The first half of the Lykken on Lending program will feature our Weekly Updates. Go to our website to read more about our regulars and weekly updates!
Weekly Updates With Alice, Allen, Matt, Les, And Rob
As you guys know, I got hit with COVID, but we’re back. I’m back. I’ve never felt so good to be back on the show, but it is so good. You value health, especially when you don’t have it there for a while. This show is created by mortgage professionals. It is for mortgage professionals. We’re literally so grateful to have you as our audience. Our commitment is to bring you timely information that you can read anytime and anywhere.
We’ve got in the Hot Topic segment, Debbie Wemyss. Debbie is the Founder of DW Consulting. It’s a great story. There’s a lot of movement going on in the mortgage industry, and I think it’s so timely that we have Debbie come on and talk about your LinkedIn profiles. A LinkedIn profile is becoming the way in which we communicate and talk about ourselves and put ourselves out there as professionals. She’s going to give us some great tips. There’s so much she can go into. More importantly, I love that Debbie reinvented herself and her career.
You’re going to read all about it in the Hot Topic segment, so stay tuned. I recommend you share this with many of your coworkers. Many owners, many senior executives, and managers read this. Share this with your people because a lot of how you put yourself out there will determine your own success and your business’s success. Here’s the other thing, investors are starting to look at these LinkedIn profiles. They’ve been doing it for some period of time. Who runs secondary? Who runs underwriting? Who runs quality control?
Having a strong profile that communicates your professional background and does it in a way that represents you and your company well benefits you. Pay attention to the Hot Topic segment. We’re looking forward to that. We’re pleased to be a part of the Industry Syndicate. Check out all the podcasts at IndustrySyndicate.com. Also, thrilled to have our sponsors, the Mortgage Bankers Association of America, as well as Finastra Fusion Mortgagebot Solution. We’ve been doing some webinars with them. I encourage you to check out those. You could go onto their website. Go back and listen to those.
Also, Lenders One, as well as The Mortgage Collaborative. Both these co-ops do a great job of getting lenders, vendors, and your peers to gather and to talk about what’s going on in the industry and be able to compare notes. Pure data. Being able to talk to lenders of your like size about some of the issues you’re facing can make such a difference. These organizations are solid. As well as Community Mortgage Lenders of America, as well as Insellerate.
Knowledge Coop does a great job. Ken Perry and his team do a great job in keeping you trained and helping you have a learning management system that’s a part of your company that is customized and then also can provide so much content. Also, Mobility MMI, the Mortgage Market Intelligence, they do a great job of helping you recruit LOs. Ben Teerlink is going to be our guest next time. Also, Modex does a great job of helping recruit. Modex and Mobility MMI really complement each other. I encourage you to check out both of these companies.
We have an increasing number of our clients that are using both companies, and they see the advantages of both. The interview with Dale Larson that we had on November 22nd, 2021 with Dale and Dale was really good. Also, Snapdocs, digitizing your mortgage closing to offer a better experience for your closing teams. You got to pay attention when you are working with settlement partners and borrowers. Snapdocs provides an elegant solution. I encourage you to check it out. Read the interview we did with Vishal Rana on September 13th, 2021.
Talk about telling your story, being able to do it, and do it well. There’s an old proverb that says, “Let another man’s mouth praise you, not that of your own.” SuccessKit. I want you guys to get to know SuccessKit because of what they can do to help you create a testimonial that really improves your credibility and helps get your message out. I encourage you to check out SuccessKit.io. Also joining us now is a new sponsor, our good friend Brent Emler. We had them on November 29th, 2021. Check out LendersToolkit.com. Let’s get over to Rob Van Raaphorst with the MBA Mortgage Minute and see what Rob has for us.
I’m Rob Van Raaphorst. Welcome to the Mortgage Minute and the latest news from the Mortgage Bankers Association. HUD released much-needed guidance around the application of special-purpose credit programs under the Fair Housing Act. This announcement is a response from MBA and the National Fair Housing Alliance, who, earlier in 2021, called on HUD to clarify that these programs were, in fact, acceptable under the Fair Housing Act.
