POS, Commercial, Retention, LOS, Non-QM Tools; Disaster News; IMB P&L Helped by Servicing
“My friend showed me a photo of a famous meteor crater in Arizona. It’s amazing how close it landed to the Visitor’s Center!” Here in Tucson, the weather is fine but “tornado season” has hit with a vengeance in other parts of the United States. Anyone who thinks that the severity of storms is declining should reconsider. (Catastrophe and disaster updates below.) For some good news, call it “kicking the can down the road” or a “budget plan,” but Congress passed the budget appropriations bill, and it was signed by President Trump over the weekend. In six months we’ll get to watch it all over again. But for lenders, kicking the can down the road is not an option. Our MBA presented the IMB profit figures: tepid at best, and some would say indicate that there will be no easy sledding ahead. “Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $40 on each loan they originated in the fourth quarter of 2024, a decrease from the reported net profit of $701 per loan in the third quarter of 2024… (lots of stats below). (Today’s podcast can be found here and this week’s is sponsored by CoreLogic. Whether it’s using cash to purchase a home, debt consolidation, or a straight cash-out refinance, CoreLogic’s Precision Marketing’s data-driven insights pinpoint your best opportunities to retain and recapture your clients. Today’s has an interview with CMG and WIMIN’s Sharon Barney on experiences, challenges, and successes of women in the mortgage industry.)
Lender and Broker Products, Software, and Services
Today at 10AM PT for 30 minutes on Now Next Later, Sasha and Jeremy talk to Christy Soukhamneut, Chief Lending Officer at University Federal Credit Union, about the real ROI of digital automation in lending. Christy challenges the hesitation many lenders have towards new technology, and shares insights on measuring success and saving money throughout the innovation process.
“The best originators aren’t just salespeople. They’re warriors, mastering the art of lending with precision, discipline, and an unwavering commitment to their clients. In our upcoming NMP Webinar, The Way of the Samurai MLO, top-producing originators Scott Valins (GoRascal) and Kenny Simpson (C2 Financial Corporation) will reveal their strategies to win for business owners and real estate investors. Bring your questions and learn from these masters in this fireside chat-style webinar. Joining us will be non-QM experts Will Pendleton and Adam Wagner of The Loan Store, who will break down the mindset, tools, and tactics needed to dominate today’s lending battlefield. Don’t miss this chance to learn from industry warriors who are cutting through barriers with bank statement loans, DSCR loans, and asset depletion programs. Join us Thursday, March 27, at 2 pm ET / 11 am PT: register for the webinar here.”
Commercial lending is experiencing hyper growth due to $1.5 trillion in ballooning loans over the next 3-5 years. There is a shortage of commercial mortgage brokers, and with banks liquidity issues, a perfect storm is brewing for the secondary market that will create massive deal flow. Chris Perez, Oceanview Commercial Lending, a 25-year veteran, is offering a new commercial platform for brokers which includes training in technology with access to thousands of lenders. This is a turnkey custom approach to integrate into your existing mortgage business. Schedule an appointment today or join the free weekly seminar every Wednesday 1PM EST. Adding commercial to your book of business is a way to expand your current product line while substantially increasing revenue.
A complex process controlled by hormones, temperature and the autonomic nervous system allows chameleons to change the color of their skin to blend into any environment. The Empower® LOS, a productivity chameleon of sorts, is unmatched in configurability, adapting to your business needs with a scalable system that can morph as you grow and eliminates the need for coding or developer resources. This system puts the power of automation and customization directly into the hands of the business users, enabling timely adjustments to fit unique operation landscapes. The Empower LOS also offers direct integration with the industry’s leading PPE, marketing, and mortgage CRM solutions, ensuring every implementation maximizes efficiency and empowers lenders to achieve exceptional borrower experiences while future-proofing their beneath-the-skin operations. See the difference for yourself.
It’s MARCH MADNESS over at Carrington Mortgage Services, LLC, bringing BIG plays and BIG wins in Non-QM. As part of its Non-Stop Non-QM commitment, Carrington is waiving its underwriting fee for all non-QM loans over $1M submitted in March. This is one slam dunk deal you don’t want to miss! Contact your Account Executive to learn more. In addition, Carrington is looking to add qualified Non-QM account executives and underwriters in several markets across the country. Finally, Carrington will be at the MBA Secondary and Capital Markets Conference in New York on May 18-21. Contact Sam Bjelac to set up a time to meet with the Carrington Team to discuss how they can help grow your Non-QM business. It’s Non-Stop Non-QM at Carrington, so come be a part of it!
