The first half of the Lykken on Lending program will feature our Weekly Updates….to read more info about our regulars and weekly updates, go to our website!
Weekly Updates With Alice, Allen, Matt, Les, And Rob
It’s good to have you back on the show. We were at the National MBA Conference in San Diego and it was over-the-top good. I was talking to Alice about the Empower event and how absolutely inspirational it was and how excellent it was. Lisa Sun’s story was so good and riveting. She spoke with no notes. She poured out her life story in a way that had us all laughing and crying. When they say when a good book or a good movie has you laughing or crying with some regularity, it absolutely worked.
It was a great conference. I wish you all could have been there. I was debating whether or not to go. I was looking at the vast majority of vendors that are going to be there, but I ended up going and the MBA met their quota. It was well attended all the way through and the meetings were some of the over-the-top meetings I’ve had. It was really good.
One of the meetings I did was I caught up with Michael Fratantoni and we talked about his economic forecast. We also got into an interesting dialogue and I recorded it. That’s going to be our Hot Topic segment in this episode. Be sure to read all the way through to the Hot Topic segment. This show is created by mortgage professionals. It is for mortgage professionals. We’re so grateful to have you as our reader in our commitment to bring you timely information, which we’ll read anytime and anywhere. What better time to be tuning in to this show than when we just got back from the conference?
I’m going to share with you some of the things that we heard a lot of that I thought were interesting. Some of the things that leaped out at me were Malcolm Gladwell. Listening to him was so good. There were a number of speakers that were outstanding, but guess what he said? I’ll share this before we move on but what was interesting was he said that when he was in DC, he rode the train or the subway. When he was in New York, he rode the train. He said, “For the longest time, everyone would be holding a book or something and we’re reading it, but in recent years, that has shifted. A vast majority of people now are listening to shows.”
He saw people not holding papers or books, and they were listening. He’s going, “I got to ask you.” He started asking people, “Do you mind if I ask you what you’re listening to?” They go, “A podcast. It’s a good podcast. It’s about this,” or “I have an interest in that.” He realized if he, as a writer, wants to stay relevant, he has to go to where the audience is.
He says, “If they’re doing podcasts, I need to start doing podcasts. I don’t believe books are dead,” neither do I. I agree with him on that, “But to draw them to my books, I need to do a podcast.” He has launched a podcast. It is the number one podcast I believe in the world and you have to pay $495 a month to listen to it. It is so good. Anyway, we had a great time there. Podcasts are ruling. We’re so thrilled to have you as our audience here.
Thank you to the Industry Syndicate. They do a great job of promoting our show as well as a lot of others. Go check out IndustrySyndicate.comlearn more. Shout out to MBA for all that they do for our industry. It was so good. Be sure to sign up for the Mortgage Action Alliance app and Open Doors Foundation. We’re going to go have an episode talking about the Open Doors Foundation and what they do for families who have children that are going through some real health issues.
As a result of those health issues, they had to stop working there or they had to go be at the hospital full-time. If you have a young kid and then it’s in the hospital with a terminal disease, you’re not going to be working. You’re going to be at the hospital. You want to be there for every moment of everything, as it turns out. They talk about that and that’s what Open Doors does. It helps families going through particularly difficult circumstances and their lives to keep them in their homes and keep their mortgage payments current. Another one inspirational thing.
Also, I want to say a big shout-out to Finastra. I’m so grateful to have them as a sponsor. Their Mortgagebot Solution is powerful in receiving, managing, storing, and retrieving data, delivering loans, and doing so through electronic documents. They got a great paperless environment that they’ve created. Also, Lenders One. I got to see Justin Demola and everyone there from Lenders One. I’m so grateful, as well as The Mortgage Collaborative.
I went to their party. I had a great time. Seeing David Kittle and the team here at The Mortgage Collaborative, both of these coops are doing well. I encourage you to check them out. More and more lenders are becoming members of both of them, which we are and I’d like to think it’s because they’ve learned that here. Also, there’s the Community Mortgage Lenders Association. I’m grateful for their sponsorship.
