RMC Vanguard Mortgage Corporation announced today the conclusion of the first “Lenderpalooza” event held in Houston, Texas. The objective of “Lenderpalooza 2008” was to create an informal atmosphere for the Leaders of On-line Mortgage Lenders to share ideas and best practices.
Topics discussed included maintaining profitability, technology improvements, sales, customer service and brainstorming with the goal of an enhanced customer experience and increased internal efficiency among the participants. Attending the round table discussion were:
Saul Pohn, CEO/President, First Residential Mortgage Network, Inc.,
Geno Zale, President of Lending, First Residential Mortgage Network, Inc.,
Timothy Burke, CEO, Nationwide Lending Corporation,
Monte Robbins, CEO/President, CapWest Mortgage Corporation,
Kurt Simons, Chief Financial Officer, CapWest Mortgage Corporation,
Jeffrey Douglas, CEO, Wyndham Capital Mortgage,
Owen Raun, President, RMC Vanguard Mortgage Corporation,
Matt Kiker, Chief Financial Officer, RMC Vanguard Mortgage Corporation.
Regarding the event Timothy Burke, CEO of Nationwide Lending said, “Having been a part of so many advisory type meetings through the years I’ve learned that the eventual success of the meeting is always predetermined by the character of the people and companies who are invited. This was the best lender meeting I’ve ever attended!!”
As part of the dialogue, Mike Minnis and Kirsten Harkin from Service Link and Jamie McDonald and Ed Powell of Sparkroom presented their products to the group.
Speaking about the take-aways from the conference Owen Raun is quoted as saying “Sharing your best practices or secret sauce with your competetitors is an intimidating proposition. I believe we all have mutually benefited by sharing our various methods of dealing with the problems we each face every day. I’m looking forward to Lenderpalooza 2009!” ###
Tags: Industry News
Our Chief Financial Officer, Matt Kiker recently attended the MBA Secondary Marketing Conference in Boston. Below are his notes on a variety of subjects from the economy to secondary marketing and as well as the current challenges in our industry.
For the past three and a half days, I have been in Boston at the annual Mortgage Banker Association’s National Secondary Marketing Conference. At the event, I met with a few of our investors, some vendors and had the opportunity to listen to several speakers who are considered experts in various areas of mortgage finance. Since it is not possible for everyone to attend events like this, I would like to give you a synopsis of what I learned and what came from the meetings I had with our investors.
The headlines have screamed for a year – the sky is falling and it is all because of, or at least precipitated by the sub-prime lending crisis. What is the real story and how will this market shake out in the next year or two.
In a speech from Jay Brinkman, the chief economist for the Mortgage Bankers Association, numerous statistics and opinions were given that gave some insight into the current economic status of our country and specifically, the residential real estate and finance markets.
There will be no more rate cuts by the Fed. Why? Because, now the attention has turned toward inflation fears and the lower valuation of the US dollar. Treasury securities are not attractive at the current rates for foreign investors, some of the largest holders of US debt.
Mr. Brinkman said, “If we are not in a recession, we can certainly see it from here.”
- Net Exports are falling 
- Non-Residential investments in real estate are down (this includes office buildings and other commercial structures)
- Residential investment is falling
- Inventories have grown 
this is usually a good thing, but the inventories we have built are American made SUVs so
- Government spending is up which is usually good for the economy
The government’s stimulus package should help our Gross Domestic Product (GDP), the amount we spend on US goods and services, but the amount of the injection is not going to add jobs to the economy and sustain the economy. The stimulus will likely extend the time before some utter the “R” word.
Strengths in the Current Economy
- The banking industry is healthy, but capital constraints at the larger banks has made money tight in some areas
- US companies with international business have done well, although the companies that are purely domestic have not all faired as well. For a success, we only need to look at John Deere – the demand for farm equipment oversees is very high.
- Other than in the construction industry, the contraction we have felt is not terribly severe – there have been worse times in recent history.
- Exports are up, but Net Exports are down Weaknesses in the Current Economy
- Risks of inflation. (Expected inflation is a key component of interest rates)
- Energy prices
- Uncertainty in tax rates for capital gains and dividend taxes after the presidential election and the additional taxes that are to be put on by states and municipalities
- Entitlement costs – we have a lot of soldiers and ex-military that will start collecting benefits in the next 5 years.
