Nov. 19: Letters on buydowns, China’s real estate, pricing, and the cost of fraud; Vendor news; Saturday Spotlight: Momentifi (with a pep talk)

Our industry is driven, in part, by interest rates, which in turn are driven by supply and demand and current economic conditions. Currently the focus is on inflation and the Federal Reserve’s efforts to dampen it. Several statistics come out every month gauging price moves, probably the most well-known is the Consumer Price Index. Let’s “open the kimono” on this statistic. Would you like to be one of 300 “economic assistants” who work for the Bureau of Labor Statistics and visit the same stores, looking at the same items, month after month, secretly? “Del Monte Fruit Cocktail, last month $1.69 for a 12 ounce can, now $1.74…” They visit liquor stores, body shops, dental offices, doggy day cares… 28,000 locales in seventy-five urban areas, checking current prices and weights. The CPI tracks changes in how much urban dwellers pay for a representative market basket of goods and services and is based on the work of these individuals. Organic catsup, French bread, gelatin, going to a movie… the list goes on and on. The CPI itself is used for many things, not just to drive the Federal Reserve’s decision making and the bond markets, including government funding for school lunches, the income of 80 million people by helping determine Social Security benefits, military pensions, and food stamp allowances. Now, back to the mortgage world!

 

Saturday Spotlight: Momentifi

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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). 

We are a sales training and content marketing platform focused on helping loan officers and mortgage companies grow. In 2005 we launched our Certified Mortgage Planning Specialist (CMPS®) course, which remains the first and most widely recognized mortgage planning designation in the industry, with over 10,000 graduates. In 2015 we launched a CRM technology, which we exited earlier this year. In 2022, we launched some training courses and a bilingual marketing platform to help loan officers and real estate agents expand homeownership opportunities for diverse homebuyers from historically underserved communities. Our focus for 2023 and beyond is to expand our training courses and bi-lingual marketing platform to help our loan officer and mortgage company clients grow their business even during challenging economic circumstances.

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? 

We provide a very flexible work environment where team members can pick their own hours and vacation days (coordinated among each other). This fosters an “I’ve got your back” attitude among the team. As a sales training company, we also provide in-house training to our team, focused on helping each team member find more meaning in their work.

Tell us how your company maintains its culture in a work-from-home environment, or how you plan on bringing employees back into the office, if applicable. 

We have team get-togethers, including team workdays and team lunches. We’re planning a team trip soon to celebrate the launch of our new bi-lingual marketing technology platform, which was an all-hands-on-deck project over the past year!

 

Things you are most proud of that don’t have to do with sales. 

We’re most proud of helping our team members and clients find more meaning in their work. We created a podcast on the topic called, The StorySeller. Season 2 kicks off the first week in December. Our CEO, Gibran Nicholas, also wrote a book called, The StorySeller Adventures: How to Grow an Epic Business and Find More Meaning in Your Work. The book is scheduled to be published in January 2023.

Fun fact about Momentifi (and a few words of encouragement). 

Our founder and CEO, Gibran Nicholas, started in the mortgage business 22 years ago at the age of 20. He became a millionaire at twenty-five and lost everything two years later, only to regain it all, plus invaluable life lessons, over the next decade. He shares many of those lessons in his soon-to-be-published book and podcast. Here’s Gibran’s best advice for loan officers and mortgage companies who may be struggling in this challenging environment:

 

It’s not about the market. It’s not about your competition. It’s not about difficult circumstances. It’s about your response to the market, your competition, and your difficult circumstances. Self-Doubt and the negative thoughts in your head are the biggest villains you’ll ever encounter in life and business. If you can control your mind, you can control anything. The best advice I have is to imagine Self-Doubt as an actual character, as the nasty villain in the story of your Life and Business. Then imagine yourself as a Great Warrior going to battle against him. You CANNOT let him win. So, don’t. As any Great Warrior, get your inspiration from thinking about the people you’re fighting for. Perhaps your family or your clients. Most importantly, though, fight for yourself. Think about the child version of yourself. Love that person. Protect that person. Fight for that person. Be your own champion.