Also, Insellerate. Josh Friend created some great technology that’s revolutionizing how lenders interact, communicate, and engage with borrowers before, during, and after funding all the way through. It’s a great power experience. We talk about user experience, UX, and he’s got it down with what he’s doing. Check out the episode we did with him back on June 21st, 2021. We have recorded a number of episodes with Josh and I encourage you to check those out. Also, Knowledge Coop with Ken Perry. Ken and I are part of a mastermind group together called and we had a reception. Ken is so talented and his team.
The creativity that goes into training. It’s called edutainment. Make it educating but entertaining. Bring the two together. If you are looking for help with creativity, check out KnowledgeCoop.com. Also, Mobility MMI. The Mortgage Market Intelligence platform as well as Modex. Both of these companies do similar things and they’re a good complement to each other. We recommend you have a subscription license with both of these entities. Modex and Mobility MMI to do recruiting.
Also, Snapdocs is our newest sponsor. I want to say a special thank you to Rob, Alice, Allen, Matt, and Jack for their participation in the show. I don’t know if Jack’s going to be joining us now or not, but it’s always fun to have him join in with us. Let’s get over to Rob Van Raaphorst with MBA Mortgage Minute. Rob?
I’m Rob Van Raaphorst. Welcome to the Mortgage Minute and the latest news from the Mortgage Bankers Association. At MBA’s Annual Convention and Expo 2021, FHFA Acting Director Sandra Thompson announced the two steps towards advancing housing sustainability and affordability. First, the GSEs will incorporate desktop appraisals into their selling guides for many new purchase loans beginning in early 2022.
Second, the GSEs will expand certain eligibility requirements for their refi now and refi possible offerings. According to MBA’s latest forbearance and call volume survey, the total number of loans now in forbearance has decreased to 2.21% with an estimated 1.1 million homeowners in forbearance plans. That’s it for this week. Thanks for joining me.
It’s great seeing Rob, Jon Meacham and so many others there on the team. I appreciate the relationship with the MBA. Let’s get over to Les Parker with the TMSpotlight and the macro view of the markets. Matt Graham is here. He is the Founder and CEO of MBS Live with his market update. Matt, it’s good to have you here with us.
It’s good to be here.
I received so much feedback about you joining us, the excellent job you’re doing, and how informative it is. How many people absolutely love MBSLive.net? It’s great. You’re doing a great job. You got a lot of friends out there.
You tell those four people I love them too.
It was a lot. I couldn’t believe it. It’s one of those things where I guess it’s an appropriate place to slip that in. It was so overwhelming. I did not realize the extent of our audience, and it became so evident with all the people coming up and introducing themselves. From morning to night at every meeting, we didn’t kick through a meeting without someone stopping in and introducing themselves and saying how much they do on the show. Thank you, readers. We appreciate it very much. Matt, they commented about you and how much they like you. Let’s get good about what they love you commenting about. What’s going on in the markets?
It’s been a few weeks since we talked and a lot has happened in that time. Interesting and wild stuff, stuff that foreshadows more drama ahead. I think what’s most fascinating right now, and we have to take a moment to go over a little bit of backdrop, is that we have a situation that, in many respects, is similar to 2013 when it comes to bed tapering, but there are some key differences this time around too.
It is all so sudden because a few months ago, we weren’t necessarily thinking that we were going to see a tapering announcement from the Fed by November 3rd and now, it is pretty much a certainty. That fact has driven a majority of the bond market volatility and then it’s been joined by some other stuff as well, but it’s making things interesting. To recap what happened. On September 22nd, Powell press conference after the Fed announcement and he says that the tapering is going to happen probably by the next meeting unless the next job report is awful.
The market sold off a little bit, then it sold off some more the next day and heading into that jobs report, things ramped up and the market was waiting to see if that jobs report would be strong enough to make tapering a certainty. It was so, so and the bonds corrected a little bit but not enough to suggest that the market was discounting tapering at this point. The selloff continued. We saw inflation expectations ramp up and we saw yield curve trading get pretty crazy. What that means is traders aren’t necessarily saying, “I like bonds or I don’t like bonds.” They’re saying, “I hate the shorter-term bonds and I like the longer-term bonds relative to that.”
