📉 Reddit vs The Street - The Letter X

Feb 01, 2021 8:09 pm

THE LETTER X

MONDAY IS FOR WINNERS

ISSUE #38

Presented by: EPM

 

How did the 13th month of 2020 go for you all? :-)


Reddit showed everyone that the internet and social networks can do more than post political memes and cat videos. We saw Hedge Funds get hit with about a $19bn loss after everything was said and done.


Crazy just keeps getting crazier so all of you better buckle up because 2021 has busted through the door like Jack Nicholson in The Shining!


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But seriously folks, I hope you started out this year strong by adapting and executing. When I look ahead at this year I see nothing but a world of opportunity in our industry for those that want to seize it. 


Easier said than done, I grant you. But before you can say what you want to do or what you’re going to do, you need to start with WHY. And no I am not talking about Simon Sinek, although “your why” is important, but I am going deeper than that. Are you asking WHY daily?


Why not me?

Why not you?

Why not us?

Why not now?


“They get business so easily it seems from their referral partners.” 


Why not me?


“You tell me that you want to do video but that it won’t be as good as other videos.”


Why not you?


“They are the top producing team in our company.”


Why not us?


“I am busy this week, but as soon as things calm down I will learn that new tactic.”


WHY NOT NOW?


Ask yourself “why not” daily. Not just of yourself, but from your team and your company. Eventually, the excuses and “reasons” you tell yourself won’t stand up and more importantly, stand in your way of progress. 


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Event Announcement 

EPM's Broker Success Summit


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. 


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 going into every situation with no preconceived expectations because when you live in the moment you can go far beyond your limited thoughts, always say yes to No Limits!

 

 

Mortgage Rate X

Lender Price Rate Lookback

 

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MBS X

Diana Bajramovic of MBS Highway

 

Housing Bubble?

Fed Chair Jerome Powell was recently asked if he’s concerned with a housing bubble forming. He responded by saying that the gains we are seeing don’t seem to be a problem at the moment and feels that the Fed should continue to help keep interest rates low. With that, the Fed will continue to purchase Mortgage Backed Securities and Treasuries, which should help keep interest rates lower.

 

Continued Strength in Demand for Homes

We received some reports this week including New Home Sales and Jobless Claims. This week’s New Home Sales report measured signed contracts for the month of December and was up 1.6%, which was slightly lower than expectations. That being said, this is still a strong report as home sales are up 15% year over year even with inventory being down 6%. Currently there are only 302,000 new homes for sale across the country, and with such hot demand, there is a 33% rise in the amount of homes for sale that have not yet been constructed. The median home price is now up 8% year over year at $355,990. Overall, we are seeing very strong demand in the face of tight inventory.

 

Be sure to stay up to date with this information by watching the Daily Morning Update on MBS Highway.

 

 

// Have you signed up for TLX-M? TLX Masters is a new opt-in membership where you can receive more specialized content from me on a more frequent basis. If you would like to sign up for the new subscription you can do so here.


Monday Mortgage Grind!

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WHAT are people asking for on Google as it relates to mortgage? Let’s take a look!


what mortgage can I afford


what mortgage will I get approved for


what mortgage can I afford with my salary


what mortgage rate can I get


what mortgage can I afford on 100k


what mortgage can I afford on 60k


what mortgage can I afford on 70k


what mortgage can I afford on 50k


WHY is this important? Your content should speak to INTENT and NOT keywords you THINK people are searching for.


Tax Credits - Lawmakers introduced a bipartisan bill Thursday, the Neighborhood Homes Investment Act. It is supported by a number of organizations, including Habitat for Humanity and the Mortgage Bankers Association.


Bond Market Warning - After spiking in early January, interest rates returned to near-all-time-low levels by the middle of the week.  By the end, however, the market began to flash a warning about more volatility ahead.


