🔥 Super Bowl Hangover - The Letter X
Feb 08, 2021 7:26 pm
THE LETTER X
MONDAY IS FOR WINNERS
ISSUE #39
Monday is for Winners, so I wanted to say congratulations to the Tampa Bay Bucs and all their fans. There is nothing like waking up the day after a championship so I hope you take some time and enjoy this feeling because the work to win again starts very soon.
Speaking of winning, there was a recent quote from Elon Musk that resonated with me.
Elon was on the hot new app Clubhouse and was asked the following question:
“What words of encouragement would you give an entrepreneur?”
His answer?
“If you need words of encouragement, don’t become an entrepreneur.”
Made me think of how that could be used to talk about our industry as well. The mortgage industry is not for the faint of heart and it demands hard work, sacrifice, and commitment to win a “championship.”
When we interview people now, we tell them that this job comes with a warning label and if your work does not live up to your resume/interviews, then you will quickly be exposed. It is all about setting expectations and going further about attracting the right people.
Growing the right team, the right way will be more important than ever with the eventual market shift that is coming. If you think you saw a lot of change this past decade, buckle in because this decade will be 10x that.
Scale and grow now, but do so that you remain nimble to be flexible with the market. Enjoy this week’s TLX!
Event Announcement
Why not now?
I am excited to announce that EPM will be holding our first ever Mortgage Broker Success Summit in Atlanta, March 18th-20th (Thursday - Saturday) at the Westin Perimeter. This event is for mortgage brokers or those interested in becoming brokers and not for service providers or real estate professionals.
We are bringing in some of the best brokers, experts, coaches, and speakers to mastermind with you during this 3 day event. There will be a ton of value and will be focused on those that want to make 2021 their best year ever!
This will be an in-person event with very limited seats so make sure you reserve your seat now. Those that reserve first will get special access to the registration link by mid-Feb. I hope to see you there! Reserve your seat today!
Say Yes Every Day
Laura Brandao - President of AFR Wholesale
This week say yes to failure! Many times in our lives we don’t step outside of our comfort zones out of a fear of failure but if you go into the situation with no expectations or preconceived ideas you will never fail because the experience alone is a WIN!
Mortgage Rate X
MBS X
Diana Bajramovic of MBS Highway
Yield Curve Control
In an interview with the Fed’s Loretta Mester, she states that the Fed is avoiding going negative in rates and wants to get back to Yield Curve Control (YCC). This is where the Fed uses asset purchases such as buying Mortgage Backed Securities (MBS) and Treasuries to keep interest rates low, rather than using the Fed Funds Rate, in hopes of keeping Mortgages Rates and 10-Year Treasury Yield at a stable level. The Fed does not want to see longer-term interest rates get out of hand.
Inflation
Our friend peter Boockvar said that if inflation gets up towards 3%, this would reduce the buying power that families would have in purchasing a home. For example, the current rate of inflation is around 1.5%. If this moves up to 3%, a family that’s earning $100K would see a $1,500 reduction in their buying power. It’s interesting to think about all the stimulus plans that are trying to be put in place in hopes of putting as much money in, while inflation would take that money away.
Jobs
Initial Jobless Claims came in down this week by 33K to 779K. This is below estimates of 830K and was revised last week down 35K to 812K. Keep in mind that the current initial Jobless Claims level is still about 4 to 5 times greater than what we would’ve normally seen pre-pandemic. We also got continuing claims that saw a slight improvement and are still at around 4.6M. Overall, these are minor improvements and levels are still high. Pandemic Unemployment Assistance and Pandemic Emergency Claims are still extremely elevated. The total level of weekly claims are right around 18M. Around this time last year, this number was around 2M.
We continue to monitor these reports and more in our Daily Morning Update on MBS Highway.
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Monday Mortgage Grind!
Content Ideas - I use Buzzsumo to help me with content ideas and wanted to share some top ideas based on their crawling of sites like Reddit and Quora.
- Advice for Millennials - Mortgage, Financing, Real Estate Related Topics
- How to Get Preapproved For A Mortgage: Loan Approval Explained
- How to Get Rid of Private Mortgage Insurance On Your Mortgage
How to create content that people will care about? Answer their questions!
