The Mortgage Market is Changing Some Originators will go BUST, Big Banks Exit Mortgage, What is NEXT

Video Closed Captioning:

good morning good afternoon good evening

folks michael zuber one red cellar time

back with his good friend and friend of

the channel matt the morgues guy how you

doing buddy doing great live from las

vegas yeah so you know what you and i

called something gosh six months ago we

said refi demand would eventually

collapse 75 it was down 78 this morning

according to mortgage bankers

association so i just wanted to kind of

pick your brain and kind of talk about

the future again

and as an outsider

i can just generally say hey i think

it’s going to be smaller right we’re

seeing layoffs and all of that so that’s

kind of a layup i think you have insight

that it’s really going to be changing

and evolving not only getting smaller

but getting leaner and meaner so what’s

going on you think in the mortgage

market over the next i don’t know six to

12 months yeah i mean we’ve already

started to see it and it makes sense if

you know when i say it out loud people

go okay that makes a lot of sense you

know as the market shrinks as competit

and you know competition gets fierce

the big boys are gonna win some of the

smaller fish are going to go out of

business or consolidate with other small

fish to create something that’s

sustainable through a tougher market

nobody’s should be lying and saying like

the next 12 or 24 months are going to be

easy in mortgage it’s going to be hard

when you go when you come off of back to

back championships

and you know

some of your star players lose you know

all the refinance is gone

and so um

we’re starting to see some interesting

stuff too um the the humda data on

on mortgage applications i didn’t know

they were collecting

cost data but apparently they’ve been

collecting cost data which shows

you do

a mortgage in the retail channel

it might cost eight thousand or eighty

five hundred dollars i don’t know the

exact figures but i’m gonna look it up

for a video that i’ll do on my channel

on the broker side it’s like two

thousand to twenty five hundred so it’s

cheaper to do a loan on the broker side

so the brokers

pass that savings loan to consumers

you know they’re doing it

faster and cheaper not only are

you know all these consolidations

happening but i’m seeing

more consumers more loan originators

moving over to the broker channel

because they can offer

the same product at a discounted price

right and so

besides the moving and shaking of

companies

as the broker channel has grown

you know from its low of eight to ten

percent of originations

i think we’re in the 20s now i see that

growing even more and then i read news

from

you know the ceo of wells fargo that

says hey we’re going to downscale our

mortgage operations we’re going to shut

down you know some of our

offices and different metros and whatnot

they have got so many other things they

make money off of they’ve realized

they’re no good at mortgage sorry wells

fargo but none of the big banks like old

antiquated bank systems are just not no

they’re not built for you know the new

environment and and so over the next few

years it’ll be interesting to see you

know smaller companies go out of

business or consolidate

low producing loan originators the same

they’re going to either go out of

business do something else join a team

as a junior lo or whatever the case may

be so all that stuff is going on and

then with

margin compression and competition and

other things going on i think the the

broker channel grows gets to 30 plus

probably yeah there there’s um you know

a little bit of shrinkage in retail and

then a large shrinkage on on the bank

side yeah partly because they just don’t

want that right they can do credit cards

and business loans and all the other

things that make them money and that

they’re known for right and you know

mortgage for banks

from what i’ve seen are just to retain

so they can get those other services

they don’t really want to ride them yeah

yeah the other thing i think it’s

interesting i i wish i remember the

company there there was another very um

popular youtube channel that talked

about and a mortgage originator who just

went out of business or bankruptcy i

forget the name

but basically there’s a lot or at least

that video was kind of pushing the idea

that oh my god look banks are going to

go out of business just like last time

you know you know washington mutual

countrywide indymac wamu all the it’s

it’s nothing like last time right we’re

not talking about banks we’re talking

about originators right these don’t have

loans or they don’t have savings

accounts and checking accounts and

things of that nature

but loan like companies that were built

to be loan originators some of them are

going to go out of business right you

were built for a model where you might

do 100 million in loans and now you’re

going to do 35 your cost structures all

out of whack you should go out of

business right

right right yeah that’s the thing too is

is a lot of folks have evolved and

they’ve changed business structures and

they’ve done the things that make the

cost to originate a loan thousand twenty

five hundred dollars the other ones you

know were

cost so much you can’t have all that

cost built in expect the consumer who

now has access to way more than they did

ten fifteen years ago as far as like

you know

data and being able to say oh i don’t

think six percent’s a good rate for this

five percent down conventional you know

yeah on the broker side for five and a

quarter um those folks are going to have

a hard time in the next 12 or 24 months

yeah i’m trying to remember the video i

watched it last week i think it was

another point in that video they were

talking about loan depot loan depot’s a

public company right

correct yeah yeah i think they were

trading at a dollar or something like uh

they’re really cheap

yeah now i mean and and that too lone

people is a big company yeah it was a

big strong company if uh

if if they ran into trouble um you know

