MCT Virtual Exchange 2020 kicked off Friday, November 6 with a trio of sessions that drew rave reviews.
While this is the 9th year of the Exchange and 14th Exchange overall, it is the first ever to be virtual, and many of the topics our speakers, panels, and attendees discussed were related to the mortgage space as the industry goes through and comes out the other side of this pandemic.
View the MCT Exchange Week 3 Recap
MCT Exchange 2020 Day 3 brought a couple of meaty panels to conclude the virtual conference. The first session, “The Future of Secondary Executions,” was moderated by Phil Rasori and sponsored by Mr. Cooper.
While the title of the session was self-explanatory, presenters Greg Vacura (Wells Fargo), Mike Quinn (American Pacific), Steve Pawlowski (Fannie Mae) and Amy Creason (Freddie Mac) all possessed varying ideas about the direction of the industry and how lenders can best position themselves.
Talk revolved mostly around leveraging APIs and technology to enhance and facilitate the lending process. The presenters shared the sentiment that the future of secondary executions is going to be all API, and 2021 is a great year for lenders to figure out how to expand APIs and consolidate interfaces across multiple electronic systems.
Lenders need to embrace technology to keep up with industry trends.
Presenters stressed that the trend toward pricing granularity would only continue, and that any lenders not embracing technology should expect nothing less than to be picked off. Other trends identified included lenders seeking out multiple investor takeouts for each loan, monitoring client-level prepay speeds, the automation of the sales process and how new and emerging technologies will impact investors.
Despite attendee demand for the session to continue for another hour, it was time for the conference to begin its final panel: So, You Think You Can Retain MSR’s?
Client Panel: So you Think you Can Retain MSRs?
The servicing-oriented session was sponsored by Western Alliance Bank, moderated by Bill Shirreffs, and presenters included Phil Laren (MCT), Brett Hively (Ameris Bank) and Paul Peterson (Western Security Bank). As volatility has driven drastic changes in servicing multiples this year, presenters echoed that MCT has been the industry “fact leader” and elaborated on 2020 prepayment speeds, granular MSR pricing, becoming a new servicer, and various recapture strategies.
No planning can really help account for massive disruption in the marketplace, but MCT helped us jump on the implications of COVID-19 early on.
Mr. Peterson praised MCT, saying “It was critical to have a partner like MCT to shepherd us through the market volatility.” That was piggybacked by Mr. Hively, who added “no planning can really help account for massive disruption in the marketplace, but MCT helped us jump on the implications of COVID-19 early on.”
If a company wants to retain MSRs, it must think like an asset manager rather than a mortgage bank.
All three presenters agreed that to create the right servicing asset, knowledge of credit, compliance, and convexity are paramount. To retain MSRs, a company must think like an asset manager rather than a mortgage bank. If a company doesn’t want to manage that asset or the best execution calculations suggest it is better to sell the asset, it may not be the best idea to retain servicing.
Some considerations panelists suggested going forward were monitoring borrower technologies that make prepayment easier, tax depreciation of the asset, aggregators coming back into the space and the effect of SRPs returning to normal levels.
Networking Roulette, Cocktails and Scavenger Hunt Winners
The ninth and final session of the conference was Networking Roulette & Cocktails, sponsored by JVB Financial. Winners from the scavenger hunt were also announced. The bittersweet conclusion of MCT Exchange 2020 left many attendees feeling more informed on the pulse of the secondary market and eager to sign up for MCT Exchange 2021. For future MCT Exchange alerts and to stay up to date, Join the MCT newsletter.
View the MCT Exchange Week 2 Recap
MCT Exchange 2020 rolled on to day two last Friday, building on a poignant and educational week one. The second of three days of MCT Exchange 2020 brought another slate of worthwhile content and discussion for virtual attendees.
Unlike the first day of MCT Exchange 2020, where MCT’s Curtis Richins and Phil Rasori began conference proceedings, day two began with the Keynote Session sponsored by LoanNex: What We Learned in 2020 & What to Expect in 2021.
