There are lots of interesting questions out there. “Why didn’t Tarzan have a beard?” for example. Another is, “Do borrowers know about low down payment loan options?” Lenders and LOs should be educating borrowers on the advantages of these in the slow months. And, “Are there any African American-owned mortgage banks?” NAMMBA’s Tony Thompson answered with, “There are several African American-owned banks who usually reside in local minority markets with 3-5 retail branches but they focus primarily on deposits and SBA loans. There is only one African American owned mortgage bank. Utah’s United Security Financial primarily does servicing but originates some residential loans and is owned by Lois Johnson. It is licensed to operate in 49 states, she is the country's only African-American Ginnie Mae lender and is also an issuer of Fannie Mae.”

Capital Markets

Lots going on there, not only in the U.S. but around the world. The U.S. 10-year closed Tuesday at 2.82% as Treasuries across the curve all moved a similar direction and amount (the 2-year yield and the 30-year yield to their lowest levels since September while the 5-yr yield settled at its lowest level since late May) ahead of today’s FOMC decision. Housing starts and building permits report exceeded headline expectations but driven by an increase in multi-family starts; starts for single-family units were at their lowest level in 19 months.

The housing report yesterday substantiates the weakening levels of homebuilder confidence and is a reflection of the impact rising interest rates are having on single-family construction activity. Builders are still challenged by several factors, including high input and labor costs. These results also likely reflect slower demand for new single-family homes, as emerging economic and financial market uncertainty, coupled with affordability challenges, are keeping some potential homebuyers away.

Internationally, British Prime Minister Theresa May confirmed that parliamentary debate on the Brexit withdrawal bill will resume on January 7, as a failure to approve the current withdrawal bill would lead to a “no-deal” Brexit. Australia sees no strong case for a change to monetary policy despite acknowledging recent softness in the housing market and sluggish income growth. Japan's government lowered its growth forecast for fiscal 2019, the Italian government is expected to lower its 2019 GDP growth forecast, and Switzerland lowered its GDP growth forecast for 2019 to 1.5% from 2.0%. Around-the-world slowing?

Regarding our Central Bank, today’s FOMC statement, due at 2PM ET, is expected to see the Fed hike the fed funds target range by 25bps to 2.25% to 2.50% while the IOER is only expected to increase 20bp to 2.40%, which would be below where the Fed effective rate is expected to trade after the hike. The statement should emphasize the data dependency of their reaction function while equities will be looking for more dovish overtones given the recent tightening in financial conditions.

Outside of the Fed events, the calendar has already given us MBA mortgage applications for the week ending December 14. Did your applications pick up last week? Congrats! The industry’s, however, fell nearly 6%. Those saying refis are dead are incorrect as they currently account for nearly 44 percent of overall activity! (FHA & VA apps are each about 10 percent.) The Q3 current account deficit was released ($124.8 billion), and we’ll have November existing home sales, expected to decline to 5.14 million from 5.22 million, are due out. We begin today with the 10-year yielding 2.81% and Agency MBS prices are better by .125; rates are lower based on world-wide economic concern.

Lender Products and Services

Tomorrow is a webinar titled, “The Lender’s Guide to Frictionless Mechanic Lien Waivers” presented by Land Gorilla and zlien. Lien waivers are an essential part of ensuring construction lending payment processes are fair. They are seen as a major friction point for lenders and contractors alike, however, as problems here can lead to inefficiencies, higher risk of loss, and unnecessary project delays. By understanding the risks and pitfalls surrounding traditional lien waiver practices, lenders can create more modern, frictionless methods that protect loan stakeholders and provide better visibility onto any risks. Join Land Gorilla and zlien on Thursday, December 20th, 2018 at 10AM PST for a webinar to understand the risks associated with inconsistent, manual lien waiver processes, the common pitfalls and pain points for both lenders and contractors, as well as best practices you can use to ensure a seamless lien waiver process. Register today!

The holidays provide a perfect time for lending leaders to disconnect and think critically about their business and how they can improve for the new year. 2019 will bring with it a year of challenges to overcome. Still, conditions exist to shine and win, as long as you are willing to be agile enough to embrace change and lean into the winds of market challenges to find the opportunity within (opportunity, I might add, that many of your less-reflective competitors will fail to capitalize upon). A new eBook, “2019 Mortgage Lending Resolutions” is a great read to save for your holiday break as you begin preparing for a new year. Exclusive to Rob Chrisman subscribers today, it’s a must-read for all mortgage leaders and their teams. Download your Free Copy Here.  

According to a recent IMF report, Home Point Financial is now the 5th largest wholesale lender in the country. In Q3, Home Point grew at 8.4% over Q2, the fastest reported growth in IMF’s Top Ten Rankings. With its ongoing focus on the TPO channel and retention of its Servicing, Home Point continues to build a platform that is attracting top-flight sales talent.  Says Home Point Chief Business Officer and Head of Production Phil Shoemaker, “We have taken strategic steps to focus on our TPO partners and enhance the tools our sales team needs to succeed in today’s marketplace. We look forward to working with AIME to help expand wholesale market share in 2019 and supporting the upcoming launch of the ARIVE platform in order to best support our broker clients and their customers.”

Looking for ways to grow your business? Freddie Mac is collaborating with clients to deliver automation and insights that provide a competitive edge. Cut back on documentation and reduce time to close with Loan Product Advisor® automated income and asset assessment capabilities. Save borrowers time and money with ACE appraisal waivers, now available for certain condo unit loans. Grow your condo business with Freddie Mac’s unit-level condo exception tool, Condo Project Advisor. Get greater efficiency with simpler collateral QC and underwriting in Loan Collateral Advisor®. Sharpen your edge.    