Now, a special credit program is a program under the Equal Credit Opportunity Act or ECOA that a lender creates to help low-income and historically disadvantaged borrowers. These people may not have the traditional requirements needed for a loan or have affordability challenges, so financial institutions tailor products to meet their needs. However, there were questions about whether these programs under ECOA comply with the Federal Fair Housing Act, a different statute that covers mortgage lending.
HUD’s guidance clarifies that if these special credit programs conform with the Equal Credit Opportunity Act, then they generally would not violate the Fair Housing Act. MBA released a statement in response, applauding HUD for this clarification, even though there are a few nuances we hope to address in the future. That said, the issue is a priority for MBA’s Minority Homeownership Task Force, and we look forward to working with HUD in the future. That’s it. Thanks for joining me.HUD's guidance clarifies that if these special credit programs conform with the Equal Credit Opportunity Act, they generally will not violate the Fair Housing Act. Click To Tweet
I’m so grateful for what the MBA is doing through the HUD programs, through all the programs, all their initiatives to help increase homeownership and do what they can in many aspects, especially when you look at the underprivileged. Kudos to the MBA. I’m so grateful for our partnership with them. Anyway, Rob, good job. I appreciate it very much. Let’s get over to Les Parker with the TMSpotlight and the macro view of the markets.
TMSpotlight sound bites is brought to you by PowerSeller, making hedging easy. Trading on the crest of the Fed. It’s like magic. Traders continue to wonder if the peak of the Fed’s intervention is over. Think about Aesop’s fable, The Scorpion and The Frog. The scorpion’s nature stings its enablers. The lesson lives in the global markets with its various players where it’s hard to distinguish the villains from the heroes.
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I love Les Parker and Gary teaming up to do another great TMSpotlight segment on the macro review of the market. Thanks, Les. I appreciate it very much. You could sign up again for the paid version of the newsletter with the word power. I’m so grateful to have health. Someone who is not suffering from health but suffering from a lack of sleep is our good friend Matt Graham with MBS Live. He just flew in from his son. I love parents that really pour into their kids at this stage in their lives. Matt, I’m so grateful for you to be on the show. So sleep deprived. How are you doing, friend?
Sleep-deprived, but it’s worth it. There are worse things to lose sleep over, for sure.
You don’t get these years back. It’s good to have you back. What do you got for us?
It’s an interesting time. First off, I want to say, Les’s segment is just right on. A lot of people that I talked to have been wondering this for years now after QE1, and especially after QE2 and QE3. Is this just the new way it’s going to be forever and ever? Is the Fed going to always be buying some bonds or reinvesting some bonds and then maybe stopping for a little bit only to get involved again when the next who hits the fan.
I think a lot of people would like to know. A lot of people have strong opinions on it. I think there is some hypothetical situation in the future where they could get out. Clearly, they are decreasing their amount of bond buying presently. We’re going to talk a bit about how they want to accelerate that. The market’s reaction is interesting and paradoxical. I don’t know what the implications are going to be going forward, but it’s an interesting thing to keep in mind and to watch to see how it unfolds.
We’ll get to the Fed being the central point of conversation in the current week. To set up the current week, we go back to two weeks ago when the Omicron news cycle flared. There was a lot of concern about that. A very logical selloff in stocks and a rally in bonds. That was incredibly linear. You can take a chart of stocks, say S&P Futures since that trades overnight, and overlay that within your treasury yields, and they are almost right on top of each other the whole time.
The following week, we had several articles and some comments on news interviews from officials saying that this Omicron thing might not be as bad as we thought. That’s the gist of those comments. It’s not necessarily exactly what they said, but that was the takeaway. When that happened, you saw stocks reverse and bond yields reverse. As many people know, stocks recovered all of their pre-Omicron losses and are hanging out at those levels right now.
The bond market did much better. It did not follow stocks all the way back up last week. I think that was notable because we did have a treasury auction cycle and corporate bond issuance adding to that supply side of the market. That typically causes a little drama for bonds on auction weeks. We also had lurking in the background the week before and heading into that weekend, Fed speakers really being blunt about accelerating the tapering process in order to get to a point where they could hike rates quicker to combat inflation that is no longer seen to be transitory.
