting it in proposed rule format and hopefully, we see that the comments come in very favorably. I’m encouraging all our readers have your lender hurry up and comment that this is all good. There are no hidden problems within this.

At first, I wasn’t sure about USDA having the right amount of technology to pull this off because it’s different from doing something than it is being the administrator of something. They make a statement in here that they feel the agency expects to use their existing process and technology systems with some substantial modifications to implement this. They will need to make sure that they take the time to get that right. Other than that, from a process and commenting standpoint, it would be easy enough for you to jump in and say, “This is a great proposal. We want USDA to have the ability to issue lender approvals and to go with the proposal as they present it.”

They are proposing to audit about 2% of the loans post-closing, which is very reasonable. There wasn’t anything in there that we could object to. Simply saying follow the way FHA does it and we will be happy to take this off your plate and be able to issue our own USDA approvals. A lot of times, for these types of commentaries, we are waiting to hear from the MBA because these get very convoluted sometimes and you want to be careful with your answer, but this is an easy one.

I would encourage everyone. That was my big announcement. I would love to see everyone participate in that. One other quick note, I heard Les Parker say it and I wrote it down. Inflation add or below 3% in less than a year. I have another. Les Parker tidbit that we will be tracking and checking the next datas. That’s my report now.

I love how you hold him accountable. He said it. That’s encouraging. Alice, thank you so much for being here. Marc and David, any commentary that you have on Alice’s?

Nothing from me. I love it. Especially the fact you are going to hold Les accountable.

I love it too.

We always love that. She does that well. Parker is reading this. He always read and he gets a big smile and says, “You can hold me accountable. Go ahead. Hide and watch it.” He can go to the bank on this, but anyway, it’s so good.

It helps to validate. When people say something and then you can say, “Les said this,” whatever the timeframe was, and he was right. That’s my goal is to prove Les is right.

That’s the right attitude. Yes. We love Les Parker and he’s right way more times than wrong. That’s why I love his newsletter. Sign up for it. Alice, thank you so much for being here. We have got Allen Pollack walking off an airplane. I was texting him. He sent over his notes and I could have read them, but I decided we were going to wait. Allen, welcome. Alice has done it from a fishing boat. He has done it from the airport as well. I hear the noise in the background. Good to have you here with the tech update. What have you got?

Likewise. Good to be here. We have done this before. What’s more exciting is proving Les Parker right. I didn’t realize Les needed that much help. If you are reading, Les Parker, you can reach out to me during the hours between 9:00 and 7:00 PM Eastern and I’m more than happy to consult with you and help you out to always be right. I’m fine with answers. In general, anywhere, if someone doesn’t know you that well, they say you are great and I ask, “Could you write that down so I can give that to my wife?”

Let’s talk about tech sales. We have all had them. It happens. Sometimes they make us wonder, “What was the product team thinking? How did they get that out?” Here it is. I was driving and my phone vibrated in my pocket to provide me with this message. “You will not receive notifications while you are driving.” Clearly, there was an issue with the timing of how they delivered that message.

That goes along with the user interface experience item I brought up a few years ago when COVID started. There was this hand sanitizing machine that had this beautiful person on the front and the finger was pointing down to tell you where you are going to sanitize your hands. People were putting their hands under where her finger was compared to where the nozzle was where the sanitizer was coming out, and so it was dripping all over the machines. User experience.

Let’s talk about saving time and money. I didn’t realize David was going to be on now. One of my topics now is something near and dear to David’s heart. I know he cares so much about it, which is vendor management. We’ll talk about that in a moment. Big news. Save time and money. You may not know this, but Google released their free website designer and associated tool. It’s called Google Web Designer.

 

Here’s why this is such a big deal. Number one, it’s free. There are all kinds of features like ad creation, and simple code development, and it’s designed to make your job easier. Especially if you have a marketing department or you don’t have a marketing department, this is a way for you to verify and test out different ways that you may want to market out there. Before you spend the money to make something grandiose and official, groundbreaking, and all those fancy terms we use in our industry, check this out, Google Web Designer. I don’t know how easy or hard it is. I did google it to see what the reviews were, but I was googling something on Google for Google, so clearly, I was going to only get good reviews. Check it out.

Let’s talk about the second item. This one, I’m going to say, “Hold on to your seats.” It leads for financial institutions that can’t afford to be a mortgage origination but can’t afford not to be in it and we have said that so many times. Rocket is official now to offer a financial institution what they are calling mortgage as a service.

It’s a new partnership between Rocket Mortgage and Q2. Provides banks and credit unions with a digital home loan application experience with live mortgage assistance. It’ll reside on the financial institution’s mobile and online platforms. Meaning that it can be branded and labeled for the financial institution. If you don’t have to acquire technology as that FI, but even better if we’ll provide clients. Customers and members of the credit union with digital access to Rocket Mortgage. It’s integrated into their Q2 digital banking platform.

