The Institutional Risk Analyst

To paraphrase our friend and fellow mortgage maven Rob Chrisman, ponder a 2022 lending market that’s 75% purchases and just 4.79 million uni

Last week we posted a snippet from Rob Chrisman’s housing finance blog about former Fed Chair Janet’s Yellen being "puzzled" due to the lack of home ownership by Millennials. The ensuing reaction was an order of magnitude above our normal level of discourse, leading us to think that there is a raw nerve among Americans when it comes to home prices.

One reason why banks are selling off is the prospect of significant layoffs and operating losses in the mortgage sector. Rising costs and tight production spreads have driven the mortgage industry into the red this quarter, with many shops not even meeting minimum production levels to achieve break even. Rob Chrisman warned in his weekly comment that he expects to see at least one large bank shedding “thousands” of people this summer...

“I know many owners and CEOs of residential lenders… and would never bet against their success. They represent a very savvy, entrepreneurial, and street-smart group of individuals but are faced with many risks, with LO comp, technology, housing inventory, and shrinking margins in the forefront.”