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Tour De Mortgage Finance Learn Something New Everyday About Your Industry
QUANTITATIVE EASING VS TIGHTENING
Ok, so this is a cool party or client conversation tidbit that will help you sound like the authority in your industry. Use it. Duh!
So, quantitative easing is where the FED buys up a bunch of treasuries or mortgage backed securities that you originate creating a false demand for mortgages which results in lower rates because the higher the demand the less we have to pay for our rates.
Quantitative tightening is what is happing right now. Yesterday, the FED minutes released that they were going to run off their balance sheet to the tune of 60 Billion per month for treasuries and 35 Billion per month for mortgages aka mortgage backed securities aka MBS.
What the heck does that mean Jack or Lucy?
So, the FED is going to NOT buy 35 Billion of mortgages that last month they were. This means the demand for MBS will be at a minimum 35 Billion per month less. Ruh Roh!
BUT, There Is MORE!
Now, the FED owns a lot of mortgage backed securities. What that means is they are getting paid off a lot of money every month due to sales or refinances and more sales than refinances I am sure.
So, lets say they receive 40 Billion in payoffs from what they own then they will not reinvest the 35 Billion they have been but will reinvest 5 Billion which is 40 Billion in payoffs minus 35 Billion in runoff equals 5 Billion in purchasing still.
This has been worked in to our pricing but the good news is they will still purchase depending on their payoffs but it will be 35 Billion to the lesser. In addition, they are laying off 60 Billion of treasuries our direct competitor compared to our 35 Billion.
This helps us when investors are debating on the safest investment in the world US Treasuries and the 2nd safest investment in the world US Mortgage Backed Securities because they are backed by the US Govt the most stable economy in the world. Kind of crazy huh? They will find higher prices in treasuries than MBS.
So, now you know the difference between quantitative easing and quantitative tightening.
Product & Guideline Highlight Knowledge That Gives You An Edge Over Your Competition
TOUGHER LOAN NEED BETTER UW’S & AE’S
I do not think I have ever been this worn out with loans in the pipeline in quite some time. Keep em coming. HA!
We are seeing a massive amount of govt loans and a massive amount of manual underwrites due to rates as well as to you guys are trying to do loans you would not have tried in the past.
One of the keys to your success is going to be working with seasoned underwriters as well as seasoned AE’s.
Flagstar’s average underwriter has been here for 10+ years and the average AE for 10+ years. I am personally working on year 14.
More now than ever it will be key to work with a lender that knows how to underwrite these loans and find ways to make deals work vs ways to deny deals.
I have been getting a lot of transfers from other lenders to us to get deals done and I won’t mention any names but it is becoming apparent that having a great system is useless if you cannot get loans to the closing table.
BUT, we have denied quite a few files as well that never should have been submitted. Get FULL apps on those tough customers and cover all the questions.
Use me for scenarios and questions as well. I am the best in the business because I work with the best in the business.
Oh, and don’t send me your tough deals only. Send em all and you will not regret it. Pricing looks great and we are closing faster than ever!
Marketing Ideas And Opportunites Little Things That Can Make A Big Impact
NOTHING IN MARKETING IS ORIGINAL
From time to time I get someone who asks me “Jack, can I use this article to send out to some clients or realtors?”.
Please hear me on this and let me be absolutely crystal clear!
I am here and I write everyone of these articles to help you be more informed and better at what you do.
If you can use one of my articles to better your business YES PLEASE use it for your benefit.
I don’t copyright it, I don’t care to get acknowledged (except for fellow loan officers) and use it at your will.
The only thing I do request is you do not just copy and paste my entire newsletter each day and call it your own. That is just bad integrity but using it or rewording it or whatever is perfectly fine. I actually see it from time to time and gives me a big ole smile that I can be a part of what you are doing.
So, that is my marketing piece for the day. Don’t plagiarize but there is nothing original left in this business so copy it or reword it or make it your own and grow your business.
