As Mr. Cooper works to investigate and contain the attack, customers are stuck waiting to pay and struggling to access information.
MINNEAPOLIS — As word began to spread this week about a cyberattack impacting mortgage giant Mr. Cooper, many customers didn’t immediately realize that they were impacted until they tried to log on to pay their mortgage.
Others, who have had their payments scheduled to come out automatically, still might not realize the issue. Others, might not even know that Mr. Cooper is the servicer of their mortgage.
“When you’re paying off your mortgage, in most cases, that loan is going to be bought or sold to a servicer. IE, Mr. Cooper,” said Zach Kwakenat, vice president of mortgage lending, for Guaranteed Rate Affinity. “Mr. Cooper is the largest servicer of mortgage loans across the country, actually.”
The company released an update on the incident on Thursday:
Mr. Cooper Group determined on October 31, 2023 that the company experienced a cybersecurity incident in which an unauthorized third party gained access to certain technology systems. Following detection of the incident, we initiated response protocols, including deploying containment measures to protect systems and data and shut down certain systems as a precautionary measure. We value our customers and take their data privacy very seriously, and we have launched an investigation with assistance from leading cybersecurity experts and notified law enforcement.
At this time, we believe this cybersecurity incident was isolated to Mr. Cooper systems and technology and did not affect any of the company’s clients’ or partners’ systems or technology.
Mr. Cooper customers and customers whose loans we service on behalf of our clients who have tried or need to make payments will not incur fees, penalties or negative credit reporting as we work to resolve this issue. We are actively working to resolve the issue and restore our systems as soon as possible, and we are committed to providing regular updates at https://incident.mrcooperinfo.com/.
That information might be news to some customers because the link to that information (and frequently asked questions about the cyberattack) is blocked by some internet browsers, which deem that the connection to the site is not secure.
“I can tell you if consumers do have concerns or they don’t know what to do, they can certainly call the Department of Commerce,” said Jacqueline Olson, Assistant Commissioner of Enforcement for the Minnesota Commerce Department.
Though there isn’t much action for customers to take in terms of paying their mortgage right now, she says it’s a good time to be proactive and check their accounts for signs of identity theft.
“They could contact one of the credit bureaus and place a one-call fraud alert on their credit report,” Olson said. “They only have to contact one of them to make that happen.”
Here are some more FAQ’s about the incident from the Mr. Cooper informational page:
Q: What happened? A: On October 31, Mr. Cooper became the target of a cyber security incident and took immediate steps to lock down our systems in order to keep your data safe. Our systems remain locked down, and we are working on a resolution as quickly as possible.
Q: Was customer data breached as part of this incident? How will I know if my data was impacted? A: We are actively investigating this event to determine if any data has been compromised. If customers are impacted, they will be notified and provided with identity protection services.
Q: What is Mr. Cooper doing to protect me? A: We value our customers and take their data privacy very seriously. Following detection of the incident, we immediately initiated response protocols, including deploying containment measures to protect systems and customer data, as well as shut down certain systems as a precautionary measure.
Q: When will Mr. Cooper return to normal operations? A: We understand how important it is that you be able to access our systems, and we are actively working to resolve the issue and restore our systems as soon as possible. Rest assured, you will not incur any fees, penalties or negative credit reporting related to late payments as we work to fix this issue.
Q: How do I make a payment while the system is down? A: While the system is down, we are not able to process your payment. If you use ACH, your payment will be processed as soon as our systems are operational and you will receive a notification. You do not need to do anything. If you use any other method of payment, you will be able to do so as soon as we resolve this issue. Rest assured, you will not incur any fees, penalties or negative credit reporting related to late payments as we work to fix this issue.
Q: I’m a newly transferred customer. How will this impact me? A: First, welcome to Mr. Cooper. We are happy to have you. The mortgage transfer process can be stressful at any time, and it’s our goal to make it as seamless as possible. This incident may impact when you are able to access your account information for the first time. We are grateful for your patience and will keep you updated with new information as it becomes available.
Q: Will my rate lock be honored? A: Yes, your rate and fees will not be impacted by this incident.
Q: When will I close? A: We understand how important it is that we close your loan on time. We are actively working to resolve the issue and restore our systems as soon as possible. As a reminder, if you are purchasing a home, we will honor our Close On Time Guarantee.
Q: I’m working on a refinance, do I need to worry about my loan terms changing A: This incident will not cause any loan terms to change.
Q: How can I communicate with my Processor or Mortgage Professional? A: Our secure text messaging platform is the best way to communicate with your loan team at this time.
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MILAN — Following the October launch of Grazia Casa, Grazia UK editor Hattie Brett says the magazine is focused on a “dramatic increase in interiors content online at graziadaily.co.uk,” following the all-new annual interiors special’s October launch. The wave of new content, she told WWD, will be amplified as part of its ongoing collaboration with Pinterest.
“When we surveyed our print readers last year, they told us their spending on interiors had dramatically increased. And we see that online, too. Three out of our top 10 revenue-generating affiliate articles this year have been homeware focused,” Brett pointed out. The British edition of the Italian magazine is currently published under license by Bauer Media UK.
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Similarly, Pinterest and Condé Nast Entertainment forged a new content partnership earlier this year.
The Condé Nast Entertainment deal was part of a video and content strategy that Pinterest rolled out more than two years ago, envisaged to channel 160 exclusive videos produced by Vogue and Architectural Digest pegged to feature seasonal and cultural moments, including “Fashion Month,” “Wedding Season,” “Summer” and “Back to School.”
Only available in print, the special is available in newsstands and on Apple News+ until the second half of December. The new annual Grazia Casa issue features former J. Crew president and creative director Jenna Lyons on the cover and aims to bring to the fore how the world’s most fashionable approach homeware. In addition to the feature story on Lyons, the magazine took its readers on a tour of Giorgio Armani’s holiday home on the island of Pantelleria, Italy, and highlighted TV presenter, writer and lifestyle specialist Laura Jackson, who shared her tips on easy entertaining.
Slated to be released on an annual basis, Grazia Casa is packed with fashion insiders’ tips on how to decorate and “deck out” the home.
“The Grazia Casa woman is confident and style-obsessed but time-poor. She looks to Grazia Casa to cut through the noise, delivering news on what’s trending on TikTok (hello, outdoor baths) in our 10 Hot Stories section, and comprehensive edits of the best items to shop now,” Brett reflects.
Research conducted by Grazia found that its audience of AB women are now spending twice as much on interiors a month as beauty, and that its readers are increasingly looking to the publication for recommendations, advice and inspiration for their homes. AB is a classification used by the U.K. census bureau to identify higher and intermediate managerial, administrative and professional occupations. C1 refers to supervisory, clerical, junior managerial, administrative and professional occupations.
The new special offers practical tips for women who are pressed for time, regardless of budget or DIY skills, and includes research into the best products to buy right now as selected by the eye of the Grazia team and interviewees.
Intercontinental Exchange (ICE) Mortgage Technology reported an adjusted operating income of $131 million in the third quarter of 2023, up from Q3 2022’s $126 million — despite the headwinds the mortgage industry is facing.
ICE attributed “an analog to digital conversion occurring in the U.S. residential mortgage industry” for its mortgage business outperforming in Q3 even as the industry experienced a nearly 20% decline in origination volumes.
Strong sales in its Encompass loan origination system, as well as its mortgage servicing platform (MSP) solutions business, drove an improved adjusted operating income for the mortgage technology division at ICE.
In Q3, about 60% of existing Encompass customers that were due for a renewal increased their base subscriptions. ICE expects to have its second-best year for MSP sales since 2017.
“Through October, we have already surpassed our prior full year record for new Encompass sales, which was set in 2020. In our servicing solutions business, the closing of the Black Knight transaction has unlocked the pipeline with four new MSP customers signed in October alone,” Warren Gardiner, chief financial officer of ICE, told analysts in its Q3 earnings call.
Since ICE completed its acquisition of Black Knight in September, M&T Bank has become a new customer of Encompass, replacing its existing loan origination platform and adding ICE’s data and document automation platform.
ICE also cross-sold MSP and several data and analytics products to Fifth Third Bank, an existing customer of ICE, Ben Jackson, president of ICE and chair of ICE Mortgage Technology, noted.
ICE said it doesn’t anticipate any negative impact to its Encompass business from the recent commission lawsuits if homebuyers use fewer real estate agents which, in turn, could result in loan officers losing their largest referral pipeline.
“We don’t have a business of selling leads to real estate brokers and the like. For us, our core businesses are all in and around the origination transaction itself,” Jackson told analysts.
