83,000 LOs Washed Out. Who Gets Their Realtors?

Happy Monday! Apparently MBA Annual was officially a superspreader 🤒 event. At least 20 people have told me they also came home from Chicago w/ Flu A. I'm mostly back among the living, but holy hell, that was miserable.

Anyway, enough about my immune system. We've got some juicy data to dig into today, including a $141B disagreement between mortgage economists over next year's refi market. Plus, RETR uncovered a $15B opportunity hiding in plain sight for purchase-focused LOs, the housing market is increasingly becoming a playground for the wealthy, & I've got fresh intel on layoffs, people moves & what Bill Pulte might have cooking before the year is out. 🌶️

The mortgage industry loves to talk about orphaned borrowers. But there's another group getting left behind as loan officers exit the business: real estate agents.

And there's a pretty sizable opportunity here for LOs who know where to look —> at the peak of the refi boom in ‘21, there were nearly 288,000 producing LOs. Today, that number is closer to 205,000. By my math, we’re talking roughly 83,000 fewer originators competing for business. 

So what happens to all those Realtor relationships when an LO hangs up their headset?

The data geeks at RETR (disclosure: RETR is an advertising partner) did some digging & found that 5,588 real estate agents have an inactive LO as their No. 1 preferred lending partner. Those agents collectively closed 32,312 buyer-side transactions worth $15.05B over the past 12 months. The relationships were tied to 2,524 inactive LOs who collectively originated nearly 50,000 loans totaling $18.06B during the measured period.

The opportunity gets even juicier when you widen the net. RETR found that 15,248 agents have an inactive LO among their top two preferred lending partners. Those agents accounted for 91,603 buyer-side transactions & $43.26B in sales volume over the past year.

Just to be clear: Not every one of these agents is truly orphaned; many have other lending partners, & a favorite LO going inactive doesn't mean an agent is suddenly shopping for a replacement. Plus, we're talking home sales volume here, not available mortgage production.

But the broader point is v interesting: When an LO leaves the business, they don't necessarily take their referral relationships with them. 

Looking forward, if the economists are correct & ‘27 is annus pessimus, I think we will probably witness another 40,000 to 60,000 LOs wash out. For lenders looking to recruit or grow purchase market share, there’s a real opening here.

The housing market has split into two very different worlds: People who need mortgages & people who barely know what a mortgage is.

As rates climbed above 7%, entry-level buyers tapped out. Meanwhile, wealthy shoppers are showing up w/ fat down payments, tons of home equity, and/or suitcases full of cash, per the WSJ.

The numbers are pretty eye-popping. First American found that luxury prices are outperforming starter homes in 33 of the nation's 50 largest metros. In San Francisco, where the Waymos 🚘 flock like Salmon 🐟 of the Capistrano, luxury prices rose 4.6% YoY, while starter-home prices fell 1.7%. In Tampa, prices in the bottom third of the market dropped 4.1%, while the luxury tier eked out a 0.4% gain.

Builders are getting the memo, too. Lennar's average selling price slipped to $372K in Q3, while luxury-focused Toll Brothers saw its average climb to $996K. Oh, & a quarter of Toll's buyers pay cash. Must be nice! (I just took out a massive mortgage on a new dev condo last week 🙂.)

There are a couple of exceptions, per First American: Rustbelt mainstays Cleveland 🤎& Pittsburgh 🌉are seeing starter-home prices outperform luxury properties.

IMO, all this means is that the K-shaped economy has rather predictably come for housing, too. You have one group hoping to piece together rate buydowns, seller concessions & price cuts. And the other side is out there backing up the Brinks trucks b/c they disproportionately benefit when the economy turns to shit. I think we’re going to see a lot more focus on rate buydown products, home equity plays, non-QM products & jumbos over the next six months…

For the past few years, mortgage economists have been a touch too optimistic about how much business the industry would do. Now, it seems they've found religion 🙏 on higher-for-longer, w/ Fannie Mae & the MBA both predicting a pretty shitty ‘27 for refis. So have they finally gotten it right? Or are they still too bullish?

Last week, the MBA forecast just under $2T in mortgage originations for ‘27. Fannie Mae followed w/ a considerably gloomier projection of $1.865T, an 18% chop from its September forecast.

Both shops expect mortgage rates to remain above 7%. And they're pretty much in agreement on purchase volume, at roughly $1.4T.

The big disagreement is refi business. MBA expects $571B in refis next year. Fannie projects just $430B. That's a $141B difference, which, you know, is a smidge more than a rounding error.

So, uhhhhh, who's more likely to be right?

I pulled both organizations' October forecasts for the following year going back to ‘21, then compared them against the mortgage volume that actually materialized. Here's what I found:

Both forecasting shops overshot the market in all four completed years. And ‘26 is shaping up to be five in a row. Fannie was off by nearly $1T in its ‘22 projection. MBA missed ‘23 by roughly $550B. Even in ‘25, their forecasts were 7.5% & 15.5% too high, respectively.

And what about ‘26?

Last October, Fannie expected $2.348T in mortgage originations this year. It's since lowered that forecast to $2.085T, a $263B downgrade. The biggest culprit? Refis, duh! Fannie originally expected $852B in refinance volume, but now projects just $655B.

MBA has fared considerably better. Its original ‘26 forecast called for roughly $2.2T in originations, compared w/ its latest estimate of $2.1T. That's a projected miss of about 5%, vs. nearly 13% for Fannie.

In other words, both orgs are on track to overestimate origination volume for the fifth consecutive year. And over the four completed years, their forecasts were an average of roughly 19% too high.

Look, I don't envy anyone whose job involves predicting where mortgage rates & origination volume are headed. There's an old saying in this business that only a fool predicts mortgage rates. And after the last few years of inflation surprises, Fed policy zigzags, geopolitical chaos & bond market freakouts, I can see why.

These economists aren't fortune tellers. They're making educated guesses based on the information available at the time. When the assumptions change, the forecasts change. That's how it's supposed to work. I mean, who had a stupid AF war in Iran on their bingo card last October???!!!

Still, I think it's worth keeping score. Mortgage companies use these forecasts to set budgets, hire people, make investments & decide how much capacity they'll need. When expectations are too rosy & the volume doesn't show up, the consequences are very real: wasted money, excess capacity & people losing their jobs.

I’ve previously reported that many of the recent layoffs were tied to hiring decisions made at least 7-8 months ago. Which brings us back to ‘27...

Fannie just wiped more than $400B from its origination forecast in a single month, including $372B in expected refis. MBA is considerably more bullish on refinancing, even though both organizations anticipate another year of pretty shit mortgage rates.

Maybe the economists have finally gotten religion on higher-for-longer. Maybe one of these forecasts will be right on the money (MBA was v close for ‘26).

But given the track record, mortgage executives might be wise to stress-test their budgets against a scenario in which both forecasting shops are still too optimistic.