The keynote speaker was MBA Chief Economist, Michael Fratantoni, who presides over a wealth of mortgage data at the MBA and helps provide guidance to originators.
Featured Keynote from MBA Chief Economist, Mike Fratantoni
Mr. Fratantoni gave some estimates for the housing market going forward and shared concerns of his and his colleagues.
He expressed that the MBA are there to advocate for members in Washington D.C., and he is constantly in contact with government officials at the Federal Reserve and Treasury to discuss the latest statistics and policies.
He also thanked MCT for being partners during the crisis and the boots on the ground while the Federal Reserve’s “QE Unlimited” pushed margin calls toward levels that nearly put entire sectors of the mortgage industry out of business.
While 2020 has seen record volume, keep an eye on several areas of concern
While 2020 has been arguably the best year ever for volume and profitability in the mortgage industry, and to boot, LO and underwriter productivity have increased, Fratantoni instructed attendees to pay attention to several areas of concern. These include burnout that will change the bulk of refinances originated from rate-and-term to cash-out, mortgage-Treasury spreads narrowing from historically wide levels during a period of supply/demand imbalance in the Treasury market, and the increase of the CBO budget deficit, which has ballooned to above $3 trillion this year.
Data on pace of homebuilding, credit availability and other data points being closely watched
The MBA is paying attention to several meaningful data points in the housing market as the U.S. economy continues to go through a pandemic with no widespread vaccine expected until mid-2021. Mr. Fratantoni specifically highlighted the pace of homebuilding, as builders have not been able to keep up with demand for homes going on the market. He also pointed to credit availability declining during the pandemic, refinance closing times that have been slowed recently by capacity constraints, record-high FHA delinquency rates, and the number of distressed properties entering the market as the most qualified borrowers have likely already exited forbearance.
MCT Client Panel: How Lenders Navigated 2020
The conference then moved on to an MCT Client Panel: How Lenders Navigated 2020.
The panel was moderated by Chris Anderson and Andrew Rhodes, and the presenters were Wendy Johnson (Silverton Mortgage), Jon Grafflin (Essex), Aaron Bunn (Trinity Oaks Mortgage), and Dan Sugg (Michigan First Credit Union).
The panel members discussed the challenges 2020 presented to those working in capital markets, and how each has navigated through the pandemic.
Clients discuss how MCT partnership was leveraged during market volatility
Presenters were quick to point out all the help that MCT provided during periods of volatility in March and April, when daily point movements and margin calls became the norm. “MCT helped with low FICO govy notifications, providing market flashes and helping me understand the margin calls,” said John Graffin. Wendy Johnson piggy-backed on this sentiment, saying “AOT bought companies time during periods of margin calls, which helped offset my exposure during volatility.”
“It’s easy when its sunshine and rainbows. You can be caught in a whirlwind when rates move, and MCT helps you stay optimal. MCT was there to walk clients through what was happening.” – Dan Sugg, Chief Mortgage Lending Officer, Michigan First Credit Union
Aaron Bunn was impressed with BAM Marketplace, illustrating how the platform “helped with overwhelming volume, making it easier facilitate selling loans. A true ‘gamechanger’ for the business after aggregators pulled out of certain products. Mr. Sugg summed it up nicely, saying “It’s easy when its sunshine and rainbows. You can be caught in a whirlwind when rates move, and MCT helps you stay optimal. MCT was there to walk clients through what was happening.”
Week 2 Cocktails & Networking Hour
Like day one, day two ended with Networking Roulette & Cocktails, this time with an additional fourth breakout session. Once again, a big thank you to Chris Anderson for his duties as emcee, LoanNex and Verity Global Solutions for sponsoring the sessions of day two, and all the sponsors of MCT Exchange 2020. The conference concludes this Friday with three sessions: ‘The Future of Secondary Executions,” “So, You Think You Can Retain MSR’s?” and the final Networking Roulette & Cocktails, sponsored by JVB Financial. Join us this Friday at 10am PST.
View the MCT Exchange Week 1 Recap
MCT President, Curtis Richins and COO, Phil Rasori welcomed attendees to the conference, discussed some new ways MCT has been helping clients, particularly since the onset of the pandemic, and touted some of the new functionality in MCTlive! Software.