“If anything, all of the data and analytics offerings that we have that underpin this overall platform, front to back both between ICE Mortgage Technology assets that we’ve had historically, as well as the data assets that have come with the Black Knight business, all position us very well in that space going forward,” Jackson added.
The mortgage technology division at ICE posted $330 million in total revenue in the third quarter, up about 19.6% from Q3 2022’s $276 million.
Adjusted operating expenses posted $199 million in Q3 2023, up about 32.7% from $150 million in the same period a year ago.
Looking ahead to Q4 2023, ICE expects near-term cyclical headwinds in the mortgage industry to persist.
“Coupled with typical seasonal pressures on origination volumes in the first and fourth quarters of each year, we expect the total fourth quarter ICE Mortgage Technology (IMT) revenues will be in the range of $490 million to $500 million, bringing full year pro forma IMT revenues to approximately $2.06 billion,” Gardiner said.
LO Jobs; Production Efficiency, HELOC, Database Mining Tools; FHA, VA, USDA Changes; Freddie’s $2.7 Billion in Profits
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LO Jobs; Production Efficiency, HELOC, Database Mining Tools; FHA, VA, USDA Changes; Freddie’s $2.7 Billion in Profits
By: Rob Chrisman
3 Hours, 10 Min ago
The talk here in Missoula is about general inflation, and continued reductions & cutbacks as our biz hunkers down. Yet a mortgage publication just raised its subscription prices, only telling readers, “Good news, you don’t need to take any action,” then something about “auto renew… we’ll simply charge the payment method on file…” We all try to save money wherever possible. And price changes are wide-ranging… think global. Yesterday I flew into Montana and enjoyed, in my seat at 22D, a can of Minute Maid Apple Juice, produced by the Coca Cola Company. What could be more American?! Think again. A glance at the ingredients showed the can contained apple juice from the U.S.A, Argentina, Chile, China, Turkey, Hungary, Austria, Poland, and Italy. I kid you not. No wonder world events impact the price of goods here. Looking for less amenities and a higher monthly payment in your next home search? Well, Lending Tree recently released a report on just how costly buying a house in a town can get, “micropolitan” style. Of towns with populations between 10,000 and 50,000, the most expensive median home values were in Vineyard Haven, MA, Jackson, WY, and Breckenridge, CO. (Today’s podcast can be found here, sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades.)
Lender and Broker Software, Products, and Services
HELOCs, HELOCs, HELOCs! In this market, if you’re a loan originator and not fully dialed in to them, what are you waiting for? Especially when you have a lender like The Loan Store paying you 200 bps per loan. The kids trick-or-treated earlier this week, but 200 bps for a HELOC is like candy for adults, on a regular basis. Conveniently enough, The Loan Store is hosting a webinar next week to teach LOs how to best sell HELOCs and explain how HELOCs tie into the new TLS Consumer Rewards Program. Sign up for the webinar here.
“At Usherpa we have a saying, ‘Born in a branch. Forged in a meltdown.’ Most of our team, including myself, Dan, and Chris Harrington, have been in the mortgage industry since the mid-nineties in a branch where I originated loans and Chris processed them. We started a department in 1995 for CTX Mortgage where our sole purpose was to provide opportunities for loan officers to do more loans. In the mortgage meltdown of 2008, we were laid off like so many others, and started Usherpa. Today, our purpose is the same: Provide opportunities for loan officers to do more loans. In this unprecedented market, we are humbled and grateful to be partnered with so many wonderful loan officers, helping them close more deals and strengthen their repeat and refer business relationships. We will get through this together. Thank you all for allowing us to serve.”
Freddie Mac Checks In
Freddie Mac (OTCQB: FMCC) reported its Third Quarter 2023 financial results and filed its Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission. The company’s Form 10-Q and earnings press release, along with the Third Quarter 2023 financial results supplement are available now on the Investor Relations page of the company’s website.
Freddie reported $2.7 billion in profits, a 104 percent year-over-year increase in net income in the third quarter. That boost in earnings came at the same time as a 30 percent decline in new business activity, attributed to Freddie’s credit loss reserve activity. In the third quarter of 2022, Freddie booked a $1.78 billion provision for credit losses versus a $263 million benefit for the three months ending Sept. 30.
FHA, VA, and Government Program News
October 27th, the Federal Housing Administration (FHA) began implementing security enhancements that will require the use of multi-factor authentication (MFA) to access certain of its websites and systems. View FHA INFO 2023-83 for details on the systems MFA will be implemented.
FHA published a Federal Register (FR) Notice, Home Equity Conversion Mortgage (HECM) for Purchase – Acceptable Monetary Investment Funding Sources and Interested Party Contributions [Docket No. FR-6382-N-01], for public comment. This FR Notice serves to inform the public of FHA’s changes to the HECM for Purchase program by expanding the list of acceptable funding sources, including premium pricing, and permitting additional interested party contributions to satisfy a HECM borrower’s monetary investment requirement.
USDA Rural Development issued a bulletin announcing The Single-Family Housing Guaranteed Loan Program (SFHGLP) revisions to technical Handbook-1-3555, Chapter 8, Applicant Characteristics; Chapter 14, Funding; Appendix 3, Review and Appeals; and Appendix 5, Income Limits. These changes became effective upon the recent issuance of a Procedure Notice (PN).
Get “Back to Basics” with the Single-Family Housing Guaranteed Loan Program. 100 percent financing with zero down payment? Why, yes you CAN! Learn about the USDA Single Family Housing Guaranteed Loan Program and how it can expand your loan portfolio…It’s as easy as 1-2-3!
Rural Development announced that Housing Assistance Corporation has expanded its service area to include South Carolina. An updated intermediary coverage map has been posted on the Direct Loan Application Packagers page.
PRMG posted updates and clarifications in PRMG Product Update 23-49: Product Profile Updates including its alignment with the changes to FHA Standard and High Balance announced by HUD in Mortgage Letter 2023-17. Updated Onyx Jumbo requirements for rental income from current principal residence that is being converted to an investment property. Loan Level Price Adjustments (LLPAs) clarification on Expanded Access and Investor Solution. CO CHFA Conventional. Regardless of condo approval option used, a current condo budget must be provided and reviewed by the condo team for CO CHFA Conventional product.
In addition to agency loans, Plaza Home Mortgage® now offers the option to eClose for FHA, VA and USDA loan. Provide the best experience for borrowers with the convenience to review and sign all closing documents online; including the loans which require a notary with Remote Online Notarization (where available).
Plaza Home Mortgage recently launched new FHA 100 percent CLTV Combo Loan Program. This new program offers 100 percent financing by combining a FHA first lien at 96.5 percent and a concurrent second lien of up to 3.5 percent to assist with down payment and/or closing costs. Additional highlights include a minimum 600 FICO, a 30-year fixed-rate FHA first lien, no income limits, and eligibility in most states (except for NY and WA.).
Capital Markets
For the third time in the past four policy meetings, the Federal Open Market Committee (FOMC) yesterday unsurprisingly kept steady on interest rates. Even with the Committee keeping the door open to hiking again, investors reading Fed Chair Powell’s tea leaves are leaning toward a potential end to further hikes, and it appears to us that the bar for further rate increases is getting increasingly higher. The Fed acknowledged tighter credit conditions from high interest rates and tighter financial conditions from a steepening yield curve with the expectation being that it will eventually weigh on economic growth. In the wake of the meeting, the market sees even lower odds of another hike and is now pricing in a potential cut a bit earlier than it had previously.
We also learned that, according to the ADP Employment Report, after the economy posted the weakest advance in jobs in two years during September, it added 113k jobs in October, fewer jobs than forecast. Though we will receive more clarity from tomorrow’s payrolls report where 183k jobs are expected to have been created in October, this report suggests that demand for workers in a robust labor market may be starting to wane. Separately, the U.S. Treasury announced its plans for upcoming auction sizes, revealing that the total size of next week’s note and bond sales will be a bit smaller than what the market had expected. Treasury noted that it expects to increase auction sizes again next quarter to meet higher funding needs.
Today’s calendar kicked off overseas with both Norges Bank and the Bank of England releasing its latest decisions, holding rates steady at 4.25 percent and 5.25 percent, respectively. Domestically, Challenger, Gray & Christmas released job cuts for October: U.S.-based employers announced 36,836 cuts in October, a 22 percent decrease from the 47,457 cuts announced one month prior but 9 percent higher than the 33,843 cuts announced in the same month last year. We’ve also received weekly jobless claims (217k, up from 212k last week), and preliminary Q3 productivity and unit labor costs (+4.7 percent and -.8 percent, respectively). Later today brings September factory orders, Freddie Mac’s latest Primary Mortgage Market Survey, and remarks from interim St. Louis Fed President Paese. We begin the day with Agency MBS prices better than Wednesday evening by .250-.375, the 10-year yielding 4.67 after closing yesterday at 4.79 percent, and the 2-year down to 4.93.
