Nov. 5: Recruiting, training, marketing products; primer on employment & labor participation

On a personal note, my grandfather was the first mayor of Cupertino, in the Santa Clara Valley. In the 1950s my grandparents’ home (and their many acres of orchard) was taken by California via imminent domain to build a freeway, and part sold off by California for commercial use including eventually to a then-start up called Apple Computer. Fast forward to today, and Apple announced that it is dedicating $2.5 billion to combat the housing crisis in California: “Nearly 30,000 people left San Francisco between April and June of this year and homeownership in the Bay Area is at a seven-year low.” Apple is teaming up with Google to start a mortgage company! Just kidding. We’ll see how far the money goes, especially after Apple, Google, and other very successful companies have done more than their fair share of causing the housing pressures in the Bay Area. Changes in the Federal tax law, capping SALT deductibility at $10k at the Federal level, don’t help since anyone paying $1 million for a home is already paying more than $10k in property taxes. Of the top 10 metros with the largest shares of million-dollar homes, 4 are in California, and Seattle is the metro with the largest share of million-dollar homes outside of “Cali.”

Recruiting & training

Streamline Your Recruiting: “Model Match helps forward-thinking mortgage professionals manage and grow their recruiting pipeline with greater efficiency.  Model Match’s Talent Management System is the infrastructure and provides teams of all sizes with an easy yet powerful way to track their efforts. If you’re not sure who to recruit, Market Insights will help you develop a healthy pipeline of qualified candidates that are matched to the needs of your organization. Match originators based on volume requirements, product mix and more. Get a birds eye view of their production history along with all the info you need to make contact today. Level up with Model Match’s Full-Service Partnership and take your growth to the next level. Partner with a trusted and experienced team who go way beyond the title of ‘recruiter.’ Visit us HERE to learn more or to schedule a chat with our team.”

XINNIX, The Mortgage Academy released its YTD 2019 performance scorecard at the MBA Annual Conference last week in Austin. The report shows how XINNIX Performance Program graduates measure up against the industry average loan production which is reported in the MBA’s latest Commercial/Multifamily Quarterly Databook. The numbers speak for themselves! Both new and experienced loan officers who have completed a XINNIX Performance Program are outperforming the industry average in any market as the report tracks results from Q1/2018 – Q2/2019. In case you missed it last week, you can download your copy of the report here. Schedule a call with a XINNIX Account Executive today to see how The XINNIX System™ of Performance Training, Accountability, and Coaching can elevate the production of your salesforce in any market.

Lender products & services

Take a more personalized and targeted approach to marketing home equity. In this eBook, Blend prompts you to consider each customer’s priorities, then walks you through creating smart campaigns, crafting relevant messaging, and choosing the right channels to reach your audience. Read it here.

Leading independent mortgage bank in the wholesale, retail and strategic alliance sectors, Stearns Lending, LLC, has selected the Total Expert Marketing Operating System® (MOS) to deploy humanized messaging and engagement throughout the customer journey, boost LO productivity and propel business growth. The Total Expert MOS will be leveraged across the entire Stearns Lending enterprise, including Certainty Home Loans, Citywide Home Loans, Stearns Home Loans, Stearns Wholesale and six joint ventures, including BKCO Mortgage, Compass Home Loans, The Gibraltar Group Mortgage, Home Mortgage Alliance, KBHS Home Loans, and Results Mortgage. By harnessing consumer data paired with intelligent automation, the Total Expert MOS will empower their customer-facing teams to anticipate their customers’ needs, establish trusted relationships and create customers for life. The addition of Total Expert within Stearns Lending’s industry-leading technology stack further positions their loan officers to deliver value to their customers and exceed ever-increasing expectations. Read the full announcement.

Chenoa Fund: Investing in Communities – It’s no secret that gentrification is bringing a complicated web of changes to many urban communities. For homeowners, gentrification can mean rising home values. But for lower-income families struggling to hang on to an affordable rental close to work, gentrification can be a nightmare. More than 11 million Americans now use more than half their monthly salaries for rent, and renters need to earn at least $20.30 per hour to afford a modest, two-bedroom apartment. In six states and the District of Columbia, affording such an apartment requires an hourly wage of at least $25. To help counter the trend, CBC Mortgage Agency is investing in the Workforce Housing Opportunity Fund, which rehabilitates and develops affordable and workforce housing in communities with soaring rents. It’s not the whole answer to our nation’s affordable housing crisis, but it’s a good start.

“As large banks drown in increased loan volume, lenders using SimpleNexus hang ten on a tidal wave of low-interest driven business. Spikes in origination volume should always be a blessing and never a burden. And borrowers should never lose their dream home because of 60-120 day closing times! A core value at SimpleNexus is love for our customers, so it pains us to see big bank technology companies letting banks and their borrowers down. We help lenders achieve some of the fastest closing times in the industry through continuous, innovative platform upgrades, such as our integrated disclosures solution, which has helped our customers reduce their disclosure times from 2 days to just under 2.5 hours. To find out how we can accelerate closing times for you, request a demo or see us at state MBA shows in Texas, Arkansas or Minnesota this month.”

Home Point Financial’s Chief Business Officer Phil Shoemaker spoke about their Customer For Life as less of a program and more of a way of thinking at AIME’s second annual Fuse conference. Check out the video to see the foundation of the entire mindset: Home Point Financial is 100% focused on brokers. Did you know they sold their distributed retail division specifically so they could focus on broker success?  Don’t wait to partner with Home Point Financial: click here.