Are you ready for this, David? Rocket Mortgage will take care of everything related to the loan and servicing at no cost to the financial institution, no implementation fees and no subscription fees. If you can’t afford to be on mortgage and you can’t afford not to be on mortgage and you want to retain and continue to service your members, take a look at Rocket. I’m sure there are many other lenders out there that will do the same thing, but they are the ones that put the press release out and that’s the one I read. Check it out.

Let’s talk about the vendor’s due diligence. I probably piqued your interest. I got to be honest. You can’t skip this and many overlook it. A lot of times, people will put somebody untrained in that position. They will take somebody that maybe has been at that institution or you as a lender for a long time and they have acquired this skill but they have no official training.

What’s tricky is tempting to bypass what we call vendor due diligence or vendor management for a faster implementation can hurt you in the long run. With so much borrowers, non-public personal information, and withdraw on the rise, you as a lender, you can’t afford to cut corners with the security of that information.

We are not even going to talk what it costs if there is a data breach or even if you suppose there’s a data breach. What the insurance cost is and how all that changes, but thinking about compliance, cybersecurity, cloud risk, transaction risk, operational risk, and even business continuity. What if a vendor goes down if they have a data breach and they have to shut their systems down, how do you maintain business and how do you close on those deals?

We have to do that work now. There are consultants, vendors, and products. As much as doing the correct due diligence, next time, we are going to focus on the cost of vendor management. Some of the things that you do in vendor management and some of the things you want to look for. Keep in mind that I am not a vendor management expert, but I have been through the wringer many times, so I bring that up.

We will have a little bit of feedback on this. In closing, I am hiring data analysis and data management. I’m hiring people with secondary and mortgage pricing experience, QA and product folks. I mentioned this because we are in a time right now when a lot of people have found themselves maybe a little bit unfortunate and were ready for a change. There is opportunity out there. You can reach out to me and I can even be a matchmaker. Don’t forget to connect with me. [email protected].

I have got someone else who wants to talk to you, Alice. I think you should be starting getting some more emails on this. That’s good. Excellent. Marc Helm is here with us now. He knows a little bit about vendor management. He did this when he was in several shops. He owned his last mortgage company and did real well selling that. Marc, it’s so good to have you join the episode as a regular and you are going to be focusing on the servicing aspects, but the thing is, you have the experience that you do in vendor management. Do you want to add to that?

Thank you. You are spot on on vendor management. I’m going to do a segment on servicing vendor management because it is woefully inadequate in most servicing chops. The big problem with vendor management servicing tends to be that it’s done at a corporate level and they don’t transition the knowledge of the things that need to be checked from the servicing personnel into the vendor management program.

 

You got people developing what they think is a good vendor management program without access and input from the people that do it every day. I spend a lot of time on that with people adjusting their vendor management programs to be more beneficial to them long-term, but making sure they conclude the critical aspects of how vendors should perform whatever functions it may be for the servicing or operations group.

Servicing is another dimension of this and it’s oftentimes overlooked. I can’t wait to get your full report. Allen?

Marc, I want to say it’s great to have you on the show and get some more opinions because this is the best part about what we do. From being on the vendor side, I can tell our audience what it’s like to be a vendor and what we have to look out for in helping the lender. We’ll have some good conversations coming for our readers.

Thank you.

Marc, I’m so excited about you joining us. If you could share with our readers a little bit about some of the things you are going to be talking about in each and every week on your segment.

Thank you so much for having me. I am really excited about being on this show, but I want to clarify something up front that I think is very important. Some of us in the industry get called experts. I’m not sure in this day and time and anybody’s an expert in the industry. We are usually people that have the ability to impart our knowledge. We have gained over decades in the business, and I like doing that.

I like giving back. The industry has been very good for me for the past many years. If I can help somebody succeed or help someone improve operations or help somebody make a difference in their life and the way they approach their job and how they relate to employees and grow a business, that’s what’s the positive aspects for me.

I have had a very successful career. I love every minute of it, but now it’s time to give back and watch other people be fruitful from the things I can share and that everybody on this show is sharing. That’s what makes this show so exciting to me. This is a knowledge bank of people that can share in-depth knowledge on any topic related to mortgage banking and how often you have that opportunity where you get a group of people like this that can do that. That’s a special relationship and I’m so proud to be a part of it.

I want to say real quickly how much we enjoy having you here. You do a lot of coaching to some of our clients and that group is starting to grow. I was talking to one particular person. One of the senior executives or one of the executives you coach out in California who I was speaking of. This individual said, “You cannot believe the impact Marc is having on our CEO. He is good. He’s one of the successful ones.”

Like Tiger Wood needs a coach, someone needs to talk to the leaders and the top people in the industry, and Marc, you are having such a positive impact. Not only is it about the service and all the years of giving back, but you do provide an outstanding coaching service to many executives. I want to make sure that’s said out there for people to learn about. Go ahead and tell us about what you are going to be covering.

I appreciate it. I enjoy coaching as much as anything because you can see some individual success there that you don normally don’t see when you are dealing with a company overall. I love that. I’m hoping to break down each week and have a different topic for servicing. I want to spend some time educating the audience on MSRs Mortgage Servicing Rights so they can help decide in their company as they grow bigger and want to get their agency approvals and be in servicing. Is it the right thing for them to do?

