Brett Ludden on LinkedIn: 2024 Q2 Credit Risk Review (2025)

So you can't join me in California next week? Fear not. I will also be speaking about Mergers and Acquisitions at the HousingWire IMB Summit on Tuesday, October 1 in Dallas, TX. Book it!https://lnkd.in/gjUpenjt#housingwire Sarah Wheeler Clayton Collins Makenna Clay

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We're only one week away! I look forward to representing Sterling Point Advisors Financial Services as I participate in the Western Secondary Market Conference alongside Rob Chrisman, Donald Burton, and AJ George! Even as rates look like they are continuing to head down, there is a lot of M&A happening. Learn more next Tuesday, August 20 at 9:15am PT at Terranea Resort.#WSMC24

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Refinance applications have really picked up over the past 4 weeks as economic data appears to indicate that the Fed can begin its rate cut cycle in September. That is welcome news for lenders, particularly given that purchase applications haven't budged from being down 11% relative to 2023.

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I find it staggering that Twitter continues to allow obvious bots to follow me. Every day, a new bot, created in 2023 with a handful of followers and following 5000+ people follows me. They even name themselves ".._ai". These bots don't engage with me; I assume it is there for one reason: to capture what I ❤️ into a database for someone's future use.

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I have been in the analytics job family my entire career. During the past 30 years, more and more companies have adopted the information-based decision making strategy. Companies that Augment Analytics supports today are interested in finding ways to better use information to make business decisions. I personally have never seen a well-run, mature business that is driven by instinct and gut feeling.https://lnkd.in/e_dCzGrE

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I don't know a great deal about Better but it strikes me that they are touting ultra-efficient mortgage operations when they originate $962M of mortgages at a loss of 356bp (excluding depreciation/amortization). At its worst during the recent mortgage recession, IMBs lost 99bp.Better had 89bp of marketing expense (I typically see 10-15bp), 68 bp for technology (peers at 14bp according to MBA), and comp & benefits at 366bp (peers run at 208bp). One reason they didn't lose more money is because they had 54bp of interest income. I assume they used their cash to fund loans. That isn't an efficient use of equity.They could run their mortgage operations for free and still lose more money than the worst the industry has seen.

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I hear that refinances are on their way back. I suspect a lot of people will be asked to refinance when their 7% rate drops to 6.5%. Let's do some math.Loan amount: $250,000Cost of Refinance: 2% or $5,000Savings from a 0.5% reduction: $104 per monthTime recoup closing costs: 48 months (4 years)The question a homeowner should be asking is whether or not they expect rates will be even lower in a year. If so, shouldn't they wait to refinance?

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Join me at Western Secondary in two weeks, Tuesday August 20! While the weather on the east coast is getting hot and humid, you can be enjoying an escape at Terranea Resort and watching me wax lyrical about mortgage M&A trends. What could be better?#WSMC24

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More investor threats to the Fed pushing for a rate cut, now an emergency rate cut. The Dow is down 1,000 in pre-market.The market is now pricing in a 100% chance of a 50-bp rate cut in September. The same market that has consistently struggled to forecast the Fed's moves over the past 3 years. The same market that was complacent a week ago and has only added a jobs report and some manufacturing data to somehow predict a massive swing from a soft landing to a hard landing.I'm not buying it. First, 100% chance is insane. Nothing is guaranteed much less getting a 50-bp cut. Second, I believe this is machine driven correction. A bunch of positions is being unwound because of machines starting to de-risk.Buy the drop.

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