Jokes and memes are flying. Here’s one for you. “I grew up in Russia. We had the results long before the polls even opened.” Or “Did you hear that the NFL announced a team name change? The Pittsburgh Stealers!” On a serious note, what happens if an incumbent president doesn’t concede? It is being discussed, as shown in this YouTube TED Talk; things can become complicated very quickly. (Even if you just watch the first 2-3 minutes, it is worth it.) No one wants chaos, which in turn impacts borrowers and the credit markets and impacts our business. Counting and verifying votes correctly is not a sign of chaos. And all indications point to Treasury rates staying relatively low for quite some time, further helping borrowers and lenders. And mortgage-backed security prices have some room to improve… And that is good news!
Saturday Company Spotlight
Steven Rimmer, the CEO of DocProbe, had some thoughts on growth, employee mentoring in a work from home environment, entrepreneurship, and charity work.
Describe your company, when was it founded and why, what it does, recent growth, and plans for near-term future growth. “DocProbe was founded in 2010, when a lender approached our affiliate, Madison CRES, looking for a solution to alleviate the headaches of its in-house Trailing Docs department. The lender’s challenge was dealing with an inefficient process that was pulling away essential revenue-driving employees from focusing on closing loans. The workforce was also unstable during market fluctuations, all resulting in incurred penalties due to late deliveries to investors.
“DocProbe, through a platform of people, process, and technology revolutionized Post-Closing Final Docs, with dozens of lenders from across the nation now relying on DocProbe to deliver their Trailing Docs to their investors corrected and on-time. The effects of COVID have forced lenders to revamp their operation, and DocProbe has seen a surge in lenders moving over to our outsourcing solution.”
Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why. “DocProbe, together with Madison, regularly hosts educational courses around the country giving enterprising individuals the tools to enter the lending and real estate industry. We have been encouraging employees to become trainers and mentors to the hundreds who have taken our classes over the years.
“We also directly lead and support an in-house initiative to provide the means to educate over 20,000 youths, and we encourage employees to provide their own ideas, as well. The company will often put resources behind these employee initiatives, creating additional motivation for them to get involved in personal charitable activities.”
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 understand the value of continued education, and regularly bring in Internal and outside experts to give training to employees to expand their knowledge base, and keep everybody up to date on the latest information in the industries.
“Interestingly, you asked about mentoring because we have actually also adopted an in-house mentoring program to give one-on-one attention to employees on their own level. These mentors go into the various offices across the country and give educational and emotional support as needed.”
Tell us how your company maintains its culture in the office, or in a work-from-home environment if applicable. “Because DocProbe relies on numerous departments to do the work needed to build the efficient process that lenders rely on, it’s so critical for us to create a family feeling and a connection to the mission. To achieve this, we are proactive in bringing these departments and employees together as often as possible. Constant stand-up meetings and regularly scheduled town halls go a long way to creating that atmosphere.
“We want employees to appreciate the greater picture. They get a great feeling of accomplishment when they see the fruits of their personal labor played out in the perfected final product. This includes the development and operation teams, as well as the sales reps around the country who appreciate the ability to come in and say thank you to the people in the trenches getting their clients’ work done for them, quietly and efficiently behind the scenes.”
Is there anything else you’d like to share along these lines? “The story of DocProbe going from a disruptive startup helping solve lenders’ Trailing Docs headache to growing into a document digitalization trailblazer, is one of entrepreneurial spirit and transformational vision.
“As we continue to grow, we have not lost sight of what got us to this point and value the hard work and passionate involvement of each employee. We look at every lender that joins our platform as a new partner, and treat them with the respect and appreciation that they deserve for putting their trust in us.”
How can people get in touch with you? “A great place to start is at our website to get a real feel for our product and process. They can also reach out to me directly at [email protected] and I’d be happy to answer any questions they have about us and what we do.”
(For more information on having your firm featured, contact Chrisman LLC’s Anjelica Nixt.)
The atmosphere for IMB M&A
With his ear to the ground for companies buying and selling, James Johnson wrote, “Rob, you may remember the note I sent you in late March, ‘The Bull Case For IMBs.’ I took a look the other day to see if my forecasts help up, and for the most part they did. I did look like a bit of an idiot when the March/April Mortgage Meltdown arrived, but hard to predict that. I suggested that we would have a floor 30-year at 2.75%, and am now thinking closer to 2.5%. “But I missed a few points about warehouse lenders and large IMB servicers. My ‘big picture’ pitch was that we were headed for a great market, and it turned out to be pretty much ‘The Best Ever’ market.
“I believe that many company owners are now trying to figure out how long the good times will continue and when they are in danger of a reversal. Some are determined to go it alone and ride out the storm. Others want to de-risk and take some or all of their chips off the table. Both camps are in fear of doing something too early and leaving lots of money on the table. But of course their risk is they wait too long and miss their window. It’s a dilemma for sure, so what to do?
“I think that we have a bit longer to run with this bull market cycle. We are still in Phase I right now, with amazing volume and ‘double wide’ margins. But at some point, pretty soon, I see us slipping into Phase II, which will still have very good volume but with ‘single wide’ margins. It will be more of a normalizing than a crash. At that point top line margins will come in by 50-75-100 basis points, and borrower rates will drop by 15-20-25 basis points, which is how we might get closer to 2.5%. This may bring rates low enough to create a new refi coupon, and extend the refi cycle for one or two quarters, maybe longer. That’s the good news.
“But eventually we will move to Phase III, when refis are mostly gone or greatly reduced. This will not be a soft landing as capacity will be far in excess of volume. There will be margin compression as bad or worse than 2018. This down market could last 2-3-4 years, as there will need to be another refi boom to create the next bull market.
