Lykken on Lending

Lykken on Lending

A Weekly Podcast by Mortgage Professionals

06-20-2022 Weekly Updates from Adam, Les, Matt, Alice, and Allen

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LOL 06-20-2022 | Mortgage Updates

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The first half of the Lykken on Lending program will feature our Weekly Updates. We’ve got Adam DeSanctis with 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 Alice Alvey of Union Home providing a regulatory and legislative update. Then we wrap up the first half of the program with Allen Pollack giving us a Tech Report of the latest technology impacting our industry.

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Weekly Updates From Adam, Les, Matt, Alice, And Allen

It is June 20th, 2022. Juneteenth is the holiday we’re celebrating and it’s good to have you back here with us, everybody. We’re thrilled to have you back here, and back with me again is my co-host, Jack Nannery. Jack, it’s good to have you on this episode. I appreciate you.

It’s great to be here, David.

It’s so good. We do turn out some good content and we hear about it all the time. That’s because this show is created by mortgage professionals, Jack and myself, and it’s for mortgage professionals, which is you. We’re so grateful to have you as our audience. Our commitment is to bring you timely information. There is some interesting news that home equity in America hit a record level of $27.8 trillion. That was in the news over the weekend. Also, in the Hot Topic Segment for this week, we have, joining us, Christy Moss, who’s the Chief Customer Officer at FormFree and Christina Randolph, who’s Senior Director of Single-Family Strategy and Integrations at Freddie Mac.

You are going to enjoy this interview so much. It’s one of those things you don’t want to end. It’s delightful. You’re going to enjoy learning from them. It’s fun to talk to people who are passionate about what they’re doing. Certainly, both Christy and Christina are that, so you’re going to enjoy that show. I’ll say thank you to our sponsors.

We have Finastra Fusion Mortgagebot Solution. It’s a seamless platform because the entire platform is housed in the cloud, and it creates the opportunity for borrowers to have flexibility in how they complete the application. They can start with one channel and move over seamlessly to another channel. In other words, on their desktop, cell phone, or other things. We are also mobile. It’s nice to have our borrowers have that flexibility. Checkout the Finastra.com.

We had John Weinkowitz on and he did a great job. He was on June 6th, 2022. FormFree, which we will have as our guest on the Hot Topic, is a leading provider, direct source, VOS, Verifications Of Asset, income, and employment data. You’re going to learn all about it. It’s very exciting. I’m very pleased to have that partnership as well as Lender Toolkit, which does a great job with some of its technology. They’re clients like NRL can’t say enough good about Lender Toolkit.

We’re so grateful to have Brett Brumley and Brent Emler on the show in the past. We’ll have them back here again soon. Snapdocs do a great job getting those tools and support you need to implement eMortgage technology effectively. You want to check out Snapdocs’ eMortgage Quick Start Program. Briana Ings talked about that on March 28th, 2022, on our show.

We were at the Total Expert Accelerate 2022 Conference in Nashville. That was such a good conference, and all the breakout sessions. I had the privilege of presenting there with Josh Lehr. It was wonderful to sit there on stage and talk again about recruiting. It’s such an important topic these days. Kudos to Total Expert for putting on a phenomenal conference. This is one of those must-go-to conferences.

They’re a leader in the marketplace and the only purpose-built CRM and customer engagement platform that creates growth and loyalty for modern lenders and financial institutions. We hear about the roadmap for what they’re creating. It’s pretty exciting. The same thing with SimpleNexus. Andria Lightfoot was on the show. We’ve got Shane Westra and Jay as for the possibility of coming on for SimpleNexus next time. There are lots of good stuff.

Also, Mortgage Bankers Association of America, Lenders One, the Mortgage Collaborative, SuccessKit, Knowledge Coop, Mobility MMI, and Modex. We have so many great sponsors here, like the Mortgage Advisory Tools as well as DW Consulting. They say a special thank you to Adam, Les, Matt, Alice, Allen, and Jack for further contributions each and every week. Let’s get over to this week’s MBA Mortgage Minute with Adam DeSanctis. Adam, what you got for us?

Last week, FHFA published its 2021 Annual Report to Congress, which provides details on the agency’s activities over the past year, including its actions as conservator of Fannie Mae and Freddie Mac. The report highlighted FHFA’s efforts in areas related to affordable housing, the GSEs Capital Framework, pricing, housing supply, and closing the racial homeownership gap. The recommendations related to FHFA’s examination authority over third-party service providers is a topic on which MBA remains heavily engaged, emphasizing previously that it would be highly inappropriate for any such reforms to grant FHFA this authority over lenders and servicers.

