Aug. 14: New companies raising $ and turning heads; letter on rate lock accounting; compliance joke; Saturday Spotlight: Monster Lead Group

Despite universal complaints about the appraisal process, in my travels it seems that most lenders and vendors are doing well, believe that a very good first half of the year will help see them through 2021. Changes in credit are a conversation topic, as is the transition, or not, from “Work from home” to “Work from office”: giving employees some options seems to be popular. Compliance departments with lenders and servicers are as important as ever. Margins have come down from 2020 but are still solid, and volumes are steady… A good thing after 2020’s “drinking from a fire hose.” Sure enough, according to Curinos (the combination of the FBX & Novantas businesses), July 2021 mortgage rate-lock volume was down 16 percent year over year and up 3 percent month over month across all channels, while funded volume decreased 1 percent YoY and was -6 percent MoM. In the retail channel, the average 30-year conforming retail funded rate in July was 3.23%, 0bps lower than June and 6bps lower than the same month last year.

Saturday Spotlight: Monster Lead Group: Passionate about being innovators and creators who never settle!


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). 


Monster Lead Group was founded in 2013 by Ken Bartz and Brandon Glickstein, two mortgage industry veterans with decades of experience. Ken and Brandon used their industry experience to build a brand that provides mortgage lenders with direct mail lead generation services based on postal data and mortgage lending playbooks.


Built by mortgage experts. Powered by machine learning. Trusted by the industries top lenders.


Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why. 


Monster is always open for discussions of volunteer work within the company, we usually have people attending some event in the community at least once a month.


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? 


Monster’s key value is “a spirit of continuous improvement,” which encourages employees to always seek personal growth. Our Professional Development Policy allows employees to be reimbursed for seminars, degree programs, and educational or continuing education recertification courses.

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.  


Last year we were recognized by Newswire as one of America’s top workspaces in 2020 going into 2021. Our company meets every Thursday for a face-to-face zoom lunch paid for by the company through food delivery services. It’s a great way to welcome fresh faces and catch up on some inter-office mingling that we’ve missed out on in the work from home environment.


Our CCO Martin Harris likes to say, “A great culture involves a shared vision with the resolve to do something great.”


Things you are most proud of that don’t have to do with sales. 


Outside of newswire’s recent recognition as one of America’s greatest places to work, we’re thrilled to welcome so many new team members. The amount of talent we have working with us has almost tripled over 2020 and we’re still growing fast.


Fun fact about Monster Lead Group. 


We love to showcase talents here, especially those interesting niche hobbies that people have. As a group, about once a month, a good group of Monster employees get together to all go boxing and it is A TON of fun. (If you haven’t taken your employees out to a boxing studio before, I highly recommend it)


Is there anything else you’d like to share along these lines?  


Mortgage lenders understand that they’re already required to send mail in the form of Firm Offer of Credit mailers, so why not make the execution the best it could possibly be? Besides, using non-physical mediums for prospecting is unreliable. You can dodge someone’s phone call, you can give someone an old email you never look at, but you can’t fake where you live.

(For more information on having your firm, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)

Companies you may not have heard of… but may in the future

Sure, UWM and Rocket and Freedom and Plaza and loanDepot and Wells Fargo and others garner much of the press and attention. But plenty of other companies are out there, trying to make a profit filling niches in the real estate, borrower, and pseudo-lending arena. And raising money. Or losing it.

You can invest in this company, but $144 million is a lot to lose in one quarter. Opendoor is a “leading digital platform for residential real estate. In 2014, we set out to reinvent life’s most important transaction with a new, radically simple way to buy and sell your home. We have rebuilt the entire consumer real estate experience and have made buying and selling possible on a mobile device. We’ve served tens of thousands of customers who have come to Opendoor to make their moves easier… Opendoor currently operates in a growing number of cities and neighborhoods across the country.”

There’s Stavvy, “Powering the paperless revolution. While digital closings have become routine, loan modifications, deferrals and forbearance agreements have been stuck in the slow, cumbersome world of pen, paper, and postage. Until now. Stavvy represents the new standard for digital servicing.” Any vendors looking to raise money, take note: Stavvy received a $40+ million Series A funding round, led by Morningside Technology Ventures, a private equity and venture capital investment firm based in Cambridge and Hong Kong. Stavvy also has an alliance with Flagstar Bank to provide remote loan modification services.

Yes, there are new companies that lenders are taking note of, such as Unison (though it’s been around since 2004). “With a home co-investment from Unison, you can tap into your home equity… In exchange for a cash payment to you, we share in the future change in value of the home, up or down. (There are thousands of dollars of fees, and a 3 percent transaction fee.)

Landis? Landis, a rent-to-own platform, announced a funding round with Sequoia Capital and celebrity investors like Jay-Z and Will Smith. As Jeremy Potter points out, “Always a mention with companies like Divvy Home, and Home Partners of America, Landis attempts to deliver homeownership in 4 steps: qualify, find a home, work with a Landis coach while building credit and assets, and buy the home.  Rent-to-own and lease-to-own are old concepts made new with technology enhancements.”

