Feb. 27: Readers’ letters on the CFPB, rates, and how lenders will keep lending; Saturday Spotlight: Symmetry Lending
Some questions are difficult to answer. What does the bacon industry have against re-sealable packaging? What is it about certain loan originators who, when rates actually go “up” to 3.25%, think the sky is falling and world ending? Will all the refinance rate jockeys will go back to selling cars? But something that can be answered is, “What does someone in their late 20s or 30s outside of our industry think about home ownership and how do they select a lender? One of the podcasts this week included an interview with insight into exactly that: To listen to the interview with Ariadne Smith, please click here and scroll to 2.23.21. Lenders are also focused on potential changes in the regulatory environment and on the pressure on rates to move higher. Let’s see what readers are saying about both.
Saturday Company Spotlight: Symmetry Lending provides dedicated focus on delivering Piggyback HELOC solutions to every loan originator’s toolkit.
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).
Symmetry was founded in 2018 with a leadership team that brings decades of specialized Piggyback HELOC expertise. This focus is driven by a deep understanding of how a Concurrent or Post-Close Piggyback HELOC can bring unique solutions to borrowers, loan officers, and their real estate agent referral sources. As a perfect complement to these solutions, Symmetry commits to a unique and industry-leading experience of Service, Speed, and Simplicity.
In less than 3 years, Symmetry has expanded its offering across 36 states with operational offices throughout the country facilitating nearly $3 billion in Piggyback HELOCs. Symmetry’s team of Area Managers is dedicated to providing education and support to mortgage origination professionals regarding the benefits of structuring their agency or jumbo 1st mortgage with a Symmetry Piggyback HELOC.
Tell us how your company maintains its culture in the office, or in a work-from-home environment if applicable.
Like many others in the industry, Symmetry transitioned to a remote working environment in March 2020. The team has nearly doubled since then, testing the will and dedication of our leaders, who exceeded all expectations by onboarding and training almost 100 new team members. Our culture of passion and care enabled these leaders to accomplish all of this without slipping on our commitment to Service, Speed, and Simplicity. To the credit of these team members, Symmetry is proud to have never missed a beat and continued to offer Piggyback HELOCs through the early-COVID turbulence.
Since inception, our company has prioritized a solutions-oriented experience that is so much more than an assembly line of HELOCs. Every submission is treated with the understanding that it is the most important file on somebody’s desk, whether that be the loan officer, real estate agent, or, of course, the borrower. As such, every submission deserves the highest priority of care and attention to detail.
What things you are most proud of that don’t have to do with sales?
Symmetry is so proud of, and thankful for, the many friends, colleagues, and partners that have supported us with the launch and growth of this special company. While “perfect” is hardly a word that is often associated with the mortgage industry, Symmetry embraces a “pursuit of perfection” effort that keeps us focused on over delivering for our mortgage origination and capital markets partners. With a mindset that “businesses don’t make decisions, people do”, our entire team takes great pride in our collective and individual reputations and relationships, internally and externally.
Fun fact about Symmetry Lending
Prior to Symmetry’s existence, most of its leadership team established a close working relationship with each other many years earlier through various loan origination, servicing, and capital markets transactions across multiple asset classes at multiple organizations. These long-standing relationships are fundamental to our underlying culture.
Quyen Truong, a partner at Stroock & Stroock & Lavan (in Washington, D.C.) and former Assistant Director of the Consumer Financial Protection Bureau (CFPB) wrote with some thoughts on the Biden administration’s new developments in regulatory/enforcement activities.
“Consumer financial protection is a top regulatory priority for the Biden administration, heightened by COVID-19 financial hardship and its outsized impact on vulnerable populations. A crucial first step for regulators is analyzing potential actions to address the Trump Administration’s rollback in key areas where implementation of the Dodd-Frank Act and other responses to the 2008-2009 crisis had built up a demanding new regulatory framework.
Another is scrutiny of industry interactions with consumers during the pandemic including, specifically, in the area of loan servicing, where supervision and enforcement efforts will focus on mortgage forbearance and foreclosure, as well as fair lending and disparate impact. For instance, consumer communications (from disclosures regarding forbearance arrangements, to implementation management and credit reporting, to handling of consumer disputes) will be the subject of close review.
