Feb. 2: Bidding, credit verification, DPA, warehouse, marketing, disaster alert, TPO products ; valuing lenders 101

Happy Groundhog Day, where the rodent saw its shadow this morning, so plan on six more weeks of winter. There’s an old Yiddish proverb “We plan, God laughs.” Lots of people plan on owning a home, and will need financing. (Today’s podcast features an interview with homeowner Riley Howard about his decision why he refinanced his primary mortgage rate four times, and how he chose his lender(s).) Plenty of lenders are planning on being around to help do the estimated $2 trillion in home loans this year. Plenty of people had planned on the Federal Reserve’s Open Market Committee (FOMC) bumping up overnight rates by .25 percent (25 basis points) yesterday, and sure enough it happened. But rates dropped anyway, despite the planning and expectations, and if you want a primer on why, here you go. (Today’s podcast can be found here and this week’s is sponsored by Milestones. Giving homeowners an all-inclusive homeownership experience including home value and equity monitoring, home maintenance reminders and how-to articles, cloud-based document storage, one-click access to hire professionals for various projects around the home, and much more.)

TPO loan products


Are you looking for new ideas, products, tech solutions and training to win more purchase business? Join Rocket Pro TPO next Monday (2/6) at 2pm ET for the next IGNITE Live meeting! Register here! This monthly meeting, hosted by Executive Vice President, Mike Fawaz, is designed to deliver new and special announcements plus insights and solutions for the broker community.  February’s meeting will showcase how VA lending can be a big part of your purchase strategy in 2023. Want to exceed the expectations of buyers and sellers? Rocket Pro TPO will cover virtually all of VA’s non-allowable fees: That’s Fee Freedom for VA! If you missed the last IGNITE Live, where Fawaz introduced free credit reports for brokers, watch the replay! See you next Monday for another big announcement!

Planet Home Lending gained market share in 2022 thanks to steady leadership and our proven multichannel strategy. Planet’s Correspondent volume rose to $24.1 Billion in 2022, and by year’s end, 83% of Planet’s 800 Correspondent customers were delivering loans to us every single month. Why? Trust. They trust us to be their partner in growth, their toolkit for success, and their product gateway to everything they need to succeed. And our wide range of product offerings can build your bottom line. Rely on us for government and conventional loans, as well as niche products like renovation, manufactured homes, and buydown loans. Click here to download the latest version of our Product Highlights, then put Planet to work for you. Because no matter the market, we do Correspondent lending right.”

“As a broker, are you looking for new opportunities to better serve your buyers? Newrez Wholesale might be a perfect fit. As a national mortgage lender and one of the largest non-bank servicing organizations, we offer a full suite of non-QM loans, including our Smart Series, which includes SmartEdge, SmartSelf, and SmartVest, designed specifically with non-traditional qualifying in mind. When you join us, you’ll have more products at your disposal, more flexibility, and will close more loans. Newrez Wholesale has options to finance traditional loan amounts with more lenient guidelines to help your customers reach their goals. Contact your Newrez account executive today, or email to get approved with us if you aren’t already.”

Lender and broker software, products, & services


The Rashoman effect explores what happens when multiple witnesses each provide plausible but contradictory accounts of the same event. When used as a cinematic storytelling technique, as in Akira Kurosawa’s 1950 film Rashoman as well as more recent movies like Pulp Fiction and Knives Out, it invites audiences to consider the importance of perspective. Next Wednesday, Dan Sogorka from Sagent and Alex Kutsishin from Sales Boomerang and Mortgage Coach demonstrate how understanding the mortgage experience from every angle can help mortgage professionals play a more prominent role in each chapter of the borrower story. Get a fresh perspective by registering today.

Fifty-five years after the assassination of Dr. Martin Luther King Jr, the homeownership rate for black households is lower than when fair housing laws were passed in 1968. “A big part of this disparity is lack of culturally relevant homebuyer education,” says Gibran Nicholas, CEO of Momentifi. “While the rest of the country is embroiled in left-wing vs. right-wing debates about divisive topics, our industry is uniquely positioned to do something productive… right now.” In honor of Black History month that kicks off Wednesday, Momentifi is offering its personally branded homebuyer education tools for FREE during the month of February. You and your team can use this expert content to record videos or simply click and post to social media. Loan originators can click here to sign up. Email Gibran directly if you want to partner with Momentifi on this to amplify the great work you’re doing as an industry vendor, GSE, or housing finance agency.

