July 8: Opinions on trigger leads, perspective on the lending business climate, and the jobs data; vendor snippets

Builder stocks are on a tear, reminding us that even though segments of real estate and lending are related they don’t move in unison. We’ve watched housing stocks outperform the broader equity market in 2023. Home builder stocks are up 40 percent this year, fueled by a scarcity in existing housing supply, strong seasonal demand, and moderating interest rates. The housing sector has enjoyed a strong start to the year with demographic trends supporting further market strength. Not so much the lending sector, as lenders grapple for every potential borrower’s business with all-cash buyers and competitors, along with interest rates that show no inclination of going down. According to Curinos, June 2023 funded mortgage volume decreased 33% YoY but increased 2% MoM. In the Retail channel, funded volume was down 37% YoY and up 4% MoM. The average 30-year conforming retail funded rate in June was 6.51%, 15bps higher than May and 118bps higher than the same month last year. (Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures. We drill into this data further here.)

The labor market doesn’t care about experts predicting a recession

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All of the experts who were predicting lower rates by the summer are dead wrong. And one of the factors that they underestimated was the employment situation, certainly exemplified by this week’s data. Yesterday two well-known economists differed (imagine that!) on the possible result of the employment numbers.

MBA SVP and Chief Economist Mike Fratantoni reacted to Friday’s U.S. Bureau of Labor Statistics report on employment conditions in June. “Job gains slowed in June and estimates of growth were reduced for the prior two months. Although the unemployment rate dropped a tenth, the household survey did show some signs of a weaker market, with the U-6 increasing.

“The incoming economic data has been filled with conflicting signals. Manufacturing activity remains quite weak, while consumer spending has held up somewhat better, and new home construction and sales have picked up. Our forecast is for a slowdown in economic activity in the second half of 2023, with a recovery in early 2024. The June employment report reinforces that forecast.

“While job growth and wage growth are trending down, both are still well above the pace that would be consistent with the Federal Reserve’s inflation target. We now expect that the FOMC will raise the federal funds target another 25 basis points at its July meeting.”

But NAR Chief Economist Lawrence Yun wrote, “Jobs have been added continuously since the lifting of the lockdown, but the latest monthly net gain of 209,000 is the smallest in 2.5 years. There are 3.9 million more Americans receiving payroll checks now compared to the pre-pandemic highs of early 2020. The unemployment rate is still tight at 3.6%, but wage growth is moderating. Wages are no longer rising in the 5-6% range but at 4.35% in June. Workers’ standard of living, however, is rising for the first time in two years, even with lower wage gains because consumer price inflation is a bit lower.

“The weaker job market combined with decelerating wage growth and calming consumer price inflation are clear indications for the Federal Reserve to stop raising interest rates. The American dream of homeownership has been a challenge for younger adults. High mortgage rates, along with the lack of housing inventory, have been the main hindrance. More effort should be directed toward raising the housing supply by focusing on worker training in homebuilding and lessening barriers to construction so that once interest rates decline, there will not be a resurgence of rapid home price growth.”

Keep your chin up, lenders and LOs

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From Ohio, Marty Bihn, a branch manager with Fairway Independent, came an interesting tale on business strategy.

“Johnny and Suzy are fighting in front of the fridge. “Mine!” “No, MINE!” they repeat as mom walks in, grabbing each by the back of the neck to separate. There is only ONE orange left and each wants it. So, mom does the only fair thing (wait for it…we all think it….): she cuts in half. Was that the fairest? Well, Johnny was just hungry. But Suzy was making potpourri as a gift for mom for her birthday and only needed the peel. So, both could have gotten all of what they wanted… They just didn’t communicate.

“A husband and wife are planning a vacation. They agreed, after the previous vacation, that he could pick the next vacation and a fishing trip was on deck. But she wants to push that out for a year because her family is having a surprise party for her favorite aunt near a vacation spot they love. They argue and he feels ‘cheated,’ until a good friend of his tells him about a world class fishing option right in the area of her family outing, that is perfect seasonally, and he agrees. They have a great time, and he catches some once-in-a-lifetime fish.