MBA Advocacy Update - On Tuesday, MBA, along with several trade organizations, submitted a letter to the Office of the Comptroller of the Currency responding to its approach to the Community Reinvestment Act. On Thursday, the House Financial Services Committee held a hearing on the next COVID-19 relief legislation. And the Senate Banking Committee approved Rep. Marcia Fudge’s nomination to be HUD secretary.
Rates Under Pressure - Economic data is traditionally one of the key contributors to interest rate movement. Of the regularly-scheduled reports, none has more market-moving street cred than The Employment Situation--otherwise known as "the jobs report"
Top 10 Multifamily Financing Trends for 2021 - Capital continues to flow to multifamily sponsors and commercial real estate in general. Here are the 10 key factors that will drive liquidity in this year.
Welcome to the Street - Despite a 1.4bn net income, UWM stock plunged more than 10% last week (9.99) as investors are nervous about the prospect of declining profitability in originating mortgages after a record 2020.
iBuyer Beware - Since competitor Zillow made its big push into iBuying in early 2019, investors have struggled to understand how such a capital intensive business so dependent on market fluctuations can reliably make money. They have good reason: In the most recent quarter reported, Zillow said it lost roughly $7,500 on average for each home it bought and subsequently sold after interest expense, despite the surge in overall real-estate prices last year. Zillow hasn’t yet shown profitability in its iBuying business on that basis in any quarter and losses seem to be accelerating (WSJ).
Oh Myyy - Did you all happen to catch the Real Estate Porn Zillow skit on SNL? If not, check it out here as it is worth the watch!
Something Decent from Forbes - Forbes has been more miss than hit as of late, but here is an actual relevant article talking about Five Strategies For Real Estate Professionals Looking To Stand Out In 2021. Mortgage pros, you can learn from this one as well.
When a call option (which allows you to buy a stock at a fixed price for a fixed period) on, say, GameStop is purchased, another party must sell it. Rather than selling a naked call, the counter party (most often a market maker) will usually buy the underlying stock as a (delta) hedge. Thus, heavy demand for calls can push up share prices causing more option buying, squeezing short sellers.
President Biden’s proposal to raise the minimum wage to $15/hour will have quite unequal effects. In high-cost states like DC, MA, CT, WA, NY, and MD where $15/hour is roughly 65% of the median wage, the impacts will be much less than in MS, AR, WV, and LA where it is minimally 90% of the minimum wage! Rather than a uniform rate, base the minimum wage on median home prices.
Eurozone GDP fell 0.7% in 20Q4. While less severe than the contraction in spring 2020, this means eurozone GDP is 5.1% smaller than a year ago, compared to US GDP which is down just 2.5% compared to 19Q4. Worse, while US GDP is expected to grow in 21Q1, albeit feebly, eurozone GDP is expected to continue declining in 21Q1, meaning a double-dip recession. So much for any economic help from Brussels.
Comparing total state employment in 12/19 to 12/20, the best performers are Utah and Alaska, each with a gain of 1%. Idaho and Kansas follow with no change. Arkansas, Indiana, Montana, South Dakota, Tennessee, and Wyoming have each seen employment decline of 1%. At the other extreme, California, Iowa, and Illinois have lost 8% of their labor force, Hawaii, Massachusetts and New York are down 9%, Nevada is off 10%.
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The Vieaux
Brian Vieaux - President of FinLocker
Building Your Team For Long-Term Business Gain
Real Estate Finance, specifically mortgage lending, is not a "mainstream" career choice for most college grads. When I come across an originator in their 20's, they've usually been inspired to pursue a mortgage career by witnessing a family member's success.
Those of us who have done this for many years, and in my case, decades, recognize that it is not only a financially rewarding industry but is also personally fulfilling as we get to help people achieve the American Dream of Homeownership.
While many of us have immediate hiring needs to fulfill to meet the continued high volumes, I also recommend having a longer-term strategy that serves the growth of your branch, company, and the industry. Consider hiring freshly minted college grads to the teams you want to build, and train them on the business yourself.
Fortunately, you don't have to do all of the training yourself. I know a company that successfully used the Retail Loan Officer program offered by XINNIX Mortgage Academy to supplement on-the-job training of new loan. The rookies that took the program started to outproduce some seasoned originators by their second year and were on the President's Club list by year three!