“Time is running out, so unlock hidden gold in your contracts! Don’t miss out! American Heritage Lending’s live webinar is just around the corner, and you won’t want to miss the chance to learn game-changing strategies that can transform your business. Join us this Wednesday, March 19, at 1:00 PM EST. Did you know every purchase contract holds untapped leads and opportunities, you just need to know where to look! In this session, industry experts James Gueltzow and Jackie Weed will walk you through identifying hidden leads in contracts, building relationships with key players, and more. Using AHL’s unique lending solutions to Originate MORE! Register now here: Registration. This webinar is designed for mortgage brokers, real estate agents, and lending professionals who want to expand their pipeline and close more deals. For more details, contact James Gueltzow at or visit Originate More – ahlendtpo.com.”
“Unlock your pot of gold with Maxwell. In today’s competitive mortgage market, differentiation is key. Maxwell Point of Sale offers industry-first configurability, allowing lenders to customize workflows and borrower experiences. With over 60 third-party integrations, Maxwell seamlessly connects every part of your process, from credit checks to disclosures. Plus, Maxwell sees a 60% increase in pull-through from Rate Lock to Close, leaving competitors green with envy. Want to learn more? Let us show you how Maxwell can bring some St. Patrick’s Day luck to your mortgage process.”
Those Big Profit Quarters Were 4-5 Years Ago; Where Does Time Go?
The MBA, under the guidance of Marina Walsh, CMB, MBA’s VP of Industry Analysis (given some time, I could find some more abbreviations) reported that after running “in the black” in the middle of 2024, “Independent mortgage banks (IMBs) and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $40 on each loan they originated in the fourth quarter of 2024, a decrease from the reported net profit of $701 per loan in the third quarter of 2024.” It appears that as long as you have a plan to trundle back toward profitability, the typical warehouse bank won’t cut you off. That’s the big question: what are you doing to fix it?
The culprit? “Fourth-quarter production revenues and volume were relatively flat compared to the third quarter of 2024, while average production expenses increased. Expenses related to the uptick of applications in the third quarter were likely recognized in the fourth quarter. Additionally, while per-loan expenses increased across lenders of all sizes, lenders with larger volume benefited from scale, as fixed costs were spread over more volume, and they were able to generate an average production profit in the fourth quarter. Meanwhile, lenders with lower production volume struggled to break even.
“With the slowing in prepayments in the fourth quarter, net servicing financial income improved and helped the bottom line. Across both production and servicing operations, 61 percent of mortgage companies in MBA’s sample were profitable, compared to 71 percent in the previous quarter,” added Walsh.
“The average pre-tax production loss was 4 basis points (bps) in the fourth quarter of 2024, down from the reported profit of 18 bps in the third quarter of 2024, but less than the loss of 73 basis points one year ago. The average quarterly pre-tax production profit, from the fourth quarter of 2008 to the most recent quarter, is 41 basis points.
“Total production revenue (fee income, net secondary marketing income, and warehouse spread) decreased to 339 bps in the fourth quarter, down from 341 bps in the third quarter. On a per-loan basis, production revenues decreased to $11,190 per loan in the fourth quarter, down from $11,417 per loan in the third quarter.
“Total loan production expenses (commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations) increased to 344 basis points in the fourth quarter of 2024 from 323 basis points in the third quarter of 2024. Per-loan costs increased to $11,230 per loan in the fourth quarter, up from $10,716 per loan in the third quarter of 2024. From the fourth quarter of 2008 to last quarter, loan production expenses have averaged $7,628 per loan.
“Servicing net financial income for the fourth quarter (without annualizing) was $142 per loan, up from a loss of $25 per loan in the third quarter. Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses, and gains/losses on the bulk sale of MSRs, was $84 per loan in the fourth quarter, down from $93 per loan in the third quarter.
“The purchase share of total originations, by dollar volume, was 78 percent. For the mortgage industry as a whole, MBA estimates the purchase share was at 62 percent in the fourth quarter of 2024.
“Including all business lines (both production and servicing), 61 percent of the firms in the report posted pre-tax net financial profits in the fourth quarter of 2024, down from 71 percent in the third quarter of 2024.”
If you’d like a copy of the Quarterly Mortgage Bankers Performance Report, contact Falen Pitts (202-557-2771) or if you have questions regarding the numbers or methodology, Marina Walsh.