If you’re doing what we normally do and benchmark the mortgage market bond following with something like the ten-year treasury yield, you’re not seeing as much drama as has existed in the treasury market. There’s been a ton of drama in five-year notes, for instance, which continue to surge to their highest levels in a long time even though ten-year yields are still under their levels from March 2021.
You also had falling COVID case counts, more booster information rolling out higher oil prices, inflation reports coming out saying that inflation was higher and all that in conjunction added up to incontrovertible paper on November 3rd. The Fed Chair Powell did as much as confirmed that and it sent yields even higher. By Thursday, we broke into 1.70% in the ten-year and corrected a little bit, but it hasn’t been enough to derail this trend toward higher rates.
The bottom line to all that is starting September 22nd, the bond market began an exodus. It can’t immediately press a button and take yields from 1.25% to 1.75%, but it started that ball rolling and we’ve seen a very linear trend channel with higher highs and higher lows pointing directly toward 1.75%. If the pace were to continue, then we’d be there by November 3rd rather easily.
Being at 1.70% is close enough for some people and it’s leading some pundits to say that we’re going to see some support here. We’re going to bounce. It doesn’t matter in the bigger picture. What matters is whether or not the current environment plays out like 2013. Here’s the really interesting thing, I posted a couple of charts about this on MBS Live. You would think that when we talk about the Fed and bond buying, when the Fed is buying bonds, rates are moving lower in general, and when the Fed stops buying bonds, rates would move higher.
That makes sense to you. It turns out it’s exactly the opposite and so confusing, but if you think about what the Fed’s goal is and we tend to write it off as lip service, the goal with all of this QE is reflation right to bolster inflation and risk-taking. Those things are bad for bonds in general. The market does a really good job of getting ahead of what it knows is coming. If it thinks or knows that the Fed is going to be buying bonds, it will rush to get ahead of it.The mortgage market does a really good job of getting ahead of what it knows is coming. Click To Tweet
In March 2020, it rushed down to all-time low yields because the Fed was going to be announcing bond buying. Every time that QE has been shut off, we see yields begin to drop and the same was true in 2014. As soon as the Fed begins tapering in the past or discontinues QE the past, that’s when yields fall. It’ll be very interesting to see if that happens this time around because it is not the same situation as we had historically. There is potential for the economy to grow. It will depend on inflation remaining in check and that will depend on oil prices.
It’ll depend on the global economy. Foreign central banks are getting more scrutiny than normal from US traders and the whole thing. It’s interesting right now. Keep an eye on GDP. It’s normally poo-poo of the GDP data because it is very stale. This is one of the three times per quarter that we get it where it will be the least stale. This is advanced GDP. It’s the first look we have at Q3. We’ll get to see what that Delta damage is like and then inflation the following day can either add to that or push back in the other direction.
There is a lot of good stuff and great information here. This is amazing. You have a lot of friends out there. I went and looked at the statistics on yours and people do tune in. They then go back in and read several times. How about that, Matt?
I guess I need to be clearer with that to get my point across the first time.
Go sign up for MBSLive.net using LOL for Lykken on Lending as a signup code and you’ll get the extended trial period with no credit card required. Although you want to put a credit card in because you’re going to want to get subscribed to the service. It’s that good. You can glean so much out of this and it gives you great tools if your loan officer, if you’re a production person, running a company, managing interest rate risk at your company in secondary. This is a powerful tool and I strongly encourage you to sign up. Matt, thanks for being a part of the show. I appreciate you and all that you bring to help us in achieving excellence. You’re a good man. I appreciate you.
I appreciate you, Dave.
