Do you know what a “HENRY” is? No, not this timeless song. It’s an acronym for, “High Earner Not Rich Yet.” The demographics of the current home buying generation are fascinating. Millennials, born between 1982 and 2000, after years of everyone else wondering if they were going to own pets, get married, have kids, and want a house, are now owning pets, getting married, having kids, and are buying houses. Are there enough houses of 70+ million people in their 20s and 30s? No, but we did have some good supply-side news this week: Privately owned housing starts in March were at a seasonally adjusted annual rate of 1,739,000, which is 19 percent above the revised February estimate of 1,457,000 and is 37 percent above the March 2020 rate of 1,269,000, per the U.S. Census Bureau and the Department of Housing and Urban Development. (Single-family housing starts last month were at a rate of 1,238,000, or 15 percent above the revised February figure of 1,074,000. The March rate for units in buildings with five units or more was 477,000.) But is it enough? Builder issues go back years: more below.
Saturday Spotlight: Service 1st (Service First Information Solutions, LLC), where loan verification services are made simple.
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).
Service 1st was originally founded as the Credit Bureau of Santa Maria in 1926. In 2019, the Knuth family acquired the Redding, CA company and rebranded it as Service First Information Solutions (dba Service 1st, or S1 for short). With branches in California and New Jersey, S1 is the information services affiliate to NCS (National Credit-reporting System, Inc). S1 leverages NCS class-leading income and identity solutions that complement the firm’s origination solutions, such as credit reporting and portfolio monitoring. Enhancements to S1’s Income+ are ready for release in Q2, along with a big update for verification of employment that will deploy near year end. S1 is also moving its headquarters from Egg Harbor City, NJ, to join NCS in Hammonton, NJ. The move will be complete this fall.
Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why.
We prefer to downplay our corporate charitable efforts. However, we are very proud of our employees who volunteer bi-monthly with the Community Food Bank of NJ, working on food distribution in South Jersey. The response to COVID-19 severely impacted the hospitality industry along our coast, specifically the Atlantic City casinos. As families deal with continued loss of income, we feel strongly in helping to place food on our community tables.
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?
S1 leverages LinkedIn for continuing education, reinforcing business concepts such as the S.M.A.R.T. goal system. Managers work with employees on career goals along with specialization certificates selected by both prior to reviews. Last year, S1 incorporated the “360 Review” concept into annual reviews to improve partnership and leadership opportunities.
Tell us how your company maintains its culture in the office, or in a work-from-home environment, if applicable.
Accountability is crucial at Service 1st. Accountability drives ownership, which fosters pride in our work product. Collecting and measuring data limits disruption and is an essential tool at S1. Our technology partnerships with MeridianLink and NCS provide excellent reporting platforms during office closures.
Fun fact about S1.
Service 1st ‘s founding company began as a regional credit bureau during the 1920s. During that early period, merchants issued credit regularly via in-store credit. From growing demand, regional credit reporting agencies and repositories like S1 continued to compile consumer files – on paper. Think of the filing cabinets needed for storage! From paper files to punch cards to magnetic tape, the digitization of consumer files was an enormous undertaking for credit bureaus during the 1960s and 70s.
Many similarities exist between those times and today. S1 and our shared industry make daily improvements at removing friction in the origination process. Improvements such as removing borrower documentation requirements with consumer permissioned data steadily gain acceptance. S1 has been the tech-forward, customer-focused company for nearly 100 years and we look forward to guiding our client’s legacy for their vision of the future.
(For more information on having your firm, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)
There are scores of vendors tending to lenders around the nation. Each one wants to be cost-effective, be able to “talk” to other vendors, and be relevant to lenders. Let’s take a look at who is partnering with who, and what is happening in technology.
Lenders can take the Systems Survey, the first survey of STRATMOR Group’s 2021 Technology Insight® Study. Have great insight into the CRM, Point of Sale, Origination, Closing and collaboration tools, all the mortgage technology solutions available in the market today. Lenders who participate in the three-part series of surveys will receive the reports for the surveys they complete for free. Complete all three and you’ll have the entire 2021 Technology Insight® Study for the investment of your time. Take the first survey now and rate the systems you’re using!