that that would be scary but i was i i

wouldn’t be surprised right because like

i just hired somebody um

to help with with setting up files

like high quality yeah they’re a dollar

43 stock yeah um high quality people are

being let go every day from these from

these companies that just that they have

to do layoffs they have to get as thin

as possible just to be able to compete

and survive yeah but i want to talk

about loan depot because again the the

the

story in the video that i watched was

basically hey loan depot is just like

another big bank and lone deep was going

to go out and it’s going to be a

cascading of horrors

and you i don’t know loan depot’s

business other than what i researched in

20 minutes but basically they’re alone

originally they’re not they don’t have

savings accounts and check-ins accounts

they’re not having cds they’re not a

bank they’re not wells fargo they’re not

citigroup they’re not jp morgan right

right yeah they’re there’s a loan

originator i’m i’m almost certain they

have a retail side probably

yes but they’re not a traditional bank

right so when you’re when people are

popular folks are saying loan depots

just like wells fargo that is factually

incorrect and misleading

yeah i mean and you know what’s funny

you mentioned that mike because i i

can’t remember what i saw but it was

like this company consolidated with this

company this company filed for

bankstreet this company this like the

small players you know loan originators

are going to consolidate or go into

business and all that stuff um but to

your point people were trying to compare

that to the explodo meter yeah i

remember crash yeah where it’s like this

every day you get news with somebody

else uh going out of business blowing up

yeah not quite the same but no but but

you’re gonna have again so when i look

at the mortgage origination business we

talked about this months ago right you

did six trillion dollars or whatever it

was last year you’re gonna do three and

a half this year or something something

really and guess what the business will

be smaller right the overhead that was

built to run six trillion is not the

same overhead not the same companies

that you need at three and a half it’s

just not you’re the industry will be

smaller

right yeah i think i think it’s like 4.2

down to two and a half so yeah it’s a 40

reduction um

which

you know purchases

are going to be down slightly but not

much refi is down

and so like all this humongous expansion

where there there’s lenders mike that i

talked to i talked to the guy

um at home point they went from 250

million a month and they’re big they’re

like number two in the nation to 10

billion a month they’ve 40 x to their

production so

like average year and then 2020 2021

those years we’re like you shouldn’t

even we shouldn’t be comparing like

we’re gonna expect to have four trillion

in originations uh every year those were

outliers now we’re back to reality yeah

and two and a half trillion is a is a

pretty gosh darn big yeah if you remove

if you remove 20 and 21

you know two and a half two six that’s

that’s you know within 10 of kind of

normal range right

yeah exactly yeah yeah where i think

actually 2022 was projected to be bigger

than 19. wow so yeah okay larger than

average year even though everyone’s like

oh my gosh down 40 what’s what are we

what’s going to happen well all the

extra staff that you had to get to to do

all this refinance and that goes from

like every level from company you know

to to regions and branches even to the

original like the loan officers that had

three assistants

maybe you only need one yeah

yeah so at the end of the day i i just i

was really bothered by a video that was

trying to connect loner originators

with

washington mutual and

you know these other institutions that

were real banks a loan originator who

was built even if they’re public

it’s not it’s not a bank it’s just not a

bank and to have people say that it is

is

it’s not helpful but again i think the

industry’s smaller i think it’s really

insightful that wells fargo would make a

economic decision right charlie sharper

i think the ceo is like hey we’re not

good at it

you know he has enough problems

uh fixing the bank he’s like we’re just

gonna that’s a loss leader for us that

we just don’t need

let’s do something else so again i think

the mortgage industry has uh 12 to 18

months of pain it’ll come out leaner and

meater meaner on the other side of it

the good news for the consumer

everyone’s going to compete so you’re

going to get the best deal also all the

people that aren’t very good at it will

get out of the business because they

won’t be able to survive so you’re going

to have the best originators writing you

the best loans with the best terms with

the best companies

it’s good for consumers i agree and if

somebody wanted to reach out to you and

be see what’s going on how would they do

that go to greatmortgagebroker.com fill

out the form let us know where you’re at

how we can help and we will be in touch

and you also have a great youtube

channel which is oh yeah go to math

moore’s guy on youtube 650 plus videos

um it’s really cool when i hear somebody

go you know what i just stumbled across

your channel i watched 24 videos

yesterday i learned so much uh you know

from from other loan originators to

consumers

everybody in between um i want to i want

to get back to some of the the true

educational content that’s on there

which um so many people want what’s

going on the market and all that other

stuff that i’ve got to mix that into

yeah it’s it’s there’s so much changing

it’s hard to stay current and educated

right yeah

i throw in a video where it’s talking

about restricted stock unit income and

other stuff it’s just not as exciting

it’s it’s it’s good education so if if

there’s a question that you want

answered on the mortgage side and you

type in that question matt the mortgage

guy and i don’t have a video on it ping

me and i’ll make you one there you go

thanks buddy i appreciate you thanks

mike

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