Have a great one up there in Portland. Alice Alvey, it’s good to have you here. We missed you, Alice, at the conference so much, especially at the Empower event. As with Matt, you have such a large community of people out there that value you. I had so many people at the Empower say, “I haven’t seen Alice here. Is she here somewhere?” I said, “No, she couldn’t make it this year.” You have such a large following of faithful readers in our community. You have so many people that adore and love you.
Alice, I was thinking about you when Secretary Marcia Fudge spoke. She’s the 18th secretary of the Department of Housing and Urban Development, HUD. It was inspirational. She ran a revival there. It was over the top. She was evangelical, quoting the Bible, standing on and seeing what she believes in and how we’re going to do this. If we could put a man on the moon many years ago, we could increase housing. It was amazing, Alice. It was so much fun, but I thought of you several times both at the conference and these sessions. We missed you there.
I wish I was there. She’s got to be super happy about the new money coming FHA’s way, at least as far as we see things moving so far. It looks like the appropriations for HUD will go up. I think it’s an increase of over $5 billion with a focus on giving them the technology that they need. We have, as an industry, been advocating for them to be able to upgrade. It’s amazing some of the things that they can’t do with their own data. We have to still send them copies of things that we did in their system. We’re excited for them and her leadership. I’m so glad it was excellent. I’m sorry I missed it.
We’d love to have you there, but you’ve got some updates for us. What do you have?
I do. For this update, I want to elaborate a little bit on what was in another part of the conference when Sandra Thompson got up there and as Rob was talking about in their brief update, it’s one sentence in the update, but it’s a lot of implication to the industry. That’s what Fannie and Freddie talked about that they will be incorporating desktop appraisals again for new purchases beginning in early 2022.
What this essentially means, for those of you who remember the old 2055, it wasn’t that old. We used it a little bit during COVID, but we used it a lot many years ago. It was a prominent way to get an appraisal, which essentially is the appraiser doing more of the basic work and not having to go into the home. This makes a big difference, especially for rural properties. It does increase the ability of the number of appraisals for an appraiser to complete, but the trick is in early 2022, it says, for new purchases.
Purchase transactions only appear to be the starting point. We don’t know what LTVs are or any other criteria. Folks know that now for rate and term refinances, upwards of 70% was one of the last statistics that I saw. The minute there’s a good 80% to 70% LTV on the property, there’s the very likelihood that you will get an appraisal waiver now. We’re hoping to see a combination of relief between appraisal waivers and to put 2055 more meaningfully back into the process to help ease some of the appraisal pressures we’ve been experiencing for the last couple of years.
It was very interesting. I was good. It sent me back to looking through some of the comments on their request for information on this topic that came back in December and at the beginning of the year throughout the industry. Different participants were sending their responses to that on the direction they thought the agencies should go. I was reading NAR’s comments. They’ve got 1.4 million members. It’s a big group with a big voice and they weren’t a big fan of appraisal waivers.
They like having someone go out to the house and check the condition of the property. Even though there’s a lot of stress to get appraisals done, not everybody’s for doing drive-bys. They believe that with the older housing stock, we should have someone check the condition of the property each time. There are still more to come, but at least one step in the right direction but not for probably several months before we see that coming into play. I wanted to let everybody know that was it. It was one sentence. We haven’t heard anything more. There’s not a whole memo to answer all of our questions yet, but we will keep listening and let everybody know when we hear more. That was it, Dave. Back to you.
There were so many aspects of what was being announced and the cheers that went up. I think the thing that was probably most interesting about what Sandra Thompson talked about was the desire to expand the number of people that we have in home ownership. She’s one of the ones that spoke again in a slightly different style but was very pro getting back to the point where we have more inclusion in our home ownership.
However, she stressed, “As we do this, we are going to make sure that we have it done in such a way as to not cause adverse effects on delinquency.” In other words, we’re not going to give away money again. We’re not the fog the mirror and sign here type of program. It’s how to do that, but she’s brilliant at eliciting everybody’s thoughts on this.
