Daily Mortgage News & Commentary

Sep. 10: Resume red flags, alternative programs, Agency MBS runoff ;Saturday Spotlight: Flueid

As we all know, it’s been a tough year for our industry. I receive plenty of emails about companies downsizing (though some are expanding) and from people looking for new work. Did you know that the average recruiter or hiring manager spends only six seconds looking at a resume before they decide if it is suitable or not? In the U.S., one corporate position attracts around 250 resumes, on average. Employers immediately spot red flags, such as resumes with cluttered layouts, lack of headings, or ones that are too long or too short. However, if you’re looking for a new job, resume experts at CV Maker have revealed the top red flags to avoid when creating a resume. Typos and grammatical errors are probably the first red flags that employers look out for, revealing an applicant that doesn’t pay attention to detail. Additionally, an unprofessional email address can leave a lasting, unsavory first impression to a hiring manager before they have ever met the candidate and can signify a candidate does not value their professional career. Large gaps of time between employment are an immediate flag. One gap in employment isn’t that unusual, but make sure you have a valid explanation for multiple as most high performers don’t have huge gaps in their employment history. If a candidate has switched positions frequently, there should be valid reasons. A candidate saying they “needed a change” can indicate inconsistency or unreliability versus being recruited by another company or a previous role shifting from what they were initially hired to do. Finally, a little personality is good, but too much personal information takes away from a resume being a document to highlight your skills, accomplishments, and work history. The best way to show a little personality is through your hobbies and interests. However, make sure these are relevant to your job role. As a reminder, you can post your resume for free here and employers can view them for a nominal fee of $75.

 

Saturday Spotlight:  Flueid 

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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).   

Flueid fuels transactions with data and insights to make them easily flow from start to finish. The company’s SaaS platform, Flueid Decision, drives processes by bringing powerful data and analytics forward to the start of the loan life cycle to reduce closing timelines, lift pull-through ratios, simplify workflows and avoid closing delays. It gives lenders key information upfront on the borrower and property in less than a minute to empower their ability to immediately vet the borrower, lock the rate and push the transaction down the fastest workflow to closing. Learn how Flueid Decision can support you in today’s home equity market and arm you with a tool for the next cycle. 

 

Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why.  

Flueid’s Employee Well-Being Fund (WBF) lifts up our employees through challenges, celebrates successes and advances charitable initiatives and other needs. Through the WBF, Flueid annually sponsors non-profit organizations and special causes. Many employees also participate in marathons to fundraise, combining their passion for athleticism with their causes of choice. Others give back through mentorship programs for students or young professionals.

 

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? 

Flueid’s leadership team has established a monthly, always-on cadence of career development check-ins, and monthly meetings with the full Flueid employee base to build knowledge and understanding of the company’s vision and industry. The team also prioritizes the championing of Women in Leadership through nominations, support, and participation in industry-leading women’s networks.

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. 

Flueid prioritizes talent and believes that meaningful productivity happens wherever employees feel most comfortable. The company has a hybrid and flexible working environment. Approximately 70% of our employees are remote, with the remaining teams in our Austin, TX and Santa Barbara, CA hub offices. We ensure teams and managers have constant touchpoints, as well as visibility to leadership so remote employees don’t feel isolated.
Things you are most proud of that don’t have to do with sales.   

It’s our mission to ensure our teammates are empowered and championed in pursuit of our goal to make the real estate experience streamlined for everyone. By staying true, focused and committed to our north star, Flueid’s technology can help reduce the impact of real estate’s market cycles on businesses while making consumer data security a priority and industry standard. We are proud to stand as partners and collaborators with the industry to help make data more accessible for a reliable and predictable transaction every time.
Fun fact about Flueid. 

 

Flueid’s journey began before its founding when core teammates started bringing the real estate transaction online in the 1990s. Recognizing the value of data and technology, as well as an industry ripe for innovation, they began building and implementing leading technologies and digital tools for companies of all sizes. This includes building most of the legacy title underwriting engines on the market and establishing the first-ever title company to take every order online and run a virtual infrastructure. Today, that same obsession with innovation and client experience is central to Flueid’s team – a team of nearly 100 technologists and industry experts who have guided companies and other industries through digital transformations.

