Cinco de Mayo: LO jobs; AMC alternative, workflow, HMDA dashboard products; Opendoor & Redfin earnings; a look at what is moving rates

Airbnb rolled out some changes in an effort to take business away from hotels. Mexico has about 400,000 Airbnb listings, and I mention this because today celebrates Mexico’s victory over France in the Battle of Puebla on May 5, 1862. It was a relatively minor battle (and the French reclaimed Puebla a year later) but a symbolic one because a small Mexican army defeated a larger occupying force. By 1867, Mexican troops had driven France from the country. Mexico is just one of twenty Hispanic countries, and lenders know that the rise in overall Hispanic home ownership in recent years played out in first-time home buyer numbers and many have “diversity” departments that encompass many lending facets including minority homeownership. Hispanic homeownership in the U.S. climbed significantly in 2020: There are now about nine million Hispanic homeowners in the country, according to a report released by the National Association of Hispanic Real Estate Professionals. Viva la Raza! (Today’s podcast can be found here and is this week’s is sponsored by Blend. Want to power a better lending journey from application to close? Find out how their digital end-to-end mortgage experience can help you reach your business goals.)

 

Employment; marketing position wanted

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Hey, mortgage sales professionals do not join radius financial group for our amazing culture, president club trips, best workplace accolades, 100 percent 401K match or because of our shared success program which grants phantom stock to ALL employees. Join radius to grow your business, mortgage team, and wealth. Over the past 23 years, radius has become the best at what we do by caring intensely about the career growth of our team members and investing in technology that simplifies and automates our process. We are a world-class customer-obsessed team focused on our loan officers’ growth and success. So, if you want real opportunities to grow, the ability to make a positive impact starting on day one and the freedom to chart the career you’ve always wanted, at radius, you can! For confidential inquires please contact Carla Herrera.

If anyone out there needs a little help with their marketing efforts, such as content creation, social media management, or branding strategy, let me know. An experienced marketing person and mortgage veteran is looking to help a small number of individuals and/or companies on a part-time basis. If you are a company with no marketing personnel, or an individual seeking to increase your scope, let me know and I will forward your email.

Lender and broker software, services, and products

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Village Capital & Investment is excited to announce that Seth Elbaum has recently been hired to help grow its Correspondent Lending division. Mr. Elbaum has been in correspondent sales for the last 16 years, most recently at Northpointe Bank and BOKF. Village Capital is a GNMA buyer with no overlays and a consistently strong execution. You can contact Seth Elbaum.

Today’s a great day to grab some tacos, a margarita (or six) and head over to LenderLogix to check out the new Spanish version of its LiteSpeed point-of-sale. With a seamless integration into Encompass® by ICE Mortgage Technology™, LiteSpeed makes it easy for your Spanish-speaking borrowers to finance with you by eliminating the aggravation of a clunky online loan application. LiteSpeed has all the features you want, without the bloat, at a price your CFO will love!

Quorum Federal Credit Union’s HELOC special offers have been extended. With turn times as fast as 24 hours and our expanded guidelines, including up to 90 percent on a Primary Residence and 80 percent CLTV on Second Homes and Investment Properties, we’ll help clear any financial hurdles. In addition, Quorum partners have the opportunity to earn 1 percent borrower-paid compensation on the entire line amount. There are no minimum draws and no early termination fees. Ready to connect with Quorum? Contact your Quorum Account Executive, visit Quorum’s Partner Portal, or email us for more information.

“Looking for insights to help drive your business strategy? Richey May’s 2022 Interactive HMDA Dashboard is now live! The mortgage industry experts at Richey May have scrubbed the raw 2022 Home Mortgage Disclosure Act (HMDA) data, offering a window into mortgage origination trends nationwide, and organized it into a dynamic dashboard that allow lenders to drill down on specific markets and companies to aid in strategic business planning. This dashboard allows you to compare your loan characteristics to your peers so you can see where you stand. Lenders will also find this dashboard valuable for identifying new markets for expansion, seeking out M&A opportunities, measuring the success of sales efforts and more. Access the dashboard on our website today and reach out with any questions you may have.”

Managing Opportunity and Risk in Volatile Economic Conditions. MSR owners and servicing stakeholders join LoanCare to discuss where revenue and risk can be identified within loan servicing portfolios. Understand how to monitor and manage customer engagement, liquidity, operational controls, and compliance through the power of transparency. Learn how actionable decisions can be made in minutes instead of hours spent in data analysis. Use code LOANCARE100 for complimentary access for those without MBA membership. Register today!