As a reminder, Advantage Credit, Inc., and Partners Credit & Verification Solutions announced their merger in January. “Advantage and Partners will continue to function independently for the immediate future, then begin to combine their operations strategically in phases to eliminate the risk of any adverse impacts to their clients or employees. The management teams of each division remain in place and a new parent company Ascend Companies, Inc. has been formed to govern the businesses and take ownership of other commonly held ventures, including Advanced Data, a rapidly growing verifications platform. (Watch for future news about Ascend Companies.)
Unify a full suite mortgage-specific Business Growth Platform, is working with Experian® to create an industry-leading mortgage lead qualification engine. By using Experian’s PowerCurve® decisioning solution available through Unify, lenders can utilize a streamlined process that helps financial institutions gain flexible access to more data and advanced analytics. When a customer applies to get prequalified through Unify, a soft credit inquiry is performed, which does not impact the consumer’s credit score.
Redwood Trust, Inc. announced two technology investments under its recently launched RWT Horizons venture, a strategy focused on early and mid-stage companies driving innovation in financial and real estate technology, and digital infrastructure. Investments made through Horizons are designed to support companies whose technologies are accretive to Redwood’s businesses, including its residential and business-purpose lending platforms.
Gridiron Capital, LLC acquired Class Valuation stating it will partner with and support Class Valuation’s management team as they continue to execute on a shared vision for growth and strategic innovation within the residential valuation services industry.
Academy Mortgage Corporation has partnered with Homebot, Inc., enabling Academy Mortgage Academy Mortgage Loan Officers to automate their client retention strategy, engage their clients and prospects, and build relationships with Real Estate Agents.
NAMMBA Consulting and NAMMBA Cultural Outreach have partnered together to conduct the first annual holistic report of diversity for positions across the entirety of the mortgage industry. Registration for the survey ends April 30, 2021. Survey participation is open to all companies within the mortgage industry.
Digital Mortgage platform Maxwell announced a partnership and integration with Byte Software. With the establishment of this partnership, Maxwell’s digital mortgage point-of-sale will connect to Byte’s loan origination system via an API integration. The integration of Maxwell and Byte will allow users to seamlessly connect their data and work within Maxwell with their LOS, creating a simple, intuitive process for lenders and borrowers. This includes acceptance of the new URLA 3.4 compliant loan application.
LoanLogics introduced LoanLogics IDEA™ for MSR Transfer, a new solution that automates document processing and data extraction for mortgage servicers and banks when acquiring mortgage servicing rights (MSR). LoanLogics IDEA for MSR Transfer normalizes document naming and stacking order across any number of sellers to streamline MSR acquisitions and creates an automated repeatable process to onboard loans into a buyer’s servicing system. Critical document logic with over 100 tests that perform required document checks is also included.
Finicity is now a Fannie Mae VOI/VOE report provider.
Builders, Building, and demographics: current issues go back years
Forbearance has been a topic for over a year now. Some people are worried about the housing “bubble” busting. But it is wise to look at the credit profile of current borrowers, and how the equity numbers tell a different story, one of stability. More and more believe that the housing market is not set up to see the rate of foreclosures experienced in the 2007 housing collapse.
When one looks at equity, delinquency, and forbearance reports, like the MBA’s, Black Knight’s, or CoreLogic’s, the average homeowner gained large amounts of equity during the last year, dropping the current percentage of homeowners who are under water nearly nationwide. And median home prices for both single-family and condo homes in most areas continue to break records, and well-priced properties, if and when they come on the market, result in bidding wars.
So, even if someone was at risk of losing their home, with our current above-asking close-to-list average, they can quickly sell their home on the open market and avoid foreclosure. Additionally forbearance is declining because people are rolling off of it now. Some who signed up for it never used it, or went back to making payments after a few months. Who is at risk of foreclosure then? Those that put the least amount down on their mortgage, such as VA, USDA, or FHA loans with down-payment assistance – some are upside down over 100% loan to value. If they enter into forbearance and are in lower income bracket, now they may not be able to make payments and may not be able to get out from under the home. That’s the risk of foreclosure, and that’s a small subset of our national population.
Meanwhile, the roots of the housing and affordability crisis are not hard to see. Across the country, home shoppers have had fewer homes to choose from than a year ago. Four years ago articles were pointing out how regulation is impacting the supply of starter homes by increasing the cost to build them. Back then, regulations imposed by government at all levels accounts for 24 percent of the final price of a new single-family home built for resale. Do you think that has changed much since 2017?
