LOs on the Front Lines & Lenders for Sale

Happy Wednesday! In today’s edition, we hear from LOs on the front lines of a Sisyphean 🪨 market. Plus, exclusively for paid subscribers: one broker gets an absolutely brutal EPO from an agent referral partner, news on a couple lenders for sale, a convicted fraudster shares his wisdom on a panel & more!

In the Cincinnati metro area, buyers are “sitting on the fence longer than we've seen in years,” according to Ravi Patel, a branch manager at Union Home Mortgage. “Not a no, just a not yet, so education has been the grind.”

Higher-end borrowers are warming up to ARMs again to shave 25 to 50 bps off their rates. Meanwhile, buyers are pushing for seller concessions rather than price cuts, which Patel’s team is using to fund temporary rate buydowns.

There is more work on the front-end in this macro environment. “Our approval calls run 15 to 20 minutes longer on purpose,” he said. “We lay out every option upfront so buyers are ready to write strong offers & our referral partners close more deals.”

Matt Gehr, co-owner of Missoula, MT broker shop Jenks & Gehr, told me that Q4 looks like a continuation of the rest of the year. 

“Fewer transactions to go around, more competition for what's there,” he said. “Rates matter more to consumers than they did before & they are a lot more willing to do the work to shop you, even if they like you. It takes good service/expertise AND good pricing to consistently win deals. A really good LO can probably spin mediocre pricing still, but it's much harder than it would have been. Refi is dead except for divorce or other extenuating circumstances. HELOCs are a thing.”

In Missoula, inventory has improved & buyers have “way more” leverage in negotiations, Gehr said. They’re more particular as a result.

“I've had a lot more buyers terminate on inspection than in any previous year by a wide margin. Buyers that are closing are almost universally getting real concessions.”

Other LOs across the country told me buyers are none-too-pleased w/ the increase in appraisal fees related to UAD 3.6. One broker in Ohio said his go-to AMC used to charge $525. “He told me $700 today for these new reports, I said how about $600.. we settled at $625 for now.”

At many large retail shops, conventional pricing is not sharp & LOs are relying on other products to get deals done, LOs said. (Can you take a HELOC lead & convince them to do a cash-out refi instead?)

To boot, some agents are now moonlighting as LOs themselves, limiting pipelines of their former referral partners. (More on that in a future edition → even broker-owners are getting in on it as non-producing branch managers on their own P&Ls.)

The growth in dual-licensing doesn’t worry Patel. “Because the barrier to entry in this industry is so low, there will always be people wanting to become loan officers. But the ones putting in the work, doing lunch-and-learns, throwing events, & bringing real value to the table will keep gaining market share,” he said. “The gap between the top 20% of loan officers & the bottom 80% is wider than it's ever been.”

Since I launched this newsletter over a year ago, the single most common request I’ve gotten (besides “who’s your source?”) is: can you plz start a podcast?

I am aware that the mortgage industry isn't exactly suffering from a shortage of podcasts. Some are great. Some are… pretty shit if I’m honest. So we took our time building The Mortgage Scoop Podcast. We wanted to produce something that's genuinely fun to listen to, packed w/ insight & quite different from the 900 other mortgage podcasts fighting for your attention.

So here’s what we’ve been cooking: a 30-minute weekly breakdown of the most interesting things being whispered about in mortgage. Unfiltered commentary, w/ scoops & insights you can’t get anywhere else. And we’re respectful of your time!

I’ll be co-hosting w/ Jeremy Dean, a mortgage broker & title company owner who’s been on the front lines for decades. I bring the reporting & Jeremy brings the operator’s take on what it actually means for your business.

We’re launching in a few weeks & I want to hear from you - what would you like us to cover? We’ll be on Apple Music, Spotify, YouTube & wherever else you get your podcasts (Yoto Player for all the toddler parents out there???). 

Interested in sponsoring? Plz reach me at [email protected].

There’s a post on one of the mortgage FB groups that caught my eye this morning. It’s from a broker who says he got stabbed 🔪 in the back by a Realtor who bought a second VA property in CA & then paid off the mortgage immediately. He got hit w/ a $11,620 EPO(!). Check it out.