Powell, in his congressional testimony, even said that time to drop the transitory verbiage when we’re referring to inflation. He also said things about accelerating the tapering process. I think given all that and given the fact that stocks were moving back in the other direction, oil was moving back in the other direction, and the general low level of interest rates in the big picture, it’s striking and perhaps encouraging to see bonds hold their ground as well as they did last week.
There wasn’t a ton of important economic data, but the most important report was probably the CPI data on Friday, the consumer price index. It was very well received, given that it came in at the highest levels in 30 years. Those were in line with economists’ expectations. There’s a little bit of an explanation for that. Nonetheless, inflation is high, and bonds have a lot of supply to deal with. Bonds are worried about the Fed accelerating the taper, and nonetheless, they leveled off without making any new highs on Friday and actually stayed under Wednesday’s level.
There was a bad 30-year bond auction on Thursday, and that didn’t seem to faze the bond market either. We’re seeing some resilience here, and maybe fingers crossed, let’s be optimistic, but from an objective standpoint, the bond market was more resilient than it should have been heading into the end of last week. Now, this week could be a different story. By coming in as expected, that CPI report really put more emphasis on this week’s Fed.
For instance, if it had been much higher than expected, then the market would’ve shifted to forecast or expected the Fed would be more hawkish and less bond friendly. We would have gotten some of that movement out of the way on Friday. By coming in as expected, it makes the Fed’s reaction that much more volatile because we don’t know exactly how they’re going to play it. A lot of people think that the Fed is simply going to double the pace of tapering, so increase treasuries to 20 a month as opposed to 10 and increase MBS to 10 a month as opposed to 5.
There are also some calls for just a 50% increase, so taking it up to $15 billion a month in treasuries and $7.5 billion in MBS. Either way, that’s going to accelerate their balance sheet wind down and get them to a point where they can hike rates sooner if that’s what they decide they need to do. I think if they do that, they’ll do it in another way where they say, we want the flexibility. We want the latitude to be able to do those rate hikes, and we don’t like to do rate hikes if we’re still adding to the balance sheet on the bond-buying side of things.
Now, one Fed speaker, I think it was Bullard, said we could hike rates before we stop tapering. That is the only time I’ve heard a Fed speaker say that, so I’m not sure how well-received that idea is on the committee. The bottom line is Wednesday afternoon 2:00 PM, we get the Fed announcements. They’re probably going to say something about accelerating tapering. They’re also going to be releasing their summary of economic projections, including the infamous dot plot that forecasts rate levels that each Fed member expects. Usually, that produces a good amount of volatility on those four meetings a year where those come out. If you got locks to lock, you might want to make sure they’re in by Wednesday. If you’re a big gambler, you might want to look for an opportunity on Wednesday afternoon.
Blowing those dice, roll them if you want to, but play it smart. One question that just came in from one of our audience, Matt, for you specifically was, “I love your system. Kudos to you for what you do. Discovered you through Lykken on Lending, and we’re grateful for this service.” One of the things they said knows you do most likely, presumably, what is a general flavor on from originators out there that you’re hearing bullish about 2022, concerned, general thoughts?
Tempered expectations. Every time we have these boomy cycles like we had in 2020 and 2021, then leaner times ahead, but not so lean that the people with the realtor relationships or that have reliable database marketing strategies will struggle during those times. Maybe not say they shouldn’t be in the industry, but that are not necessarily as dedicated to being in it for the long haul. Those fruits might get shaken from the tree, let’s say. That’s an opportunity for everybody. In our community, people are pretty good about trying to keep other people grounded and say, make hay while the sun shines and don’t go buy Ferraris just because you made $1 million this year because you might not next year.In our community, people are good about keeping others grounded. Click To Tweet
I think it’s important that we all keep a level set optics here. The forward-looking forecast for 2022 fits you’re poised at $2.5 trillion to $2.7 trillion in origination volume, and who knows where it comes in, but that’s where the forecasts are bunched around right now. In 2019, we were a $2.1 trillion market. If you isolate on 2020 and 2021, surely, the number looks bad. It certainly looks challenging. If you look back over 2016, 2017, 2018, 2019, that $2.7 trillion forecast for 2022 is still a fuzzy number.