Jobs
Planet’s multi-channel business model gives our MLOs the stability to meet any market head on. Planet’s team has access to exclusive creative product solutions such as Purchase EDGE. These novel products are attracting more MLOs and Branches eager for a secure future in the mortgage industry. Advance your career, and your market position, by moving to a top lender that values professionalism and innovative thinking. Contact VP of Talent Peter Briggs or 949-202-8213. All inquiries are held in strict confidence.
“At Fairway Independent Mortgage Corporation, customer service is a way of life. #FairwayNation mortgage loan officers are dedicated to finding great rates and loan options for our customers while offering some of the fastest turn times in the industry. Our goal is to act as a trusted mortgage advisor, providing highly personalized service and helping you through every step of the loan process, from application to closing and beyond.”
Don’t forget that private mortgage insurance companies are hiring: MGIC, National MI, Arch MI, Radian, Essent, and Enact (in no particular order). And while’s we’re at it, Fannie Mae and Freddie Mac. And my cat Myrtle’s friend the CFPB has career opportunities.
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Federal ReserveChair Jerome Powell left the door open to a future interest rate hike on Wednesday, but most housing professionals are hopeful that the Fed may be done hiking interest rates for 2023.
Tight financial and credit conditions, slowing inflation and high 10-year Treasury yields – the primary driver in the rise of longer-term interest rates – will likely discourage the central bank from a further rate hike this year, economists and mortgage professionals said.
In turn, this will provide relief and bring down stubbornly-high mortgage rates.
“I think the one thing I take away from today is that financial and credit conditions are tighter now, which was different than before,” said Logan Mohtashami, lead analyst for HousingWire. “Unless the 10-year Treasury yield falls considerably, the stock market rallies and home sales start to take off again, December should be off the mark.”
The 10-year Treasury yield, which acts as a benchmark for mortgage rates, fell to a two-week low at 4.766% on Wednesday after the Fed held interest rates steady in a range of 5.25%-5.5%.
Fed officials forecasted one more rate hike in 2023 in its September dot-plot estimates, which shows the range of forecasts for where interest rates could end up. The majority of Fed officials had expected interest rates to finish the year at around 5.6%.
Marty Green, principal of Polunsky Beitel Green, described the Federal Reserve as a “blackjack player with two face cards.”
“The only sensible play at this meeting was to hold pat,” Green said. “It is becoming increasingly clear that the Fed is indeed done raising rates in this cycle. While the cycle has been inordinately painful to the mortgage industry, with another interest rate pause, we should be at least one step closer to some relief in 2024.”
Inflation has fallen significantly since hitting a four-decade high last summer, but consumer prices have increased by 3.7% in September year-over-year, still climbing faster than the Fed’s target of 2%.
The economy is starting to slow down and inflation will moderate at a pace that suits the Fed, said Melissa Cohn, regional vice president of William Raveis Mortgage.
“We’re coming up against Nov. 17, when the government funding ends,” Cohn said.
Coupled with the Israel-Hamas war, the central bank could keep the Fed’s pause on another interest rate hike for a third consecutive month after its next meeting on Dec. 12-13.
“Even though Q3 economic growth came in quite strong, and several job market indicators continue to show strength, so long as inflation continues to come down, the Fed is likely to pause at this level for some time,” Mortgage Bankers Association‘s SVP and chief economist Mike Fratantoni said.
Fratantoni went a step further in anticipating the Fed to cut interest rates in the second quarter of 2024.
“If the Fed does indeed move to cut rates next year and signals its intent to do so, mortgage rates should trend downward. Our forecast calls for this to happen, which would support a somewhat stronger spring housing market,” Fratantoni said.
Powell, however, made clear on Wednesday that the committee is “not thinking of rate cuts” and is intent on bringing inflation down to 2%.
The best-case scenario is for the Fed to keep rates steady in December, said Raunaq Singh, founder and CEO of Roam, a platform for affordable homeownership.
Depending on November’s inflation readings, a slight rate hike in December is also likely, he noted.
“This will exacerbate the housing affordability crisis, which has already reached an all-time low,” Singh said. “Median monthly mortgage payments are at an all-time high. More than 50% of mortgages have monthly payments north of $2,000, whereas two years ago that number was more like 18%.”
While the odds of an additional rate hike is low, the Fed is expected to keep the option on the table, Danielle Hale, chief economist for Realtor.com, raised a cautious view.
“As long as a rate hike is on the table, investors are likely to position cautiously, and the tendency for rates to remain steady to slightly higher remains,” Hale said.
Improvement in data should reflect lukewarm readings on the economy and lower inflation, which will be more important drivers of lower rates, she explained.
At the final FOMC meeting in December, two months of inflation and labor market numbers will be reviewed to determine the direction of future interest rates.
Dave Stevens, CEO at Mountain Lake Consulting and former president and CEO of the Mortgage Bankers Association(MBA), said the current rate environment “is what’s crushing the mortgage industry and grinding it to a halt.”
“This is a really tough one because it’s an inflationary recession, where the Federal Reserve is having to actually contract the economy by driving interest rates high,” Stevens added. “…This is going to be the hardest, slowest winter, and you’re going to have a hard time finding anybody who’s old enough to remember a period that was this hard.”
Jeff Walton, CEO and co-founder of mortgage data analytics company InGenius, which provides loan-officer data to IMBs for recruiting purposes, said it’s going to be a “tough time through winter.” He added that the hope is we see some improvement in the spring or summer, “but it’s anyone’s guess.”
“I was speaking to someone the other day who said, ‘If you’re in this business [mortgage lending], I can’t see a downside to a recession.’”
Industry consolidation underway
Hale said he would not be surprised to see 40 to 50 merger and acquisition (M&A) deals play out over the next six months.
“I think there could be some big deals,” he said. “And to be blunt, I’ve been in conversations around deals that I think would be shocking, but nothing’s transacted yet.
“… I can tell you that I have two [potential M&A deals] that I’m leading currently. I have four more that I’m in negotiations on representing buyers, and in some cases, buyers who might be interested in multiple transactions, and I think I’ll know the results of those [talks] in the next couple of weeks.”
Ludden said what he sees ahead is the thinning of the mid-sized IMB ranks due to mergers and acquisitions as well as a thinning of the smaller IMB players, many of whom will “become brokers or just dissolve.”
“In our pipeline of deals underway, the vast majority involve [lenders with] $500 million to $5 billion in annual originations, and it’s as big of a pipeline as we’ve ever had,” Ludden said. “…There are roughly 1,000 lenders [IMBs], and our expectation is that probably 70% of them are sub-$500 million [in annual origination volume].
“I think you’re going to see a lot of them transition to brokers.”
He said of the remaining 300 or so IMBs with $500 million or more in annual origination volume, “it’s not unreasonable to assume that group will be whittled down to 150 or 200.”
Ludden said much of the consolidation is expected to take place via M&A deals involving IMBs in the $500 million to $2 billion range in annual originations.
“So, we’ll be much more top heavy [at the end of this cycle], with the remaining three-quarters of IMBs in that group [of 150 to 200] being in the $2 billion-plus category [due to mergers and acquisitions],” he said.
Ludden added that in many cases, the M&A deals ahead will be handled quietly without press announcements, and that “nobody ever sees” to guard against recruiting headhunters luring away the loan officers of companies being acquired prior to deals closing.
Stevens stressed that financing costs are prohibitively high right now and, in most cases, are not favorable for leveraged buyout deals.
“The guys who are doing buyouts now are going to be buying with their own cash,” he said. “I don’t think anybody’s going to borrow to buy, … so, that limits the pool of buyers.
“… There are some folks who were very successful in 2020 and 2021, generated huge portfolios and have retained earnings, probably, in large part, from servicing, and they didn’t buy corporate jets or things of that sort,” Stevens added. “These are the folks who are buying right now, and I you know because some of them are my clients.”
Loan officers going away
Data from InGenius shows that the average number of active IMB and bank loan officers with valid Nationwide Mortgage Licensing System (NMLS) licenses dropped 49% between the third quarter of 2021 and the second quarter of 2023 — from 181,656 in Q3 2021 to 89,094 in Q2 2023.
Mortgage-origination volume between 2021 and yearend 2023, however, is projected to drop 63% — from $4.44 trillion to $1.64 trillion, according to the MBA’s forecast. Hale said he thinks that 2023 origination forecast may even turn out to be on the high side.
