Interesting take on the mortgage industry. Wondering how it jibes with our resident mortgage professionals' understanding.
"Mortgage Mayhem"
I think Alchy works for a bank....I just insure their mess....
I contract on the commercial side of things, so I only know about consumer lanes from talking to residential loan officers and what I read.
That being said, I'm not so sure that capacity will be as big of an issue as they are alluding to. My understanding is that many banks and others were not able to scale up and have been putting in rather long work weeks for quite a while. I also don't have a great feel on funding from upstream on these things. I'm sure
@FireFoley can provide some better insight into how the overall Treasury rates feed into the funding stream. I'm sure they use some sort of blend to fund, as well. The average home loan pays out in 10 years plus or minus, so it would stand to reason the the 10yr UST is a huge signal and it's been moving up since late summer.
Dodd Frank certainly had it's pros and cons and was intentionally difficult so those who drafted it could retire and work in consulting to help banks navigate the new law, and probably not cheaply either. But honestly, I don't ever really hear of banks holding home loans in house to any real consequence. They just package, sell, and take their 100bps or so. But everyone has been busy, and not just the lenders. Title agencies, appraisers, etc etc.
It doesn't take a genius to know that there's something hinky. It just takes paying attention. It's always like that. Someone like Foley may see rate issues. Crete may see volume issues, I may see pricing issues, and so on, but once you notice one thing, you'll dig and see more.
Honestly, for me it was the sheer prices of homes. I think the market would've corrected last summer if not for COVID. And now I'm expecting a bust. First I saw pricing, then you identify some of the reasons why pricing is high, then measure how fragile those supports are, and poof....you've gone from noticing one thing to realizing it's a house of cards. And what really gets me is when you look at housing starts compared to '05/'06. This market has no real momentum or volume comparable to back then, which I think will cause a much quicker turn than '07/'08.