The Michigan Mortgage Lenders’ annual conference wrapped up yesterday in Grand Rapids. “Down 50 percent” seemed to be the common theme, although personnel who had been through a few mortgage cycles seemed to be in much better shape, mood-wise. Vendors everywhere are feeling the pain as lenders attempt to renegotiate pricing of goods and services. The numbers bear out the pain: according to Curinos, July 2022 funded mortgage volume decreased 53% YoY and 15% MoM. In the Retail channel, funded volume was down 57% YoY and 15% MoM. Purchase rates were 237bps higher YoY and 28bps higher MoM, while Refinance rates were 24bps higher MoM and 233bps higher YoY. Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures and drills into this data further here. And this is born out in lender’s numbers. For example, Rocket reported second quarter numbers this week, and volume was down 58% on a YOY basis, although gain on sale margins improved. Like most originators who held onto servicing, servicing income has offset declining origination income.
Saturday Spotlight: Calque
“Use the equity in your current home to buy your next home.”
In 3-5 sentences, describe your company (when was it founded and why, what it does, where, recent growth and plans for near-term future growth).
Launched in 2021, Calque partners with established lenders to empower homeowners to use the equity in their current home to buy their next home. The Trade-In Mortgage™ from Calque is an innovative mortgage product that simplifies and streamlines the home-buying process, allowing homeowners to submit non-contingent offers as good as cash on a new property, buy and move into their new home before they sell their existing one, and make repairs and stage their original home for sale after they have moved out.
Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why.
Calque engages with the Department of Housing and Urban Development to offer counseling assistance to potential customers of its affiliated lenders to support low-to-moderate income homeowners. Engaging with potential borrowers who may benefit from this product through a coordinated effort with HUD furthers Calque’s mission to educate consumers about their homeownership options so they can strengthen their overall financial picture.
What does your company do to help elevate your employees’ growth? Describe any mentoring programs, outside classes or training, in-house training. How does the company help people develop?
Calque sponsors Continuing Education for all employees to foster and support their expanding knowledge of mortgage lending and real estate technology. The company also launched an internship program this summer, giving finance undergraduates interested in pursuing careers in the space an opportunity to learn more about the industry. The internship program aligns with the company’s mission to draw more innovation to the field of home lending in order to help chip away at barriers to homeownership.
Tell us how your company maintains its culture in a work-from-home environment, or how you plan on bringing employees back into the office, if applicable.
Calque strives to create a flat hierarchy where communication is encouraged, and to promote comradery, we host company off-sites on a quarterly basis where employees engage face-to-face in both business and social activities. As a startup seeking to reimagine home lending through innovation, Calque is aware that creativity and free-thinking are crucial to the company’s continued evolution. From the very beginning, we have taken steps to create a culture that nurtures our talent so that every team member feels like a crucial part of the company and an active participant in its mission.
Things you are most proud of that don’t have to do with sales.
We provide “top-to-bottom, end-to-end” support that includes technology, marketing, compliance, customer engagement, Realtor outreach and lender support. As we’ve seen in recent events, there is a lack of communication from innovative lenders to consumers. As part of this effort, we are launching an education/resources section on our website to help consumers understand the home-buying process.
We are also very proud of our cost structure, which we believe to be exceptionally transparent and efficient. Most of our competitors’ processes involve selling the home an extra time and often costs as much as 3% to 5% once hidden fees like leasing costs are included. With our product, no such hidden fees or extra steps exist – what you see is what you get.
Fun fact about Calque.
The word ‘Calque’ traces its roots back to Latin and means “loan translation.”
Is there anything else you’d like to share along these lines?
The Calque solution allows any homebuyer to close on their new home before they sell their existing home. Unlike programs that appear similar, Calque doesn’t act as a real estate agent for either the buyer or seller, and thus has no involvement in nor conflict of interest when it comes to pricing the home for purchase or sale.
(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)
Credit: Just say, “Opt out”
E.E. writes, “Rob, I’ve been in the mortgage industry for 36 years and have witnessed many changes – some good and some bad. What needs changing is the ability to sell MCR (mortgage credit report) data to other mortgage companies. I work with clients often times for long periods of times but warn all of them about the pending bombardment of other lenders who might try to contact them because we pulled an MCR. Why isn’t this a violation of their privacy…along the lines of HIPPA, for example? Some believe that someone’s pockets are getting lined.”