LOL 06-20-2022 | Mortgage Updates

Mortgage Updates: FHFA’s 2021 Annual Report to Congress highlighted FHFA’s efforts and areas related to affordable housing, the GSCs Capital Framework, pricing, housing supply, and closing the racial homeownership gap.

 

Also, MBA announced that Laura Escobar, President of Lennar Mortgage, has been nominated to serve as MBA’s Vice Chair for the 2023 membership year. She is expected to be installed at MBA’s 109th Annual Convention in Nashville, Tennessee, in October 2022. We certainly hope to see you there. That’s it. Thank you for tuning in.

If you’ve never met Laura Escobar, you’ve got to meet her. She is a finer model. I enjoy it. That’s an exciting announcement. She’s on the ladder and Mark Jones is. There are so many great talented leaders in our industry and we’re excited about what the MBA does, so check it out. I’m real excited about Laura Escobar. I listened to her at the mPowering events. I heard her speak, and I’m going, “She is so dynamic.” We’ve got great leadership from the MBA. Thank you, MBA. Let’s get Les Parker‘s TMSpotlight at a macro view of the markets. Les?

The major central banks want to fight hot inflation by implementing QT, Quantitative Tightening, which will hurt credit spreads, deflate financial assets even more, and push the US economy into a recession. The open questions are, “When will a recession hit? How hard will the recession be? What unintended financial crises emerged?” The Swiss Central Bank’s 50 basis points increased last week. It took its rate to negative 25 basis points. It underscores how much low-rate money remains in the world. When bad things happen, expect rates to drop, waiting for the bull. These Jews are my own. Watch the wait at TMSpotlight.com.

That’s so good, Les Parker. Thank you so much for that. You do a great job each and every week with Gary Catrambone, turning on these very well-produced highlights to get you thinking anyway. Also, check out TMSpotlight.com. You can subscribe to his newsletter for free by putting in the word POWER as a code when you’re signing up and also get the paid version for free. Mark Grahams is taking the day off because it is a holiday, Juneteenth, but we do have Jack Nannery. He went out fishing and came off his boat.

Jack lives on the Gulf and he has lived the life that many of us wish, but he takes the time because he loves podcasting. I’m so thrilled to have you here, Jack. Let’s talk about where rates are at. It’s insane what’s going on and people are out there going, “Rates are so high. The market is falling off.” Wells Fargo published that they’re predicting 2022 volumes to be 50% from the previous year. Jack, as we were talking before that, it is still a record volume. Let’s talk about it, Jack. What are your thoughts about the market?

First of all, I want to touch on something that Les mentioned. He said that Switzerland increased their equivalent to funds rate right by 50 basis points to a negative 25 bits. Clearly, the US Fed is one of the leaders in trying to address inflation. Inflation exists here and in Europe and the Fed has taken a leadership role among the central banks to address inflation. Whether or not that throws us into a recession, that’s hard and soft landing. I had to chuckle when Les mentioned they raised 50 basis points to a negative 25 bits.

What are your thoughts on current rates here in America? We’re going to be talking more about this when you and I talk on July 4th, 2022. You and I are going to do a special episode on this topic of leadership on the marketplace, and there’s so much. Jack, I texted you beforehand the graphic that shows how much volume was going through the market in Q1 and people were jumping off of bridges or getting out of the industry depressed and things like that. It’s surprising. We need strong leadership.

That is what we’re going to be talking about on July 4th. I’m going to tease that up over and over again because I’m looking forward to it. Jack gave a great analogy on a phone call that we had together, and we’ll tease that up like that. Folks, these rates are going up but we were thrilled when rates fell to these high elevated levels a few years ago. This is not the end of the world and it’s going to come down to strong leadership. Jack, I want you to opine on that before we spend a whole lot of time. I want to get your thoughts.

I never thought that I would look at the ten-year and think, “Thank goodness, the 10-year is back to 3.239%. On June 13th, the ten-year closed at 3.48%, David. I thought, “Where is this thing heading?” Fortunately, it rallied and we’re back down to 3.239% or on the round of, call it 3.24%. I find it amazing that I’m sitting here going, “It’s rallied back down to 3.24%.”

