So, 2020 is off to a good start, right?
I mean there isn’t too much going on… the 10-year bond fell under 0.400% and subsequently split from its normal trend of following the MBS market, we saw the largest single day drop in the Dow’s history, then the largest single day rally, then Non-QM lenders “paused” their lending activities (c’mon nobody “pauses”) after their securities dried up, Jumbo Lending, HA! Forget about it… for now at least, margin calls are depleting independent mortgage banker’s capital reserves…
Hmm, what else? Oh, remember how sexy it was to have a servicing asset?! Well now it’s as cool as wearing jean shorts with the carpenter loop (please tell me you aren’t still wearing jean shorts). People are still doing it, but the value in having a loop to carry a hammer on your shorts has diminished (for those of you not keeping up… I’m saying that the value of servicing assets has dropped as a result of the crazy rate spikes). 3.3 Million people filed for unemployment in just 1 week, mortgage lenders across the country are adjusting and changing their guidelines around self-employed income, rental income, temporary leave income, and verifications of employment are more important than ever… but hey we can do “drive-by” appraisals… silver lining?
It’s a mess out there and I haven’t even dipped my toes into what’s happening with the government products. Credit standards have tightened… kiss the sub 640 FICO good-bye (and in some cases sub 680). Some experts think this could be the end of FHA products as we know it (or is it knew it? Idk). If you haven’t seen it, Anthony Casa does a great job explaining the current struggle in the government lending space on LinkedIn. It’s a good watch!
PHEW! I’m gassed after that…
Mind you all of this has happened in a little over a month while we all sit around in sweatpants at home trying not to become Jack Torrance from The Shining “All work and no play makes MJ a dull boy”. I mean who could’ve predicted a worldwide, “flu-like” pandemic, that turns the world upside down… besides Stephen King, who obviously saw this coming 40 years ago and wrote the fantastic 1979 novel The Stand which was made into a fantastically bad “made-for-TV-movie” in 1994 starring Gary Sinise and Rob Lowe.
Look, in all seriousness the scariest and most worrisome part about all of this is the unknown. We have no clue what is really going to happen. The only thing you can do right now is be a decent human. Listen. Stay safe. Be kind. Be patient. Over communicate. That’s all we can do… and trust me your mortgage lenders are scrambling and adjusting guidelines, pricing and everything else to protect themselves during these wild times. Show them grace, because the world is going to turn to our industry to see how we navigate these waters… and look we don’t exactly have the best record (1929, 1987, 2008). We took losses in each of those fights. Let’s make 2020 different.
Stay healthy and stay safe.
Talk to you soon,