For those interested in pursuing an organic hiring strategy, consider partnering with Tony Thompson's National Association of Minority Mortgage Bankers of America (NAMMBA). NAMMBA Talent Hub aims to connect 50,000 students to opportunities, including internships, jobs, professional development workshops, or mentorship.
I participated in NAMMBA's College Town Hall last week, where I discussed my career path and recommended various career opportunities that college grads could pursue. I've since had a couple of conversations offline with a few enthusiastic attendees and even identified a couple of hotshot students to intern with FinLocker in the summer.
Lending, Leadership and Life Quotes
Eddy Perez – President & CEO of EPM
Industry Professional to Watch!
Brianna Harris - Community Manager @ AIME
Make sure you tell Brianna that you saw her in The Letter X!
Beyond The Numbers
Fobby Naghmi, EVP, National Sales Mgr. of First Option Mortgage
“Take it with a grain of salt” or as some say, “a pinch”, but both mean the same thing, believe something but with a healthy dose of skepticism. Why would we want to do that? I mean if someone is lying to me, or “embellishing” the truth, why not just say “DUDE!! Really?!?!”
There is actually an account of a Roman general, who in an attempt to build immunity against being poisoned, the general began to take small doses of poison but with a grain of salt. The salt would mask the bitter taste of the poison
Could you Imagine giving your underwriter a borrower’s income documents? Then telling them to just take it with a grain of salt. Yeah…no need to verify them. “DUDE!!! Really?!?!”
I bring this up because just this past week, a friend of mine called me to tell me he was very upset at me, due to what he heard that I had said about him, to another friend (Rewind to 8th grade please). When I asked him what I had said and to whom, he didn’t want to tell me. In other words, it was more convenient for him to believe in something, rather than to verify the information to be accurate. He was happy to stay in his cocoon and wear his little pity party dress by himself. I digress.
By allowing this phrase to remain in our culture, society has made it easier to believe in something that may not be the exact truth rather than to verify the information itself. We could in fact just call it what it is, a convenient lie.
The Edumarketer
Ginger Bell, Founder of Edumarketing
Use Video to Share Important Industry Updates with Realtors - Like the HUD & DACA Updates
This week we are giving you a HUD/DACA video for you to share with your Realtors!
You have heard about the importance of creating videos and you may have even included it in your goals and plans for 2021, but finding the time to create videos is hard. However; finding the time to put video into your weekly agenda is important! In fact, according to Cisco, video marketing is expected to make up about 82% of all consumer internet traffic by 2022. For mortgage originators, that means 2021 will have to be the year of video marketing!
Sharing information about important updates, like the recent changes from HUD regarding DACA recipients are a great way to inform, educate and be the resource.
A video on updates is often shared by your real estate partners with their clients, so it's a great way to offer a value add to them. We wanted to help the industry out, so we created a video about the recent HUD changes for you to send out to your network. The video is not branded so if you want to add your logo, feel free.
Click HERE to watch the video we created and then click on the link below to get the MP4 video to download and send out to your database or post on your social media, YouTube channel or on your website.
Click HERE to get your MP4 download of the video.
More about the HUD/DACA Announcement can be found HERE.
Mortgage X Marketing Manifesto
6 Strategies to Help You Get a Higher Marketing ROI
1. Invest in a lead generation website PLUS landing pages that are optimized for marketing and lead conversion
2. ALWAYS include a strong call-to-action in your various marketing efforts to drive traffic to your website or landing pages ("APPLY NOW" doesn't count!)
3. Follow up with your leads fast and often, and make sure you're using text messaging as the first response (this doesn't have to/shouldn't be manual)
4. Optimize the Thank You Pages of your lead forms with a quick video to introduce yourself and explain next steps/set expectations + a link to your calendar
5. Retarget traffic that doesn't convert with animated banner ads on Google Display Network and with Facebook Ads
6. Find opportunities to introduce leads to your referral partners so that YOU'RE the one referring business to your sphere as often as possible
Thanks, and I'll catch you on next week's The Letter X!
I hope you enjoyed TLX #39! Now go crush this week!