 

But wait, there’s more! During difficult times, there’s always a temptation to ask ourselves questions like, “Why is this happening to me? What’s the meaning of Life? What’s the meaning of suffering?” One of my favorite books of all time is Man’s Search for Meaning, by Viktor Frankl. In that book, he suggests that we imagine ourselves sitting across the table from a character called Life. She turns to us, looks us in the eye, and asks us this question: “Hey friend: What’s the meaning of your life right now?” In other words, “What are you doing right now to create unique value for yourself and for the people around you?”

 

That’s a powerful question! So, this holiday season, I’d challenge you to answer it: “What is the meaning of your business right now at this moment? What unique value are you creating for clients, employees, or strategic partners that they can’t get elsewhere?” That, my friends, is the key to winning in any business environment. You are the Creator of Unique Value. Your mission, should you choose to accept it, is to sell your clients and strategic partners a story about the unique value that you can provide to them right now!

 

Visit us or reach out directly to Gibran Nicholas to learn how you and your team can get daily expert marketing content in English and Spanish to attract clients, stand from your competition and grow your business in 2023!

(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)

Pricing & competition: Dog eat dog

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From Washington, Jeff writes, “I feel we have (temporarily) returned to ‘race to the bottom’ pricing. My manager at the institution I work for agrees that we are posting competitive rates at zero origination. The ‘real’ market is significantly lower. When our customers/consumers shop (and I tell them I welcome it) pencils get very sharp. Pricing exceptions exceeding 100 bps in price are common. The sad part is when buyer agrees and locks, informs the competitors and then one comes back with an even lower price. Integrity is tested and the interfering party shows true colors.

 

“I had this happen yesterday. The customer stayed with me and my company and told the low-baller ‘no’. They honored their agreement with me and my company after 1) discussing the fair competition and ‘why’ didn’t the low-ball bidder give their best bid initially and 2) asking what I would do. To that I answered after I receive quotes and commit, my word is my bond and my integrity matters. Lastly, I kindly offered ‘I would respect their decision’ regardless. The customer agreed and was actually annoyed by the low-ball bidder and did not want to do business with them. It could have gone either way. This time integrity won.”

Thoughts on buydowns given economic forecasts

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I contend that no one has a crystal ball and can consistently and accurately predict when and what interest rates will do. Still, from out in California Jay Voorhees, with JVM Lending, writes, “My team and our agents understand the strong likelihood of a sharp reduction in rates by Q2 of next year, based on the comments of several respectable parties. For example, in his podcast this week Jeff Snider (Eurodollar University podcast), pointed out how the interest rate inversion curves today are eerily similar to what we saw at the same time in 2007, signaling a very weak economic outlook. And, in a recent Wealthion podcast, with Stephanie Pomboy and Jim Rickards, the host reminded us that inflation fell from 5% to 0% in 2008 very quickly. This is why the above commentators all expect inflation to subside and rates to fall.

“Anyway, if rates fall sharply, and I think they will, borrowers will soon be able to refinance. And if they have a permanent buydown (like Alicia recommended in last Saturday’s commentary), all of those points will be wasted. But, if they have a temporary buydown, most of the points the seller paid will be still be in an escrow account and able to be used to pay down the remaining principle balance. Further, temporary buydowns offer far more rate and payment relief in the near term.”

Jay wrapped up with, “So, if I was certain rates were going to remain high, I would agree with Alicia. But I am not certain and strongly believe rates will fall, given the accurate track records of the above commentators, so I think temporary buydowns are the way to go.”

China & real estate: may you live in interesting times

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Capital markets vet Brent Nyitray writes, “The Chinese government instituted a 16 point plan to shore up the real estate market. The government is hoping for a soft landing, however a country that has entire cities built on spec probably won’t have one. The situation in China affects the U.S. in a couple of ways. First, I would bet that some of the weakness in West Coast markets like San Francisco and Seattle is due to Chinese liquidating assets. Remember, in a crisis, you sell what you can, not necessarily what you want. Real estate accounts for about a third of the Chinese economy, which is bubble territory. In the U.S., real estate accounts for about 16%.

“The Chinese crisis will also impact global demand as the main effect of a burst real estate bubble is a collapse in domestic demand. This will reduce demand for all sorts of commodities which will help quell global inflation. This should also cause a flight to quality in China which means they will be buying Treasuries. This means lower interest rates in the U.S.”

The cost of fraud

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In the STRATMOR Group we take regular courses in phishing, fraud, and cyber-attacks. Ask any company that has been the victim of an attack and it is a terrible thing.