During 2022, there were 18 weather/climate-related disasters in the U.S. with losses over $1 billion. From Hurricanes Ian, Nicole, and Fiona, to drought, flooding, wildfires, tornados, and more, natural disasters wreaked havoc last year, and will continue to do so. When a natural disaster strikes, how do you know which properties in your pipeline or portfolio may be affected? FEMA declares the impacted region a “disaster area” using county boundary designations — but natural disasters don’t always affect all properties within those boundaries. Disaster Alerts from Black Knight can help you reduce your financial exposure and provide better borrower support during a disaster. This innovative solution leverages multiple sources to pinpoint the specific impacted properties, so you can focus only on those properties in the impact zone. To learn more, download our complimentary whitepaper Natural Disasters and the Impact on the Mortgage Industry.

If your LOs have recently closed a deal, their clients have probably forgotten them already. In fact, 4 out of 5 LO’s are forgotten by past clients, but Velma has a way of keeping past clients coming back. Velma Connector turns your LOS into a post-close marketing powerhouse. Connector integrates with your LOS and uses its data to automatically send your LOs clients timely emails, texts, and postcards to remind them your team is there for them. That you’re there when a life event happens and it’s time for a refi or to buy a new house. Don’t wait until your clients are with another lender, get Connector today and keep your clients yours!

Own Up is the nation’s only mortgage concierge marketplace enabling mortgage companies, banks, and credit unions to access exclusive, high intent and highly qualified borrowers. A recipient of numerous accolades, including Fintech Breakthrough’s “Best Digital Mortgage Platform,” Own Up is currently onboarding select lenders to further its national expansion. Own Up seamlessly integrates into all major lender CRMs, lead management systems and pricing engines. Lenders interested in acquiring qualified leads with industry-leading conversion should reach out to learn more.

No matter what the groundhog sees today, Warehouse Lenders and IMBs are enjoying the sunshine on OptiFunder’s Warehouse Management System. After tripling market share in 2023, 1 out of every 8 loans originated by IMBs now fund through OptiFunder and the platform offers more connectivity between originators and warehouse lenders than ever before. Mortgage lenders know they are making the best decisions when allocating loan pipelines to their integrated warehouse partners, and with recent losses for IMBs of $624 per loan, every transaction matters. Warehouse banks help their customers maximize utilization by enabling secure, automated funding requests directly from their customers’ systems of record and can send messages, status updates, and manage custom incentives direct to their customers in real time. For more information, visit OptiFunder’s booth at Experience 23 or request a demo.

Demand credit pricing doesn’t change in 2023. Unless our data suppliers change their pricing, Service 1st won’t budge. With faster turn times & unmatched customer service, we are the mortgage industry’s preferred credit and verification partner for technology-forward solutions: 50.1% completed under 12 business hours and 84% in less than 48 hours! Easy onboarding, no implementation fees, and multiple service cascades, including VOE. There’s a reason we’re called Service 1stSchedule a meeting today.”

Tired of having your buyers put their home search on hold while they save for a down payment? Help those clients start their home buying journey sooner by offering DPA Advantage, a government sponsored plan administered by AFR Wholesale®. DPA Advantage offers eligible homebuyers a completely forgivable grant option in the amount of 2% or 3.5%, making quality housing more affordable. Plus, AFR recently both improved our pricing and removed overlays, making DPA Advantage accessible to even more potential homeowners. Together, we can bring more families home. For more information about becoming an AFR partner so you can offer DPA Advantage to your clients, go to afrwholesale.com, email sales@afrwholesale.com or call 1-800-375-6071.

What’s my company worth?


Many owners of lenders around the nation are earnestly interested in making a decision about what to do with their company before a decision is made for them. I have received this question from a number of owners of small lenders. ‘Rob, is it only the lenders who have servicing who have any value? Or can small lenders with decent market share like mine have interest from buyers?”

I turned to STRATMOR’s M&A team, and Garth Graham replied. “Great question, Rob, and one we field nearly every day. We are hearing from lenders who are inquiring about the M&A space, and often trying to find out what is going on and what they should do.