Weather-Related Disaster News
Man-made or natural, weather and climate happen. And the decisions made by investors in mortgages in the secondary markets, insurance companies, owners of servicing, or builders, all impact the price to your borrowers. While lenders and servicers wait for FEMA to declare portions of states disaster areas in this latest round of storms, triggering policy and procedure changes in those areas, who’s doing what now?
In addition to previously declared counties, West Virginia DR-4861 was modified with additional counties declared. Reference PHH Correspondent announcements for all disaster declared counties, requirements, procedures, and conditions.
On 3/10/2025, with Amendment No. 1 to DR-4861, FEMA declared federal disaster aid with individual assistance to Western Virginia’s Logan and Wayne counties affected by severe storms, straight-line winds, flooding, landslides, and mudslides from 2/15/2025 and continuing. See AmeriHome Disaster Announcement 20250302-CL for inspection requirements.
On 3/11/2025, with Amendment No. 2 to DR-4861, FEMA identified an Incident Period End Date of 2/18/2025 for West Virginia counties affected by severe storms, straight-line winds, flooding, landslides, and mudslides from 2/15/2025 to 2/18/2025. See inspection requirements in AmeriHome Disaster Announcement 20250303-CL.
Homeowners have felt a 61% increase in policy premiums during the last five years and without the proper education, tools, organization, and documentation face up to 40% higher out-of-pocket expenses, delayed and even denied insurance payouts. Alarmingly, 1 in 10 homes annually will be affected by weather events. Only 17% of American homeowners are estimated to be prepared for a catastrophic loss; the numbers are staggering. DomiDocs tackles this challenge head-on launching Documenting for Disaster® program, providing a step-by-step program designed to provide education and organization through a secure, cloud-based platform. Additional details can be found in the Press Release.
Capital Markets
With the flight-to-quality trade taking hold in the wake of tariff uncertainty, financial markets have been adjusting forecasts and expectations amid heightened uncertainty resulting from the new administration’s economic policies and layoffs. The latest inflation data, which predates recently implemented tariffs, showed prices were softer than expected in February. The Consumer Price Index rose 2.8 percent on an annualized basis, down from 3.0 percent at the end of January as increases in both food and energy prices eased. Shelter inflation saw its slowest annual increase since 2021, rising 4.2 percent from the prior year. Price increases for services are expected to moderate as wage pressures ease and rental price growth slows, however increased tariffs are expected to increase prices on goods which could hamper continued progress on overall inflation in the near term. It’s possible the FOMC could view tariff price effects as transitory and continue to put more weight on the labor side of their dual mandate when making future monetary policy decisions. For the moment, the market doesn’t expect a rate cut until June.
Keep in mind that the PCE Price Index is the Fed’s preferred inflation gauge, and it has a slightly different methodology than CPI and PPI. There is some chatter out there that the PCE Price Index may not reflect the positive surprises we saw in CPI last week. And yes, all eyes are on the Federal Reserve this week, with the central bank scheduled to deliver its second interest rate decision of the year. With no changes to rates expected, the real focus will be on the updated dot plot and Chairman Powell’s press conference. Psychology and sentiment figure into mortgage rates and pricing, and both have been slammed by U.S. President Donald Trump’s back-and-forth on tariffs and trade war escalation. Additionally, growth prospects for the world’s largest economy have soured. Traders will be looking at the dot plot to get an idea of the Fed’s growth projections and will be keenly watching for any commentary on tariffs from Powell.
This week brings those aforementioned FOMC events on Wednesday afternoon, but besides the Fed, markets will also digest the latest decisions from the BoJ, the BoE, SNB, and Sweden’s Riksbank. Economic data of interest includes retail sales, business inventories, Fed surveys, housing-related data, import prices, and industrial production/capacity utilization. Besides bills, Treasury supply will consist of $13 billion reopened 20-years and $18 billion reopened 10-year TIPS. Regarding MBS, Class C and D 48 hours are tomorrow and Thursday, respectively. February retail sales (+.2 percent, lower than expected, ex-auto and gas +.5 percent, as expected) and Empire manufacturing for March (-20!) kicked off today’s economic calendar. Later today brings business inventories and the NAHB Housing Market Index for March. We start Monday with Agency MBS prices roughly unchanged from Friday’s close, the 2-year yielding 4.03, and the 10-year yielding 4.29 after closing last week at 4.31 percent.