Aalto, not the Finnish architect or wine company, has done something besides claim the top spot in the alphabetical list. The SF Bay Area company has raised $13 million in a Series A funding round led by Sequoia Capital, which, along with Background Capital, Defy Partners, Maple VC and Greg Waldorf, has brought Aalto’s total capital raise to $17.3 million since its 2018 inception. Aalto’s online marketplace directly connects homeowners to buyers. A potential seller can list their home on its platform in five minutes. Aalto has built up a network of more than 30,000 buyers and about 25 homes have been sold via the marketplace. Currently, about 85 homes are listed for sale on its platform, with an average of one new home being added per day.

Figure & Sagent (sounds like an English clothing store) are partnering on mortgage servicing SaaS & a transformative blockchain vision. Sagent, a fintech software company modernizing mortgage and consumer loan servicing for America’s top banks and lenders, today announced two major strategic deals with digital lending and payments disruptor, Figure. Sagent will power Figure’s mortgage servicing as it aggressively grows mortgage market share, and the firms will partner to accelerate Figure’s transformative blockchain vision.

P&L for locked, unclosed loans for lenders and AMCs

In Friday’s commentary I discussed the value of a locked loan. “Income and revenue are certainly metrics whence people make decisions. Is the profit on a locked, but not funded, loan something a lender should count on their balance sheet? And if so, if the loan falls out, is it a real loss?”

Interest Rate Lock Commitments (IRLCs), an acronym for a lender’s locked pipeline, prompted this note from someone running mortgage for a regional bank in the East. “IRLCs are frequently a source of frustration, as is the question, ‘Is the profit on a locked, but not funded, loan something a lender should count on their balance sheet?’

“In my opinion, a locked loan doesn’t really mean much other than a borrower has some peace of mind. A lender shouldn’t count it on their balance sheet until it funds. Nor should they consider it a real loss if it doesn’t. I know my ‘derivative’ accounting friends would likely disagree, but that’s my opinion. Lenders should use locks for projections, sure, as long as they are considering some kind of fallout ratio. But thinking there is guaranteed revenue coming because a loan is locked is pretty naïve, as is thinking that the locked in price at the beginning of the loan process is going to be the same at the end of the process, with so many potential changes related to LTV, extensions, changes, or other surprise LLPAs that might pop up prior to closing.

The only parties in the loan transaction that can count their income on their balance sheet before the loan closes are appraisers and AMCs. Lenders, title companies and real estate agents all need the loan to get to the finish line before any ‘real’ profit is made. And now, aside from the market itself, AMCs and appraisers are the main source of frustration in trying to get a loan done. There seem to be a lot of really expensive appraisals now days due to price increases and volume. Borrowers are paying out the nose for appraisals and lenders are having to ‘cure’ the excess cost if they quote too low of an appraisal fee. My most recent example of this was an appraisal I quoted in Austin, TX. I quoted $1,200 thinking that was safe, and yet a week after it’s ordered, we received an email from the AMC stating that they bid it out to 50 appraisers and only one appraiser could do it with a 3 week turn time for $1,550. What else could we do but agree to move forward?

“So no, a lender can’t really count a locked loan on its balance sheet (again IMO), but an AMC and appraiser sure can. And they seem to be able to charge whatever they want, take as much time as they need, and pick and choose what orders they want or don’t want. All of this doesn’t have much to do with your original question, but it sure would be nice if somehow, some way, we could find a better way to navigate value for a home loan. Then, maybe, lenders could be more confident that loans they lock will make it to the finish line so they really can start counting them as revenue.”

Here is one proposal to stop the abuses in automobile sales: “Auto Sales Staff Honest Operation of Local Emporiums.”

This is an Act to eliminate abuse in automobile sales.

1. Anti-steering. When a customer enters an automobile showroom, they must be asked which model car they wish to consider. This must be recorded (within 3 minutes) and signed by the customer before they can be shown any vehicles. No sales representative may show, demonstrate, or offer a higher-priced vehicle unless such vehicle is offered at the same price as the vehicle originally requested.

2. Salesperson Compensation. Salespersons may no longer be compensated based on the cost of the vehicle or based on the options or add-ons which are sold with the vehicle. No salesperson may be compensated based on the price of the vehicle or the terms of the sale. Permissible methods of compensation include per-car fixed payments or payments based on the number of sales per month. Under no circumstances may any salesperson be paid based on up-selling or by selling additional options.

3. When a customer agrees to purchase a vehicle, he/she must first be given a comparison sheet showing the monthly payment for two other vehicles. The purchase may not be completed until at least 3 days after such disclosure is provided.

4. Safe Harbor. There will be no restrictions on method of compensation if all vehicles in the dealership are offered at the same price.

As soon as this new law is adopted and the auto sales business collapses, a proposal for regulation of the electronics industry will be published.

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Rob Chrisman