Mortgage

Monday Morning Cup of Coffee: The truth behind the recent loanDepot negative news cycle

HousingWire puts the puzzle together

Monday Morning Cup of Coffee takes a look at news coming across the HousingWire weekend desk, with more coverage to come on the bigger issues.

loanDepot got creamed last week with a pair of negative headlines. The top nonbank lender is notoriously mum when it comes to discussing the tough topics, so it’s no surprise they chose to keep quiet (or is it that everyone in the marketing department either got fired or jumped ship?).

Well, here’s a positive spin on those headlines for HousingWire readers, because we don’t want to kick anyone when they are down.

The latest negative headline came from Patrick Kearns of Inman (article, paywall), “LoanDepot originator's email to Realtor ignites blowback,” which he apparently chased after reading this super negative (warning, graphic language) Facebook thread on the aforementioned subject. Here's Kearns lead: "A mortgage originator with loanDepot in California tried to poach a Realtor who had worked with a mortgage broker on multiple transactions." 

This poaching attempt happened via email and didn't resonate well with some in the broker community. 

“This email was sent to a Mortgage Broker by his realtor partner whom is now being solicited by LoanDepot directly behind the back of the mortgage broker. This is the opposite of partnership,” said Anthony Casa in the Facebook post, the head of the independent mortgage broker movement Association of Independent Mortgage Experts.  “If you are a broker and use these guys, there is something seriously wrong with you,” he said.

Reading the comments, it is clear the mortgage broker community is upset, and understandably so; some even called for jobs to be terminated for sending the email. But, not to rush judgment, I reached out to the LO in the center of the story and plan to speak more with him today for full coverage later, and he believes the story is a tad overblown. People make mistakes — after all, I called Dallas as a near-definite for Amazon's HQ2 —and the LO felt this is “an isolated incident and bad discretion on the branch managers part.” To their credit, loanDepot upper management jumped in to speak to all affected parties [in the email transaction]. And that proactive behavior deserves a nod, here.

Second to the recent loanDepot under-the-bus-throwing is the fact they laid off so many workers out in Southern California. And, again, loanDepot is quiet on comments. Some people directly impacted by the layoffs, who reached out to me afterwards, loved there was some attention to the matter.

Others who continue to make a living working at loanDepot made a case for the lender’s actions. This is the best one, off-the-record:

"I work for the Greatest Company, LoanDepot. I’m a seasoned 20 year industry professional holding various positions such as area manager, branch manager and Lo. It’s a changing industry, processors were laid off, our system is getting fancy and we don’t need as many to move a loan as we did in the past. It’s moving fast into technology and the confidence in the system is getting better and better. The system is ensuring effective communication for customers and giving us every tool necessary to be our best. In addition, I’m smarter and “techy” and prepared, thanks to the training and support provided by LD and Mello. I said to my son, I feel like I’ve been in college the last 6 months learning technology, lead generation and crm’s and grateful to be ahead of the curve or disruption or whatever lies ahead in this mortgage industry. I’m grateful and thankful."

So, the layoffs at loanDepot actually fit into a larger tech trend in mortgage lending and that serves as message of hope for the lending community at large. Hopefully, the nonbank lender will learn the value of communication outside of channels it feels the need to control, so that we won't have to start digging around to see if the lender remains on solid ground.

Speaking of layoffs, operations also aren't going so well at the nation's small and mid-size mortgage lenders, which are closing up shop at a record pace, according to this article in the Wall Street Journal. 

According to author Christina Rexrode: "The number of nonbank mortgage lenders was down by about 3.5% at midyear from the end of 2017, according to the Conference of State Bank Supervisors. Mortgage-loan-originators at those firms dropped by more than 11,000 workers, or 7%, according to the group, which operates the system that processes mortgage licenses and registrations."

The takeaway on this one is two-fold. No. 1: Blame rising interest rates on crushing home lending. And No. 2: The strong will survive. Rexrode even quotes a few industry titans who fairly mention that nonbanks can be more flexible in mortgage lending, while banks can rely on other types of asset classes in housing down cycles. But with weaker credit standards not really helping out, the road to success remains an uphill drive.

Making things even worse for everyone is that the affordable housing crisis is heading full steam to a catastrophe. Just about every weekend, local reports surface about how hard working Americans struggle to get and keep a roof over their head.

Sound off if you had an affordable housing crisis this weekend!

Arlington, Virginia… check.

Los Angeles… you know it.

Olympia, Washington… most definitely.

Even quaint Bozeman, Montana? Yes. Situation critical.

Affordable housing not only reached a boiling point, but the pot is spilling over to our neighbors in the North. Check out this Bloomberg report headline (metered paywall): "Housing Lottery With 50:1 Odds Reveals Dark Side of Toronto Boom." 

50 to 1? That's terrible odds, even in Vegas, which, by the way, is also experiencing an affordable housing crisis. But Bloomberg authors state that Toronto resident, "Debbie Ross has the same chance of snagging an affordable apartment in Toronto as she does picking a long-shot at the Kentucky Derby."

"Ross is hoping to win one of 75 rental apartments in a lottery run by the city’s public housing agency. She’s up against 3,779 others, so the odds of winning are only about 50:1 but figures it’s as good a chance as any of finding a place to live," the report states. 

The odds are truly stacked against Ross and 49 other households, and with a global economic slowdown widely predicted next year, the affordable housing game looks to get tougher before it gets easier.

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