Tracey King with Partners Credit and Verification responded with, “This is a huge issue and I couldn’t agree more. Especially now, it seems like borderline harassment with borrowers. Unfortunately, there is little we can do about it. Federal law allows it; here is a document from the FTC we send out to some of our customers to give a little color to how or why this is happening.
“There is little to do to prevent it, but there are a couple of options. First, if you work with real estate agents, I suggest that from the onset, you suggest to the borrower to “Opt out” of these offers prior to their credit being run. Make sure to do this as early on as possible as it takes a few days to take effect. They can call 1-888-5-OPTOUT or go to www.optoutprescreen.com.
“The other option is when you first pull a credit report, you can run a PreQual (soft pull) with 1, 2, or 3 bureaus to see if the borrower qualifies. Because it is a soft pull, it will not set off the trigger and notify competitors. However, you are unable to reissue this report and would have to ultimately pull credit, which will then start the trigger process but hopefully after your relationship has been established. I do believe the best approach here, especially if you have a relationship with realtors, is to go the Opt-Out route. The borrowers can also see this as an added benefit of working with you and not being solicited by dozens of lenders.”
Jobs, jobs, everywhere
Housing and jobs drive the economy in the United States, and the last couple of days have given job’s data their day in the sun. Yesterday’s jobs’ data was particularly strong, with nonfarm payrolls increasing by 528k. What did the experts have to say about the employment conditions in July?
MBA SVP and Chief Economist Mike Fratantoni’ observed, “Job growth in July remained strong, and with upward revisions to May and June, job growth has averaged 437,000 per month over the last 3 months. Despite the negative reading on second quarter GDP, this is not a picture of an economy in recession. And even though initial claims for unemployment insurance have increased modestly in recent weeks, these data show that the pace of hiring, spurred by more than 10 million job openings, continues to exceed any increase in layoffs.
“Strong demand for workers continues to push wages up, with average hourly earnings up 5.2 percent compared to last year. The unemployment rate fell to 3.5%, matching the pre-pandemic low. With business demand for workers still strong, wage pressures should persist.
“The GDP and other recent data releases showed a shift in activity from goods-producing to service-providing sectors. This report matched that, showing much faster job growth in the services sector.
“Construction employment increased by 32,000 over the month. Although housing demand waned due to a spike in mortgage rates, builders continue to add supply to a market that needs it. With solid wage gains and a recent drop in rates, some buyers may return to the market.
“This remains one of the strongest job markets in the past 50 years, no comfort for those hoping for a slowdown which would reduce inflation and lead to a less aggressive path of rate hikes from the Federal Reserve.”
Doug Duncan, Fannie Mae’s Chief Economist, penned, “This morning’s jobs report from the Bureau of Labor Statistics (BLS) points to continuing strength in the labor market… job growth was concentrated in the service-providing segment, with the health care and social assistance (+97,000 jobs), leisure and hospitality (+96,000 jobs), and professional and business services (+89,000) sectors leading the way. We note that the level of payroll employment has reached the pre-pandemic peak level set in February 2020, finally erasing all of the job losses from the last two and a half years.
As with other recent jobs reports, the employment picture painted by the household survey is much less optimistic than the payroll survey. While the unemployment rate fell by one-tenth to 3.5 percent in July, labor force participation again ticked down to 62.1 percent, as gains to the size of the labor force appear to have stalled recently. More puzzling are the muted gains in household employment, which grew by just 179,000 in July. While still reflecting growth, this figure is far below the gains seen in the payroll survey and illustrates a continuing divergence between these two measures that we have seen for a number of months now. For instance, since March, the payroll survey has shown roughly 1.7 million jobs added, while the household survey has actually shown a decline of 168,000 employed persons.
Part of this divergence can be accounted for by a difference in definition; when adjusting the household survey to match the definition of employment from the payroll survey, total job gains are 722,000 over this period, still less than half of the gains reported in the payroll survey. This divergence gives us pause when interpreting the overall health of the labor market; in particular, compared to the robust job gains in the payroll survey, we feel the more subdued picture in the household survey may make more sense in the context of other recent economic indicators.
“Finally, we note that wage growth continues to be hot, with today’s report indicating average hourly earnings grew at a 5.2 percent year-over-year pace, the same amount as last month’s report, another sign that firms are still eager to hire, and this continued wage growth is doing nothing to ease inflationary pressures in the economy. We also note that residential construction employment (including specialty trade contractors) grew by 14,100 in July; while this number has been volatile lately, this month’s solid gains should help homebuilders to fulfill their current orders.”