“… We’re in the business of giving data for recruiting, and we’re still growing as a company because the haves [the healthy IMBs] are buying data … to go after the have-nots’ [loan officers],” Walton said. “There’s no question about it, the ‘haves’ definitely have a growth hat on and are buying data to recruit, and they are definitely extremely active.”
Hale added: “I’ll bet you a dinner that by February [2024], those [LO] numbers are down by 20,000 to 25,000 from where they are now because [NMLS license] renewals in all the states happen at the end of the year. A lot of originators or companies won’t pay the license-renewal fees at the end of the year for originators who haven’t closed a loan in the last six months.”
Hale continued: “… I worked for a guy at one time who said, ‘You know, you don’t know who’s not wearing swim trunks until the tide goes out,’ and the tide is now receding. We could be down to 60,000 to 70,000 originators by 2025.”
Walton said there is going to be more IMB consolidation this winter, adding that he doesn’t see any other outcome at this point. “Even if rates don’t go up [further], it’s going to get worse. And if they do go up, then it’s going to get really worse.”
Sevens said most acquisition deals taking place now involve lenders who might have gotten an up-front cash offer a year ago.
“Today, almost every originator has been losing money several quarters in a row,” he added. “And so virtually every deal being put on the table now is an asset-only, earn-out offer, with no money upfront, so they [the seller] get paid assuming the buyer makes a profit.
“So, the deals aren’t as attractive to sellers. …We’ll definitely see between now and April more [M&A] transactions occur in the [IMB] space. And some [IMBs] may just decide to get out of mortgage banking and become brokers, and some may shut their doors, so we’ll have to see how this all plays out.
Disruption opportunities
Walton stressed that as difficult as the winter ahead will be for the IMB industry, at the end of this dark period — which could last through next year, unfortunately — “there will be lenders who come out the other side of this in better shape than before the downturn.”
“Market disruptions create opportunities,” Walton said, adding “for IMBs that are structured right, this is actually an opportune time.”
Stevens added that a phrase coined at a recent MBA convention by Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School, has now become a bit of an industry slogan: “Survive until ‘25.”
“We are going to see who the best leaders are in our industry by who survives this downturn,” Stevens said. “…A lot of people thought they were really good at this business in 2020 and 2021, and they got really arrogant based on their success, some becoming multi-millionaires or billionaires during that period of time.
“But if you couldn’t be successful then, you shouldn’t have been in any business because rates went to 3%, and you could refinance the world and make a great margin. Now, we’re going to separate the winners from the losers in terms of who’s really built for long-term survival.”
Stevens added that those IMBs that do make it through this dark period “are going to have the strongest management quality.”
“And we’ll probably end up with a much stronger industry on the backend of this [downturn],” he said.
The White House released its first-ever standards aimed at reducing a bevy of safety and security concerns raised by artificial intelligence.
The order is sweeping and addresses potential risks AI technology poses to consumers, workers, national security, privacy, innovation and immigration.
“One thing is clear: To realize the promise of AI and avoid the risk we need to govern this technology,” said President Joe Biden during a press conference on Oct. 30. “There’s no other way around it, it must be governed.”
The executive order includes an emphasis on the development of new standards, tools and tests across the board. There are eight parts to the order:
Safety and security. Create new safety and security standards for AI, with an emphasis on national security.
Consumer privacy. Protect consumer privacy in AI systems.
Advancing equity. Avoiding algorithmic discrimination in the workplace; by federal contractors; and landlords. It also calls for best practices for using AI in the judicial system.
Health care and education. Advance the use of AI in the development of affordable and life-saving drugs. Provide educators with the resources to deploy AI-enabled educational tools.
Mitigate risks to workers. Collect information on how AI could impact the labor market while developing principles and best practices to maximize the benefits of AI while addressing potential risks like job displacement.
Promote innovation and competition. Expand grants for AI research in key areas like health care and climate change. Expand the ability of highly-skilled immigrant workers with expertise in critical areas to remain in the U.S.
Collaborate with other nations. Establish international frameworks for the use of AI worldwide.
Ensure effective government use of AI. Develop guidance for agencies’ use of AI systems; helping agencies acquire AI products and services; and accelerate the hiring of AI professionals in the federal government.
Biden said during the press conference that the order is the “most significant action any government anywhere in the world has ever taken on AI safety, security and trust.” At the conclusion of the press conference, Biden also called on Congress to pass legislation on AI.
What’s in the Blueprint for an AI Bill of Rights?
On Oct. 5 the White House released its “Blueprint for an AI Bill of Rights” outlining five principles to guide the creation and distribution of automated systems. Recommendations under each of the principles include continuous risk identification and mitigation, as well as testing and evaluation during all phases of the creation of AI systems.
Safe and effective systems. Automated systems should be designed to proactively protect users from harm.
Algorithmic discrimination protection. Automated systems should be used and designed in a way that avoids discriminatory treatment of people based on protected classifications such as race, sex, religion and disability.
Data privacy. Automated systems must include built-in protections to protect users from abusive data practices and users should have agency over how their personal data is used.
Notice and explanation. People should be notified when an automated system is being used and should be provided with plain language explanations of outcomes from that system.
Human alternatives, consideration and fallback. People should be able to opt out of an automated system and have access to a human alternative, when it’s appropriate — based on “reasonable expectations in a given context.”
More AI news
Aug. 9: The White House announced a two-year competition called the “AI Cyber Challenge” that challenges competitors to identify and fix software vulnerabilities using AI. It includes collaboration with AI companies like Anthorpic, Google, Microsoft and AI. The competition includes $20 million in prizes and is intended to drive the development of new improved computer code security technology.
May 4: The White House announced it secured voluntary commitments from 15 of the top leaders in AI to have their systems publicly evaluated to find out how they align to the AI Bill of Rights. The companies include Amazon, Anthropic, Google, Inflection, Meta, Microsoft and OpenAI.
April 25: A joint statement made by the Federal Trade Commission, Department of Justice, Consumer Financial Protection Bureau and the Equal Employment Opportunity Commission reaffirmed its commitment to enforcing existing discrimination and bias laws among those who use AI to conduct business including social media platforms, banks, landlords, employers and other businesses.
Additional coverage of artificial intelligence from NerdWallet:
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(Photo by Chip Somodevilla/Getty News via Getty Images)
Architect Louis Naidorf had a disastrous 80th birthday cake. In 2008, Naidorf, who designed the Capitol Records building in Hollywood, was presented with a celebration cake that had been custom-baked in the shape of his iconic cylindrical building. But the pastry soon reflected the rather substantial difference between concrete and flour.
“When the cake was brought out, it gently collapsed, and everyone applauded,” Naidorf says, laughing over the phone from his home in Santa Rosa. “It was like in one of the movies where the Capitol Records building was destroyed.” Thankfully the cake for his 95th birthday, which he celebrated last month, was more structurally sound.
Designated a historic-cultural monument in 2006, the building has long been a favorite Los Angeles landmark to demolish on film — especially for filmmaker Roland Emmerich, who blew it up with an alien spaceship in “Independence Day” and slammed it with twisters in “The Day After Tomorrow.” Yet no movie can ever write the building out of a central place in popular music history. The tower is synonymous with the illustrious Capitol Records, home of Nat King Coleand Frank Sinatra, and the American record label of Pink Floyd and the Beatles, with the latter’s stars lining the Hollywood Walk of Fame right in front of the building.
Over the last several years, the building has been illuminated in support of various sociopolitical causes. In 2020, it was lighted red to support independent music venues. Last year, during their performance in Hollywood, Duran Duran lighted the Capitol Records building blue and yellow in solidarity with Ukraine. “I think that’s excellent,” Naidorf says. “Anything that vigorously engages the public on the right side of good causes transcends other issues. I’m flattered they use the Capitol Records building. It means it has enough cachet to merit being chosen to do that.”
Like the famous landmark he designed, Louis Naidorf has of late been experiencing his own brush with stardom, with postcards from autograph seekers arriving at his door. He is flattered but doesn’t take the attention too seriously.
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“It’s obvious that if someone asks me for four signatures I’m part of trading baseball cards or something,” he says. “They are going to trade four Lou Naidorfs for one Joe Smith.”
Still, he’s surprised and somewhat baffled by the sudden burst of recognition after all these years. “I guess my name ended up on a list or something,” he shrugs.
Naidorf was just 24 years old when he designed the Capitol Records building, in 1953. It was the world’s first circular office building.
