Today I head off on a business trip to Georgia for a few days, which reminded me that yesterday’s commentary had some state facts. As expected, people took exception with Texas and West Virginia’s lake trivia. Today they can take exception with the latest state rankings from U.S. News (thank you to Ken S. for sending it): Good news for Washington and Minnesota, not so much for Louisiana and Mississippi. And forgetting about states, if you think inventory is low now, what with 70+ millennials looking for homes, and housing starts running at 1.7 million per year, Zillow says just wait until the houses start flying off the shelf when the vaccine takes hold. MLOs should rekindle friendships with real estate agents just in case! Speaking of which, you can listen to the audio version of today’s commentary featuring Atlantic Bay’s Amy Ramsey on the current production environment for MLOs.)

Lender Products and Services

VOEs and VOIs can be a huge cost center for lenders. There are tons of different providers and you are probably wasting a ton of time constantly chasing down hard-to-complete verifications. Stop chasing employers for VOE/VOI: Truework is a one-stop shop for income and employment verifications. Truework has a massive employee network with over 150 million employees (35 million who can be verified instantly). Mortgage activity is already starting to heat up again in 2021, and Truework will help you close more loans with fast and accurate verifications. Get started on Truework today. And for a limited time Rob Chrisman readers get 6 free Verifications ($240 value). Let us do the heavy lifting so you can focus on what matters. Set up time with Zackary Green to claim this offer.

“Women have been making a mark in finance since the 1800’s and with women representing over 44% of ARBOR Financial Group we are continuing the tradition. ARBOR supports a diverse culture empowering our clients, staff, and loan advisors. As a direct lender and mortgage broker, ARBOR provides direct access to 75+ lending institutions. ARBOR’s transparent platform gives ‘The Power of Choice’ to our loan advisors and clients so that they can craft tailored loan solutions with pure rates. Join us throughout the month on Facebook, Instagram, and LinkedIn as we feature stories from our Senior Loan Advisors Momi Pointer, Angela Comstock, Kim Capizzi, and Julie Aragon. Each will share their unique journey as a woman in the industry and why they chose ARBOR. The all-woman marketing team headed by Mary Caoile, CMO, have an exciting month planned. Thinking about growing your business? Schedule your confidential consultation at 310.210.3170 or email.”

James Brody, Chair of Johnston Thomas's Mortgage Banking Practice Group, as well as The Mortgage Collaborative, are co-hosting a complimentary webinar at 10:30 AM PST, on Thursday March 11, which will be their second annual webinar titled "Regulatory Round-up: Invaluable Tips for Maintaining Compliance in 2021 and Beyond". Per Mr. Brody, with our slowly but surely moving past the trials and tribulations of 2020, the increase in regulatory scrutiny promised by the new Biden Administration and leadership at the CFPB, looms large. In addition, if you were not able to attend and would like a complimentary copy of the PowerPoint from Johnston Thomas's MSA and Advertising webinar program, click on “Marketing Service Agreements and Advertising Compliantly”. In the event you have any qquestion's regarding either of these two programs, please contact Mr. Brody directly.

Are you looking to close more loans, faster? Capacity allows you to take care of your borrowers with superior customer service and 24/7 automated support—all through a mobile-friendly chat interface. Capacity correctly and instantly answers more than 84% of all prospective and current borrower questions without any human intervention. Capacity works in tandem with lenders by directing loan officers to use the Capacity bot as a first line of defense. If the bot does not know the answer, it escalates to the appropriate support agent. One of our mid-sized clients deployed Capacity on their website, and Capacity supported 6,500+ consumer facing questions in the first few months alone. Are you ready to provide superior customer service 24/7? Deploy within 30 days. Request a demo.

“Raise your hand if you’d like your AMC to turn around appraisals faster and reduce underwriting conditions. Everybody? We thought so! Triserv is proud to announce that we’re implementing new technology in our platform designed to do just this. We’ll be able to better measure appraisal performance and quality management, as well as implementing predictive and prescriptive analytics for quality control and revision management. Read more here. Triserv is a 50-state AMC that has client-specific, dedicated teams on both coasts offering high-touch, personalized service. To find out more, contact Triserv Appraisal Management Solutions.”

March Madness starts March 18, and already conferences have begun hosting tournaments to determine which teams are going dancing. For lenders using Sales Boomerang, the only madness this March is in their pipelines. “One of my team's highest-performing LOs nailed down a whopping $2 million in revenue in 110 seconds with Sales Boomerang,” notes Corey Shelton of Atlantic Coast Mortgage. And ACM isn’t the only lender to score a slam dunk. Lenders using Sales Boomerang see an average 20-40% lift to loan volume and 65% borrower rebound for just $299 per acquired loan: A 20x ROI. Punch your ticket to pipeline madness today.

