Good Morning on the Magnificent Monday,

This piece below from Dan Rawitch has several kernels of insight. Worth the read.

MBS are down slightly, as is the ten year. This is on no concern because the Fed owns all phases of the bond market. I feel somewhat redundant and unnecessary at this point. I can tell you that I think we will see things soften a bit more in MBS prices and that the FED may back off just a bit as they realize these amazing bond prices are not doing enough to drive he health of our industry. In other words, there are not getting enough bank for their buck. JP Morgan/ Chase announced late Thursday that their warehouse lending division will no longer fund loans with FICO scores below 700. If you work for a non-bank lender that uses Chase for warehouse lending, you may be impacted by this. They made the same announcement for their direct lending channel. Jamie Diamond is no fool and has never been one to take undue risks. My hope is that other warehouse banks do not follow Diamond in this decision. What this tells us is that the Fed has still not provided enough of a default backstop for the mortgage banking industry. I believe it will come and I believe the FED will do what is required to keep the heart of our industry beating. The pulse may slow but we will continue.

Back in 2008 I wrote a book and began public speaking. I also started a seminar business called “loan survival training camp”. In fact I met thousands of you through my national speaking engagements. Back then I reminded everyone that that Loan Officers do not fail in the mortgage industry, they fail in how they manage their home finances. While I remain VERY bullish on our industry, I will tell you that what you drive and the size of your home will bring you less comfort than the person living a prudent life style. Especially during times like this. Debt is your ultimate enemy unless it is tied to something that provides cashflow and appreciates. Trust me, I am not lecturing anyone. Luckily, I saw the bad stuff coming in 2007 and we sold the “big” house. However, I still had car leases, an airplane hangar, a hefty payment on my airplane and second homes. In early 2008 I began shedding toys. I called it a toy-addectomy, which was the slow and painful removal of my toys. When the toy and debt shedding was over, I felt amazing and we were able to travel for a couple of years, home school my daughter and live in Mexico, while running the seminar business. If I am bullish, why am I telling you this now? I am telling you this because I believe this could get a bit tougher before it gets better. That said, I do not think it will get bad but I do think that if you are overleveraged, it will feel bad and I would like you to reassess your priorities. If you are old like me, you get it. If you are younger, you may have to experience this on your own. Just remember that your mission is to serve others and help them build great financial futures. When you come from that perspective, you will care less about how you look (drive and live) and more about helping others.

In closing, I am not wanting to scare anyone. I still believe this will be a great year. I know people that had amazing years in both 2008 and 2009. You can have a great year, your best year in fact if you stay focused on serving others, stay positive and work hard! Let’s make 2020 our best year yet! I firmly believe it can happen!

Please stay safe and healthy and make today great!