Though it was 70 years ago, he vividly recalls how he felt when he received the assignment for his first solo project. “At one level, I felt enormous anxiety that if I didn’t get a solution, very, very quickly, something terrible would happen,” he says. “On the other hand, I felt a total confidence that I could do it. So it was a crazy contradiction.”
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Naidorf notes the building’s porcelain enamel sunshades with carefully spaced gaps to play with light and shadow. These cause spiral lines to appear on the building, drawing the eye into a rhythm rather than straight up and down. “You can see Capitol Records from quite a distance and you get a first impression of its basic form and character. You have a reading of it as complete,” he says. “But the building is designed so that the closer you get to the building, you discover more details.”
What about the long-standing myth that its round shape was designed to look like a stack of records with a rooftop antenna resembling a phonograph needle? As hard as it might be to believe, the legendary story about the building is just a coincidence — an urban legend that Naidorf has tried to debunk for decades.
In fact, when his boss, Welton Becket, tasked him with the assignment, the building was simply referred to as Project X. Shrouded in secrecy, Naidorf was given little guidance for the project other than being asked to design a 13-story building on a sloped side street in Hollywood that had to be kept as cool as possible and had smaller than usual floor space. He also didn’t know for whom he was designing it. Naidorf says it was common for clients’ identities to be kept confidential during the initial planning stages of a project.
However, Naidorf relished the creative latitude. The absence of information left him unburdened by preconceived ideas. “I knew the door was open for something special. It urged me so strongly,” he says earnestly. “I felt, and I think all architects feel this way … there’s a drive to translate the mundane bare requirements that clients come in with into something that has some poetic qualities about it.”
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Naidorf then had an epiphany: The project’s requirements were “eerily resonant” with a series of circular buildings he had designed for his master’s thesis in college. “The round shape is a very efficient enclosure of space,” he says. “You get more bang for your buck.”
Not everyone agreed with his approach. Naidorf says that Capitol Records co-founder and President Glenn Wallichs became irate when Naidorf presented him with a model and drawings of a round building, and “violently rejected” the design. “He thought it was a cheap stunt designed by a young guy to make the building look like a stack of records,” Naidorf says, laughing.
Wallichs insisted that Naidorf replace the round design with plans for a rectangular building. But when both rectangular and circular designs were presented to the insurance company financing the land, Naidorf says that Wallichs was urged to proceed with the round design.
Soon after, when talk of the building housing a radio station (that never came to fruition) was raised, Naidorf fretted when he was asked to design an antenna. He was worried that it would look like a phonograph needle and cement the idea that the building was designed to look like a stack of records.
Owing to his nagging concern, Naidorf positioned the rooftop spire asymmetrically, poised to appear as if it touches the roof delicately, like “a ballerina en pointe.” He calls it the building’s “grace note.” Still, the stack-of-vinyl myth persists. Laughing, Naidorf says, “It’s the most enduring myth of all.”
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Despite his good humor, it leaves him conflicted. “The building was not designed as a cartoon or a giggle. To have it trivialized with the stack-of-records myth is annoying and dismaying,” he says. “There’s not a thing on the building that doesn’t have a solid purpose to it.”
Naidorf’s ingenuity has been especially impressive to Los Angeles-based architect Lorcan O’Herlihy, who says he has “often responded strongly to the fact and admired that here was this interesting architect [Naidorf] who was combining science and art, or artistry and technology. Welton Becket [& Associates], very much to their credit, were at a period where modernism was at its heyday and they had to come up with ideas that were new and fresh and they did it, and Lou was certainly instrumental in that. His work is extraordinary.”
Naidorf was born in Los Angeles in 1928. His father owned a shop where he made and sold women’s clothing, with Naidorf’s mother lining the garments. Owing to his father’s lack of accounting skills and business acumen, however, the business often collapsed, forcing his parents to work at a garment factory until debts could be paid off to reopen the store.
Throughout his childhood, Naidorf’s family struggled financially as they moved around, living mostly in Silver Lake and Los Feliz. With only enough money to rent studio apartments, Naidorf’s parents slept on a Murphy bed while Naidorf spent his nights on a mattress on the floor.
As a little boy, Naidorf felt drawn to buildings. When his third-grade teacher decorated the classroom with a Hawaiian vacation theme, his fascination morphed into a calling. “I asked my teacher who made the drawings and she said, ‘Naval architects.’ And then I asked her who draws the plans for houses and she said, ‘Architects.’ She told me to ask my mother to show me the floor plans that were published in the real estate section of the Sunday edition of the newspaper.
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“When I saw them, I was a goner,” he swoons. “I now knew what I wanted to do. I wanted to be an architect.”
Naidorf remembers, at age 8, designing a three-bedroom house, using a card table as a makeshift drafting table. Soon after, he began designing small towns. “It wasn’t anything brilliant, but I was learning to draw, learning to scale and learning to think in spatial terms,” he says. When he was 12 years old, Naidorf got a part-time job at a bookstore, where he spent his first two paychecks on architecture books, absorbing them until they were threadbare.
Beyond literature, Naidorf amassed a growing collection of architectural materials (T-square, rectangles, instruments for ink drawings), thanks to his bar mitzvah presents, and decided he was ready to get to work. Sanford Kent, a young architect who had just graduated from USC, hired a tenacious 13-year-old Naidorf, paying him out of his own pocket.
Naidorf says tackling the abstract problems Kent gave him at once stimulated his mind and were instrumental in forming his long-standing ethos. “It got me thinking about architecture in terms of its effect on human emotions. The key issue is, ‘How do people respond to your work, whether from a distance or by living it?’” he says.
He continued to soak up whatever he could about architecture, gearing his junior and high school classes toward studying architecture in university. He attended UC Berkeley instead of the privately funded USC, not only to leave home and expand his horizons but also because of its affordability.
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Even still, Naidorf couldn’t afford all of the program’s required materials. He borrowed airbrushes from his fellow students, who would also give him their pencil stubs instead of tossing them out. Naidorf submitted his assignments on pebble board, which was not only cheaper than illustration board but allowed him to draw on one side, flip it over and draw on the other.
In 1950, Naidorf graduated at the top of his class and got his master of architecture degree a year early. He skipped his graduation ceremony because he had a job interview the next day at Welton Becket & Associates, where he was promptly hired. Among his earliest design assignments: a tray slide for a hospital cafeteria, a clothes closet and a “Please Wait to Be Seated” sign for a restaurant.
Three years into his employment, he began working on the Capitol Records building. Naidorf says he would design it the exact same way if he were given the assignment today.
Andrew Slater, former Capitol Records president and chief executive (2001-07), attests to the building’s distinctive charm. “When you go to work every day in that building it’s like you’re going into a piece of art, and it informs your attitude … to do something with that mindset, which is great,” he says. “Even though working in the music industry is, in a sense, an industrial endeavor, you never felt like you were doing anything industrial when you walked into that building.”
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Still, Naidorf fears being perceived as a “Johnny One Note,” as he puts it. Noting the plaque bearing his name outside the building’s main entrance, he expresses gratitude but wariness “that this one modest project has to carry my whole reputation on it.”
It’s a fair point, given the magnitude of Naidorf’s notable oeuvre. It’s earned him 17 regional honor and merit awards and AIA California’s Lifetime Achievement Award (2009). His work also has been featured at the J. Paul Getty Museum in Los Angeles.
“I know Capitol Records is always the first one people talk about and it’s a splendid, iconic building that fuses artistry and functionalism, but he’s also produced other projects over the years,” says fellow architect O’Herlihy. “The Santa Monica Civic Auditorium is brilliant.”
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Naidorf designed the 3,000-seat capacity Santa Monica Civic Auditorium on the heels of the Capitol Records building, in the late 1950s. Essentially two buildings in one, it was a challenge to design a locale that functioned at once as a performance space with a sloped floor and an exhibit hall with a flat floor for sports events, banquets and trade shows.
He transformed the floor from flat to tilted using a hydraulic system that was hailed for its innovation. “I don’t think you’ll find any place that has a symphony on a Friday night and a gem show, or some kind of hobby show, on Saturday,” he says.
Formerly home to the Santa Monica Symphony Orchestrabut currently sitting vacant, the Civic Auditorium opened its doors to the public in 1958. From 1961 to 1968, it hosted the Academy Awards. It also was the site of live recordings including George Carlin’s comedy record “Class Clown” and the Eagles’ “Eagles Live,” a double LP recorded during their three-night run at the venue. It also hosted “The T.A.M.I. Show” in 1964.
