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BofA market share, Black Knight update, big NO to IPOs?! 😲

By January 20, 2021 No Comments

Bank of American managed to make less money in mortgages, somehow

Lending volumes are up across the… wait. Wait a second. Bank of America reported fourth-quarter earnings yesterday and its mortgage business is actually shrinking, unlike most other lenders.

According to the WSJ, deposits at the bank grew by about a quarter over the past year, with nervous consumers and companies looking for a safe place to stash their money (<— paywall link).

But the economic fallout from the coronavirus crisis has sapped customer demand for loans. The bank’s book of outstanding loans — including mortgages — and leases, which had initially grown at the beginning of the pandemic, shrunk to $927.86 billion at year-end, its smallest in more than three years (<— also a paywall link).

As we reported earlier, the big banks are releasing reserves, which is an indicator the feel the economy is growing stronger. BofA is no exception (earnings snapshot, here). While Bank of America processed some 2 million deferrals when the pandemic hit, only 77,000 of them were still in place at the end of last year.

‘We continued to see signs of a recovery, led by increased consumer spending, stabilizing loan demand by our commercial customers, and strong markets and investing activity,” said Bank of America CEO Brian Moynihan.

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Rise&Shred news in brief

We skim the headlines, so you don’t have to. Here’s all the important news, happening right now. 

—> This investor is no-go on mortgage IPOs

Gary Gordon invests in the stock market but he won’t invest in all the mortgage companies that went or play to do an initial public offering. It’s not a popular opinion, but it’s worth sharing. You get five free articles a month by clicking this metered paywall link.

Here’s why Gordon won’t invest: “mortgage origination demand has begun to decline and industry capacity is growing, indicating sharply declining profits.”

He continues:

Why my lack of enthusiasm for the mortgage banking IPOs? Because:

  1. Mortgage banking is not a great business, and can be a terrible business.

  2. Refi booms end, as the current one is in the process of doing.

  3. The supply of mortgage lending capacity is rising, in large part because of these IPOs.

  4. The current private owners are using the red-hot stock market to cash out.

—> FHFA extends foreclosure and eviction protections

The Federal Housing Finance Agency announced Tuesday that Fannie Mae and Freddie Mac will once again extend moratoriums on single-family foreclosures and real estate owned evictions, this time until Feb. 28, 2021.

—> Black Knight deploys next generation of its popular mortgage broker PPE

Black Knight, a leading provider of integrated software, data and analytics to the mortgage and real estate industries, recently deployed the next generation of its industry-leading Loansifter Product, Pricing and Eligibility engine (Loansifter PPE).

Touting an intuitive and completely modernized user interface, the new platform builds on an already established best-of-breed foundation used daily by thousands of mortgage brokers nationwide. The new Loansifter PPE boasts a variety of timesaving enhancements and new functionalities that help eliminate manual processes and automate associated broker workflows within the pricing engine, the company said, in a statement.

—> Merrill Lynch Global Economist Ethan Harris sees light at the end of the COVID cave

(h/t: Calculated Risk) What does this mean for the economy? We continue to see upside risks to our above-consensus forecast. We think the vulnerable population will be inoculated by March/April, cutting hospitalizations dramatically, and allowing a partial reopening. Michelle Meyer and team have already boosted their GDP forecast for 2021 from 4.6% to 5.0% based on a somewhat earlier and bigger stimulus package. Moreover, like most forecasters, they have not incorporated the impact of a second package.

—> More people crave privacy when searching online

Is this the beginning of the end for Google’s search domination? Probably not, but it’s still interesting. DuckDuckGo, a search engine focused on privacy, increased its average number of daily searches by 62% in 2020 as users seek alternatives to impede data tracking.

The search engine, founded in 2008, operated nearly 23.7 billion search queries on their platform in 2020, according to their traffic page (that growth trajectory curve is wicked!). On Jan. 11, DuckDuckGo reached its highest number of search queries in one day, with a total of 102,251,307.

DuckDuckGo does not track user searches or share personal data with third-party companies. And how does that compare to Google? According to Google, they have over 5.5 billion searches per day and a whopping 2 trillion searches per year.


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WATCH: Incoming Treasury Secretary will “act big” on next stimulus package

President-elect Joe Biden's pick for Treasury Secretary, Janet Yellen, testified yesterday before the Senate Finance Committee, which is considering her nomination for replacing Steven Mnuchin.

The video of her 3-hour+ testimony at the committee can be found here.

According to a preview obtained by Rise&Shred, all signs point to her calling for “big” action on the COVID-19 pandemic after Biden unveiled a $1.9T economic stimulus plan last week.
Quote: “Economists don't always agree, but I think there is a consensus now: Without further action, we risk a longer, more painful recession now – and long-term scarring of the economy later. Over the next few months, we are going to need more aid to distribute the vaccine; to reopen schools; to help states

 keep firefighters and teachers on the job,” Yellen will say in her testimony.

“Neither the President-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big.”

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