What an exciting year it’s been for the mortgage tech industry! This is especially true for one major player in the space: Floify. Throughout 2018, this self-funded mortgage automation solution has introduced some of the most innovative features, integrations, and partnerships LOs have ever seen from a digital point-of-sale. Floify’s rise to the top has not only yielded massive ROIs for LOs who use the platform to efficiently automate their mortgage processes, but also helped many top-producers generate multi-million-dollar loan volumes without breaking a sweat. Newcomers to the Floify family, including industry titans like CBC Innovis, DocMagic, LendingQB, Equifax, AFR Wholesale, and more, have brought slick new automations and communications, as well as VOE/VOI, credit reporting and other necessary services, into one convenient and affordable solution. To learn how Floify will help you get on the leading edge of mortgage tech in time for the New Year, request a demo.

The Mortgage List is a simple, one-stop location for those searching for vendors and service providers to the mortgage industry.  With the most complete database of providers The Mortgage List offers a free online resourcewhere you can find everything you need to set up, grow, build and manage your mortgage business.  At The Mortgage List you can search for vendors, locate training, connect with other professionals and stay up to date with industry insight. The Mortgage List is the most comprehensive B2B mortgage industry platform allowing industry professionals to connect with businesses who provide services to the mortgage industry.

M&A Continues

Southern California’s New American Funding announced its agreement to acquire the assets of Marketplace Home Mortgage (Minneapolis). This transaction is scheduled to close before year end and is expected to add over $1 billion in yearly production to New American with Marketplace’s management of Keith White and Elly Cummings staying on. “Marketplace has been growing steadily for almost 25 years and achieved a 29% annual national market share growth since 2014, and has achieved the # 3 market share ranking the Twin Cities MSA while being rated ‘The Best Mortgage Company’ in Minneapolis in 2018.  New American, led by Patty and Rick Arvielo, originates over $10B annually, has a servicing portfolio of over 108,000 loans for $27 billion, approximately 185+ branches, about 2900 employees.

The STRATMOR Group successfully represented Marketplace in this transaction and Partners Garth Graham and Jeff Babcock had some takeaways on M&A dynamics in the current market environment. “It is important to identify a buyer that brings a sufficiently tangible value proposition to the acquired company’s originators is critical to retaining its sales force, especially in a climate where aggressive recruiter tactics present a substantive risk in acquisitions. The buyer’s reputation assumes great importance in retaining the sale force, and NAF has proven this through its high organic growth. Structuring the transaction terms and conditions to motivate full adoption of the buyer’s acquisition synergies benefits all parties to the deal. Acquisitions can be the most cost-effective, low risk strategy for entering geographic markets.”

On the depository side of mergers & acquisitions, PCBB’s Steve Brown checks in on where bank activity is most active. “For this, we take a look at a really nice graphic from S&P Global Market Intelligence. It peppers a map of the US with dots of activity using various colors. At the highest level, what jumps out from that map comes by drawing a straight line right down the middle of the country. Doing so shows much higher bank M&A activity is occurring on the eastern side of the line than the western. By doing a rough count, it appears activity on the eastern side is running about 5 to 1 vs. the western side. It remains to be seen what impact rising interest rates and volatile equity markets will have on economic activity and bank deals by the time the calendar turns to 2019. However, as you think about this in context of all of your business priorities for the coming year, it seems like 2018 M&A activity will deliver deal flow that is about average, rising prices and low new bank formation, as the backdrop.”

(Speaking of banks, the American Bankers Association notes that through September, just 13 new banks launched since 2010. And the FDIC notes the number of community banks is steadily being whittled down in some areas, leading to bigger banks that cover broader geographic areas. The FDIC further notes this trend poses the question of whether the banking industry can serve the needs of smaller communities with fewer community banks, and whether some rural communities will begin to suffer from it.)

Employment

FirstBank Correspondent Lending is looking to hire an Account Executive with a proven track record and customer base in the Southeast, including the states of TN, SC, GA, AL, MS, & FL. “Backed by FirstBank, a successful financial institution with $5B in assets, we have the technology, pricing and marketing to ensure your growth and success. A wide array of products including Jumbo, USDA Single Close Construction, FHA, VA, USDA, Freddie FNMA, Doctors Programs, etc., give you the ability to fully support the changing needs of your clients. Come thrive in a culture-driven environment where your voice is heard, your opinions matter, and the client comes first. Excellent compensation package included. To learn more, please visit www.firstbankonline.com/about/careers.

Considering a change? “At MortgageRight, we set ourselves apart by offering lower rates, better pricing and higher compensation! We’re making a name for ourselves across the nation by operating with thinner margins than other industry players. We saw the rising interest rate environment coming ahead of time and decided in advance to put several key strategic factors into place that would help our producers win in a market like this one! Very simply, we can offer lower rates and/or a higher comp, and we can back our claims up 100%! But don’t take our word for it. Check out this recent example: We recently on-boarded a branch manager who was able to increase his comp by 50BPS AND offer 1/8 better RATE to his customers! Give us the opportunity to show you how our model can help you win more deals in any environment. We’ll be happy to put any candidate in touch with recent hires and existing LOs to discuss our strengths, see what we have to offer, and hear our vision for the future. For a pricing engine walk through, contact Mike Russo at (866) 425-5456 or visit us.”