In the meantime, while the Civic was still under construction, Naidorf designed the 15,000-seat capacity Los Angeles Memorial Sports Arena, the biggest arena in Los Angeles when it opened in 1959. (The arena was demolished in 2016 to make way for the Banc of California Stadium, now called BMO Stadium.)
Naidorf says the Sports Arena, home to various Los Angeles sports teams including the NBA’s Lakers (1960-67) and Clippers (1984-1999) and the NHL’s Kings (1967-68), was built to attract sports teams to Los Angeles, but uncertainty about whether they’d catch on meant the facility had to be viable for other purposes.
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In 1960, a year after it opened its doors, the Sports Arena hosted the first Democratic National Convention in Los Angeles, where John F. Kennedy became the presidential nominee. Muhammad Ali (then known as Cassius Clay) won a boxing match there in 1962. It also hosted rallies by Martin Luther King Jr. and the Dalai Lama, and saw concerts by legendary rock acts including the Grateful Dead.
Bruce Springsteen played the venue’s final concerts before the building was demolished, a three-night stint during which he dedicated his song “Wrecking Ball” to the building lovingly nicknamed “The Dump That Still Jumps.” “Well, it was pretty dumpy by the end,” Naidorf says, laughing. “Not all architecture is permanent,” he continues. “I’d rather it was demolished and some useful purpose made of the site than having it sit there old, shabby and neglected as it was.”
Naidorf’s credits also include the Beverly Hilton Hotel, the Beverly Center and the Reagan State Office Building downtown. Outside of Los Angeles, Naidorf helmed the restoration of the California State Capitol Building in Sacramento, a six-year undertaking and then the largest-ever restoration undertaken in the U.S., and he designed President Gerald Ford’s house in Rancho Mirage.
The tallest building in Arizona, the Valley National Bank building (now Chase Tower) in Phoenix, also was designed by Naidorf, as well as the Hyatt Regency Dallas and adjacent Reunion Tower, the most recognizable landmark of the city’s skyline.
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He details these and his other high-profile projects in his 2018 book “More Humane: An Architectural Memoir”, filled with photos, backstories and personal anecdotes. Flipping through its pages, one learns that Naidorf not only took risks designing his projects but even risked his job on occasion.
He writes in his memoir that in 1958, when he was designing the Humble Oil (now Exxon) headquarters in Houston, he refused to design separate locker rooms and drinking fountains for Black and white people, as the company asked him to. When he went home on that Friday night, he describes not knowing if he’d have a job the following Monday. Not only did Naidorf not lose his job, he says, but the company ceased segregating its locker rooms and drinking fountains after that.
“I realized architects have access to some of the most powerful people in the world and it is our job to bring up issues that represent social issues rather than just architectural design,” he says. “The only thing for evil to triumph is for good people to remain silent. Architects should not remain silent.”
Naidorf also understood that sometimes he was designing projects where people don’t want to be, like the Naval Medical Center in San Diego, which opened in 1988. “I felt that there were two emotions we had to contend with,” he says. “One was to lay the sense that this would be welcoming and have a more personal quality. But if you go to a hospital you want a quite contradictory thing. You want to have a sense that it’s state-of-the-art, that whatever powerful forces can cure you, they’re there.”
Instead of one medical building, which he felt would seem ominous, he designed several structures and a series of outdoor walkways to make the facility feel warm and comforting. The treatment and diagnostic part of the facility was bold, with an abundance of steel and glass. Walkways were lined with floor-to-ceiling glass to allow patients to see the outdoor courtyard, grass, trees, sky and distant views of a golf course “based on the primitive feeling you have in the hospital, which is to get out of the damn place,” he says.
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When he was out shopping a few months ago, Naidorf met a woman who mentioned that she had been in the Navy, forcing her to move around a lot when her son was battling childhood leukemia. Without knowing she was talking to the Naval Medical Center’s designer himself, she told Naidorf that it was the only hospital that didn’t scare her ill 6-year-old son, who has since made a full recovery.
“What kind of an architect…,” Naidorf says, overcome with emotion and his voice breaking, “do you have to be not to hold that as better than any design award?”
Though Naidorf had risen through Welton Becket & Associates’ ranks to become vice president, director of research and director of design, he grew increasingly unhappy after the firm’s merger with Ellerbe Associates (it was renamed Ellerbe Becket). He moved into academia full-time in 1990, spending just one day a week at the firm.
Naidorf became dean of the School of Architecture and Design at Woodbury University, earning numerous distinctions, including teacher, faculty member and administrator of the year. He was also a guest professor at UCLA, USC, Cal Poly Pomona and SCI-Arc. At his retirement ceremony in 2000, he was awarded an honorary doctorate, marking not only the end of his academic career but also his time in Los Angeles.
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Charmed by the beauty of Northern California, Naidorf moved up the coast to Santa Rosa. For the next 15 years, he continued working with Woodbury University as campus architect, designing and remodeling some of its buildings, and was invited to be a board member.
When he parted ways with Woodbury at 87 years old, it was not with the goal of taking it easy. Naidorf had other pursuits in mind, including his work with City Vision Santa Rosa revitalizing the city’s downtown area.
He also helped his close friend, Mike Harkins (who edited Naidorf’s memoir), design his new house free of charge after the 2017 Tubbs Fire burned Harkins’ home to the ground and he and his wife lost 99% of their belongings.
“Lou offered without solicitation: ‘I’d like to design your house,’” Harkins says. “To me or anyone else who knows him, it was a heartfelt offer that of course he would make, and yet so much more. One analogy might be if Eric Clapton said, ‘I’d like to play at your wedding.’ The knowledge and sensibility that comes along with a Naidorf design offering is huge, just like his heart.”
Most recently, Naidorf has been experimenting with plans for a project to help people who are unhoused.
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Naidorf has made the most of his architecture license over the last 71 years. His voice fills with pride when he reveals that he holds the earliest issued active architecture license in the state of California, obtained in 1952.
“It’s something I wanted to be since I was a little kid. My architecture license was so hard to come by. I don’t want to give it up,” he says with palpable emotion. “I don’t want to be retired. I want to be an architect until I fall over. I plan to be buried as a licensed architect.”
Of recently turning 95, he jokes that he feels like a bad vaudeville performer who soon will be pulled offstage by a hook. But Naidorf remains in remarkably good health after surviving both prostate and esophageal cancer in his 80s.
To keep his brain sharp, he does exercises including counting backward from 100 by sevens and taking IQ tests online.
As a nonagenarian, he says there is no key to living a long life. He suggests, though, that it helps to try to use it well. “It’s not how big the steak is but how tasty it is,” he says. “I think you have to seek a calling, listen for it and search for it. Find something in your life that is really yours. … Get engaged with something that’s going to scare you, something where the problems are hard. And take risks. There is no failure.”
He also notes the importance of adaptability. “I have had four marriages. I’d better be resilient,” he quips. Twice divorced and twice widowed, Naidorf has a daughter from his first marriage, four stepchildren (who call him “Dad”) from his fourth marriage, 11 grandchildren and six great-grandchildren. An intensely private man, he’s reticent to speak publicly about his relationships and family, preferring to focus on his work.
“I remain so fascinated with architecture,” he says. “I cannot even walk past a store where somebody is putting in an electrical outlet without stopping to look in and watch it.”
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The chatty Naidorf turns summarily succinct, saying, “I certainly have had a good run.”
Verification, HELOC, POS, Servicing Transfer Products; Webinars Today and Tomorrow; Fannie’s Solid Earnings
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Verification, HELOC, POS, Servicing Transfer Products; Webinars Today and Tomorrow; Fannie’s Solid Earnings
By: Rob Chrisman
52 Min, 10 Secs ago
“Change is inevitable, except from a vending machine.” Corporate changes are the name of the game. Atlanta’s Crescent Mortgage’s bank owner is aligning all mortgage facets of the enterprise and moving to “retail only” and eliminating third party. Rather than wind down, Colorado’s Universal Lending is inking an agreement with Lower LLC in a partnership setting up Universal Home Loans being in the same markets as a division of Lower LLC and improve its competitive position. Every discussion that I’ve had with real estate agents lately involves a) thousands of agents leaving the business due to the lack of… business, and b) how 8 percent mortgage rates have absolutely ground transactions, and even interest in looking at properties, to a halt. Meanwhile, I’m having similar conversations with loan originators as a) NMLS licenses are declining, and b) 8 percent mortgage rates have ground activity to a halt. From a broker-dealer’s perspective, BAML’s trade desk reported that, “Supply limped into the weekend, closing at 1.2bn amid a light rate move, dragging the 5 day average to 1.8bn.” (Today’s podcast can be found here, sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades. Hear an interview with Richey May’s Seth Sprague on the servicing marketplace, strategic planning, and returns to profitability from an advisory perspective.)