- Wage inflation – as baby boomers retire, the supply of skilled workers decreases and drives up wages for those who can replace the retirees.
Unemployment rates continue to show the importance of a college education. The unemployment rate for people without a highschool diploma is rising and is currently over 8%. For a high school graduate, unemployment is 5.5%, for those with some college it is 4%. Those lucky enough to finish college are enjoying a 2% unemployment rate and they have for years.
The forecast for mortgages is lower for 2008 through 2010. We had $160 billion in subprime loans originated in 2005-2007 – those loans are obviously gone, but even the prime loans are on the decrease. In 2008, the forecast is $1.9 trillion, followed by $1.8 and $1.7 trillion in 2009 and 2010 respectively.
New and existing home sales will fall by 14% in 2008 and single family housing starts are down 40%.
Established neighborhoods remain strong as homes built after 2000 make up the vast majority of vacant homes in the nation. As a lender, older is better many times.
Home price declines have received a huge amount of press. There are several sources for the information, but one thing they lack is a geographical breakdown of where the price declines are. As you may have guessed, they are in California, Florida, Nevada and Arizona. By removing these states from the statistics, things look incredibly different.
Where is there risk for lenders? Lots of places, but especially in places where the population is migrating from. The largest migration of people who buy homes are leaving California, Florida, Michigan and Ohio. While California may appear to be holding steady, in reality they continue to see new immigrants and children of immigrants who will not qualify as potential home buyers. Another quote from California has become common “Every divorce in California is a bankruptcy.”
There is some good news for lenders. Many people are thought to be waiting for the real estate market to reach a bottom before stepping into home ownership. There are a lot of renters in this category. How can we start marketing to these people now?
Foreclosures are up and especially among those holding the minimum payment mortgage. Whether option-ARMs or traditional ARMS and regardless of the credit quality, ARMs have a higher default rate than fixed rate loans. 50% of foreclosures are PRIME ARMs.
Lastly, secondary marketing executives have stated that concerns in the past were severity of loss that comes from a borrower failing to make payments and then going to foreclosure. The models for predicting that risk have been fairly good. Investor attention has now turned to frequency, meaning how often is the borrower delinquent and for how many payments before a modification or a work out of some kind is allowed or called for. I do not imagine many of you have thought about the implications of that, but there is a high cost associated with servicing loans. If the cost to service loans increases, those increases will be passed to us in higher prices and fees from investors. FNMA and FHLMC have already raised their fees in response to the additional risks they have identified in their current portfolio along with their need for capital.
Tags: Insights
Once you get 3 or more people telling you how excited they are about something new I have to try it out. Twitter is just that “something new”. On this podcast Bill Rice gives us the who, what, when, where and why on using Twitter. Follow us on Twitter! Bill also summaries Sales Twit which is an “add-on” to Twitter and a skinny version of a lead management system. Also, Bill will be Co-Hosting future podcasts here with me. If you would like to be a guest or know someone who would be a good guest – or a vendor or product you would like us to host on the podcast let me know. Thanks.
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Tags: Insights · Podcasts
As of this morning, RMC Vanguard Loan Officers have quoted 855 of the over 10,000 consumer loan requests on Zillow’s Mortgage Marketplace. Of those quoted we have had contact with 3.27%.
So, here is the good, bad and ugly and other suggestions:.
Good:
Lots of consumers are interested in receiving mortgage information
Bad:
They don’t seem to be quite as interested in doing anything beyond receiving quotes,
Consumers seem to be confused about how to select the best quote,
Amount of opportunities to quote seem to drop each day.
Ugly:
Low contact rate, loan officers loosing interest.
Other suggestions:
1) Automate the process of quoting. We would recommend using Mortech-Inc. They support over 70 lenders, we are one of them and have had a long standing relationship.
2) Cap the number of quotes a consumer can receive. This creates an incentive for the lenders to respond quickly and makes it easier for the consumer to understand and compare the offers.
3) Allow consumers to input their contact information,
4) Create a formal process for Zillow to police low ballers, i.e. set up an email address consumers or lenders could use to notify zillow of abuse. For example, lowballquotes@zillow.com
5) Create a management console so that we can keep tabs on what our LO’s are doing, vs. not doing.