“Did anyone get exactly what they want? No, but because they ultimately communicated, they both got to get most of what they wanted.

“In this season of belt tightening and re-evaluating, be very careful of assuming the other side of things. Offer kindness and care in sharing the why on things you want, not just digging your heels in. We don’t want things cut that we like, like comp or marketing budgets. But we want a better price to compete. We want a file cleared but don’t understand how tough Freddie has become on income or wet basements. But non-saleable loans hurt us all and make it harder to sharpen our price and profit.

“In our personal lives, take the time and care to seek out the why, to ask some extra questions and listen. You will be shocked at how much easier it is to find solutions. In business, don’t be afraid to ask the questions you really want to know the answers to. To a real estate agent: “Do you have a loan officer that is your go to person?” (How many of us have talked and been told “Well, I give out three names” and it isn’t true?)

“Our business was too easy for too long. Please re-read that. It was. Many companies and people jumped in for that easy money and sort of ruined things. This season had to happen; it does in all businesses over time. Think of the auto industry when Japan challenged it in the 80’s.

“This is our moment to look at the orange, communicate, and figure things out. Don’t get a knife out and start hacking halves. Think. Communicate. Ask the tough questions. Be vulnerable. ‘I cannot afford to have my hours/days cut!’ ‘Well, can you afford to be let go?’ ‘I don’t like doing those loans!’ ‘Well, do you like your paychecks?’

There are always solutions. On my bad days I convince myself they only involve hacking things away. On the good days, when I make myself think and ask and listen, this season goes from tough to beautiful and we can see clearly the groundwork being laid for much better times. It is coming, it always is. We can determine if we hack halves or get communicating and get creative in the meantime. Remember: Johnny and Suzy BOTH could have gotten all they wanted.”

And Fairway Independent’s Christy Vann wrote, “I used to ‘keep playing’ because I had to. Now ‘I keep playing’ because I want to. I have had my share of tragedy, struggles, hardships, detours, and disappointments. Earlier in life I was trying to keep from sinking instead of swimming, forced to do things because of circumstances.  My life consisted of work and kids; There was no ‘me’ time.

“When my youngest son graduated from high school and left to go to college, I was an empty nester with all of the emotions and thoughts that go with it. I felt like I didn’t have anything to do. But I did know it was ‘me’ time to rediscover myself and pour back into the pieces of me that I lost along the way. I could continue to be miserable and lonely or work hard to find a way out of the mindset that I was just here to get by and that I had no purpose.

“It’s a game changer when you allow yourself to shift your energy from ‘living to live’ to ‘living to thrive.’ We fear what is before us because it is the unknown, but by doing that we keep doors closed that could be the next greatest thing to happen to us. People in our industry should allow themselves to enjoy the gift of discovery. No matter what aspect of your life you apply it to, dive into it. Find what helps make you thrive. Love yourself. Love the closed doors in front of you because they hold opportunities to make you the best version of YOU if you allow them too.” Thank you, Christy.

Trigger leads in the news

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Recall that in mid-June Rep. John Rose (R-TN) introduced H.R. 4198, the Protecting Consumers from Abusive Mortgage Leads Act, which would eliminate abusive trigger leads while preserving their use in appropriately limited circumstances such as communicating with existing customers. The Rose bill is a separate proposal that differs from H.R. 2656, as introduced by Rep. Ritchie Torres (D-NY) in April, which would issue a blanket ban on trigger leads. H.R. 4198 would allow for prescreen reports (trigger leads) to be permissible under the Fair Credit Reporting Act (FCRA) in limited circumstances during a real estate transaction. A consumer reporting agency would not be allowed to furnish a trigger lead to a third party unless that third party certifies having a consumer’s consent or a current relationship with the consumer.

Taylor Stork, CMB, wrote, “Trigger leads are actually pre-screened leads – under FCRA these are supposed to be followed by a firm offer of credit. In practice this rarely ever happens. I personally don’t want my servicer or my bank (let alone my credit card companies, auto lenders, etc.) spying on my credit report activity. Our customers who choose to do business with us are being inundated with 30, 40, 50 even 60 harassing calls and texts and emails and letters within minutes or hours of having their credit pulled for a legitimate permissible purpose. Many of these violate FCRA, TCPA, CAN-SPAM and DNC, not to mention state laws as well. It’s time to put an end to this practice.”