MBA Advocacy Update - Feb. 1, 2021


Safe Harbor - This brief analyzes historical loan performance to study the CFPB’s newly issued Seasoning QM Rule, which would provide a 3-year pathway to safe harbor for loans that are rebuttable presumption or nonqualified mortgages at the time of origination.


Forbearance - While the number of Fannie Mae and Freddie Mac (GSE) loans in forbearance continued to decline last week, that 4,000 loan improvement was more than offset by an increase in FHA and VA loan and loans serviced for bank portfolios and investors in private-label securities (PLS).


HPF IPO Size Cut - In what some experts have called “Gamestop Effect” causing market turmoil, the HPF offering is smaller than what the company last week was aiming for, when it anticipated 12.5 million shares priced between $19 and $21.

 

Bowtie Economist Quick Hits


While this may be nothing but a stupid bubble, created by new technology such as Reddit/chat boards and Robinhood and the unintended consequences of low interest rates and massive liquidity due to overreliance on monetary policy, it could be the Wall Street accident we are all afraid of! Bubbles can last years before bursting, think Tech Bubble. The four most expensive words in the English language, “this time is different.”


Existing-home sales jumped in December to a seasonally adjusted annual rate (SAAR) of 6.76 million, the highest level since 2006. Usually, sales weaken in December but due to Covid-19 seasonality has disappeared. Had December’s sales of 540,000 occurred in July, it would have resulted in a seasonally adjusted rate of just 5.3 million. The December SAAR number is so high because December sales have averaged about 400,000 since 2005.


The Fed, the ECB, and the BoJ have collectively increased balance sheets by $8 trillion since Sars-Cov-2’s debut. Last recession, it took the same central banks eight years to accumulate that much. With such large reserves, higher rates due to rising inflation pose a risk. If rates rise due to an improving economy, taxes will also rise, good. Stagflation, (high inflation and low growth) though quite unlikely, would be dreadful. 


In December, housing starts were at a seasonally adjusted annualized rate of 1.67 million, their best since 9/06 and up 5.2% Y-o-Y. Single-family activity was up 28% Y-o-Y, multifamily starts fell 39%, both percentages being strongly Covid-19 influenced. Total starts were 1.4 million in 2020, up 7% from 1.3 million in 2019. I suspect 2021 starts hit 1.5 million with single-family starts finally returning to normal, multifamily is already there.


Have you joined the Mortgage X Mastermind yet? It is our FREE Facebook Group. 


 

The Vieaux

Brian Vieaux - President of FinLocker


Addressing Racial Disparity In Homeownership

As February is Black History Month, I decided it was an appropriate time to look at the racial disparity in homeownership and ways the mortgage and fintech industries can improve Black Americans' homeownership rate.

The Fair Housing Act was passed in 1968 to open up opportunities for Black Americans to become homeowners by making it illegal to discriminate against any person from buying based on race and other protected classes. It eventually worked, when Black homeownership peaked at 69% in 2004 and 2005. However, numbers dropped following the 2008 housing crisis and haven't recovered.

 

In Q3 2020, the percentage of Black Americans owning a home was 46.4%. It is 75.8% for non-Hispanic white alone householders. According to NAREB 2020 State of Housing in Black America, the homeownership rate for Blacks who graduated from college is only 3.2% higher than that of White high school dropouts. 

Lenders deny mortgages for Black applicants at a rate 80% higher than that of White applicants, according to 2020 data from the Home Mortgage Disclosure Act. Yet, Black borrowers who overcome the hurdles of mortgage qualification often pay higher rates for FHA-backed loans and conventional mortgages.