It’s a great number.
Realistic numbers as opposed to all-time crazy numbers from the last two years.
I think Matt’s comment around tempered expectation resonates with me, David, just because 2022 will be the third-best origination year out of the last several years.
Additional runs toward low rates are possible. When those happen, if they happen, then that creates little pockets of mini booms for refis. It’s always going to be the case that those who are fostering strong realtor relationships are going to have the most consistent experience that we wouldn’t say that refi opportunity is dead, especially niche opportunities that some people focus on.
Jack, thanks for jumping in. Appreciate that. Matt, I love the perspective. I love your website, it is elegant and it is so powerful. Folks, you could get signed up for our extended trial without a credit card. I think you should sign up, so you have your powerful tool. Just sign up. Put that credit card in there and do it. You won’t regret it. Matt, I’m so grateful for you to be a part of the show. I appreciate you, friend. Let’s get over to Alice Alvey, CMB Vice President of Education and Training at Union Home Mortgage with legislative update. Alice, there’s so much. We missed you last time.
Thanks. I’m glad you’re feeling better. I wanted to start my segment by just saying that all our hearts and prayers are out to those who experienced all the devastating storms over the weekend. This is horrible. Rob Chrisman had a link to the NPR video, the drone footage that was very impactful. I thought I’d give a shout-out to a lot of us who had a very fortunate and prosperous 2021 and 2022 as these guys were talking about.
I noticed USA Today had a whole list of places that people can donate to, reputable ways to be able to reach out and help if you can’t get out there and help. I know we’ve got family out that way as well. I know my sister was hunkered down in her shelter. They’re all okay. Even being on the fringe of that storm was very frightening. Our thoughts and prayers are out to all of you who were impacted by that storm, all your friends and family.
Thank you so much for bringing that up. I wanted to earlier.
The good news that I have is there isn’t any big legislation pending because Congress gets busy with other things this time of year. I’m happy to say I have nothing big and new to report. I just wanted to touch briefly on a couple of things. I know we keep getting readers asking if we’ve heard anything else about the appraisal reduction that Fannie Mae announced during the MBA national conference. There isn’t anything new. There’s definitely some discussion going on behind the scenes at the MBA and along with the agencies.
We’re going to hold our breath until after the first of the year to see if we can get something at that time. This is not the time of the year new big announcements like that will come out, so we’ll wait and see. As of now, I did double-check and there’s nothing new on being able to expand our use of the 2055. Last but not least, I was checking through some announcements and things and changes that Fannie and Freddie have made, just so I have something for everybody. Check your power of attorney stuff. It’s tightened down on this.
It’s got to be a natural disaster, medical emergency before you’re using a power of attorney. Oddly enough, they’ll accept it on a cash-out refi, whereas Fannie Mae will not accept it on a cash-out refi. JusMmake sure you hone in your skills on POAs. You don’t want to get that part wrong. That was just one thing I thought I’d throw out. Other than that, Dave, I’ll take it back to you for my short little sweet segment.
I was on with Mitch Kider, Alice. One of the things that we were talking about is one of the things that he’s seeing going on, again, consolidation within the industry. We’ll talk more about with Allen in just a minute. We’re seeing a lot of that happening. We’re also seeing the state-level legislation. If you have any commentary and thoughts about the state regulators and their increased oversight of our industry, it came across as almost like this is almost repressive.
We are seeing new things come from state regulators. I’ll do some digging. I don’t want to shoot from the hip right now. We’ll prepare some follow-ups for everybody in the coming weeks.
That would be awesome. We’re also going to get Mitch back on the show. I’m looking forward to that as well. Alice, thank you so much. I appreciate you so much for being such a longstanding friend and being here with me from the beginning of the show. Let’s get over to Allen Pollack. Good to have you, Allen, with the update. How are you doing, my friend? How are things in Florida? I’m always thinking of Floridians. You guys are down there enjoying the nice temperatures, and we’re dealing with 30-some degrees, not very often do we deal with that in Texas, but we do. How are you doing?
