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🔥 5 Hour Turn Times! What! - The Letter X

Sep 19, 2020 7:00 am

THE LETTER X

ISSUE #22

I knew that would get your attention!

No we don’t have that now, but the current capacity issues, record margins, and the operations arms race have created a perfect storm for lenders to look to machine learning to finally automate the ops assembly line.

Well, maybe not fully automate it, but about 70% of it. One thing I have talked about for years when it comes to the modernization and disruption of our industry, is that the roles in operations will be the first to go. Don’t get me wrong, if you are the best at what you do, you have nothing to worry about as humans will still be needed to audit and do a final check of what the machines are doing. But, if you are serving a mainly mechanical role in operations your days will be numbered.

I believe we will start to see this automation in full form within the next 3 years with a heavy dose of it in 5 years. It only makes sense as ops is where we “throw the most bodies” at problems, especially when it comes to growth. Ops is also where lenders have the most retention issues, not to mention the high expense. It only makes sense that this is where the focus would be.

I know of a few who have been working on this hard for the past 18 months, so it will be interesting how quickly they can turn it on and achieve an automated line. Even more interesting is what happens to other areas of the business when this first domino falls. I hope you all like change because this next decade is going to be ripe!

Say Yes Every Day

Laura Brandao - President of AFR Wholesale

This week say yes to Living! How many days do we just go through the motions of our routines? Well, this week be bold and Live it up because what is life if we are not truly living.

Sharing is Caring! Remember to share your personal referral link (bottom of email) for a chance to win a $50 Amazon Gift Card!

The FUSE is Lit

I know, I know, you're probably saying "not another virtual event"...I get it.

Let's be honest, most have fallen short and most of us are tired with the one-way experience with bad audio, video, with little connection.

BUT I can safely say, this ain't that! This will be unlike any virtual event you have seen because there is a HUGE in-person element across the country!

The team at AIME have truly went above and beyond to bring you THE top virtual industry event of 2020, AIME Fuse!

Excited to represent EPM at this year's conference and moderate a panel with two awesome experts.

Michael Cox, Broker Owner of Mortgage Nerds, and Andrew Pawlak will join me to talk about Developing & Defining Your Value.

This will be 100% different than the generic "Build A Brand" workshop that you see everywhere else.

In this session, you’ll learn how to develop a unique brand that sets you apart from the competition, but more importantly, how do you convert all of that into MORE BUSINESS!

This is just one session in a jam packed day of valuable content that will help you build a modern origination business.

Look forward to seeing you there!

MBS X

Presented By: MBS Highway

Fed Thinks Rates Will Remain at Zero Through 2023

The Fed announced that they think the Fed Funds Rate will remain at zero through at least 2023.

It’s important to understand that the Fed Funds Rate and Mortgage Rates are two totally different instruments. The Fed Funds Rate can change from one day to another, but a Mortgage Rate may be in effect for over 30-years.

Mortgage Rates will be affected by inflation because inflation erodes the buying power of the fixed return that a mortgage holder receives. And interestingly, the best way to combat inflation is by raising the Fed Funds Rate. If inflation begins to rise, and there are already some signs of this, Mortgage Rates will start to climb in response. All this can occur while the Fed Funds Rate is at zero.

If you would like to see an example of this, look no further then what transpired a few years ago when Mortgage Rates rose nearly 1%, while the Fed Funds Rate remained at zero.

The current rate environment presents an incredible opportunity that should be taken advantage of, and being able to understand the market to best advise your clients is critical. That’s why we’ve created CMA, Certified Mortgage Advisor. CMA is a certification to teach you what Barry Habib has learned over the last 30 years! We have a special announcement coming next week. Click HERE to join.

The News X Recap!

One of the few bright spots for home buyers and owners in 2020—a year marred by a pandemic, economic recession, social unrest, wildfires, hurricanes, and a highly polarized presidential election—has been rock-bottom mortgage interest rates.