In 2016, five years ago, Ivy Zelman and her team were pointing out the signs. “While national order growth was strong at 19%, gains ranged from single-digit growth in the Midwest (4%), South (6%) and East (9%) regions to solid double-digit growth in the Central (36%) and West (17%) regions. Several builders announced price increases effective January 1st in many key inputs such as drywall, concrete, windows and flooring, although builders are pushing back given limited pricing power to pass these higher costs to the consumer.”
Trends with builders began years ago, and could be seen by watching the National Association of Home Builders’ index of housing market sentiment numbers. Any number above “50” indicates more builders view conditions as good rather than poor. Ongoing job creation, rising incomes before the pandemic, and attractive mortgage rates were supporting demand in the single-family housing sector. Housing was forecast to be on a steady, upward glide path for quite some time. And except for a dip last April and May when the pandemic hit, a look at the chart shows a lot of optimism!
For years homebuilding surveys have indicated that growth rates are steady as entry-level momentum continues. Orders have been increasing, especially for the entry-level segment (whatever “entry level” exactly means now) ranking highest among its price point rankings as well as first-time move-up housing. And builders have continued to cite labor, permitting, and material challenges.
And four years ago, in his Perspectives blog, Mike Hernandez, Vice President of Housing Access and Affordable Housing Initiatives at Fannie Mae, discussed how to bridge the consumer knowledge gap, smooth the process for lenders, and support efforts to expand sustainable homeownership.
Builders of course, aren’t twiddling their thumbs. As far back as four years ago, when it was becoming harder to find buildable lots, many homebuilders returned to half-finished subdivisions that were abandoned as the housing bubble burst in 2007 and 2008. The supply of developed vacant lots (go-dirt) had fallen by 20% since 2011. The buyers were the big national homebuilders like Lennar. The credit markets for homebuilders remained a case of “haves and have-nots.” The big builders have been able to issue corporate debt at super-low interest rates while the small guys are getting turned down by the local bank.
Three golfing partners died in a car wreck and went to heaven.
Upon arrival, they discover the most beautiful golf course they have ever seen.
St. Peter tells them that they are all welcome to play the course, but he cautions them that there is only one rule: Don’t hit the ducks during your first three months here.
The men all have blank expressions, and finally one of them asks, “The ducks?”
“Yes”, St. Peter replies, “There are thousands of ducks walking around the course, and if one gets hit, he quacks, then the one next to him quacks and soon they’re all quacking to beat the band. It really breaks the tranquility, and if you hit one of the ducks, you’ll be punished. Otherwise everything is yours to enjoy.”
Upon entering the course, the men noted that there were indeed large numbers of ducks everywhere.
Within fifteen minutes, one of the guys hit a duck. The duck quacks, the one next to it quacked and soon here was a deafening roar of duck quacks.
St. Peter walked up with an extremely homely woman in tow and asks, “Who hit the duck?” The guy who had done it admitted, “I did.” St. Peter immediately pulled out a pair of handcuffs and cuffed the man’s right hand to the homely woman’s left hand. “I told you not to hit the ducks,” he said. “Now you’ll be handcuffed together for eternity.”
The other two men were very cautious not to hit any ducks, but a couple of weeks later, one of them accidentally did. The quacks were as deafening as before, and within minutes St. Peter walked up with an even uglier woman.
He cuffed the man’s right hand to the homely woman’s left hand. “I told you not to hit the ducks,” he said; “Now you’ll be handcuffed together for eternity.”
The third man was extremely careful. Some days he wouldn’t even play for fear of even nudging a duck. After three months, he still hadn’t hit a duck.
St. Peter walked up to the man at the end of the three months, and had with him a knock-out, gorgeous woman – the most beautiful woman the man had ever seen. St. Peter smiled at the man and then, without a word, handcuffed him to the beautiful woman and walked off.
The man, knowing that he would be handcuffed to this woman for eternity, let out a contented sigh and said aloud, “I wonder what I did to deserve this?
The woman responds, “I don’t know about you, but I hit a duck.”
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, “Hiring: New Tactics for a New Day.” The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is designed for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2021 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)