I’m doing great. Remember, for us, it gets cold when the temperature drops like that. Everyone else in the rest of the country is fortunate enough to have the cold weather when it becomes 60 out. The convertibles come down and the windows go open. That’s always funny. Florida’s great. David, I’m happy to hear your voice. You sound great. Good to have you back.
We got so much cool stuff going on. The industry’s a little quiet, like Alice said. I thought you’d find this quite interesting. I saw this article. Companies are printers. They’re apparently getting spammed by anti-work manifestos. In other words, the digital receipts the printers that you find at different companies out there in the world are getting spammed. People are hacking into them and writing things on those receipts that are going to consumers and it’s stirring a lot of eyes.
In the world of everything digital, it is a real thing. You should check your receipt when you go to the store. Let’s put it that way. It sounds like there’s probably some patch to some type of software. It was on Gizmodo if you want to Google it and check it out. It says a new report suggests someone has been hacking company printers and making them emit anti-work sentiments. Google it, check it out. It’s really funny.People are hacking into digital receipts and writing things on those receipts that are going to consumers, and it's stirring many eyes in the digital world. Click To Tweet
David, let’s talk about a couple of other quick little things. Probably you didn’t hear, but home inspection Zillow is rethinking them, and they just landed an $8-million deal for a Seattle startup, Inspectify. They partnered up with a company called Flyhomes. It’s a new company. They’ve taken $8 million from several VCs. The goal is really to find a new way to manage home inspections. Fantastic area to leverage technology. I think that’s a really cool idea. Cryptocurrency. Have you heard much of cryptocurrency lately, David?
The thing with crypto right now is a lot of folks, and when I say folks, I mean companies, are more easily adopting either payments that are auto-converting into US dollars or that are crypto. If you remember, Elon Musk had stated for a moment that he was accepting. You can buy a Tesla with crypto, and then he put that on pause. I think it’s coming back. There are all kinds of stuff with crypto going on. Your Venmo account now how’s built-in crypto. PayPal has built-in crypto. Walmart is ready to start accepting cryptocurrencies.
I know there’s a lot of gray area in the mortgage industry with crypto, but there are a lot of assets that people have that, with the IRS, now have to be declared. There was a loophole that’s been closed. Whether it’s a borrower’s eligibility and their assets in crypto or actually paying for things in crypto, it’s going to become a hot topic in mortgage. There will be some technology around it. The crypto markets are not doing so great right now. I thought that was interesting.
Here’s a funny one. We all love coffee and we all love the jokes that people do with coffee when you go to Starbucks and they make a funny hint with the name. Back to chatbox, robotic automation, and all the cool things that are going on, there is a hysterical GEICO commercial. It is a robot. He is trying to do stuff on the computer, and he gets with the CAPTCHA. Even those humans can’t do it. Highlight all the bridges in the picture, you think you got them all, and then you have to do that five more times.
It shows him getting really frustrated and uses his laser beams to cut the computer in half. He’s talking to a human next to him, trying to get help. They put the name on the coffee. At the end of the commercial, they go, Rob-ot, your coffee is ready, instead of robot. It was pretty funny. If you haven’t seen it yet, it’s a good chuckle. Here’s a tech alert, David, getting away from funny stuff. Next mortgage news. They stated there is a 94% year-over-year increase in the foreclosure activity in our market.
In November alone, there are between 19,000 and 20,000 properties that fell into this class. I say tech alert because if you are reading this and you are thinking about investing in technology or building technology, this problem’s not going to go away. If you think about somebody who needs to get out of a house, what are they going to move into? Home prices are extremely high or they’re just in an unfortunate situation. They need to downgrade or get out anyways, and they’re trying to ride the market as long as they can or ride the home and the bank as long as they can.
Either way, there are lots of opportunities and different kinds. It may not always be helping the homeowner stay in that property, and maybe helping them into something else and doing something with that property, but it’s a tech alert. Check it out. I don’t think that’s going to change much. We’ve had some folks on the show that we’ve talked to about technology, the servicing, and the pre-foreclosure side. I think that’s a fantastic area. There are great things going on more there.