We’re going to be working on getting them, both Director Thompson as well as Secretary Fudge on the show and talk more about this. I know they stick very much to a script. That’ll give us a chance to hear one-on-one on this. They both agreed to come on and I am looking forward to it. Thank you, Alice, for a great job. Alice Alvey, CMB Vice President of Education and Training at the beloved Union Home Mortgage. We’re grateful to have your legislative update. Thanks, Alice, so much. Let’s get over to Allen Pollack. He is here with this week’s tech update. Allen, it was good seeing you at the conference.
It was great to see you, David. As always, you’re surrounded by a following of people that all want to talk to you at the same time. It was good to spend a minute with you and see that you’ve got a lot of fans out there. The program’s got a lot of fans, which is great. It was funny. I figured out who one of our random text message senders is, which is great to find out a face to the name, but the conference is good.
I’ve got a quick little summary of some things that I felt were relevant about the conference and that I’ve heard talking to folks. Here they are. It’s interesting. I think the technology still has a direction, David, and still has a purpose. The focus seemed to be more aligned with the needs though, instead of people building technology because it’s cool. People are building relevant things that lenders and others want to use.Instead of people building technology because it's cool, people are building relevant things that lenders and others want to use. Click To Tweet
I think everyone agrees that the pandemic had us looking left, then we ran right, then we were looking behind us and then we’d run ahead fast again and do that all over. I think that caused a lot of folks to build some things that may turn into debt in the future, but I will say those tech partners are more than ever more engaged with each other than ever before. If you sat in a meeting and talked to a tech vendor and talked about other vendors you have, either they already are integrated or they’re talking about integrating.
Being able to leverage these vendors together is most important. eMortgage is still hot. I think a lot of folks are still trying to understand what eMortgage is. There’s the conversation around it, but eMortgage is still a hot topic. Funny enough, I spoke with multiple providers. Some are partners of mine even and there’s a lot to do to get to where the industry would say we should be with eMortgage. That’s all in the process right now.
Blockchain was discussed, but the conversation is it’s not fully adopted. There are still a lot of folks that don’t know about it yet or they know that some people are working on it, but people aren’t ready to take on blockchain from the folks I spoke to. I also learned, David, we all knew this ahead of time, but lenders will pay for technology. I think we used to say that you’re going to nickel and dime me or death of a thousand cuts as far as how much I have to pay per closed loan.
I don’t think that’s so much of the case. They’re conscious of that. The lenders reading are probably saying, “We’re conscious about it, but they’ll pay for tech. They want to move the needle forward. The problem is it’s got to be integrated. It’s got to provide upfront ROI. If you don’t have upfront ROI, I don’t know if the vendors I’m working with are going to have this or when they get integrated, you call me. I’m seeing a lot of that and hearing a lot of that.
David, the other thing that I found was a lot of companies are top-heavy. Sales and marketing, the folks that go to the conferences, are moving around. They’re talking to people. They’re out there. They’re drumming up partnerships and business. That’s one of the great things about our industry. I can call a friend who’s at a vendor and we can collaborate on a couple of names and we can immediately start marketing and start referring different folks to each other.
However, it’s the execution that people are needing help on. There are millions of people out of work. I know not millions that are in the mortgage are out of work, but there’s got to be some folks out there. I’ll end this part of the segment with that specifically. I’m hiring and I know other people are hiring. If you are a business analyst, if you can manage a product, if you’re a product manager, if you’re excellent at support, sales and marketing even, but more specifically, those first ones, reach out. We’ve got a number of partners as well as even ourselves sometimes that are looking for help.
You can reach me at [email protected], but then David, let’s go on to the bigger part of the news. Going into the MBA Conference, we had amazing news for our friends over at LBA Ware. They were acquired by SimpleNexus. For those of you that don’t know either of these companies, you should, but if you don’t, SimpleNexus now calls itself the homeownership platform and the acquisition is a first for SimpleNexus.
They have a total of 325 employees now in 29 states because we’re all pretty mobile nowadays from the two companies. SimpleNexus will now serve with the combination of LBA Ware and 425 lenders, which is a big number in dozens of mortgage technology integration partners. I read what Lori had posted or was part of the press release, which is great. She said, “Together, LBA Ware and SimpleNexus will be able to offer mortgage lenders even more than a sum of our parts and redefine not only the digital mortgage experience but also the mortgage BI category.”