You bring up a good point, David, and we’ve got rates. They’re 6% or slightly north. Affordability issues are out in the marketplace and we’re still projecting as an industry to originate somewhere between $2.5 trillion and $2.8 trillion in 2022 in first residential, both purchase and refinances. When you look at that historically, that’s one of the best 5, 6, or 7 years in mortgage banking history in 2020 and 2021.

I don’t remember the number in 2016. You got to remember that’s when we had Brexit rallied there at the end of Q2, beginning of Q3. We had as fast as we could go into the end of that year. You got to peel all the way back to 2005 and 2006 to find a market that’s more robust than the one we’re in now. There are certainly challenges. I was reading an article where the cost to originate right now is $10,500 a lot. Back in 2005 and 2006, we didn’t have that burdensome cost to originate, but nevertheless, it’s not the end of the mortgage banking world. We’re going to be in one of the top 6 or 7 origination years in the history of mortgage banking in 2022.

LOL 06-20-2022 | Mortgage Updates

Mortgage Updates: The cost to originate right now is $10,500 a lot. In 2005 and 2006, we didn’t have that burdensome cost to originate. Nevertheless, it’s not the end of the mortgage banking world.

 

That’s the perspective that everyone needs to get ahold of. This is one of those times one person gets around my peers and I go, “It’s horrible.” I smile and giggle inside because I’m hoping a lot of them go away. They’re good competitors. I don’t want them here because I want more market share. It’s those that are looking at this and seeing this is going to wash out the ones that get caught up in the drama of the drop number rather than looking at the opportunity of where it fits historically. That comes down to leadership. Jack and I are going to be focusing a lot on that on July 4th episode and you’re going to enjoy that. Jack, it’s so good to get your commentary on this. I appreciate it. We wish Matt a good day off and hope he’s enjoying his Juneteenth day.

This week is what I call Fed President Speak Week. Every day this week, maybe with the exception of Friday, one of the Fed presidents is going to be talking about interest rates. One thing to keep in mind that on Wednesday and Thursday, Fed Chair Jerome Powell will be testifying on monetary policy at the House Financial Services Committee.

We all know when Jerome speaks, the market listens. He’s like that old EF Hutton commercial years ago. We’ll have your radar up and spinning on Wednesday and Thursday. We’ve got Jobless Claims on Thursday morning and then we have the US Michigan Consumer Sentiment Index on Friday. By the way, In May 2022, the Consumer Sentiment Index fell to 50.2. David, that is the lowest level for that index since that has been used.

I missed that little detail. I knew it had dropped, but it’s interesting to show where consumer sentiment is. We’re hit with interest rates in the economy. A lot of people are paying up over $100 to fill up their gas tanks. That’s going to have an impact. That’s an ouch.

They probably overamped a bunch of mortgage bankers for that Sentiment Index.

That’s very true. Great thoughts, Jack. I appreciate it very much. I’m looking forward to us doing that episode on July 4th. That’ll be a good one. Anyway, Alice Alvey is taking the day off as well, but she did take the time to send in her comments, so we’re going to go right on over to those. Alice is the CMB Vice President of Education and Training at Union Home Mortgage. We’re grateful to have her here giving us a legislative update. Alice?

Thank you for allowing me to send in a pre-recorded session and we’re off in honor of Juneteenth. It’s a real important Federal holiday. I would love to give everyone a chance to understand a brief history of this Federal holiday. As I was talking with some friends over the weekend, we were all trying to get our facts straight on this and we needed to go look it up.

What we found was that it was June 19th 1865, and this is about two months after Robert E. Lee surrendered, Gordon Granger, a Union General, showed up in Galveston, Texas to inform the enslaved African-Americans of their freedom and that the Civil War had ended. General Granger’s announcement put into effect the Emancipation Proclamation, which had been issued nearly two and a half years earlier by Abraham Lincoln.

Here they were, two and a half years, still experiencing slavery and didn’t receive their emancipation until this day when Gordon Granger showed up. That’s why we refer to it as Juneteenth Independence Day, Freedom Day, and sometimes as Emancipation Day. Folks have been celebrating this with prayer, family gatherings, and so forth for many years, even since that time. It was back in 1872 that a group of African-American ministers and businessmen in Houston purchased ten acres of land and created the Emancipation Park, which was intended to hold the city’s annual Juneteenth celebration. Way back then, folks were celebrating. There are lots of celebrations that go on now across the country.