Vendors touch all facets of lending

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New American Funding is scrapping its proprietary CRM for Bonzo. NAF has always prided itself on producing its own tech for its salespeople. Bankerview, NAF’s CRM has been out there for 20 years, until now. Rick Arvielo, CEO of New American Funding says, “We are always striving to give the best tools to our originators and even though we have been relying on Bankerview for a long time, when I saw Bonzo I had to relent. It’s just the best I have ever seen, and we are excited to roll it out to our LOs.” Rick also shared that he liked what he saw so much after officially moving forward with Bonzo, that he would jump at any opportunity to invest in their company.

Gallus, the ‘New Kids on the Block’ of the mortgage industry, are revolutionizing Business Intelligence with its cutting-edge solutions. Powered by AWS and Snowflake, Gallus empowers mortgage lenders and servicers to unleash the full potential of their data. But what sets Gallus apart is its user-friendly approach: if you can use Google, you can use Gallus. Watch this quick video to see how effortlessly it works. Moreover, Gallus has just released their highly anticipated second version of the HMDA tool, now equipped with comprehensive 2022 data. Experience the unparalleled power of Gallus by scheduling a call with their Co-founder and CEO, Augie Del Rio. Discover how Gallus can transform your financial results by seamlessly turning data into actionable intelligence.

Guaranteed Rate Insurance LLC released a proprietary digital insurance API providing Guaranteed Rate Insurance business partner customers an immediate way to compare and purchase home, auto, life and other insurance policies at the point of sale. The Guaranteed Rate Insurance proprietary API is a “win-win” for customers and business partnerships. Business partners can offer insurance solutions as part of their product offering which creates a user-friendly, hassle-free, and beneficial purchasing experience. Customers win by insuring and protecting their home, auto and major purchases at the point of sale in a fully secure, easy-to-use manner. To learn more about Guaranteed Rate Insurance business partnerships, contact info@guaranteedrateinsurance.com.

Looking to supercharge your Loan Officers’ performance and deepen their relationships with real estate agents? HomeDashboard by Realfinity onboards retail lenders at no cost. With a record of serving over 125,000 homeowners and 52% of users engaging monthly, we empower you to deliver live property data and mortgage products, keeping your clients in a closed ecosystem. Now is the time to integrate HomeDashboard into your existing tech stack – think of all the buyers who got a mortgage in the last 18 months and will be refinancing candidates soon. Stay in front of clients, boost referrals, foster collaboration with real estate agents, and expand databases. Reach out to Luca Dahlhausen today to set up the integration asap.

The Radian company homegenius has launched an innovative new home search portal for consumers and professionals that is powered by a first-of-its-kind artificial intelligence technology. Using image recognition technology adapted from what is being developed for driverless cars, homegeniusIQ is a proprietary A.I. that analyzes home listing photos to assess room conditions and a property’s overall value. This marks a major leap forward in home search technology, which has stayed basically the same for more than two decades. Here’s a demo of how homegeniusIQ works, and to try it yourself you can upload a photo for it to analyze at the homegenius search portal.

Mortgage Automation Technologies, Inc. announced the integration of their next generation point of sale system, The BIG Point of Sale, now built on the latest API Platform available through ICE Mortgage Technology®, part of Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology and market infrastructure. The BIG Point of Sale Offering a configurable solution with a mixture of consumer and origination portals in multiple formats including web landing page, mobile application, and kiosk. The system leverages the ICE Mortgage Technology API Platform to provide a unique single point of truth database architecture. This architecture eliminates the need for a secondary loan repository outside of Encompass® by ICE Mortgage Technology.

I used to smoke weed and go to class. I’d sneak in ten minutes late with a BS excuse. Slink down low at my desk. Pray to God, nobody asked me any questions.

I was the best teacher ever.

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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.)