I’m going to tie in many things about what creates valuable servicing, what servicing assets you want to create, and yes you do control what assets you create and put in pools or deliver to investors. Most importantly, look at the ancillary benefits from ancillary incomes and the banking relationships that help you and what it does for your balance sheet as to your value and how you have to hedge it to make sure it’s on target.

One of the main things I want to do is share with you as many, and I hate to use this thing “trick of the trade” type thing, but tricks of the trade are very important for us to keep you on target and keep you producing at an optimal level. With that, I will handle the basic areas in servicing one at a time, like investor accounting and customer service default. A lot of emphasis on default and loss mitigation.

The site pool piece that’s unseen most of the time is REO management which can be a very costly part of the proposition. Then focus on vendor management and compliance for servicing and quality control for servicing. I found that with my consulting work in the industry, the compliance and quality control plans for servicing to be woefully under-repaired to take your company to the next level most of the time.

We have developed and our team has constructed quality control and compliance plans that are 95% complete and they cover all the bases for all the regulatory environments and all the requirements,. You then customize it with certain things you do for certain products like reverse mortgages or for certain investors. You have veteran’s land board loans or whatever. I’m using examples of things you can do.

As we have these discussions about the different aspects of servicing, I’m going to be interested in hearing from you and the audience what you would like to hear more about on servicing. I can talk about lots of things. If I don’t talk about the things that are impactful to you and are meaningful to you to create a better business environment that you are in, I’m not succeeding what I’m doing. I do appreciate your input and I can be reached fairly easily. David will make sure that my information is out there so that people can reach me via email or telephone if you have any questions.

If you don't talk about the things that are impactful and meaningful to you to create a better business environment, you’re not succeeding in what you’re doing. Click To Tweet

I’m excited about being on the show and look forward to the weekly topics and hopefully, you’ll help me guide you to the things that you’d like to hear about and hear more about so you understand your operations better and understand what you want to be when you grow up. Let me help you and the only way I can do that is for you tell me what you need and what you’d like to hear about. David, thank you for allowing me this opportunity to give them an overview and I look forward to the weekly broadcast.

I’m excited about it, as well as those that are wanting to go get Fannie, Freddie and Ginnie Mae approved. We turned that all over to Marc since you joined us in the consulting business on the transformation Mortgage Solutions. He does a phenomenal job at doing this. That game has changed dramatically. I’m looking for your updates each and every week on that. Mr. Kittle and Allen, any questions you have for Marc. I know him so well. We work together, but thoughts to start with you, David. Any thoughts on Marc’s update?

I’m glad to have Marc here with me and I have certainly known Marc a long time. There is no better expert in the servicing area than Marc Helm and he’s part of our group. When we talk about right sizing and how you correct things, Marc is available to come in with Howard and Stephen and our group as well. We certainly have that asset available to us and so I’m happy to have it.

Folks, let’s wrap up the show. We wish you well, Jack, and a quick recovery out of the dental chair. I’m sure you are going to be doing much better now that they got that tooth fixed, but I miss him on the show. Folks, I want to say a big thank you to all of you for being here and reading us each week and then sharing this with your peers, those in the industry, and those within your company because that’s how we have grown.

We are approaching 1 million downloads of this show. That’s amazing considering the fact that we serve in a very vertical narrow market of mortgage lending. It seems like a big industry to us, but in the big scheme of things, it’s a very narrow market. For us to be approaching that many downloads is nothing less than a miracle.

We are grateful because we care about you and it’s like what Marc said, “We are giving back. We are here and we exist for one primary purpose, and that’s the give back of our knowledge, and that’s why this show being as successful as it has been and being as well received.” I want to say again, thank you to our sponsors, Finastra Fusion Mortgagebot Solution, FormFree, Lender Toolkit, Snapdocs, TotalExpert, SimpleNexus, The MBA, Lenders One, The Mortgage Collaborative, SuccessKit, Knowledge Coop, Mobility MMI, Modex, Mortgage Advisory Tools, and DW Consulting. Folks, we appreciate you. Have a great week and we look forward to having you back here next episode.

 

Important Links

• The Mortgage Collaborative
• Marc Helm
• Jack Nunnery
• Finastra
• Mike Haedrich – Past episode
• FormFree
• Christy Moss – Past episode
• Brett Emler and Mike Whitbeck – Past episode
• Snapdocs
• TotalExpert
• SimpleNexus
• Mortgage Bankers Association
• Lenders One
• SuccessKit
• Knowledge Coop
• Mobility MMI
• Modex
• Mortgage Advisory Tools
• DW Consulting
• Candor
• Adam DeSanctis
• Les Parker
• Matt Graham
• David Kittle
• Mortgage Action Alliance
• TMSpotlight.com
• MBS Live
• Stephen Chapman and Howard Nathan – Past episode
• Union Home Mortgage
• Allen Pollack
• Google Web Designer
• Rocket
• [email protected]