Lender and Broker Software, Products, and Services
On this Halloween, don’t get tricked: Stop and think before you click. The human element is the easiest target for cyberattacks, from phishing emails to phone calls. However, with proper training, your team can become your greatest defense against these attacks. In an industry that values sales goals, it’s tempting to pursue every mortgage lead without hesitation. But recent data reveals the dangers of careless clicking. In 2022, social engineering was the top attack vector, even for the best teams. Discover how to strengthen your human cybershield here and reach out to Richey May’s cybersecurity experts to assess and define your cybersecurity training needs.
“BOO! No tricks here, only treats! Did you know that even the leanest of teams can leverage the same enterprise ecosystem technologies as the largest players in the mortgage industry? For purchasers of mortgage assets, Blue Water (“Blue Water Financial Technologies Services, LLC”) has turnkey solutions available that can dramatically widen your funnel. For example, SuperTransfer™, ensures that you receive docs and data from any number of sellers exactly in your stacking order and format with exception remediation* built into the process. Buy directly from sellers or buy from aggregators to access hundreds of sellers. Blue Water technology can help drive your valuation-based pricing* to target your footprint and return objectives- at the loan level. From pricing, valuations, transactions, transfer, QC, to boarding, Blue Water makes it easy to scale up your pipeline. *Patent pending. Connect with our expert Sales Team today.”
Maximize your return on every loan with better secondary pricing and industry-leading technology. To achieve profitable mortgage lending, you need solutions built for your bottom line. Maxwell’s tech-enabled platform enhances each step of the process, from point of sale to the secondary market. You’ll gain competitive secondary market pricing on a wide array of products, including non-QM and jumbo, and full-service fulfillment support on both wholesale and mini-correspondent offerings. Maxwell Capital customers leveraging Maxwell Point of Sale close 36 percent more loans than top competitors, increasing and accelerating closes, while built-in business intelligence tracks and benchmarks performance. Schedule a call with our team to learn more about Maxwell Capital and Maxwell Point of Sale to ensure profitability on every mortgage origination.
“Take your Encompass® experience to the next level with the Encompass Essentials – 10 Free Tools Package from KensieMae, where seamless enhancements await at no cost. We get it; this market can be tough, and we’re here to make it a little easier… for free! No gimmicks, no hidden fees, and no strings attached. Our free tools package includes 10 simple, but powerful, time-saving tools trusted by thousands of lenders, and they won’t cost you a dime. Installation is a breeze, and upgrades are on the house. Whether you’re a new KensieMae customer or already part of the family, these tools are our gift to you. Save time, reduce frustration, and streamline your workflow with tools like Doorbell, Navigation Buttons, and Macro Automation. Your lending business deserves these game-changers, so why wait? Claim yours today and supercharge your operations with the Encompass Essentials – 10 Free Tools Package!”
We all remember the houses that give the full-size candy bars just like we remember the houses that give toothbrushes and raisins. Why should your digital mortgage experience be any different? Borrowers remember a slick, easy-to-use loan app, and just like the neighborhood kids, will tell you where to go and what to avoid. Be the full-size candy bar house with LiteSpeed by LenderLogix.
Symmetry Lending has some very exciting news: As of tomorrow, November 1, Symmetry is enhancing the Borrower-Paid Broker Fee payouts on its Standalone HELOCs! Mortgage loan officers and brokers can now earn 1.5 percent on the Symmetry Standalone HELOC draw amount, with no maximum payout. Symmetry will also continue to allow for a $500 borrower-paid broker fee on its Piggyback HELOC solution. This increased payout on Symmetry’s Standalones offers a big opportunity to increase your income while the first mortgage market remains challenging and slow. In fact, HELOCs, especially Standalone HELOCs, continue to gain a lot of interest, with homeowners looking to this lower-interest financing solution to make renovations and repairs to their current home, versus buying a new home at a high interest rate, offset debt and increase cash flow in an inflationary economy, increase their home value in preparation for a future sale, and more! Don’t wait until it’s too late! Talk to your clients about the benefits of a HELOC before someone else steals this business opportunity from you. Contact Symmetry to learn more about their HELOC solutions, pricing, and industry-leading speed and service.
Verification Products
Truv is saving Lenders 60-80 percent over competitors. That’s the savings of multiple full-time employees. For example, Compass Mortgage saved roughly 60 percent in verification costs and maintained their same conversion rate. “Truv has given us the ability to lower costs, all while speeding up the verification process and providing better employment data” said Justin Venhousen, COO, Compass Mortgage. Stop wasting money. Contact TRUV today to discuss how we can help you with your income, employment, insurance, and asset verifications.
It may be spooky season, but don’t let the risk of buybacks frighten you. Reports of falsified data are on the rise, and buybacks have become an increasing problem for mortgage lenders. Requesting paper paystubs or W-2s from the applicant may be your default method of verification, but it can be burdensome for both you and the applicant, and fake pay stub generators are easily accessible via the web. Scary! Third party verification of income through The Work Number® is one of the best ways to mitigate risk, helping to reduce potentially costly buybacks. Available for use by credentialed verifiers with permissible purpose under the FCRA, The Work Number database provides instant access to 163 million current employment records directly from 2.9 million employers and payroll providers. With buybacks on the rise, why use paper-based processes when instant GSE-approved options exist?
The 8 percent mortgage rate housing market is here, and it’s time for lenders to get lean and cut out complicated fluff. Truework is saving lenders $100 on every VOI/Eby connecting every major verification method into a single platform. With one-stop verification, you can verify income for 95 percent of applicants and replace expensive and clunky legacy systems. Now is the time to sharpen your processes and with Truework Income, lenders are accelerating applications and cutting verification costs.
Fannie Mae Earnings
This morning Fannie announced that it had $4.7 billion of net income for the third quarter of 2023, with net worth reaching $73.7 billion as of September 30. It is certainly being “recapitalized!” Net income decreased $295 million in the third quarter of 2023 compared with the second quarter of 2023, primarily driven by a decrease in benefit for credit losses, partially offset by an increase in fair value gains. Fannie acquired approximately 224,000 single-family purchase loans, of which more than 45 percent were for first-time homebuyers, and approximately 45,000 single-family refinance loans during the third quarter of 2023.
Tune in Today and Tomorrow
Today, Halloween, is the next Mortgages with Millennials with Kristin Messerli and Robbie Chrisman. Tune in every Tuesday at 10AM PT to the weekly video show designed to empower mortgage professionals to tap into the millennial market. This show demystifies the psychology of first-time homebuyers and offers strategies to win more market share with a key segment of the market. Sign up for a weekly reminder with the link to join and a sneak peek into the next episode. Top Millennial producer Sean Herrero is today’s guest.
A shout out to Lender Toolkit and its 2024 Supercar event in Las Vegas to kick off ICE Experience 2024 on March 18! The company is offering early bird discounts on sponsorships, but only until October 31. Imagine your logo on an exotic car with your clients and prospects behind the wheel. And yours truly will be doing a live podcast! To get the deal on sponsorships reach out to Brent Emler or grab the sponsorship form.
Join the AEI Housing Center for the 12th Annual AEI Housing Conference, today, Oct. 31st and Wednesday, Nov. 1st, both in-person and online.
Looking for more in-depth commentary on weekly mortgage news? Register here for “Mortgage Matters: The Weekly Roundup” presented by Lenders One. Every Wednesday at 2:00 PM EST/11:00 AM PT is a dive into a range of mortgage-related topics, including market trends, interest rate fluctuations, innovative mortgage products, and industry advancements. This week’s episode features Charlotte Brown, Qualia’s VP of Product Design, discussing pain points in the closing process and working with title and escrow.
Capital Markets
Both a big federal budget deficit and a clearer path for the economy to return to low inflation without a recession are putting upward pressures on interest rates that will likely persist into next year. The December fed funds futures are nearly certain there will be no change at this week’s meeting that begins today and concludes tomorrow, and the probability for a hike in December at the subsequent Federal Open Market Committee meeting has fallen from around one-in-three a month ago to one-in-four currently. We still have the jobs report on Friday.
We also have the quarterly refunding data this week with investors preparing for increased issuance on longer dated tenors, as Treasury officials attempt to offset a widening budget deficit. There was some intraday speculation yesterday that the quarterly refunding statement for the U.S. Treasury could show increased borrowing needs for Q3, but the release showed that the Treasury plans to borrow $776 billion in Q4, which is $76 billion below the estimate from three months ago. Keep in mind that the last few Treasury auctions didn’t go well, so the bond market will be sensitive to these.