Tags: Insights
I recently interviewed Jamie McDonald, CEO, and Ed Powell, VP Sales, co-founders of Sparkroom.Jamie and Ed discuss Sparkroom’s data analytics product and how it can benefit lenders in their lead buying decisions. Sparkroom rolled out in Dec 07 and currently has 4 lenders utilizing their system. Jamie’s background includes performance marketing work at Expedia. Ed helped create Sparkroom after spending time as a loan officer, then in marketing with Lendingtree and Getsmart as well as being in wholesale with Decision1. Sparkroom’s product helps owner/managers optimize their decisions in selecting lead providers and the types of leads they buy.
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Tags: Industry News · Insights · Podcasts
Since the official launch of the Zillow Mortgage Marketplace our experience can still be best described as “positive.” It’s an interesting “venue” for Lenders and Consumers to meet in a what amounts to a stress free environment. To this point the Lender community seems to be policing itself fairly well. While we have seen a small number of “low-ball ” offers, they are far and few between.
A few suggestions we feel would be mutually beneficial to the Consumer and Lender are:
** Allow customers to provide name, phone number, email address, if they choose. Some customers may want us to contact them. If they don’t want to be contacted, they can opt out.
** Develop an API to automatically deliver inquiries and post quotes. Many of us have the ability to post live quotes fairly easily.
** Management console to see activity for our Loan Officers. In particular we would like to be able to see:
1) Number of loans quoted, ability to drill down to those quotes,
2) How many loans are quoted per loan based on transaction type,
3), How many loans have been quoted per LO based on 24 hours, last three days, last seven days, last 30 days,
4) Number contacted per LO , and status reports by contacts, declined, active, summary viewed and details viewed.
** Ask if they have a property under contract for a purchase inquiry.
** Store the loan amount ranges in saved searches.
** Increase the number of saved searches to ten from five.
** Make it easier to find a loan request. When a consumer requests more information. The information that is forwarded on the initial loan request is sufficient to find the initial inquiry if the state could be added.
** Increase the number of deals we can view under “Quotes submitted” Seems to cap itself at about 35.
As of this 8:00am this morning we have had seven loan officers quote 386 inquiries. Response rate is running just under 4%. We will be adding LO’s to the site over the next few weeks.
Tags: Industry News · Insights
Like trying to drink out of a firehose!
• Too many consumers! Lots of refinances. Many at 80% ltv and below with apparently good credit and above.
• Decent responses thus far from consumers contacting us (slightly above 5%)
• Of those we had one that wanted to lock today and we are proceeding with an application.
Some suggestions to Zillow:
• Automate the quoting process please :) Many lenders will be able to take a ping from you with that consumer request and respond back with a full accurate quote. This will bring you more lenders and a better consumer experience. Also, more time for lenders to interact with non-tire kickers.
• Allow us to see which requests we have already quoted within our “saved searches” – keeps us from having to go back through the volumes of leads to see the ones we have quoted.
• Allow us to quote multiple products – seems like the borrower can request 3 but we can only quote 1 at a time.
• Allow for us to “reprice” or “re-quote” after a set amount of time (4 hrs perhaps)
• Ability to build assignment rules for the routing of a specific type of inquiry to a specific loan officer (or group of loan officers)
Tags: Industry News
Matt Kelly and I are live on the Zillow Mortgage Marketplace. We’ve got 5 others LO’s waiting for Zillow to approve them.
Here are our first impressions.
• Seems to be a healthy amount of consumers requesting quotes so far.
• A bit cumbersome to navigate – but that’s probably something we can get used to
• Will see if/when we get any response from these anonymous consumers – one so far
• We have submitted about 20 quotes so far.
• Only 2 other lender/loan officers other then us quoting – but it’s early.
For consumers, this is a good thing Relatively accurate responses from somewhat qualified lenders without having to give out your emails/phone #’etc. If you like to shop for cars on car lots and not have the sales guy walk out to greet you – this is great.
For loan officers, probably a good thing. However, it could become your full time job to search requests, find one, quote it, find another, quote it, find another, quote it etc.. LO’s don’t get paid for quoting deals. So will see how the consumer responds. If you don’t like “tire-kickers” then I imagine you will get frustrated quickly and go back to what you were doing.
