Feb. 6: Notes on housing and the economy; capital being injected into vendors; Saturday Spotlight: FlexPoint, Inc.
Much like me releasing this commentary AND being Myrtle’s personal chef, there are a lot of Americans out there who have two jobs, and our Census Bureau has been tracking the rise of those individuals. Over the past 20 years, the percentage of U.S. workers who hold more than one job has increased by a percentage point to 7.8 percent of all employed individuals. Women hold multiple jobs at a higher rate (9.1 percent) than men (6.6 percent), and the industries containing the highest percentage of workers with two jobs are healthcare and social assistance, accommodation and food services, and retail trade. Lenders must have the agility to underwrite these loans. More borrower & housing demographics below.
Saturday Spotlight: FlexPoint, Inc.: making the home financing process as simple and straightforward as possible.
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).
The company was founded 26 years ago in California to provide and create financing for the purpose of homeownership. We have a full spectrum of products: Reverse Mortgages, Non-QM, Conforming, Direct Seller Servicer with Fannie Mae and Freddie Mac, extensive experience with Full Eagle FHA, and VA loans. In the recent year, we have increased production and added numerous software solutions to aide in ease of process- including a best-in-class consumer portal/point of sale.
Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why.
We are continuing to give back as an organization to our country’s veterans. A portion of every loan is donated to either Disabled American Veterans Charitable Service Trust, Gary Sinise Foundation, or Folds of Honor.
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?
As an organization, we believe in identifying opportunities to assist individuals in accomplishing their goals in leadership. Our Mentorship program fosters empowering team members to mentor others and develop compassionate, data-based leadership skills. For our Loan Officers, we sponsor their Continuing Education, corporate training, and 3rd party industry enhancement courses through an internal platform to ensure we’re all elevating ourselves and exceeding industry standards.
Tell us how your company maintains its culture in the office, or in a work-from-home environment if applicable.
During this unique time in history, we have embraced what it means to enrich our Culture Core Values and I.C.E. (Integrity, Compassion and Excellence). We remain connected via Google Meet video calls, give employees the uninhibited choice to work from wherever they feel safest, utilize 100% cloud-based technology, and have 24/7 virtual IT support.
Things you are most proud of that don’t have to do with sales.
Our core values are simple: Do the right thing, include all the relevant information, and be genuinely courteous. We take tremendous pride in the human aspect of our business. We are dedicated to our employee’s overall well-being, ensuring that they are wholly supported to remain focused on our customers during business hours.
Fun facts about FlexPoint Inc.
None of our locations have paid parking or an elevator! FlexPoint has maintained an entrepreneurial environment with a fantastic customer satisfaction rating and at the same time maintained 99% of our employees over the last two years.
(For more information on having your firm, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)
Housing and the economy
Ten years ago, large corporations were soaking up the majority of homes that came on the market. They still own them, and are certainly reaping the financial benefits as house prices continue to move higher. This time around, housing has been a bright spot in this economy, and it is expected to continue. This is in stark contrast to the employment data (as we saw yesterday) which has continue to reflect what we all see: lower paying hospitality and service jobs are suffering. But MLOs will tell you that segment of the population is usually not the one buying homes.
Yesterday’s commentary stated, “Remember when the CARES Act was signed, and all the ‘experts’ thought forbearance issues would crush our market? (I wonder if they were the same ones predicting the wave of REOs and the glut on the real estate markets ten years ago, which never materialized as homes were snapped up by a variety of buyers.)”
In response I received this note from Ohio’s Nick Chucales. “I take exception with this statement you made in this morning’s commentary. I led investigations in real estate matters for a state agency from 2010-2015 and can assure you that the REO crisis from the real estate bubble and resulting crash was real, and cost lenders and taxpayers billions. The media never reported the real losses because they were too busy fawning over Obama.
“I had an opportunity to give a presentation in the chamber of the Speaker of the House to various members of Congress, and to say they were floored when they were presented with losses in my state alone would be an understatement. If you are ever interested in learning what happened to all of the REO’s and how it worked I would be happy to share with you. In the current economic cycle there are homeowners that will never be able to catch up on the forbearance payments. I find it interesting that the current administration is tying foreclosure, eviction moratoriums, unemployment benefits, and student loan payments to a September 2021 date. I am guessing we may see a national shutdown before then and that will really be a game changer for the housing market.” Thank you, Nick!
The Dallas Fed recently published a paper on COVID-19 fueling sudden demand for suburban housing. COVID-19 disrupted what had been a period of sustained growth within city centers, and though new listings fell by a roughly similar magnitude in the urban centers and the suburbs during the early months of the pandemic, the stagnant inventory since then has occurred disproportionately around big cities rather than in suburbs and smaller metro areas.