NAR Chief Economist Lawrence Yun wrote, “The 20 million jobs lost during the early months of the COVID-19 lockdown have been fully recovered. More Americans are working today than at any time in history. The unemployment rate is 3.5%, matching a 50-year low. Companies have increased wages by 6.2%, though that figure is unable to keep up with 9% inflation. ‘Help Wanted’ signs abound. Part of the reason for the worker shortage is due to 3 million more people who aren’t looking for jobs today compared to the number of those looking in March 2020.
“…home sales… are running below the pre-pandemic numbers seen in early 2020 and slightly below the 2019 annual total. Mortgage rates appear to be settling down over the past month at below 6%, with the past week dipping to 4.99%, but they are well above the 3.6% to 3.9% rates in the months before the pandemic. In other words, home sales are more impacted by mortgage rate changes than jobs. But the recently stabilizing mortgage rates suggest home sales will also soon stabilize and are likely to make steady gains in 2023.”
Vendor and third-party developments
Insellerate, a leading provider of customer relationship management (CRM) and marketing automation solutions to the mortgage lending and real estate industries, announced the launch of Insellerate Settlement Services, through a strategic partnership with industry title insurance leader Nations Title. Nations Title is the national title and settlement agency under the Nations family umbrella of real estate information companies. Founded in 1996 and based in Merriam Kansas, Nations has been a leading title, settlement, appraisal management, default management services and technology firm.
Indecomm integrates BotGenius with Teraverde’s Coheus solution to Automate Change of Circumstance (CoC) processes, resulting in time savings of 50% in the CoC process. Read the press release.
Voxtur rolled out two new desktop appraisal review products: Retrospective Appraisal Credibility Review (RACR) and RACRPro announced in this press release. Both are comprehensive desktop appraisal tools that validate the credibility of the original appraisal value. Stakeholders are allowed throughout the lending cycle, from first lien origination in the primary market to portfolio management and the secondary market, to make decisions with confidence. Available in all 50 states, the Voxtur RACR products facilitate more efficient appraisal options with a focus on compliance.
ACES Quality Management® (ACES), announced it has enhanced its reporting library within its flagship audit platform ACES Quality Management & Control® Software to help align with recent mortgage quality control (QC) reporting recommendations issued by Fannie Mae. The ACES reporting team is working on additional reporting functionality to support the Fannie Mae QC Calibrations. To learn more about Fannie Mae’s QC reporting recommendations, access the Boot Camp recordings or read the 2022 edition of the Fannie Mae Quality Insider on “Strengthening Your QC program: QC Reporting.”
Ready to start using eNotes? You’ll need an eVault. As the leader in eVault solutions, DocMagic’s certified eVault platform allows you to manage, transfer, and store eNotes and other electronic assets on a short or long-term basis. Here’s what’s inside: secure storage for eNotes, RON recordings and other eAssets, integrated connectivity with the MERS® eRegistry, Transfer and Deliver eNotes with a single click, legal compliance ensured with comprehensive audit trail, accessibility for life-of-loan and beyond, and limitless integration options via robust API.
Leading national appraisal management company, Class Valuation, recently acquired AppraisalTek (ATek), a nationwide appraisal management company with a large footprint in the Western region of the United States. ATek’s in-house staff appraiser program will be absorbed into Class Valuation’s growing organic network of staff appraisers and its staff appraiser teams brought on through the acquisitions of MetroWest and Synergy.
Realfinity is now delivering even more information to homeowners about their home’s value with data through a partnership with Quantarium. “The company’s tie with Quantarium’s innovative technology will allow Realfinity users to gain more insight into their property as well as its standing within the housing industry. “The partnership with Quantarium allows Realfinity to empower U.S. homeowners with the first of its kind computer vision technologies, which can identify and assess room types and interior features that have an immediate influence on a home’s value,” said Luca Dahlhausen, Co-Founder of Realfinity. “We see accurate, historic, and current valuations as a crucial metric in making the right homeownership decisions.” With Realfinity’s relationship with Quantarium, the company’s HomeDashboard users will experience the industry’s most accurate real estate intelligence.
The adult version of “head, shoulders, knees and toes” is “wallet, glasses, keys and phone.”
Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is titled, “The All-Cash Phenomenon.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).
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