“Given the importance of consumer financial protection to the Biden regulatory reform agenda, the past month has seen rapid change, most prominently at the CFPB. Changing the CFPB’s leadership was a Day 1 priority for President Biden, and the Bureau’s Acting Director Dave Uejo immediately drove realignment of the agency’s approach. Whereas former Director Kathy Kraninger had announced a lenient approach toward financial institutions during the pandemic due to the operational challenges they face, the new CFPB is ramping up supervisory and enforcement scrutiny of institutions’ interactions with consumers and small businesses struggling with COVID-19 financial hardship.
“Some practices which the Kranginger-era CPFB noted but did not strike will become potential subjects for supervisory Matters Requiring Attention, if not enforcement action. The CFPB is undertaking a major hiring drive to beef up its legal team across the board, including in supervision, enforcement, rulemaking, as well legal staff to prepare and defend against likely challenges to its actions. In the face of these regulatory priorities, companies likewise must place top priority on review of their practices and take rapid action to tighten their compliance management systems and, if necessary, modify their practices and consider remedial steps to mitigate liability risks.” Thank you, Quyen!
Rates go up, rates go down
Mortgage rates are like the weather: you can talk about the subject and understand it, but you can’t do anything about it. It is important for lenders to know what’s going on out there, and for originators to keep things in perspective. Consumer spending has increased, COVID cases appear, hopefully, on the downward path, and the housing market continues to be strong. Economists everywhere are talking about an economic recovery and possible inflation. The low rates have been brought on by the slow economy and the Fed stepping in with dramatic quantitative easing. Lenders, MLOs, and borrowers have benefitted. Was a lender out there thinking mortgage rates would go to zero percent? As the pandemic (hopefully) subsides and the U.S. economy gains strength over the months, we can expect the Fed to eventually reduce its daily purchases of Treasuries and Agency mortgage-backed securities. Still, rates are low.
None of us can influence the direction of mortgage rates. But smart lenders are controlling their response, and how they and their MLOs react. For example, the CEO of Bay Equity, Brett McGovern, reminded his staff, “We are coming off a time with unexpected low rates. They are still low, despite having gone up in recent weeks. Due to the pandemic our government is incurring huge deficit spending, with trillions of dollars more of stimulus coming. We have a growing Federal Reserve balance sheet as the Fed continues to purchase Treasury and MBS daily. The Federal Reserve has made it clear it can change course quickly based on economic conditions. We can do the same. Even though rates have moved higher, I still see a favorable environment for all or most of 2021 with rates still historically low. But we must be aware of opposing pressures and be ready for change. We continue to execute a disciplined, steady approach to protecting our locked pipeline from interest rate moves.
“No one has a crystal ball, and anyone who says they do is misleading you. Yes, the current move higher in rates will affect the industry’s volume. What should LOs be thinking about as we head into rate territory we haven’t been in since early 2020? My advice remains the same: Control what you can control, work hard, and don’t forget your referral base and purchase business as a fallback if rates stay here or move higher.”
From Southern California, Don Schmidt sent, “I’ve been reading your newsletter for years but have never sent a comment. I totally agree with your comment about interest rates: What goes down must come up. I’m a little more cautious about the ‘when we’re out of this,’ but it’s coming. It’s my opinion that real estate is going to get a double whammy. I think once people are vaccinated and feel more comfortable to travel, they are going to say, ‘screw it,’ rates are climbing, everything is overpriced, I’m tired of being out bid on this, time is no longer of the essence, I want to see my family, I’m done with this until next year. The majority of people that have relocated out of major, high density areas are probably finished with their purchases. On top of all that, real estate is way overdue for a correction. When this market turns, it’s going to happen in a matter of weeks. I think we’ve seen the top of the market.”
Industry vet James Johnson has some thoughts on interest rates and general economic conditions. “The stock market has been trading at all-time highs based on a powerful economic recovery and ‘zero rates’ forever. The Fed is printing money and monetizing our debt like never before. If you believe that inflation is always a monetary event, then you have to be concerned with all of the money we are printing.