“Where is that coming from if we get down close to 2.5% in this cycle? Recently there is a lot of talk in the financial markets about rates heading higher as the Treasury attempts to sell this mountain of debt created by stimulus and unsustainable deficits. Maybe the Fed can balloon its balance sheet enough to absorb all of the supply? Post-election there is also the argument that with the economy suffering, the Fed will provide even more support and rates could drop further. Hard to predict the outcome, but a risk for sure.
“Today company owners can get a very nice premium up front, as well as good terms on the back end. But it’s a seller’s market right now, and that will change to a buyer’s market when we get into Phase III. I can’t predict exactly what the Phase III terms will look like, but for sure they will not be as favorable as they are today. Actually owners want it both ways, rake in the current profits but make a deal before the challenging market arrives. I can’t blame them, but it’s not likely to happen like that.
“This is not one size fits all. Owners have a wide variety of motivations. Some want to stay the course, and others are nervous about the market reversal and would like to do something before that arrives.” (If you would like to discuss this further or focus on a few of your options, contact James or 707-738-2666.)
And STRATMOR Group senior partner Garth Graham weighed in as well, saying that for lenders thinking about buying another lender, or perhaps selling their mortgage business, the timing couldn’t be better than right now. “It’s essential to focus on the fundamental factors that drive success in mortgage banking, and these considerations are not always measured in the stock price,” says Graham. Ultimately, it is all about timing.” In his new article in the October issue of STRATMOR’s Insight Report released today, Graham lays out the factors that any lender, whether buying or selling, needs to keep in mind in the current market. Don’t miss, “Timing is Everything: Four Must Know Realities About the Mortgage M&A Market” in the new Insights Report.
State Mortgage Organizations
Last Saturday I posted several notes from around the country about how important it is to support your state and local organizations, some of which are being hit from a loss of conference income. So it is important to join!
In response I received a note from the MBA of Florida’s President, Sherri Gallitz. “The MBAF has stood tall and consistently stepped in when our Industry needs us. Our elected officials depended on the MBA to help correct legislative language within the Cares Act that was negatively impacting our Industry and economy. This allowed us to keep taking applications, underwriting, and closing loans.
“With household incomes in various degrees of decline, our ability to help our consumers refinance to lower their payments or utilize much needed equity has been invaluable. Without the MBAF and all of your extraordinary efforts together, our Industry and the US economy could be failing our US homeowners now in their time of need.
“The MBAF advocates for policy change on our behalf with state legislators, the Comptroller’s office, the state Insurance Commissioner, and the GSE’s. Together we partner with home builders, the title industry, and the mortgage brokers to make sure that the business environment is as fair, and on a level playing field. No one company can fight these battles alone, and the MBAF provides us with a strong, highly respected organization dedicated to protecting the industry’s well-being – we are stronger and more successful together.” Thank you, Sherri!
Underwriting depends on complex decision making, and Candor rolled out Candor’s Knowledge Engineering Technology which models underwriter’s critical thinking by imitating the thought processes used in underwriting. This is what gives Candor the ability to “think” as it cross checks, validates and verifies income, assets, credit, borrower, and property data. Every loan Candor underwrites comes with a defect policy from Lloyd’s of London.
Endurance Advisory Partners has launched, under CEO Stephen Curry. Endurance Advisory Partners provides a broad range of consulting services with specialties such as Strategic Planning, Mergers & Acquisitions, Innovation & Digitization, Risk Management, Credit Risk, Mortgage Banking, Technology, and more to firms and executives across the country. The team published a white paper titled, “Five Themes for 2021” that offers advice to financial institutions on best practices for evolving in a post-pandemic world.
Matic digital insurance agency announced the close of a $24 million funding round led by IA Capital. The new funding will support the growth of Matic’s partnerships and integrations with insurance carriers and distribution partners. Matic’s proprietary technology reduces the time it takes to compare and purchase policies to less than 10 minutes, expediting loan closings. In addition to recent expansion into auto and life insurance, the new funding will support partnerships outside of the mortgage industry deploying insurance solutions across origination, servicing, and banking client channels.
WFG Lender Services announced the release of the MyHome® Exchange. Originally introduced in 2015 for residential resale transaction participants, MyHome Exchange is WFG’s first MyHome suite offering developed specifically for use in the refinance segment. MyHome brings mortgage transaction participants together within a single, easy-to-use ecosystem. For more information, visit its Product Page.
Pro Teck was acquired by Stewart Appraisal Management, Inc., a subsidiary of Stewart Information Services Corporation (NYSE: STC), a global real estate services company that provides title insurance and closing and settlement services, including real estate appraisal and valuation. In terms of continuity, operations will continue as always with the same people, technology, products, and name.
Blend announced a significant expansion of its Digital Consumer Lending Platform to provide its lender customers with new configuration capabilities and support for every major consumer banking product to meet customer needs quickly and without friction. The platform enables financial institutions to launch any consumer banking product in days rather than months, allowing lenders to be nimble in responding to customer needs. Additionally, three new products have been added: personal loans, credit cards, and specialty vehicles (in addition to home equity, auto and deposit accounts).
CoreLogic launched its automated valuation model, Total Home ValueX™. Building on CoreLogic’s existing Total Home Value suite and industry-leading property records database, this new solution utilizes a singular, uniform model methodology to increases home value accuracy and hit rate for all AVM applications.
I recently received this postcard from my great aunt in Florida, a.k.a., “Heaven’s Waiting Room.”
“Hearing gone. Eyesight dim. Joints stiff. Have trouble staying awake. Thank goodness I can still drive!”
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, “Do Lenders Care About Forecasts or Predictions?”
(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 2020 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.)