 

Alternative Programs

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You can expect more banks to start offering mortgages that don’t require some first-time buyers to save up a large down payment. This is part of an effort to close the racial and ethnic homeownership gap, which is a big piece of the racial wealth gap. Non-banks have been much more forward thinking in their lender practices than bank lenders, as many banks have relied heavily on brick and mortar retail, and many (especially regional banks) have been exposed to massive MSR run-off over the past two years. Bank of America’s recently announced “zero down payment” loans for first-time homebuyers in predominately Black and Hispanic neighborhoods who meet certain income requirements is the latest in the saga. Two other banks, JPMorgan Chase and TD Bank, offer similar programs. If they were adopted widely in both the public and private sector, programs like these could truly make a dent in the racial homeownership gap. Lenders are minimizing file touches, using cheaper resources for parts of the file, and moving more duties from underwriting to cheaper personnel.

 

Agency MBS Runoff

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The runoff of Agency debt and Agency MBS holdings is subject to redemption caps, with principal payments below the cap set to be redeemed without reinvestment. The Fed will reinvest all principal payments over the cap through purchases of securities in the secondary market. For agency MBS the focus is on “principal payments” because unlike Treasuries, which have fixed maturity dates, mortgages pay principal each month and these principal payments are not known in advance. This is because mortgage borrowers have the option to prepay their mortgages. The increases in mortgage rates this year has reduced incentives for borrowers to refinance, resulting in lower prepayment rates and decreased principal paydowns on Fed agency MBS holdings compared to earlier this year.

 

The pace of the Fed’s agency MBS runoff going forward is subject to significant uncertainty. Prepayments of mortgages are likely to continue to be driven primarily by the personal motivations of mortgage holders, such as whether to move to a new home, rather than by the ability to refinance at a lower interest rate. New York Fed staff projections indicate that agency MBS monthly principal payments could range between $20 and $30 billion over the next several months, and so would likely not exceed the higher monthly cap that starts this month. In this case, the Fed would cease reinvestments and the reduction of SOMA agency MBS holdings would be less than the $35 billion cap.

 

Unlike Treasury securities which are reinvested on the same day that they mature, settlements of Agency MBS purchases occur on different dates than the principal payments are received, which can result in variability of MBS holdings over the course of a month. The Agency MBS market and the way the Fed conducts purchases results in lags in the ultimate settlement of purchases of Agency MBS. Reinvestment purchases for a given month are completed in the middle of the following month. In addition, by market convention, Agency MBS purchases do not settle until up to a month and a half in the future (settlement is the final exchange of the securities and payments). Combining these two features, there can be as much as a three-month lag from when principal is received to when the Agency MBS will show up on the Fed’s balance sheet.

 

As a result of these dynamics, during the first few months of runoff, holdings were still increasing because of the delayed settlement of purchases that were made in prior months before the runoff began. For example, the $70.1 billion in settlement of agency MBS purchased in previous months plus June reinvestment purchases, offset by the $60.0 billion in proceeds from agency MBS principal paydowns, accounts for the $10.1 billion total rise in settled agency MBS holdings in June and July, versus the $35 billion decline implied by the runoff caps for that period.

 

As the redemption caps increase, expectations are that the reinvestments will cease. As runoff proceeds, Fed Agency MBS settled holdings are expected to decline. In several months, as previous purchases settle, the declines will begin to more closely track the monthly principal With the doubling of caps starting this month, the pace of the Fed’s balance sheet runoff is expected to accelerate going forward. The public can track the progress of the Fed’s balance sheet reduction at a granular level in the coming months using the resources highlighted in this post.

 

The Federal Reserve has prior experience reducing the size of its balance sheet.  Between 2017 and 2019, the balance sheet shrank by $700 billion, and this runoff proceeded smoothly, during the period when reserves were ample. Nonetheless, there are several differences between the current environment and our prior experience.  Compared with the prior period, the size of the Federal Reserve’s balance sheet is considerably larger, and the pace of runoff will be faster. The composition of liabilities is also different.

 

 

I had a lovely conversation with my wife the other day

 

Her: Now that we’re married, can you to get rid of those golf clubs?

Me: You’re starting to sound like my ex-wife.

Her: I didn’t know you were previously married…

Me: I wasn’t

 

 

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. “Secondary Marketing: What They Do All Day” 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.)