“But even in light of an apparent upcoming economic rebound, the Federal Reserve is holding onto negative real interest rates (nominal rates lower than the inflation rate). Every time things get a bit dicey the Fed talks down any possible bad outcomes. Are market investors onto this, and have they thrown the ‘BS flag’ at the Fed?
“Investors are obviously looking at a huge economic boom. Maybe it will only be temporary, 6-9 months, but most agree it is coming. At the same time it seems as if the Fed is saying, ‘Look, you investors should be happy to accept our negative rate policies. Your return will be less than the rate of inflation, and you should be happy with that.’
“But why? No wonder other assets, like stocks, housing, etc., are trading at bubble-like levels. Thursday the market threw the ‘BS flag.’ Investors seemed to say, ‘If we are going to buy your Treasury bonds, we want some sort of real return.’ I do not see the pressure relenting on this.
“Many investors have worries about asset prices and maybe bubbles forming. The Fed must talk that down, and it continues to do so. But is its pitch starting to lose credibility? There is a lot of risk for real inflation. This next round of stimulus will be 3-4 times the lost pandemic income to consumers. Of course that is inflationary. But maybe we are at the point where the Fed will not be successful in talking down rates. It is a total fabrication.
“If I am right about this, there is just more pressure on rates going forward. It is looking like a reprieve Friday, but the pressure will remain. Over time you have to think this rate pressure will continue until we get to some real rate of return for Treasuries.
“The fear for investors is that rates go higher than the Fed is willing to tolerate, and the Federal Open Market Committee doubles its monthly QE purchases to $200-250 billion. That would bring rates down but balloon the Fed’s balance sheet to $10 trillion. At that level, the NY Fed would be buying an uncomfortable percentage of current Agency MBS production and each new Treasury issue. The Fed seems unwilling to do that right now, but I can’t help but wonder what the tipping point could be? In the meantime, maybe we are looking at a boycott by bond investors, as they wait for a positive real rate. Those that have owned the 30-year Treasury this year have been clobbered.”
James’ note wrapped up with, “We are most likely looking at one of the greatest economic booms in the last 100 years. Yet the Fed is demanding that bond investors settle for a negative real yield on Treasury debt. Is this revenge of the bond vigilantes?”
A group of country friends from the Cottonwood Baptist Church wanted to get together on a regular basis to socialize, and play games. The lady of the house was to prepare the meal.
When it ca me time for Al and Janet to be the hosts, Janet wanted to outdo all the others. Janet decided to have mushroom-smothered steak, but mushrooms are expensive. She then told her husband, “No mushrooms, they are too high.”
He said, “Why don’t you go down in the pasture and pick some of those mushrooms? There are plenty in the creek bed.”
She said, “No, some wild mushrooms are poison.”
He said, “Well, I see varmints eating them and they’re OK.”
So, Janet decided to give it a try. She picked a bunch, washed, sliced, and diced them for her smothered steak. Then she went out on the back porch and gave Ol’ Spot (the yard dog) a double handful. Ol’ Spot ate every bite. All morning long, Janet watched Ol’ Spot and the wild mushrooms didn’t seem to affect him, so she decided to use them.
The meal was a great success, and Janet even hired a helper lady from town to help her serve. She had on a white apron and a fancy little cap on her head.
After everyone had finished, they relaxed, socialized, and played Phase 10 and Mexican Train dominoes. About then, the helper lady from town, came in and whispered in Janet’s ear, “Mrs. Williams, Ol’ Spot just died.”
Janet went into hysterics, and then called the doctor to explain what happened.
The doctor said, “That’s bad, but I think we can take care of it. I will call for an ambulance and I will be there as quick as possible. We’ll give everyone enemas and we will pump out everyone’s stomach. Everything will be fine – just keep them calm.”
Soon they could hear the siren as the ambulance was coming down the road. The EMT’s and the doctor had suitcases, syringes, and a stomach pump.
One by one, they took each person into the bathroom, gave them an enema, and pumped out their stomach. After the last one was finished, the doctor came out and said, “I think everything will be fine now.” Then he left.
They were all looking pretty weak sitting around the living room, and about this time, the helper lady came in and said, “You know, that fellow that ran over Ol’ Spot never even stopped.”
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