I thought that was a great statement to sum up all parts. Congratulations to those two companies. We’ll have to have them on David to talk more about what they’re going to be looking to do. If anyone remembers, back in January 2019, LBA Ware had an integration offering real-time compensation push notifications through SimpleNexus to their users.
Finally, David, I wanted to mention this. There was a survey talking about staff in general. The title is Staffing Shortages Are Impacting Credit Union. It was a national survey and they said that there’s a widespread shortage of qualified personnel to manage critical back office functions ranging from fraud mitigation and dispute resolution to regulatory compliance, mortgage and loan processing, and customer service.
There is a need for technology to help, especially with small community banks and credit unions. They can’t leverage all the different technology solutions that are out there, but also for great folks on the backside of the office. The conference was a great success. As with you, David, I was curious to see what it would be like and it was great. Everyone that I spoke to thought it was great as well. It was well worth the time.There is a need for technology to help, especially with small community banks and credit unions. Click To Tweet
With SimpleNexus, we’ve got Cathleen Gates going and that is going to be coming out. She’s the new CEO at SimpleNexus. I got a chance to sit down and talk to them and I don’t think it’s premature. They’ve committed to becoming a sponsor of the show. We’re excited about that and getting a chance to have Lori on to talk about what’s going on. SimpleNexus will be joining us as a sponsor. I’m very excited about that.
Here’s what’s most interesting. Cathleen came out of Ellie Mae and was such a part of the culture that she created. There are culture agents. There are people that carry culture inside of a company and Cathleen, you could tell by the people walking up to her, “Cathleen, the company’s not the same since you left.” They went on and on, affirming to her the type of leader she is and how she kept that group together or was so instrumental in the leadership in such a dynamic way.
There were many others there. Jonathan was mentioned numerous times on that, but it was fun to sit there and talk with her and then get interrupted by ex-Ellie Mae members coming up and saying, “We miss you. I’ve got a job here now. I’m going over here.” There’s a lot of movement going in and out of Ellie Mae, one of which is Cathleen and she’s now over at SimpleNexus.
I think she retired from Ellie Mae, so she got recruited away. She’s got talked out of coming out of retirement. There is a lot of good stuff we can anticipate with these tech companies. Allen, your segments like Matt’s and Alice’s gets downloaded and read so much. I want to thank you for your excellence in reporting what’s going on and Allen for your commitment to be here and for some fresh and great information. Good job, friend. I appreciate you.
That wraps up the weekly update and what’s going on in the mortgage industry. Next time, we are sure to come back. We have so many loyal readers and thank you again to all of you for stopping by and introducing yourselves and expressing your gratitude for this show. We’re grateful to be a part of the way you get information and keep you up to date. Our goal is to bring you timely information that you can read anytime, anywhere.
I appreciate you all so much. Special thank you goes out to our sponsors, Finastra, The Community Mortgage Lenders Association of America, the MBA, Lenders One, Insellerate, Mobility MMI, and Modex, the MBA Knowledge Coop, the Mortgage Collaborative, and our newest sponsors, Snapdocs. Soon to be falling out of the newest sponsor category because we’re going to have SimpleNexus as a sponsor here. I’m very excited to have you here. We’re grateful for our sponsors, but we’re so amazingly grateful to our readers and it’s you that has made this show so widely read. We’re thankful for each and every one of you. Have a great week, everybody. I look forward to seeing you back here next time.
- Michael Fratantoni
- Mortgage Action Alliance
- Open Doors Foundation
- Lenders One
- The Mortgage Collaborative
- Community Mortgage Lenders Association
- Josh Friend – Past episode
- Mortgage Market Intelligence
- Rob Van Raaphorst
- Alice Alvey
- Allen Pollack
- Matt Graham
- Les Parker
- Union Home Mortgage
- Allen Pollack
- [email protected]