“The answer is that there continues to be good deals for potential sellers, and the reason is that there are a lot of buyers we work with who continue to want to grow market share in a down market. We closed three deals in the last 60 days, and all had upfront premiums with solid earn outs, with a good cultural fit for the parties. Often the premium being paid is driven by the ability for the seller to add the production without having to add all the corporate expense, so it can be painful decisions about the corporate depts (secondary, HR, Risk, technology etc.), but the end result is that the production is worth more to the buyer than it is to the seller due to the cost savings. And that shows up on premium offers. And the seller gets the balance sheet plus a share of that financial benefit. So, it can be a potential win-win. Of course, it has to be a deal that makes sense for the LOs, and production staff too, so that is why culture matters so much.” Thank you, Garth.

In valuing a company, a potential buyer will look at the audited net worth and the discounted cash flows, usually for the next three years of estimated earnings. (The devil’s in the details and assumptions!) The value to a potential buyer will depend on different factors, and three main variables often used in an analysis are loan volumes, margins, cost structure, & profitability, and the current policies, procedures, & business model. Of course, repurchase obligations are included, as well as existing or potential liabilities. Are there outstanding lawsuits? Is the buyer buying the entire company, or a percentage of ownership… a minority ownership has very little value. It is not a simple process, and making assumptions about the future is problematic. A thorough examination of these factors is where the value of a competent advisor shows itself.

Capital markets: keep housing prices in perspective


Looking to receive more TBA bids? If your opportunities to trade with regional broker-dealers are becoming increasingly difficult to manage, or you are relying on over-the-phone TBA trading and manual spreadsheets to conduct and track trades, Agile is a more efficient and transparent way to engage with the broker-dealer community. Secure better bids and diversify your trading volume. Read this recent case study to learn how Towne Mortgage is leveraging Agile to grow within the broker-dealer community. Agile’s RFQ platform and Agile’s hands-on support team helped Towne gain access to a deeper bench of broker-dealers, resulting in more competitive trades and simpler trade reconciliation. Agile’s platform, which is exclusively licensed by MCT, made it easy to process multiple Assignment of Trades (AOTs), saving valuable time and significantly reducing the chance of error. If you have questions about this case study or would like more information on Agile, please contact Agile today.

In terms of bond market activity, as was universally expected, the FOMC raised its target range for the federal funds rate by 25-basis points to a new range of 4.50 percent to 4.75 percent at the conclusion of its policy meeting yesterday. This 25-basis point hike marks a step down from December’s 50-basis point hike and from the four straight 75-basis point increases prior to that. The tightening cycle likely is not over yet as the FOMC noted that “ongoing increases in the target range will be appropriate.”

Inflation, though falling, is still too high, and Fed Chair Powell said during his press conference that the central bank is whiskey-bent and hell-bound on getting rates to a restrictive level, despite Wall Street’s hopes for an imminent pause and subsequent cut in rates. For those optimists out there looking for rate cuts later this year, don’t hold your breath. The ultimate result was mortgage rates falling for a second consecutive day after Chair Powell’s comments were actually less hawkish than expected, setting off a sharp rally into the settlement close. Keep in mind that while the Federal Reserve controls short-term rates, long-term rates (e.g., 30-year mortgage rates) are primarily a function of market expectations for the path of the economy.

As far as economic releases went, we learned yesterday that the economy added 106k jobs in January, according to the ADP Employment Survey. This was lower than the consensus estimate of 158k, and the 185k forecast for tomorrow’s jobs report. Apparently, there was some sort of weather-related impact which depressed the number. We also learned that total construction spending declined 0.4 percent during December as construction downshifted to end 2022. The January ISM Manufacturing Index dropped further into contractionary territory, marking the third consecutive month of declines to now reach its lowest level since May 2020. The cumulative effect of rate hikes around the globe is clearly adversely impacting demand.

Before the market opened today in the U.S., both the Bank of England and European Central Bank raised their rates by 50 basis points in somewhat of a surprise. In this country, today’s economic calendar is already underway. Job cuts from Challenger for January: U.S.-based employers announced 102,943 cuts in January, a 136% increase from the 43,651 cuts announced in December. We’ve also had weekly jobless claims (183k, lower than expected and indicating a strong jobs picture), and preliminary Q4 productivity and unit labor costs (+3 percent and -1.1 percent, respectively). Ahead are December factory orders and Freddie Mac’s latest Primary Mortgage Market Survey. We begin Thursday with Agency MBS prices better slightly and the 10-year yielding 3.38 after closing yesterday at 3.40 percent with the 20-year at 4.04.

Sometimes things aren’t always as they seem, as shown in this short clever video titled “Blind Date Surprise.” (Watch to the end.)

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. “Productivity: More Important Than Ever” is the current blog. 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 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