Even as the national housing market has rebounded since June, sales near major metro centers have continued to underperform versus the suburbs. In August, new listings in urban centers were 16 percent higher than in August 2019, while those in the suburbs were flat to down.
Even now at the start of 2021, a steady level of inventory near city centers signals the ongoing demand shift from large urban centers toward the suburbs has continued even with mass vaccination and a resumption of normal life hopefully on the imminent horizon.
With remote working rates expected to remain well above pre-pandemic levels, demand for housing near these urban centers may have permanently declined. Many builders have noted that buyers are looking for dedicated office and virtual school spaces in particular, increasing demand for homes with more square footage in cheaper locations. Fortunately, the entire housing market remains relatively strong. Homeownership rates over the middle half of 2020 saw the same gains as in the four years from 1997 to 2000.
The Mortgage Bankers Association’s much-heralded and oft-quoted Dr. Michael Fratantoni recently presented his latest economic and mortgage market thoughts. Monthly payroll growth slowed at year end, and the overall economy moderated, as evidenced by an unemployment rate that appears on the rise again. With the Fed funds rate expected to be at zero through 2022, the lending environment should remain favorable, evidenced by strong, sustained refinance volumes. Purchase applications also show strong continued growth, with strong home sales despite tight inventory. For first-time homebuyers, some welcome news in that home price appreciation is expected to decelerate.
After $3.6 trillion of originations in 2020, the MBA expects $2.75 trillion in 2021, including $1.56 trillion purchase originations. And with IMB (independent mortgage bank) net production profits surpassing 200 bps late last year, the question is now whether those production spreads will hold seeing as mortgage-Treasury spreads have narrowed. The mortgage market is still dealing with elevated delinquencies after the initial spike in Q2 2020, and Ginnie Mae continues to have a higher percentage of servicing portfolio volume in forbearance than Fannie Mae and Freddie Mac.
Vendors: a random sample of who is doing what, and raising money
(As a quick note, I am often asked about what vendor is doing what. A good place to start a search for vendors is on The Mortgage List.)
Doorvest announced a $2.5 million in seed funding, bringing its overall funding to date to $3.6M with Mucker Capital as the lead investor. Doorvest will be launching a Home Renovation Guarantee product that will guarantee all renovation-related repairs and maintenance on investment properties for one year. This year-long guarantee is a first for the real estate investment industry, which offers shorter-term guarantees, and comes in tandem with guaranteed tenant placement for one year, meaning customers can anticipate all costs affiliated with their investment upfront.
Roostify secured a $32 million round of financing led by Ten Coves Capital. “The Series C funding will accelerate Roostify’s vision of simplifying home lending without compromising on quality and time-to-market. With this financing, Roostify has now raised $65M in total capital. “The company intends to use this funding to leverage innovative AI to simplify the entire home buying experience and grow its staff by 50 percent… Roostify is transforming the home lending experience through meaningful AI and data-driven capabilities. Ten Coves was joined by principals at Stone Point Capital. Returning investors Cota Capital, Mouro Capital, Colchis Capital, Point72 Ventures, and JPMorgan Chase also participated in this funding round.
Blue Sage Solutions closed a financing round from Goldman Sachs Growth Equity, which focuses exclusively on investments in growth stage and technology-driven companies. Blue Sage doubled revenues in 2020 from the previous year. Blue Sage will use the capital to continue investing in growth initiatives, including developing additional features that will further strengthen its Digital Lending Platform.
Nashville’s Built Technologies, a construction finance software and construction payment technology company, closed an $88 million Series C funding round.
SocialSurvey announced a new platform launch and name change, having evolved and grown its CX technology. Now a true, consolidated, impactful, all-in-one experience platform, as of February 1st SocialSurvey is Experience.com. Experience.com’s Management Platform (XMP) allows enterprises to automate the collection of 1-to-1 experience moments, connect that data to the people who can impact or correct those experiences in real-time, and celebrate those experiences to build social proof.
Sagent, a fintech company modernizing mortgage and consumer loan servicing for America’s top banks and lenders, announced a seven-year renewal and partnership expansion with Trustmark. Trustmark will continue the use of two Sagent mortgage servicing platforms: LoanServ, a real-time system of record, and Account Connect, a servicer-branded, consumer-facing dashboard for homeowners.
LoanLogics has launched LoanHD® HMDA DirectCheck™, a new software that easily analyzes HMDA data for compliance with mortgage industry regulations and quickly identifies loans needing manual exception review. Using data from a lender’s trusted source, LoanHD® HMDA DirectCheck™ triggers a proprietary rules engine that automatically clears loans with no errors, often the vast majority of loans, and identifies loans with defects for manual exception review. The HMDA audit worksheet enables data to be edited and conditions cleared in a matter of a few minutes.
