Sell, Merge or Burn the Furniture 🔥

Have you declared yourself ‘safe’ from the great Microsoft Office 365 364 outage of ‘26? Scores of mortgage lenders & vendors suffered through the disruption on Thursday. And when I say suffered, a lot of staff actually didn’t mind it at all.

“It started working this morning, & I think we all got through it just fine,” one IMB exec in the Northeast told me Friday. “Some people actually enjoyed having a little break. If it had been two or three days, it would have actually been a problem.”

Most of the mortgage people I spoke to said they used WhatsApp, Zoom, texts for comms & handling files. Going clear-to-close & sending out packages days prior helps avoid major problems when an outage of this scale happens.

“We just cram everything into today,” said a West Coast IMB exec. “We found some title companies aren't always accommodating.”

It’s no secret that the mortgage industry has become enormously dependent on a relatively small number of technology providers. Think about how many critical functions now run through cloud-based platforms: LOSs, PPEs, credit reporting, income & VOI/E, doc management, closing platforms & servicing systems.

These systems don't operate in isolation. They're increasingly interconnected, often relying on the same underlying cloud infrastructure. An outage at one major provider can ripple across dozens of vendors & thousands of lenders, even if their own technology is working perfectly fine.

A few hours or a day w/o email/CoPilot is annoying but manageable. Two or three days w/o access to critical systems means missed closing dates, expiring rate locks, delayed fundings & some very unhappy borrowers.

I think there's also the question of how securely lenders can operate when employees start improvising w/ text/Signal/WhatsApp & alternative ways to transmit sensitive borrower information, but we can save that discussion for another day.

Ultimately, the industry has spent billions digitizing basically every step of the mortgage process, which has made things way more efficient. But it's also created an awful lot of shared points of failure…

Choo-choo! The mortgage industry's M&A train is picking up steam. STRATMOR Group expects 46 transactions by year-end, & Garth Graham says the calculus for sellers is plain as day: If you're not making money today & the next three years don't look much better, why keep fighting?

In a wide-ranging interview w/ NMN, Graham said weak profits, the rise of vertically integrated giants & the breakneck pace of AI adoption are pushing more owners toward the exits. Some lenders are simply exhausted by the tech arms race. Graham described the thinking of certain sellers: “I'm out. I don't, this is too much. The pace is too crazy.”

Who's buying? Mostly larger IMBs scooping up smaller ones, though Graham flagged an interesting mini trend: Smaller banks, often w/ less than $5B in assets, are getting back into mortgage M&A. They see opportunities to leverage existing customers, expand home equity & potentially benefit from looser capital requirements.

Meanwhile, warehouse lenders may be losing patience w/ unprofitable IMBs. And the companies determined to remain independent face some awkward decisions about staffing, technology & expenses. Graham's advice is to model the good, bad & ugly scenarios. Don't assume another big recruit or a magical refi boom will be your savior.

“There's only so much fixed expense you can cut before you're burning the furniture to stay warm,” he said.

A rather grim description of the mortgage industry's current predicament, but not an inaccurate one??? BTW, it shouldn’t go unnoticed that pristine conventional MSR books are selling at 7x multiples.

We published a ‘26 M&A predictions story in late ‘25. How well do you think the predictions held up?

As I’ve chronicled, lenders for years have tried to turn real estate agents into mortgage originators w/ mixed results. The pitch is simple: Why just refer the borrower when you can help originate the loan & get some of those sweet, sweet bps on top of your commission, too?

In the real world, though, it’s not so simple.

Realtors are getting a piece of the LO commission pie, & at one bank, they're already involved in 15% of mortgage production. Is this the future of lower-cost origination? Plus, are buyers finally coming off the sidelines after the election? We've got some interesting intel on both for paid subscribers, plus a loaded batch of Quickies👇.