LexisNexis Risk Solutions released today the results of its annual True Cost of Fraud Study: Financial Services and Lending report (here). “The costs for credit and mortgage lending firms remain above pre-pandemic levels, although they are trending downward after substantial increases observed at the start of the pandemic. According to U.S. loan companies, each $1 in fraud losses costs $4.08. Canadian lending firms find that each $1 in fraud losses actually costs $3.74.

“Lack of identity verification is a top challenge that contributes to fraud across the customer journey. Canadian lending firms and U.S. mortgage lenders saw the biggest increase in identity-related fraud across account creation, with a 9% rise and 11% rise respectively since 2020.

“Fraudsters targeting mobile channels, increased bot attacks, various scams, and the rapid adoption of buy now, pay later (BNPL) are causing concern for financial services and lending firms.”

Vendor and third-party provider morsels

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Secure Insight is pleased to announce the launch of WINN, a wire only verification tool that offers particular protection to warehouse banks. By accessing our verified trust account data compiled over ten years resulting in tens of thousands of stored accounts in all 50 states utilized by more than 70,000 closing agents, it offers immediate verification reporting. No need to wait for verification, no requirement to send us any documents or information, just enter the name of the wire recipient or the account information and in seconds a report will be returned confirming the accuracy of your data. According to the most recent industry data we have 92% of the closing agent market already compiled and monitored, with the ability to verify new account information the same business day. Reports are offered at a price around 50 cents per report (even lower in large volume). Reports are available through API integration or a secure web-based access portal. Elements of fraud including wire fraud were present in almost 50% of all loans closed in 3d Q 2022 according to the National Mortgage News. For more information contact Amanda Padd to schedule an intro call and demo or to obtain a sample report.

Ascend Companies Inc; a small portfolio of mortgage industry affiliates that includes the Credit Reporting Agencies Partners Credit and Advantage Credit, as well as the AMC, ARC, now offers origination clients significant cost savings by bundling borrower and property solutions throughout the Western US, supported by robust SLAs on both sides of the offering. “To state the obvious, offering clients cost savings solutions in this market is imperative. The marriage of commonly owned AMC and CRA service business lines enables us to offer clients material savings solutions when it comes to their origination price tags.  We will never compromise on either the quality of our solutions, or teams. Our businesses have been around for a combined century, and our leadership teams have been finding solutions in different markets for decades. Things aren’t easy right now for anyone, and while we know they will get better, we want to help our clients navigate the storm.”

Insellerate’s innovative new solution AgentConnect helps retail loan officers close more loans. AgentConnect takes Co-Branded marketing to a new level by automatically delivering dynamic open house flyers, property websites, and landing pages instantly through MLS data in real-time, which is auto-generated and compliantly displayed, including loan officer’s specific loan and pricing options. AgentConnect fosters dynamic relationships with partners through innovative campaigns that drive results while delivering full transparency through the buyer/borrower journey. Work with partners like never before by taking the guesswork out of manually creating flyers, struggling to find content and images, and worrying about including compliance requirements. Learn more http://bit.ly/3gaofwz

Staircase, the company building an integrated, digital infrastructure to accelerate tech-enabled mortgages, has launched a new application programming interface (API) that enables lenders and servicers to embed automated underwriting technology into any application and sync to their point of sale (POS) and loan origination systems (LOS).  saving time and money.

The new API from Staircase provides Innovators with same-day GSE integrations. For just $1 lenders can integrate their systems of record with Fannie Mae and Freddie Mac and achieve greater loan decisioning capabilities. For more information about the GSE API, email hello@Staircase.co.

 

Tavant, a Silicon Valley-based provider of industry-leading digital lending solutions, announced its partnership with American Financial Resources, Inc. (AFR), a national mortgage lender, operating in the wholesale, correspondent, and retail origination channels, to enhance the lender’s digital mortgage experience, end-to-end. Leveraging Tavant’s Touchless Lending™, AFR’s correspondent lenders, mortgage brokers, loan originators, and consumers will now be able to automate the traditionally cumbersome lending process, providing a more streamlined and seamless experience for all stakeholders.

I used to be able to do cartwheels. Now I tip over putting on my underwear.

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. “Supply and Demand are Still Driving Mortgage Pricing” 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 2022 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.)