Waterstone Mortgage has moved toward a fully digital mortgage process via the implementation of Snapdocs, the leading digital mortgage platform. Waterstone Mortgage has moved from doing zero hybrid eClosings in 2019 to having them make up more than 70 percent of its business in 2020. On average, hybrid eClosings are already proving to be 60 percent faster than wet closings, with the majority of clients reviewing documents online within Snapdocs ahead of their appointment, resulting in 80 percent reduction in errors. Waterstone Mortgage has also started to incorporate eNote and full Remote Online Notary (RON) eClosings, where customers conduct the entire closing appointment virtually, beginning with eSigning documents then completing the appointment with the notary via webcam.
Reverse Mortgage Funding LLC (RMF), one of the largest issuers of reverse mortgages in the nation, has released two digital Social Security guides. One helps consumers maximize their retirement benefits, and a second to support planning professionals in better serving their clients’ long-term financial goals. The guides cover a wide array of topics including the Cost-of-Live Adjustment (COLA) for 2021 and the major changes in recent years to benefit claiming strategies. Consumers can download the digital guide at reversefacts.com/ss2021. Financial professionals can download their free digital guide through RetirementExpertsNetwork.com, RMF’s free online educational platform for advisors.
ServiceLink’s EXOS Express Pass technology has integrated with Cloudvirga’s Digital Mortgage Platform providing Lenders the ability to accelerate title decisions, digital title delivery and close more refinance loans faster with less complexity. With EXOS Express Pass, lenders can cut days from their origination timeline by receiving an optimized clear-to-close path within seconds.
As a reminder that vendors should satisfy certain needs of the consumer, Greg Chaffin with First Funding USA sent along, “Rob, FirstFunding, Inc. rolled out the FlexClose Funding program about two years ago. During the adoption curve we learned that many real estate agents, mortgage loan officers, mortgage lenders, homebuilders, and settlement agents have different understandings of the decision process that occurs before sending mortgage loan funds to escrow. There seemed to be a disconnect in the evaluation of risk elements associated with advancing funds prior to a loan’s disbursement, including timing risks, calculation/compliance risks, acceptance of credit risks, fraud risks, etc.
“One of the most common misconceptions is the time required to have loan funds sent via wire transfer to be recognized in escrow with sufficient time to close and disburse. FlexClose Funding reduces the time required to transmit warehouse financing funds to escrow and effectively expands the window to receive/disburse mortgage loan funds. A FlexClose Funding eligible transaction is not dependent upon the rigid deadlines of the Fed’s wire transfer system. This benefits all parties to the transaction including the buyer/consumer, mortgage lenders, sellers and even escrow agents, expediting both refinance and purchase money transactions. Those that see the potential of an expanded funding window and immediacy of funds are preparing for the purchase market but know that it also helps relieve pressure and anxiety during the current crush of refinance transactions.”
(The pinnacle of American football is tomorrow. Warning: rated PG/R, depending on your upbringing. This tall tale is from Jacksonville Jaguar’s head coach Urban Meyer, and focuses on a turtle and Woody Hayes who coached Ohio State for 27 years.)
“Ohio State had lost a bowl game, so Earl Bruce brings in Woody Hayes to the locker room. I had been there just a week and I’m thinking, ‘Holy smokes, this is Coach Hayes!’ I’m sitting in the back. Coach Hayes was not healthy at the time, but stands up and starts laying into the coaching staff about toughness. That we have no toughness in the program. That’s why we lost the game. On and on and screaming, this old guy pounding the table. He screams, ‘We have no toughness, and the reason is because you’re not tough. No one on this staff is tough enough, and that’s a problem.’
“He reaches down and grabs this box, slides the top off, and there was something in the box moving around. He reaches in and he pulls out this turtle. He reaches down, this turtle’s snapping and he says, ‘I’m going to show you toughness.’ He unzips his pants and takes out whatever he takes out. The turtle reaches up and snaps at him. You see the veins and the sweat (on Hayes). He screams at the coaches, ‘That’s toughness! That’s f’n toughness!’ He reaches down, pokes the turtle right in the eye and it falls off. He wipes the sweat off his forehead and says, ‘That’s the problem. We don’t have anybody in this room tough enough to do that right there.’
“One assistant raises his hand and says, ‘Coach, I’d do this. Just promise not to poke me in the eye.'”
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, “Lenders and Vendors Going Public: Pros and Cons”. 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.)