One thing I found very interesting was that it was back in 1980 in Texas that they became the first state to designate Juneteenth as a holiday so this isn’t new. It was new that all of us, as a country, joined in the acknowledgment of Juneteenth and the importance of this day. Texas has recognized this all the way back since 1980. it was great to see that we now have a new Federal holiday for all of us to reflect on the importance of the end of slavery, no matter what our backgrounds are. Thank you all. There weren’t any big legislative news items and I thought this was very fitting to share some ideas on instead. I’m going to send it back to you. Have a great day, everyone.

That was really good. It was informative. We’re both in Texas, so it’s nice to know that the rest of the country caught up with what we’ve been celebrating here forever. Thoughts?

I’m not made of Texan, David. Some of the historical aspects of the trip to Galveston to inform the slaves that they have been emancipated are news to me. I’m a Floridian by birth, but I consider myself to be a Texan now. I was born in Florida, so Texas history has always been of interest to me.

There is so much history here. Everyone thinks of the Alamo, but there’s so much more here. Alice Alvey, thank you so much for giving us that update. I appreciate you so much. We’ve got Allen Pollack made it into the show. What’s the tech update you got for us?

Way too many fun things. Jack and I had a good conversation. When all Zoom calls in this industry start, we all ask where each other are from. Jack and I completely forgot, but where in Florida are you from? I want to say Jacksonville because I remember your phone number starts with 904.

I’m 1 of 14 Jacksonville Jaguar fans in the country.

We got fifteen now after living here for many years. I don’t think you and I have chatted much, especially now that I know you’ve pretty much retired on a boat. I’ll have to give you a call and we’ll chat a little bit. Let’s get into some fun news. David, since this s an easy day, I want to start with a fun fact then I’m going to head to a joke.

There was a survey that was done, which was a test bed of a bunch of surgeons. They found that surgeons that grew up playing video games more than three hours per week, which is not a lot thinking about the surgeons our age, or at least my age and the video games that were out, made 37% fewer errors and have a 42% faster completion rate when performing laparoscopic surgery and suturing. Go figure the ramification.

Fun fact: Surgeons that grew up playing video games more than three hours per week made 37% fewer errors and had a 42% faster completion rate when performing laparoscopic surgery and suturing. Share on X

That gives new insights into laparoscopies, which so many surgeons have done. It’s so good information.

For anyone that is reading, the question or the joke is, how do computers attack each other? It’s real simple. It’s by using popup ads. We’ve all been attacked by a computer at least once or twice. Let’s get to the fun news. There’s a company out there called HomeLight. They raised $115 million for further development of their real estate home technology platform and their series D. It was $60 million in equity and $55 million in debt. The company’s platform is designed to help customers nail down their mortgages, but it also helps finalize various processes related to the purchase.

The reason I brought them up, David, is because, at this unique time, more than ever, hopefully, your organization has been thinking about how to better attract and complete or drive a borrower from beginning to end and how to make their experience exceptional, satisfactory, and to help drive referrals. If you’re a financial institution, we invest X amount of years into each of our members or our borrowers and look at the mortgage transaction as a segue into that continued investment as well as a cross-sale to the other products we have.

For a non-financial institution, you’re looking at things a little bit differently, but at the end of the day, we’re all trying to figure out how do we partner with the right tech solutions. Who is going to partner with HomeLight, Opendoor, Zillow, and all these other platforms out there? You may not like some of them, but what is the technology and how do you leverage technology? Some of those technology solutions or advertisers are sponsors of this show that help you manage and track. Do you know what they don’t do? They do not educate the consumer and that is done human to human.

It’s great news for HomeLight and interesting. Honestly, if you’re a mortgage lender, non-bank or bank, I would keep or continue to tune in to this show and share information about some of these platforms. It is extremely important as everybody is fighting for a market share of where that loan is going to start. Take a look at HomeLight.

David, I wanted to chat a little bit about how you implement technology. You have so many opinions on this. I bet you, Jack, and the other members of our normal weekly episode have so many different opinions. I brought up BrightStar Credit Union last time. They’re one of the largest out here in Florida. Jack, if they’re the official financial institution of the Jacksonville Jaguars, I wouldn’t be surprised that you have an account there.