As of September 15, just under 3.7M homeowners remain in COVID-19-related forbearance plans. That’s down more than 22% from the peak of over 4.7M in late May. These loans represent 7% of the active mortgage universe, unchanged from last week. Together, they represent $781 billion in unpaid principal.

It was a phenomenon 12 years ago that ended with a huge decline in homeownership among Millennials, and now it is happening, for the same reason to Gen Zas a huge surge in unemployment sends young adults home to live with their parents. The root cause this time, of course, is vastly different; a deadly virus rather than a general slowdown in the economy coupled with mortgage defaults and delinquency.

Banks retreat again from residential servicing. The decline in the bank share of mortgage servicing comes as nonbank lenders are taking the lion's share of the expansion of volumes. Large nonbank lenders such as Rocket Mortgage, PennyMac, Freedom Financial and Mr. Cooper are taking the biggest share of refinance volumes across retail, direct and correspondent channels as the commercial banks withdraw.

Rates are not as low as borrowers might expect because overworked lenders are keeping mortgage rates higher to try to slow the onslaught of mortgage and refinance applications, according to experts. Once lenders catch up, mortgage rates are expected to fall further.

The mastermind of one of the largest mortgage frauds of the Great Financial Crisis has been released from prison after serving just nine years of a 30-year sentence.

Bowtie Economist Quick Hits

Taxes paid to state and local governments are currently deductible up to a maximum of $10,000/year. There is now talk of eliminating the cap. Why? 96% of the benefits of repeal would go to the top 20% of income earners, reducing their taxes by $2,640/year, 57% of benefits would benefit the top 1%, a tax cut of $33,100/year, and 25% would benefit the top 0.1%, a tax cut of $145,000/year!

While the CPI rose by 1.3% Y-o-Y and core CPI, which strips out volatile food and energy, is up 1.7% Y-o-Y, their highest levels since Sars-Cov-2 arrived, inflation will not be a concern for years. Inventory shortages, which have been a meaningful contributor will soon dissipate, and high unemployment, weak demand, and excess industrial capacity will remain for some time. Moreover, the Fed’s favorite measure PCE inflation is even lower.

In 7/20, 52% or 26.6 million adults ages 18-29 lived with at least one parent, up from 47% or 24 million in 2/20. This is the highest percentage since at least 1940 when it was 48%. This percentage bottomed at 29% in 1960 and has steadily risen since. Importantly, unmarried college students living in college dorms are treated as living at home, thus early college closures were not the cause.

Good things come to those who Mastermind! Have you joined the Mortgage X Mastermind yet? I would like to invite you to join our community that is 100% focused on helping MODERN industry professionals crush it.

The Vieaux

Brian Vieaux - President of FinLocker

Win Locally

I talked with a loan officer this week who established a mastermind group for prospective first-time home buyers in his community/market. They meet virtually once per month to share best practices on the overall journey of homeownership with specific topics like budgeting, saving for down payment and even credit improvement. It started with a handful of people who attended a home buying seminar and quickly grew to over 30 who plan to buy their first home in the coming 6 months to 3 years.

What impressed me most about this approach is the awareness of the importance of “getting to the consumer first”. He understands he is not going to win a marketing fight with the largest of lenders, who invest millions in customer acquisition. He has aligned with technology partners that allow him to leverage his relationships, expertise, and willingness to do the work to differentiate himself. Investing just a few hours per month on this specific tactic, this originator is grooming a pipeline of ready buyers that will pay off in the years to come.

Mamapreneur: Real Talk with a Side of Mom Jeans

Jess Vogelpohl Southwest Coaching

I, object:

Did ya know: "70% of buying decisions are made to avoid loss" - are you uncovering what your prospects don't want to lose...?

If YOU aren't:

🥺Cue massive amounts of objections.

🥺Cue lots of back and forth.

🥺Cue shopping around for a better deal.

🥺Cue not using YOU.

….Meh.

➕ Find the need - dig the pain - dig some more pain - show you are the remedy.

No pain, no change. No one starts a workout routine because they LOVE the way they look.