Heading to the MeridianLink User Forum at the Disneyland Resort next week? FirstClose, an award winning fintech provider of data and workflow solutions for mortgage and home equity lenders nationwide, is proud to be a Diamond sponsor of this year’s event. Following the keynote speaker on Tuesday May 9, FirstClose will be joined by executives from Sharonview Federal Credit Union and Flagstar Bank onstage for an in-depth discussion about the state of Today’s Home Equity. Looking to up your “equity game” or have questions about how to get into the space, let’s set up some time to chat!

“Serving to innovate. Innovating to serve. Xactus is all about that. In our quest to advance the modern mortgage, Xactus is working hard to identify areas where technology can improve the status quo, streamline workflows, enhance your profitability, and help you close more loans more quickly. For example, how often does the IRS reject your 4506-C Form? Did you know almost one in three are rejected for minor errors? We knew there had to be a better way, so we sought a partner that takes a modern approach to tax return verifications, TaxStatus, a leading provider of official tax data and IRS account monitoring. Now we offer real-time IRS data feeds and we’re the only mortgage verifications provider doing it. Filling voids in the marketplace, rolling up our sleeves and working with our customers to offer innovative solutions, providing attentive customer service…. Xactus has an unrivaled commitment to your success. Learn more, email us.”

Hey lenders, did you know that you can directly engage appraisers without having to use a third-party AMC? Clearbox can show you how, and to do it in a manner that is both compliant and will yield you better service. If you carefully curate your fee panel using our panel management tools, you will see a lift in quality. Buyback risk is real. Clearbox has access to over 65,000 appraisers and 800,000 real estate agents (for Property Data Collection). Now is the time when production has slowed to shift to new processes to ensure quality and service are best in class. Let us show you how it’s done. Contact Larry Fortino or Joan Trice for a demo.

Curinos looks at April: a big jump from March

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According to Curinos, April 2023 funded mortgage volume decreased 53 percent YoY and increased 46 percent MoM. In the Retail channel, funded volume was down 62 percent YoY and increased 39 percent MoM. The average 30-year conforming retail funded rate in April was 6.38 percent, 1bps higher than March and 197bps higher than the same month last year. Purchase rates were 4bps higher MoM and 193bps higher YoY, while Refinance rates were -13bps lower MoM and 198bps higher YoY. Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures, and drills into this data further here.

Earnings: a barometer of our biz

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There are currently only 562,000 active listings of houses for sale in the U.S. Can low numbers of homes for sale really support all the big real estate companies out there?

Opendoor, “a leading digital platform for residential real estate,” released its first quarter 2023 results, led off by Q1 2023 revenue of $3.1 billion. “Resold 92 percent of our Q2 Offer Cohort (earlier than expected) and our new book of inventory is exceeding our target 4-6 percent annualized guidance. 8,274 homes sold in Q1 2023; purchased 1,747 homes in the first quarter. Evolved transaction platforms and tools to improve operator productivity by 20 percent once fully launched. Grew partnership channels to expand customer reach, which accounts for over one-third of our contract volume and consists of the three largest online real estate portals (Zillow, Realtor.com, and Redfin), the top U.S. homebuilders and thousands of agents nationwide (saw nearly 10x in repeat agent business since 2019). In April, we announced a workforce reduction of approximately 22 percent or 560 employees, primarily focused on volume-based roles. We expect this to deliver savings of approximately $50mm in annualized expenses… Here’s the press release and shareholder letter.”

Redfin, owner of California’s Bay Equity, had quarter end cash and cash equivalents of $152.3 million, down from $648.7 million a year ago. For “good” news, the mortgage banking loss dropped from $6.5 million a year ago to $1.3 million for Q1 this year.

Capital markets: a deep dive on what is driving rates now

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Ever wondered what a “bull steepener” is? It is a change in the yield curve caused by short-term interest rates falling faster than long-term rates, resulting in a higher spread between the two rates. This often occurs when the Fed is near the end of its tightening cycle and the market starts to look ahead to a new easing cycle. It was only last year that the Fed began dramatically raising rates, and economists say that the Federal Reserve’s interest rate hikes take time, anywhere from four months to more than a year, to work through the economy.

As the Fed waits for tight monetary policy to deliver a broader-based slowdown of inflation and a less tight labor market, other parts of the financial system could fall, and have fallen, under strain too. The bond market was already strong due to the regional bank situation at the start of the week (the second-largest bank failure in U.S. history occurred when the Federal Deposit Insurance Corporation seized First Republic Bank), and regional bank concerns were once again front and center yesterday (PacWest Bancorp announced that it is mulling strategic options, including a potential sale and Western Alliance Bancorp is also allegedly seeking strategic options) on the heels of Wednesday’s Federal Reserve rate hike, causing a flight to safety over worries about the eventual impacts on growth.

