JPM mortgage lending robust, “fully back” in corresponding channel
JPMorgan Chase second-quarter profits jumped 155% as the U.S. economy continued to rebound, but executives warned on Tuesday that the sunny outlook would not make for blockbuster revenues in the short term due to low interest rates, weak loan demand and a slowdown in trading.
On the mortgage side, the big bank’s servicing business took a small loss, but they managed $40 billion in originations in the quarter as homeowners continue to exit forbearance programs.
“I think the most significant — one of the significant things that are going on is we've really finished unwinding all of our credit pullbacks from the crisis. So, we're fully back in the corresponding channel, which is obviously helping the volumes,” said CFO Jeremy Barnum in a call with investors. (Full transcript here.
Barnum noted there's obviously been a huge refi boom over the last year with lower rates. But, that's starting to slow down a little bit. The purchase market has been quite robust, “although now we've seen so much home price appreciation that maybe affordability starts to be a little bit of a headwind,” he added.
“So, as we sit here today from a margin perspective, you have your kind of typical dynamics. As rates go up a little bit, refi slows down a little bit that the industry has built capacity,” he said.
“You have probably a little bit of a margin headwind looking forward. And obviously, there's a mix effect. So, as corresponding becomes a much bigger part of the originations, you have mix-based margin compression,” he added. “So it's a headwind relative to a super elevated prior year quarter, but it's still perfectly healthy.”
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Is your state a top state for doing business?
[Spolier: Yes, if you live in Virginia!]
So it’s Virginia. But who came in last?
A year of pandemic and social reckoning has changed the nation in countless ways. But one thing has stayed the same: America's Top State for Business is Virginia.
The Old Dominion captures top honors in CNBC's 2021 competitiveness rankings, just as it did in the previous study published in 2019. It is Virginia's fifth win since the study began in 2007, more than any other state. And it is the first state to post back-to-back victories.
How did they win?
Virginia's strongest category is Education, where it finishes a close second to perennial leader Massachusetts. The state comes in third for Workforce, hampered slightly by a relative shortage of workers. Unemployment is running slightly below the national average, and Virginia lags in terms of educated workers moving into the state, according to CNBC's analysis of Census Bureau data.
North Carolina nabbed second place. While Utah came in third (Shred Media HQ) and Texas came in fourth (Rise&Shred HQ).
This year's most improved state is Maryland, surging 19 points from its No. 31 ranking in 2019 to finish No. 12 this year.
New York came in 22nd.
California came in 33rd.
Maine came in last among the continental states. Alaska and Hawaii were the last overall.
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Compass and Guaranteed Rate launch digital mortgage business
Three months after its initial public offering, the brokerage on Tuesday launched OriginPoint, a partnership with nonbank lending giant Guaranteed Rate.
OriginPoint will operate in all of Compass’ markets, which as of May, included 47.
There were few details about the new business, but Guaranteed Rate’s digital mortgage platform will migrate into Compass’ platform, and will also be available to other brokerages.
One of the largest nonbank residential lenders in the country, Guaranteed Rate said it funded more than $73 billion in total mortgages last year, and has originated over $60 billion in loans so far this year.
Compass' stock price has declined significantly since its IPO; it was the worst performing stock among its real estate peers over the past three months, according to Mike DelPrete. And while stock prices certainly fluctuate, the decline has a significant, real world impact for the Compass agents that participated in its agent equity program.
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