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Ishbia becomes a BILLIONAIRE; Rates; Fifth Third’s Mortgage Collapse 😮

By January 25, 2021 No Comments

This is Mat Ishbia first week as a billionaire (probably)

On Friday morning the CEO of United Wholesale Mortgage ran the opening bell at the New York Stock Exchange. Mat Ishbia described it as “a once in a lifetime dream,” on his Twitter, including video of him ringing the bell.

“So proud that @UWMlending is now officially a public company and trading under $UWMC. Thank you to all of our  amazing broker partners and team members that made today possible,” he continued.

He also more than proud, he’s probably worth more than a billion dollars because of UWM successes, which Ishbia said in a paywalled interview with the Wall Street Journal, will continue to grow in 2021.

To make the IPO happen, UWM merged with a blank-check company belonging to businessman Alec Gores, the older brother of Detroit Pistons owner Tom Gores. The deal values UWM at $16.1 billion, and will leave Ishbia and his father and company founder Jeffrey Ishbia with a 94% ownership stake. That puts both Ishibas in the Billionaires Club.

The company expects to exceed its initial projection of $210 billion worth of mortgage originations this year, Chief Executive Officer Mat Ishbia said in the WSJ interview, thanks in part to signaling from the Federal Reserve that short-term interest rates would likely remain low for several years.

“The mortgage market is going to be a little bigger this year than a lot of people thought,” Mr. Ishbia told the WSJ. “Our expectation is that we have a lot of upside in our projection numbers from what we had originally disclosed.”

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Treasury will support low interest rates

It’s not just the Federal Reserve that will work to keep rates low for years.

President Biden’s pick for Treasury Secretary, Janet Yellen, began her confirmation hearings last week, and investors are already speculating how her policies could affect historically low mortgage rates.

The government spending, coupled with the high likelihood of more to come, should give a boost to the sagging economy, and could increase inflationary pressures. Bond market investors responded to the expectation of increased government spending, which is part of the reason Treasury yields recently jumped to 1% for the first time since March last year.

“Janet Yellen has always been more focused on trying to reduce unemployment, even if it means slightly higher inflation,” says Lawrence Yun, chief economist with the National Association of Realtors, in this Time article. Everyone believes she will favor policies that support low interest rates.

So while we may not see the barrage of low mortgage rates we had in 2020, rates should still remain favorable for borrowers in the near future. According to Yun, we can expect to see modestly higher mortgage rates, maybe 3% by the middle of the year.

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Fifth Third’s mortgage revenue collapses and more news in brief

The mortgage business at Fifth Third collapsed from September to December, highlighting just how volatile mortgage lending can be.

According to its Q4 results, Fifth Third says mortgage banking net revenue decreased by $51 million, or 67%, primarily driven by lower origination fees and gains on loan sales resulting from a decrease in origination volumes, margin compression, the decision to retain certain mortgages originated during the quarter, and an unfavorable MSR net valuation adjustment.

Mortgage banking net revenue decreased $48 million, or 66%, primarily driven by an unfavorable MSR net valuation adjustment and an increase in MSR decay resulting from higher prepayment speeds.

Despite this, Fifth Third still had a strong fourth quarter. That’s because losses to the mortgage book were offset by gains in other financials offered by the bank.

—> Nations Lending, a leading full-service national mortgage lender, has selected John Owens as Vice President of Strategic Growth. Owens will play a critical role in driving production strategy, identifying growth opportunities and tapping into exceptional talent throughout the United States. He will report to Corey Caster, Executive Vice President of National Production.

—> CoreLogic, the analytics and data-enabled solutions provider that CoStar may buy (see Friday’s BREAKING news) announced that Stearns Lending, LLC, a leading independent mortgage bank, has successfully integrated CoreLogic’s income calculation and analysis solution. Stearns adopted the innovative solution to specifically help their teams of underwriters and loan officers automate, streamline and standardize existing mortgage origination workflows at scale — ultimately accelerating their processes, improving the customer experience and reducing their cost per loan.

—> Wells Fargo's former general counsel, James Strother, will pay the Treasury Department $3.5 million in a settlement over his role in the bank's 2016 fake accounts scandal, the Office of the Comptroller of the Currency announced Friday.

—> That’s it for now, we don’t want to over-news everyone. Please share the love and forward Rise&Shred and ask them to sign up! We appreciate all the support. And, as always, Show up. Hustle. Repeat. Every. Day.

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