 

So how do we reduce discrimination and improve the homeownership rate for Black Americans? The Urban Institute made these recommendations in its report, Building Black Homeownership Bridges: A Five-Point Framework for Reducing the Racial Homeownership Gap


  • Improve and expand financial education, housing counseling, and homeownership preparation to renters and younger generations
  • Helping Black renters gain access and understanding of homeownership tools at an earlier age
  • Explore more options for the use of fintech to advance understanding and access to homeownership
  • Increase visibility and access to down payment assistance and low-down payment lending programs
  • Expand small-dollar mortgages for purchase and renovation
  • Consider diverse sources of income to qualify for a mortgage 
  • Strengthen post-purchase counseling
  • Tools to monitor real-time home values and home equity

Here are some organizations that can provide additional resources:

National Association of Minority Mortgage Bankers of America (NAMMBA) – Supports minorities and women who work in the mortgage industry with education and career development. Currently focused on connecting 50,000 college students to positions within the real estate finance industry.

 

Cultural Outreach – Focused on helping financial institutions and mortgage lenders connect with young and underserved markets. Here’s their Lender Resources

 

FinLocker provides all users with the tools and educational resources to achieve financial stability through homeownership. Proving borrowers with a transparent, tech-driven financial solution can help address the racial disparity in homeownership and wealth creation.


 

Lending, Leadership, and Life Quotes

Eddy Perez – President & CEO of EPM


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Industry Professional to Watch!

Steve Carpitella - Chief Retail Officer at EPM

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Make sure you tell Steve that you saw him in The Letter X!

 

Beyond The Numbers

Fobby Naghmi, EVP, National Sales Mgr. of First Option Mortgage


We’ve all heard the saying “When the student is ready, the teacher will appear” And if you haven’t heard it, well, you probably haven’t been ready to hear it! 

 

Nonetheless, I have questioned how does this teacher appear?  Is it possible that the student actually manifests the teacher due to their own need to learn?  I know in my own life, as I have delved into areas that I would like to understand more about, it seemed people entered my life who could teach me about the topic I was seeking to understand. 

 

Let’s take the creator of the Mortgage X newsletter, Jason Frazier.  Was it a random act that him and I both ended up in Tampa, Florida at a convention?  And then how random was it that I told Jason that I was frustrated in my attempts to create a podcast. And poof…he tells me the solution on how I could create a podcast.  Was that all an act of randomness? Or was my desire to create a podcast so strong that the universal law of manifestation put Jason and I together for that moment to occur?  In recent years, I have begun leaning more to the latter. 

 

Teachers don’t just appear until the student’s desire creates an unstoppable force that puts the two together.  What creates that desire?  The ingredients are simple: Humility, honesty, and a longing to continue learning. 


 Mortgage X Marketing Manifesto

Andew Pawlak, CEO of Leadpops


Time To First Value (TTFV) in Mortgage

 

In the SaaS space, TTFV is something many companies examine as an area to track and improve upon during the customer onboarding process. 

 

An example of onboarding is the process of getting a new customer to launch and log into/use their account during a 14 or 30 day trial. 

 

The idea is to create value for the customer as quickly as possible during that period. This can be achieved in a variety of ways, including but not limited to: convenience, ease of use, access to information/knowledge, speed, and/or results.

 

All communications, training, guides, tips, videos, tutorials, etc. provided during that period work

towards providing value in different ways for the various personas that sign up. 

 

Though it's a popular topic for SaaS companies, I haven't heard it come up outside of software

customer onboarding. 

 

Perhaps it goes unsaid in the mortgage space... but I suggest that it's something to think/talk about and strategize on. 

 

To be clear, yes, value should be provided before, during, and after (always and forever). That's easy to say, so let's get that out of the way. 

 

In terms of TTFV as a focal point to help improve closing rates and the overall consumer experience, there is plenty of room for improvement for most individual salespeople, and across companies and organizations. 

 

Your customer onboarding experience starts the minute you have your first conversation with a prospect (even if it's via email or text) all the way through to closing, especially your initial interactions when you're working to separate yourself from competitors, earning trust, and creating loyalty. 

 

If you think there's any room to increase your closing rate of leads to loans (or anything you sell), consider how you might be able to improve TTFV for your prospects and clients.

 

Thanks, and I'll catch you on next week's The Letter X!


I hope you enjoyed TLX #38! Now go crush this week!

 


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