As other banks and investors worry that they could meet a similar fate as First Republic, they may act more cautiously. In the near term, these tighter credit conditions translate to less money going to businesses and consumers, meaning less economic activity and growth overall. On the whole the Fed is clearly worried about tightening credit conditions. With a slight tweak to its language in its Statement this week, the Fed has not so subtly announced that the time to step back and watch may have arrived.

The outlook for both the economy and future Fed rate path now largely depends on the resiliency of the job market. Fed funds futures are now predicting the Fed will stand pat at the June meeting, there is a 50-50 chance of a rate cut at the July meeting, and the futures market sees 75 basis points of easing by the end of the year. However, if growth holds up and the economy ekes out a soft landing, the Fed could hold its policy rate above 5 percent into 2024. In his press conference, Chair Powell pushed back on the idea that the Fed was ready to cut rates. Looking strictly at the Fed’s dual mandate, that makes sense. The labor market remains incredibly robust, while inflation remains way too high. Powell acknowledged that it would take a while for the economy to get down to 2 percent inflation, but emphasized the Fed isn’t willing to relax that target to something higher.

The Fed under Jerome Powell has been shooting to thread the needle for a “soft landing” of the overheated U.S. economy: slowing it down without causing a recession. Fortunately, recent economic numbers have lined up with the runway. GDP rose at a 1.1 percent annualized rate in the first quarter as several categories posted their biggest drop since the start of the pandemic and inventories subtracted the most from GDP in two years. The good news from this cooling economy is that inflation is also slowing. CPI inflation came down to 5 percent in March from a 9 percent peak last summer as prices of food, gasoline, and durable consumer goods leveled out, albeit at high levels. At the same time, consumer spending came in at its strongest level in almost two years with historically low unemployment and persistent wage gains so far having allowed consumers to keep spending. Critics would argue that the mixed bag of data (tepid growth, sticky inflation, better-than-expected tech earnings, a strong labor market, and most importantly, high consumer spending) has renewed chatter of stagflation, aka elevated inflation, and anemic growth.

It’s a scary time out there. In addition to the aforementioned inflation fight and regional bank worries (First Republic became the fourth regional U.S. lender to collapse since early March), and to say nothing of the layoffs the mortgage industry and other industries have experienced, there is also the threat of the U.S. defaulting on its debt. Treasury Secretary Yellen announced that the federal government was likely to hit its debt limit in about a month, around June 1. If that happens before Congress raises the ceiling, the federal government could default. Defaulting could spark global financial chaos because investors have traditionally viewed American debt as a safe investment in a risky world. Powell put a point on the risk posed by a failure to pay debts already incurred by the federal government, warning that not raising the debt limit would be unprecedented, with highly uncertain and negative effects on the economy. A financial crisis can lead to less spending across the entire economy, suppressing jobs and wages. It can also hurt people’s investments, including retirement accounts and other savings. A debt ceiling crisis would likely cause the Fed to cut rates even faster.

Today brings the April payrolls report: 253k, much stronger than expected, unemployment rate at 3.4 percent, lower than expected, and hourly earnings were +.5 percent, very strong. The labor market was expected to start to show some weakness but is still cooling at a much slower pace than other economic indicators after 500 basis points of rate hikes in aggregate over the past year that the Fed is now looking to pause. Fedspeak resumes with St. Louis President Bullard, Minneapolis President Kashkari, and Governor Cook all delivering remarks. We begin the day with Agency MBS prices worse .250 and the 10-year yielding 3.43 after closing yesterday at 3.35 percent and the 2-year is at 3.88 after the jobs data.

Most people don’t know that in 1912, Hellmann’s mayonnaise was manufactured in England. In fact, the Titanic was carrying 12,000 jars of the condiment scheduled for delivery in Vera Cruz, Mexico, which was to have been the next port of call for the great ship after its stop in New York. This would have been the largest single shipment of mayonnaise ever delivered to Mexico. But as we know, the great ship did not make it to New York. The ship hit an iceberg and sank, and the cargo was lost forever.

The people of Mexico, who were crazy about mayonnaise, and were eagerly awaiting its delivery, were disconsolate at the loss. Their anguish was so great that they declared a National Day of Mourning, which they still observe to this day.

The National Day of Mourning occurs each year on May 5th and is known, of course, as Sinko de Mayo.

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 Yield Curve Is Inverted: Should Lenders Care?” is the current blog. The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is 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 2023 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.)

Rob Chrisman