Unify is helping thousands of its Clients reclaim important time in their day using the automations and tools in the Unify Business Growth Platform. Many manual tasks are taken care of by automations for marketing campaigns, Mortgage Inquiry Alerts, lead nurturing, realtor outreach, in-process loan communications, client retention direct mail, team communications, real-time LOS data synchronization and POS 2-Way data integration with systems like SimpleNexus. You can see the Unify/SimpleNexus integration here along with the Unify mobile app. Loan Originators and their support teams will be more efficient while also improving customer experience.

Looking for your best DPA options, all in one place? Look no further than TMS’ growing list of nationwide Down Payment Assistant programs. They took the treasure hunt out of DPA searching so you can spend less time looking, and more time putting clients in homes. Check out their recently updated list and find your next DPA here.

Correspondent and Broker Products and Services

Amid the ongoing pandemic and remote work environment, Stearns Wholesale continues to utilize innovative technology to connect with and engage its team across the country. Last week, Stearns Wholesale held their first-ever virtual wholesale rally for over 500 attendees. This virtual event brought their company together for a day full of live streamed keynote sessions covering Sales Enablement, Operations and a 2021 vision for each department. Attendees were also able to network, leverage gamification features to win fantastic prizes, and interact in virtual exhibit halls through their event portal. Best of all, the rally included sessions with special celebrity guest speakers, Daymond John from NBCs “Shark Tank” and NYT Best Selling Author, Andy Andrews, which allowed attendees to gain insight on marketing and branding, principles for success, and goal-setting strategies. If you want to learn more or partner with Stearns, click here to be contacted.

“The Correspondent Lending Team at Citibank N.A. would like to invite you to visit our booth during the ICE Mortgage Technology’s Experience 21 Virtual Conference, March 8th -24th. Visit the virtual exhibit hall to see our booth and get caught up on all the latest from Citi Correspondent!  2021 is off to a great start as we continue to add new sellers, grow our support staff, sharpen our secondary execution, and leverage new technology like the CRA pricing feature embedded in the Encompass EPPS pricing engine.  These positive enhancements are a small part of our 2021 plan to deploy new technology focused on improving the delivery experience and expand loan programs that drive best in class execution options for sellers. We invite you to be part of this growth by contacting our National Client Services Team at 800-967-2205 or completing the Prospective Seller Questionnaire.”

Kind Lending celebrates its first birthday right after celebrating a significant milestone last month: funding over $1 billion in six months. All the accolades for this unprecedented achievement go to the talented Kind Ambassadors and go the pioneer broker partners who trusted their business with Kind Lending. Check out a special birthday greeting from Founders Glenn & Mindy Stearns. It’s a great time to join the KIND Movement. Visit the website for job opportunities or to become an approved broker.

General Lender Assessments

People in our business wonder how rating agencies look at lenders. I learned quite a bit by attending a Moody’s webinar yesterday about how the process, which is simultaneously simple and complex, works. An assessment looks at the financial profile of the lender (revenue, cash flow, consistency, financing), its operating environment (competition, history, market stability), and its creditworthiness (company stability, business profile, and growth potential). Currently only a handful of companies are in the publicly held residential lending market compared to the entire industry with thousands of residential lenders across the country.

Residential lending itself has modest barriers to entry, but some technology can be very expensive as companies grow. Scale is important, as lenders know, but overall the industry’s stability continues to increase, and uncertainty has decreased as odds of major Freddie and Fannie reforms lessen. Publicly held companies sometimes have a perceived disadvantage since their focus is on quarterly earnings rather than the longer-term time horizon that privately held companies have. Public companies also have an increased level of disclosure and governance rigor. So who’s doing what out there?

We can expect to see some shifting in 2021. For example, out of Colorado yesterday came news that Bellco Credit Union and Cherry Creek Mortgage have joined forces to create a new lending company, Bellco Home Loans. Cherry Creek’s been around since 1987 and Bellco since 1936, so neither company is the new girl at the dance. “In addition to its primary purpose of serving Bellco Credit Union members, Bellco Home Loans is open to Coloradans across the Front Range and Western Slope to help them secure loans while the housing market in Colorado continues to be competitive due to historic low interest rates.”