For Lender/managers, not really a good thing. I manage a group of loan officers. My concerns center on having leads distributed fairly, on a set schedule so I know consumers get accurate real time quotes as soon as possible. Zillow doesn’t have a way for me to manage lead flow. Also, it’s possible that 2 or more of my LO’s will “compete” for the same lead. And, if/when this consumer responds and chooses one of our loan officers, I have no way of knowing if the referral source was Zillow or another source. Which is important in our shop since LO’s have different pay structures for different sources.
Also, I’m a bit concerned that the ease of “posting a comment” about a LO will get a bit ugly. I hope not, but we all know that once in a while, just like the best airlines, we lose someone’s luggage, it happens to all of us.
Since Zillow opens the door for all consumers that receive a quote to post comments – it allows tire kickers to post comments with equal weight to someone that went through the full process and closed a loan. Could get a bit ugly.
In fairness to Zillow, I did express these concerns and it does sound like they will be working on a more “lender manager friendly” version in the future.
But hey – it’s early.. Three Cheers to Zillow for getting this out of the gate!
Will let you know our impressions as we go forward.
Tags: Industry News
March 20th, 2008 · 1 Comment
Recently I spoke with Alan Johnson, founder and President of Loanxengine. Alan and Loanxengine have been pioneers in the lead management part of our industry. Alan shares news of a pending relationship with Lendingtree.com as well as in dept discussion of the many functions such as Autobidding, Eligibility/Pricing, CRM, Lead Management and a slick best execution rate monitor system.
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Tags: Podcasts
March 17th, 2008 · 1 Comment
Whatever you did this weekend probably didn’t match the Federal Reserve Board of Governors: announced two initiatives designed to bolster market liquidity and promote orderly market functioning, and approved the JP Morgan – Bear Stearns deal. First, they authorized the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets. It is available today, and will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities.
Second, the Federal Reserve Board decreased the primary credit rate (“Discount Rate”) from 3.5% to 3.25%.
Lastly, the Board also approved the financing arrangement announced by JPMorgan Chase and Bear Stearns where Bear is being purchased for 1% of its value only 16 days ago!
Tomorrow, the FOMC will meet, and obviously the odds that the Fed will cut the Fed Funds rate by 1.0% have increased. Mortgage prices are really a mixed bag (“where should they be priced?”) with the 10-yr down to 3.41% currently.
- Wilbur Ross is buying $53 billion in Option One subprime servicing (owned by H&R Block) for $1.1 billion.
- WaMu pricing for the “jumbo conforming” product? Although it varies by coupon, the difference is roughly 2.5 points in price, about .625% in rate over regular conforming product. JP Morgan Chase checked in with 2-3 point price adjusters, based on loan attributes, similar to WaMu.
- Want to read the latest RESPA reform proposal? http://www.namb.org/namb/GA_Home.asp?SnID=1106143601
- How about the latest appraisal guidelines, with the chance to comment before the end of April? https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/index.jsp
- Countrywide’s new soft market policy is implemented today. CW also announced that their enhanced appraisal requirements are effective 4/15: except for FHA/VA, all loans delivered for purchase are subject to the Enhanced Appraisal Requirements. All conforming loans program will require an AUS Approve/Eligible. Effective 3/13 the maximum LTV and CLTV for nonconforming Fast & Easy was changed to 75%, and later this week (3/21) conforming F & E will be limited to 90% LTV and 80% CLTV where subordinate financing is used. Countrywide’s Equity Programs will be eliminated 3/21, along with their House America program.
- ING is no longer offering stated product.
- Freddie Mac is telling its lenders that it will start purchasing “conforming jumbos” in May and that jumbo loans originated “retroactive to March 1″ will be accepted for delivery.
- Last week Washington Savings Bank, Maryland, announced its wholesale division would cease doing business. “As the financial markets have continued to retract, we have found, that keeping up with the multiple investor changes for products and pricing, has turned into a full time job that has too many opportunities for error. Our investors have begun to flee the wholesale channel of business, and with no place to sell these loans, TWSB has made the decision to simply exit this channel of business.”
- Tower Mortgage, a wholesaler out of Rockville Maryland, “Welcome to Tower Mortgage, we’re your LENDER FOR LIFE”, shut down Friday.
Anyone who has sound and can view an animated film on their computer may want to check out www.yegsz.com. It is Sam Zell’s (billionaire and real estate entrepreneur) New Year’s message dealing with the credit crunch, and is pretty entertaining. Just click on the 2007 link.
Tags: Insights