Loan quality management, David, to prevent foreclosures, ACES, another big name in the loan quality management side of their industry. They just did a partnership with a RegTech platform company called Winnow. I haven’t heard of them, but it is a technology of all compliance and regulatory information made up of a team of attorneys. This database is now going to be integrated directly inside ACES.
If you are doing your low-quality management, your post-closed QC, or your pre-shift delivery, whatever it is, with ACEs, I don’t know if they finished it or they’re doing it, you want to check that out. One more thing, David, on the vendor side, OpenClose, the company I work at, just launched our native mobile app, native Android, native Apple, and native iPad for loan originators giving them the freedom to be wherever they want at any time. Consumers all want everything when they want it. They want to do things on their own and pull the rip cord and get that help. Originators need to be ready and they need to have the same tools. We just did that at OpenClose now.
David, the MoSCoW Method, the only reason I mention it is everyone needs to get prepared for 2022. I can talk more about it next time, but the goal is to think about what you must have, what’s nice to have, what you may have, and what you won’t have. If you categorize your 2022 technology plan, you will be able to figure out exactly what it is. The last thing I’ll leave you with, David, is over-ambitious or over-cautious, which is better. MoSCoW method is going to help you get there.
I can’t wait until next time then if you hear about that. Do we have to come back next time? Awesome. MoSCoW, it’s an acronym. What does it stand for again?
I actually don’t know what all the letters stand for, but it’s a prioritization method. A lot of people look at it as timeboxing, which is much easier, but it’s simply must-have, should-have, could-have, and won’t-have.
I just looked it up, and that’s exactly what it is. It is must-have, should-have, could-have, will not have. That’s a really important part because I think more and more lenders are struggling with that, especially since we see a lot of consolidation going on in the tech space. Thank you so much, Allen, for being here as you are each episode bringing us wisdom, insights, and a little bit of humor. I appreciate it very much. Thank you. Jack Nunnery, as we wrap up the first part of the show, do any thoughts and wisdom you want to share with our listening audience?
David, I’m going to be a very interested third party watching Friday’s Fed meetings. It really is read between the lines, as Matt was saying inflation. There was a fundamental shift in Jerome Powell’s words when he closed the lid on transitory inflation. What he’s saying, David, is it’s no longer transitory. It’s inflation. We’ve got to deal with it. I look to see more posturing to accelerate tapering, and then does that move forward that mid-2022 rate height that the market has out in front of it, David? I think Wednesday’s a big day. Audiences need to make sure that they dig into the FOMC meeting. I think it really sets a tone for what we can expect here from the Fed.
Good point, Jack. Keeping you guys focused on what is probably going to be the biggest news of the week. Thanks for being here with me and co-hosting this. I appreciate you wrapping it up with me. All right, folks, that ends this week’s weekly mortgage update. Those of you reading, just stay right here. We’ll continue right on. Those reading on a downloaded basis, move on to the next topic. That wraps up the first half of the show.
Folks, it’s so good to have you be a part of the show. I want to say a special thank you to our sponsors, Finastra, CMLA, Lenders One, Insellerate, Mobility MMI, Modex, MBA, Knowledge Coop, Mortgage Collaborative, Snapdocs, SuccessKit, and now, Lenders Toolkit. Great toolkits out there, folks. We’re thrilled. Next week, we got Ben Teerlink of Mobility MMI and also Mobility RE. They have two focuses on the real estate side and on the recruiting side. I’m looking forward to having you back here and reading our interview with Ben Teerlink. So good to have you with us, everybody. I’m looking forward to having you back here next time.
- DW Consulting
- Mortgage Bankers Association of America
- Finastra Fusion Mortgagebot Solution
- Lenders One
- The Mortgage Collaborative
- Community Mortgage Lenders of America
- Knowledge Coop
- Mobility MMI
- Dale Larson – Past episode
- Vishal Rana – Past episode
- Brent Emler – Past episode
- MBS Live
- Union Home Mortgage
- Mitch Kider – Past episode