Hebron talks about UWM ultimatum, capital markets and more
On Wednesday March 10, Mortgage leadership perspectives starring Julian Hebron, founder of The Basis Point. Hebron and series host Andrew Berman, National Mortgage Professional Magazine’s Head of Engagement and Outreach, explored the UWM Ultimatum, Capital Markets, What Independent Originators Can Learn from Big Brands, economic outlook for 2021, opportunities for initiators in 2021 and beyond and More.
Hebron is a former C-Suite Mortgage Marketing Manager. He worked for a few years as a leading designer and branch manager while creating The Basis Point, a blog; sales and marketing strategy consulting for banks, lenders and fintechs, and a down-to-earth financial media brand. He has also held sales and marketing leadership roles at UBS, Wells Fargo, LoanDepot and LendUS / RPM Mortgage for the past two decades.
- “As the initiator, I wrote a Friday newsletter called ‘Market Week’. When August ’07 hit I started expanding it to a two paragraph newsletter that was really for clients and realtors on Fridays and realtors would have figured it out, they knew how to talk about rates when talking about rates. open days on weekends. I basically got all of my real estate business out of it, ”Hebron said, discussing the creation of The Basis Point. He would later become a marketing machine for his network.
- “Bikes are so important. I was taught early on that these were full market cycles or nothing. Our industry obviously survives and thrives through full market cycles, but the production mindset is certainly more like monthly quarterly behavior. So that’s how it is, I’ve been asking senior executives for years, “Who is the customer? »Is it the end consumer or is it the loan officer? Everyone knows that most executives say the loan officer because the loan officer is their viability… their market share. This is how it works because most of the market share is still primarily retail rather than direct. We can include brokers in the retail business because its consumer facing loan officers generate the business. So all managers will say that loan officers are the customers. I had a line in the sand on this long before AIME or BRAWL or whatever, that is, the customer is the customer. I formed this sensitivity as an initiator, boots to the ground, stomach to stomach with people who sign papers the old fashioned way. Loan officers have all the leverage.
- Hebron brought up the UWM ultimatum to brokers who work with Rocket Mortgage and Fairway Independent Mortgage Corp. “I was really surprised to see some loan officers say like, ‘Yeah!’ I feel like part of the sentiment around, say BRAWL, is an argument against long play on a full market cycle as an initiator who wants the most options. All options all the time is the mindset of the professional originator / loan officer. “I’m going to go where I’m going to get those options. So for me a decision like this is really complicated because I can see where I fit in today with this line that was drawn in the sand by a big wholesaler because I need this product. . But if you play this for the long haul, you and I both know that the main wholesaler’s game is completely overhauled from what it was in the last cycle and will be again in the next cycle. . To all of the initiators, please think carefully about what this means to you, ”Hebron said.
- “If I am a broker today, I am not signing this addendum today because I believe that even if I am told that I am losing this option, I would still make the decision to keep everything else open. It is an incredibly difficult decision, there is no doubt about it.
- “The brokers are better and we are better because we have access to all the options. “
- “The rest of the world is going to have a lot more visibility than ever before in terms of understanding the gains on sale and what that means, how important maintenance is in a full market cycle. I think it’s going to be incredibly important because Wall Street, just like the last cycle, doesn’t fully understand that it’s a little tougher than people think. We know mortgages are a wonderful cash flow business, but it was never that valuation business.
- “Rocket is the best example of the biggest institution with the most creations and the most services and frankly their rating is pretty flat. I think when the street watches us evolve in the first quarter of ’21, the quarterly gross origins, buy and refi numbers are the same as we are going to make $ 700 billion more in one quarter, just like we’ve been doing in the last few quarters, but then it’s going to start to go down and then who captures the most buying business is obviously going to be a factor and then how well the service supports ratings. This is what the public world is now going to watch because we have a target on us like we haven’t had in 14 or 15 years because there just weren’t any public mortgage companies.
- “A few things, the first IA in mortgage lending was in 1994. We’ve been there for 26 years. Yes, we’ll be moving more to the direct, but there’s this convergence of the big mortgage companies that are just retailers, that are powered by fintech under the hood, but they’re all retail LOs. I think humans stay but you still have to be smart and choose which horse you want to ride.
- Regarding the capital markets, Hebron said we experienced our rate spike by half a point. “This brought us to a level that coincides with what the 30-year rates were supposed to be 2T, 3T and potentially even 4T. We could, as we have done in previous cycles, get there quickly. The bond market is very smart, knows what to do and will always trade before any fear of inflation, “Hebron said. He told Berman that the fear of inflation is not real. He says that even though the economy will have some short-term volatility, it is expected to balance out and be somewhere between 3.5% and 4% by the 2021 30-year close.
- “Anyone can watch the rates all day. Just know this, this year the industry will make 4 million refits and 5 million purchases, units. Next year, 5 million purchases and 1.6 million refis. That’s all everyone should care about. I had 5 million purchases this year and next year and this is my business model. The rest is just chatter.
Check out the full interview between Hebron and Berman below.
See all interviews from Mortgage Leadership Perspectives Series on his YouTube channel.