In the news last week for different reasons, Rocket's purchase mix of origination volumes fell to about 8.6 percent in the final quarter of 2020 versus the industry average of 34 percent. The MBA estimates that purchase mix will be 74 percent in 2020, meaning Rocket will need to significantly increase its market share by product in order to maintain its overall market share over that period. Overall, closed volumes were up +20 percent quarter-over-quarter versus industry volumes up just +5 percent, per the MBA. The company's total volume market share increased +80 bps to 8.6 percent, based on IMF totals. This implies Rocket had a 2.2 percent share of the purchase market in the quarter versus Rocket’s 11.9 percent share of the refinance market over the same time period.

The increased competition in the broker channel is significant because this is the channel that Rocket is targeting to increase its share in purchase. After UWM announced that it would no longer let its brokers work with Rocket, or at least with a fee, UWM then noted the following day that 93 percent of brokers who had taken action so far had decided to stay with UWM. Additionally, UWM informed brokers that they are likely to see more competitive pricing in that channel from competitors, suggesting that broker channel volume in aggregate could increase at the expense of margins as UWM and Rocket compete for share.

Heading from Michigan to Texas, Mr. Cooper reported higher contribution from early buyout (EBO) gains in servicing and a longer continuation of the current strength in origination margins and volumes, partly because of the correspondent channel returning to normal. The company beat consensus mainly on stronger origination volumes, though servicing margins came in better expected as well. Management was more positive on being able to generate strong margins in direct-to-consumer (DTC) versus correspondent given expectations for heightened price competition in the latter channel.

Overall, Mr. Cooper’s management expects margins in the first quarter to be consistent with Q4 2020 results, and for margins to remain elevated in 2021 before normalizing heading into 2022. Correspondent mix bounced back to 55 percent, which is near 2018-19 levels. Gain-on-sale (GOS) margins in DTC are likely 2-3x that of correspondent, but the correspondent channel remains important from a new customer acquisition standpoint. Management reiterated that they are continuing to work on monetizing Xome. While there was no update on timing, interest in the business was noted to be high.

Capital Markets

Yes, rates have slipped higher based on 1) the expectation of the pandemic winding down, and 2) the blatant fact that someone, sometime, has to pay for the government’s stimuli. But think back for a bit on the fundamental economic news we’ve seen. Nonfarm payrolls in February and January’s gain were revised higher, well above the forecasted total. Not surprisingly the gain was led by the service-providing sector which has been the hardest hit over the last year’s social mitigation restrictions. As these restrictions are lifted and as the population regains comfort with patronizing businesses that involve close interpersonal interactions, this sector of the economy is likely to continue to see improvement.

The unemployment rate fell to 6.2 percent, which was better than expected but the “U-6” measure of unemployment remains high at 11.1 percent. The Bureau of Labor statistics notes the potential that some workers are being misclassified as employed when they should be classified as unemployed. The official measure of unemployment has benefited from a 4.2 million person decline in the labor force and a decline in the participation rate. Fed chair Powell has also indicated he believes the rate to be artificially low since a person is considered to be in the labor force only if actively looking for work and there are likely millions of people who want to work, but for various reasons are not actively looking.

Looking at bonds yesterday, call it whiplash. Call it volatility. Call it whatever you want, but know big swings in Treasuries, MBS, and rates are not welcomed news for originators. Investors poured back into the market’s riskiest assets, while Treasuries rebounded from the selling that opened the week to see the yield curve flatten. The market did not receive any top-tier data, but the day’s $58 billion 3-year note sale was well received. The NFIB Small Business Optimism Index rose slightly in February from January. Today should have a little more substance, with the release of the Consumer Price Index report for February, followed by a $38 billion 10-year note reopening.

Today’s economic calendar is already underway, and we’ve seen that mortgage applications decreased 1.3 percent from one week earlier for the week ending March 5, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. Mortgage rates actually fell a couple bps or remained flat during the reporting period, depending on who you ask, despite the 10-year yield continuing to rise. Maybe we are on the cusp of that big price war we’ve been hearing about for some time? We’ll see the February CPI and Core CPI. Later today brings the February budget deficit and reopening results from the $38 billion 10-year Treasury note auction. The House is also expected to take up the vote on the Senate's $1.9 trillion Covid bill. Today’s MBS purchase schedule sees the Desk in all three classes, starting with $1.5 billion UMBS15 1.5 percent and 2 percent followed by $3.1 billion UMBS30 1.5 percent and 2 percent and $1.9 billion GNII 2 percent and 2.5 percent, for a total of up to $6.4 billion. We begin the day with Agency MBS prices worse nearly .125 and the 10-year yielding 1.56 after closing yesterday at 1.55 percent.