Today’s busy month-end economic calendar is under way with the Q3 Employment Cost Index (+1.1 percent, slightly higher than Q2), where a 1.0 percent quarter-over-quarter increase was expected, the same as the prior quarter. Later this morning brings Redbook same store sales, August house prices from S&P/Case-Shiller and FHFA, Chicago PMI for October, Dallas Fed Texas services, and several Treasury auctions. We begin Halloween with Agency MBS prices better than Monday afternoon by .125-.250 and the 10-year yielding 4.82 after closing yesterday at 4.88 percent; the 2-year is at 5.03 percent.
Jobs and Transitions
“First Community Mortgage (FCM) continues to experience remarkable growth, having doubled our branch locations, spanning from coast to coast. Despite challenging market conditions, FCM continues to thrive, committed to expansion. As a state-chartered lender, FCM loan officers can originate in 48 states, unlocking a world of opportunities. Our dedicated transition team is ready to support you during your first 120 days, ensuring the journey to FCM is seamless and successful. Our unique business model is tailor-made to empower our leaders with the support and flexibility they need to cultivate their businesses and deliver exceptional customer experiences, yielding outstanding results and a significantly higher income potential. Our unwavering commitment to enhancing your experience shines through in our substantial investments in technology, aimed at simplifying your workload and unlocking your full potential for business growth. Come along with us and discover the possibilities. Contact Bret Head or visit us online.”
Brokers and correspondents should know that Arc Home, a leading Non-QM and Non-Agency lender, is delighted to announce the appointment of Brian Devlin as President. Brian brings more than two decades of diverse industry experience, making him the ideal leader to guide Arc Home through its next phase of growth. In addition to his role as President, Mr. Devlin is set to assume the position of CEO following a transition period with current CEO, Richard Bradfield, who will embark on new opportunities. Brian shared his excitement, saying, “Joining Arc Home is an incredible opportunity to collaborate with the best professionals in the industry. We’re committed to providing top-notch Non-QM and Non-Agency products, processes, and service to our valued clients.” To learn more, click here, or reach out to your Arc Home Account Executive. Find out why this leadership addition, along with our top-tier products and pricing, makes Arc Home your go-to partner for Non-QM and Non-Agency lending in 2024.
As part of its ongoing growth and expansion, top tier Third Party Origination Go (TPO Go) announced the hiring of Katie Plezia, Kim Kriel, and Brice Waterman as Account Executives who will be instrumental in driving sales production and operational excellence. Each brings more than twenty years of mortgage industry experience across all lending channels, including roles in sales production and management as well as operations management, and are regarded as top performers, having received multiple awards and recognition for sales production, including rankings among the top 10 AEs in the country for several consecutive years. Adam Millstein, VP and National Sales Manager shared, “Katie, Kim, and Brice’s passion for this business is evident and their respective patterns of success are enviable. They exemplify the type of people that we want and need to represent the TPO Go brand as we continue on our journey, and I can’t wait for the great things we’ll do together.” TPO Go is a national mortgage wholesaler, offering Fannie, Freddie, Ginnie, niche renovation lending products such as VA, 203k, Fannie Mae Homestyle and Freddie Mac’s Choice Renovation, USDA, VA, TPO GO 100/Chenoa, and a proprietary TPO GO first-time homebuyer program to brokers.
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A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.
New York CNN
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Policymakers at the Federal Reserve are feeling optimistic that a rise in long-term Treasury yields could finally put an end to the past 19 months of historic interest rate hikes meant to tamp down inflation.
Wall Street is also feeling hopeful that there won’t be further tighteningof monetary policy. The odds of another interest rate hike by the Fed in November are falling, according to the CME FedWatch Tool.
Financial markets currently see a nearly 90% chance the US central bank will keep rates unchanged at its next policy meeting to be held on October 31 through November 1. Just a month ago, markets had those odds at just 57%.
The majority of traders are betting that there will be no more hikes and that the Fed will hold rates steady through June 2024 before loosening policy, the CME tool shows.
What’s happening: US Treasury rates are white hot — 10-year Treasury yields are near their highest levels since 2007. That’s bad news for the economy,but those yields could be doing the Fed’s job for it.
For American consumers, an elevated 10-year Treasury return means more costly car loans, credit card rates and even student debt.
It also means more expensive mortgage rates. Mortgage rates tend to track the yield on 10-year US Treasuries. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow.
US mortgage rates are at 23 year-highs, and home affordability is at its lowest level since 1984.
That means consumers are beginning to sweat. Americans haven’t been this worried about missing a minimum debt payment since the early weeks of the pandemic, according to consumer survey data released Tuesday by the New York Federal Reserve.
The average perceived probability of not making a minimum debt payment in the next three months increased 1.4 percentage points to 12.5% in September, according to the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations. That’s the highest rate since May 2020.
But what’s bad for the economy tends to be good for bringing prices down. And some Fed officials indicated this week that rates are now high enough to lower inflation to their target goal of 2%.
Philip Jefferson, the number two official at the Fed, said in a speech on Monday that he would “remain cognizant of the tightening in financial conditions through higher bond yields and will keep that in mind as I assess the future path of policy.”
That’s Fed speak for: I’m paying attention to the fact that borrowing money is more expensive and I’ll keep that in mind when deciding what actions the Fed should take in the future.
Dallas Fed President Lorie Logan also suggested on Monday that higher yields mean there’s not as much need for future rate hikes.
On Tuesday, Federal Reserve Bank of Atlanta President Raphael Bostic said barring unforeseen economic events, he didn’t see the need to raise interest rates any higher.
“I think that our policy rate is at a sufficiently restrictive position to get inflation down to 2%,” he said at the annual convention for the American Bankers Association. “I actually don’t think we need to increase rates anymore.”
Bostic, who does not vote on policy decisions, said that Treasury yields showed rates were “clearly” restrictive and slowing the economy.
Last week, San Francisco Fed President Mary Daly said that the increases in Treasury yields since the Fed’s last meeting in September were equivalent to another quarter percentage point interest rate hike. If financial conditions remain tight, she said, “the need for us to take further action is diminished.”
What about markets: In a twist, the prospect of a steady Fed policy buoyed markets and sent Treasury yields lower on Tuesday. Bonds compete with stocks for investors’ dollars, so when equities go up, yields often go down.
The 2-year Treasury yield fell to 4.96% on Tuesday and the 10-year Treasury yield dropped to 4.65%, but both still sit near recent highs.
What’s next: Investors will pay attention to the Producer Price Index (PPI), which tracks the average change in prices that businesses pay to suppliers, due out Wednesday and the Consumer Price Index (CPI), a closely watched inflation gauge, on Thursday for furtherclues about the Fed’s next move.
PPI for September is expected to be unchanged for the year at 1.6% and lower for the month at 0.3% versus 0.7% in August, according to Refinitiv estimates.
Inflation as measured by CPI, meanwhile, is expected to have slowed month-over-month to 0.3% from 0.7% in August.
Birkenstock is now an $8 billion company
It’s official. Birkenstock will be making its debut on the New York Stock Exchange Wednesday under the ticker symbol BIRK.
The beloved cork-soled shoemaker priced its initial public offering at $46 a share, making Birkenstock an $8.6 billion company, reports my colleague Elisabeth Buchwald.
That would make Birkenstock one of the 5 largest consumer discretionary IPOs of the past 20 years, according to data from Renaissance Capital.
It also means that the company is valued at about 37 times its earnings. That’s a signal of confidence in the market despite an “ongoing IPO market slump,” said Megan Penick, public securities chair and partner at law firm Michelman & Robinson.
The climate crisis is coming for your hoppy beer
Hops in major beer-producing European countries like Germany, Czech Republic and Slovenia are ripening earlier and producing less since 1994, scientists found. And, perhaps most alarmingly for the IPA lovers of the world, they are starting to lose their critical bitter component, reports my colleague Rachel Ramirez.
It’s going to get worse, researchers say. Hop yields could decline by as much as 18% by 2050, and their alpha acid content — which makes beer bitter — could decrease by up to 31% due to hotter and drier conditions, according to a study published Tuesday in the journal Nature Communications.
Scorching temperatures have already shifted the start of hop growing season by 13 days from 1970 to 2018, according to the study. The growth of new shoots from the hop plant typically occurs during the spring, but since 1995, the researchers found it’s happening earlier in the regions analyzed than years prior.
In recent years, more consumers are preferring beer aromas and flavors that require higher-quality hops, according to the study. Since these hops are only grown in smaller regions, researchers say they’re put at even higher risk from climate change-fueled heat waves and droughts.