Freddie Mac Single-Family is ALL FOR reducing barriers and raising hope. Freddie Mac is expanding the thinking around affordable lending and inspiring others to do the same. With All For HomeSM, we’re leading the way through providing insights, education, mortgage products and business solutions that address the needs of today’s borrower and of The Borrower of the FutureSM. Rising home prices and interest rates, coupled with a lack of entry-level inventory, are increasing affordability challenges. Demographic and cultural shifts, migrations from rural to urban, first-time homebuyers with thin-credit files and complex processes pose additional barriers to achieving the American dream. It takes collaboration and partnership to innovate solutions that make a positive impact. Learn more about All For Home, discover key insights to inform your business and take advantage of solutions and tools that will enable your borrowers to make Home Possible®. All in. All of us. All For Home.

Capital markets

Looking at news that is impacting the primary markets (e.g., borrowers), officially, the US added 128,000 new jobs in October beating market expectations in the wake of the GM strike and other manufacturing slowdowns. Additionally revisions to the prior two months data were positive, adding 95,000 to previously reported figures. Third quarter GDP increased at an annualized rate of 1.9 percent, according to the advance estimate as consumer spending and residential fixed investment helped to offset a decline in nonresidential fixed investment. During September, real disposable income was up 0.3 percent, consumer spending increased 0.2 percent and the personal savings rate inched up to 8.3 percent.

Manufacturing activity continues to contract as the ISM manufacturing index was below 50 for the third consecutive month. Construction spending increased slightly in September, but is lower than its pace one year ago. The Fed also reduced its overnight lending rate last week as widely expected in an effort to stay ahead of slowing economic activity. Most market participants viewed this as the last cut of 2019 and expect no changes to monetary policy until next Spring.

One problem still driving recessionary fears is a tepid housing market. When a central bank cuts interest rates, houses are meant to become more attractive to buy (because mortgages are cheaper) and to build (because those cheaper mortgages increase demand). But interest rates don’t matter if no one will give you a loan. And even those who can get a mortgage often have trouble finding a house they can afford.

Friday’s numbers for October showed that the labor force participation rate hit 63.3%, the best since autumn 2013. Labor force participation in the largest third of the nation’s metro areas has been climbing in recent years, while participation has continued to slide lower in mid-size and small metros, stemming from both cyclical factors and structural factors. Employment in smaller metros is skewed more toward the goods sector, but the nation has become an increasingly service-based economy reliant on knowledge fostered in densely populated areas.

Additionally, smaller metros tend to be older and less educated, two factors associated with lower participation. And moving is not the option it once was, as home prices in already expensive large metros have been rising faster than small areas in recent years, exacerbating labor force participation rates between large and smaller metro areas. The increase in overall labor force participation since late 2015 has been almost entirely driven by the nation’s largest cities, and the participation rates between the biggest and mid-size metros show the gap is at a record high, calling into question how much more labor force participation can rise in this cycle and how much slack is left in the labor market.

The 127 largest metro areas have accounted for roughly 90 percent of the net new jobs added since the Great Recession, even though they account for only 71 percent of the nation’s population. Slower employment growth in smaller metropolitan areas is, in part, tied to the industry composition of those areas. Goods-producing industries, like manufacturing, have yet to return to pre-recession levels.

A majority of U.S. employment is in the service sector, and larger metros have seen service-oriented jobs rise faster. A lack of job opportunities is keeping residents of smaller communities outside of the labor force, and the lack of affordable housing is becoming a higher barrier of entry into many of the country’s largest labor markets. Weaker labor force participation in smaller communities therefore looks to be in part structural, as the workforce of smaller metros tends to be older and less educated. As a result, the gap in labor force participation rates between large and smaller metro areas will likely continue to widen, and there is likely little remaining slack in the national labor market despite the varying trends in participation by “place.”

Beyond the labor market, the divergence in labor force participation rates highlights that the economic gains of the current expansion have not been spread evenly, fueling concerns that smaller communities are being left behind. Alongside the decline in geographic mobility, a previously narrowing wage gap between high- and low-income areas has widened. With smaller metros seeing slower productivity and population growth in recent years, labor force participation becomes a crucial factor in helping narrow the growth gap between ever-larger cities and smaller metros struggling to keep up.

Looking at rates yesterday, Treasuries pulled back across the curve to open the week, including the 10-year yield closing +6 bps to 1.79 percent, as economic growth sentiment improved on the back of positive trade headlines and optimism about accommodative monetary policy. Secretary of Commerce Ross made two important statements, indicating that licenses for U.S. companies enabling them to do business with Huawei should be granted soon, and separately stating that good progress is being made on the “Phase One” deal negotiations and that the U.S. may not have to impose auto tariffs on foreign imports. The South China Morning Post reported China is open to different locations to sign trade deal, but will be careful about giving too many concessions. That risk-on trade, along with Friday’s move means treasuries have now erased all the post-FOMC gains and then some.


Ahead of today’s three FOMC speakers (Richmond’s Barkin, Dallas’ Kaplan, Minneapolis’ Kashkari), new ECB Chief Lagarde made her first speech, where she laid out her views on Europe’s economic and fiscal policy, saying Germany and other European countries should spend more to boost demand. Minneapolis Fed President Kashkari also delivered some remarks yesterday in a televised interview, saying that he thinks the balance of risks is still tilted to the downside.


Kicking off today’s economic calendar is the Trade Balance for September, followed by Redbook same-store sales, final October Markit services PMI, the ISM Non-Manufacturing Index for October, and JOLTS – Job Openings for September. Additionally, the Desk will conduct a GNII FedTrade operation targeting up to $576 million 3 percent ($414 million) and 3.5 percent ($162 million). This afternoon, the first leg of the Quarterly Refunding will see Treasury auction $38 billion 3-year notes. We begin the day with Agency MBS prices worse .250 and the 10-year yielding 1.84%.

At a couples therapy session the doctor asked the husband if he feels dominated by his wife.

She answered, “NO, he doesn’t!”

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job 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