They implemented new technology and spent two weeks with people not being able to pay bills, access money, transfer money, or even log in to their website. It was extremely concerning. They didn’t do enough preparation, vet this company out correctly, or put a good plan in place. I started researching and thinking. All the times we’ve talked about this or we insinuate, let’s chat about a couple of things. I put a couple of generic items together that I found on the internet and I’ve witnessed or been part of some of these in real life.

Let’s go through a couple of them. The best right now that I can think of is a multi-pronged approach. You can’t take technology and put it in place. You have to put a couple of strategies in place and run them in parallel, but those initiatives you put in place have to be driven by stakeholders with working teams. You have to actively look for and assemble your advocates across those initiatives and teams so they can create a bubble effect. That’s the first one.

The second one is setting clear objections. Get everyone on board and it has to be from the top. This is a great time for the CEO or the executive team to communicate and be a part of the team. Show the CEOs, your chief lending officer or your chief credit officer using that new technology. Have your chief underwriter or your director of underwriting do these demos and help people to get everyone on board, set those objectives, and help drive those objectives. It’s most important to show it from the top down.

The next is interesting. I didn’t know this model, David, but it’s called the TAM model. It’s a framework called the Technology Acceptance Model. It works on perceived value versus perceived ease of use. You can set those expectations and those benefits. Google it. There’s tons of information about it, but they say to use TAM as a foundation.

What’s really important is education. Ensure that you’ve tested the system and written information in a way that somebody can look information up. You don’t need fancy knowledge-based software. It could be an Excel file or recorded two-minute videos, but have some type of walkthroughs or education where you can explain this new tech and people can go back on their own, review and understand it.

Ensure that you've tested the system and written information so that somebody can look the information up. You don't need fancy knowledge-based software. Share on X

The next thing I’m going to bring up is to ensure employees know their jobs will not be threatened. Especially right now with all the layoffs you’re hearing and all the crazy bonuses which have now gone away for hiring people, let them know that they’re there to help drive success. Knowledge is a tool. They’re not being replaced. Keep communication flowing, and finally, make it fun. Some people do gamification and they build contests. Maybe whoever can create the most or best instructional videos that people vote on and win something.

Put a little competition in place, and ultimately, you have to have a vision ahead of time. You have to know that your vision is aligned once this technology has been implemented. Have you achieved the milestones of those phases as you expected? Follow a bunch of those different models. There are probably 50 more, but then you can work towards a successful implementation. Jack probably said the best thing, and he’s not even in the tech report officially, which is test, continue testing, and make sure that you test it.

That sounds like Jack. I went back to that episode and that was good. He did a great job last time of hosting. I’m so proud of him. The thing about you and Jack is you guys have been around the block a few times. I’ve been around the block once or twice, but you’ve been around the block quite a few times. That means we’re old. It’s so interesting to have that perspective.

Allen, you bring us so much information on what’s happening in technology and where things are at. I always get comments. People love your sense of humor and the things that you bring out. If you want to email Allen, it Allen@TMS-Advisors.com. If you’re looking for a job, we’ll help you there. He’s always one of these guys that’s lending out help and advice. Also, he welcomes all these latest technology ideas, so it gets his feedback from him. Allen, thank you for being here. I appreciate this tech update. Very good job.

I’m looking forward to the Hot Topic.

Folks, that wraps up this episode’s mortgage update. We’re thrilled to have you here in that first part of the show. We’re going to flow right into the Hot Topic Segment. We appreciate you being here each and every week as we do our sponsors. Jack, thanks so much for being here. Great to have you as the co-host. I will say special thank you to Finastra Fusion Mortgagebot Solutions, FormFree, Lender Toolkit, Snapdocs, Total Experts, SimpleNexus, Mortgage Bankers Association of America, Lenders One, Mortgage Collaborative, SuccessKit, Knowledge Coop, Mobility MMI, Modex, the Mortgage Advisor Tools as well as DW Consulting.

Thank you all for being a part of this show, sharing it, and making it such a big part of your lives and the way of getting information. We’re grateful for you. You are the reason why we are being so successful because you’re sharing it. We love doing it. We’re glad that you’re receiving it. Tell others about it. I look forward to having you back here next time. Have a great week, and again, Happy Juneteenth and I hope all the fathers had a great Father’s Day. Talk to you soon.

 

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