In addition to the award-winning software platform, MCT has delivered webinars, whitepapers, and blogs to enhance awareness and understanding during recent periods of extreme market volatility.
MCT has also bolstered its client services desk to limit pipeline disruption and preserve profitability for their clients and MCT is very excited for what they have in store for you this week.
Mr. Richins stressed that MCT is your trusted capital markets partner and MCTlive! is the gold standard for the industry. He reiterated MCT is plugged into the market, constantly innovating to make its product even better, and sees themselves as the best choice for any of your pipeline hedging or best execution loan sale needs. MCT also offers comprehensive training for clients on the functionality of its pipeline risk and best execution platforms.
Featured Update from Phil Rasori on New MCTlive! Release
Mr. Rasori, of Rasori’s Relentless Releases, spoke on the deployment of MCT’s remote work suite, which has become very useful for secondary marketing professionals with the transition to part-time or full-time remote work. The suite so far includes Alexa voice control integration, comprehensive mobile functionality deployment, and the proprietary chat feature in MCTlive! which is another way you will be able to instantly talk to coverage who knows your account.
Unpacking the Post-Election Market in a Pandemic
The next session saw Rob Chrisman (Chrisman LLC) moderate a panel of Brent Nyitray (Ark Mortgage), Phil Rasori (MCT), Rob Branthover (ED&F Man Capital Markets) and Ben Itkin (MCT) about what lenders should be looking for post-election. While for many, the highlight was catching a rare glimpse of Rob’s cat Myrtle (worth the price of conference admission in itself), the discussion was very substantive and brought some clarity to how markets historically react after a presidential election.
Panelists reminded attendees that the mortgage business is a very cyclical one, and in addition to keeping cash on hand for a rainy day, sellers need a robust best execution analysis to determine the trajectory of the market and whether or not to retain servicing.
Mortgage rates are at or near historical lows as MBS pricing sits near historical highs
Panelists noted, that while the winter months are historically known as a slow season for mortgage lending, it remains a very favorable environment for originators on both the purchase and refinance sides. Mortgage rates are at or near historical lows as MBS pricing sits near historical highs, homebuying remains strong, and unlike 2008, the housing market looks poised to push the entire economy forward.
The panelists also stressed there is a lot to be mindful of. March 23-30, 2020 was only one week, but it shook our industry and a substantial portion of companies realized they were next to being out of business. Going forward, originators realized the increased need to be mindful of pricing and mindful of turn times.
Investors may eventually widen pricing to slow down purchases
With the mortgage industry at capacity, investors may eventually widen pricing to slow down purchases, which will force originators to compress margins. Rates are expected to stay low with gridlock in Washington, but panelists repeated the need to have capacity to keep your loans on warehouse lines until pricing improves. Other concerns included a CFPB that will have new fangs for more regulations and fair lending lawsuits, and expiring forbearance provisions.
Interactive Networking Event & Cocktail Hour
With the close of the panel discussion, day one of MCT Virtual Exchange 2020 concluded with an interactive networking roulette and cocktail hour. Thanks in large part to Chris Anderson for his hard work as conference MC, overall feedback was very positive – especially on his must-watch cocktail making video.
Many attendees even said that they would like that time to be a bit longer, but it was great to see all the different smiling faces and the random groupings in the breakout rooms, made it fun to see how the random pairings worked out.
The Red Hot sponsored by Bank of Oklahoma was also a nice addition, and even if attendees didn’t partake or held off until later, MCT was pleased to hear it was an unexpected highlight.
MCT Exchange picks back up this Friday, November 13 at 10am PST with the Keynote Session: What We Learned in 2020 & What to Expect in 2021 from MBA Chief Economist, Mike Fratantoni. That session will be followed by an MCT Panel: How I Survived 2020. The conference will conclude with another networking roulette and cocktails, this time sponsored by Verity Global Solutions. The second day of Exchange 2020 promises to build on the first, and MCT is very excited for what they have in store for you this week.