As Tapering Nears, Mortgage Companies Must Adjust

In this episode, Jeff outlines why mortgage applications have fallen 6.9% in a market that has reached $4.5 trillion over the last 18 months, and will likely shrink to $3 - 3.5 trillion once the government tapering begins, ushering in higher rates.  Many mortgage companies may implode as a result, and there will be some continued consolidation in the marketplace alongside several of those companies that have already gone public.  They will extract the profits garnered from being publicly traded, then use that money to expand or further their products, which unfortunately does not work to the advantage of the consumer. 

In trying to regain a more secure footing in the mortgage market, some large companies are bringing the private markets into play.  They have been putting Non-QM loans into loan pools and creating their own securitization by selling bonds for those mortgage pools on Wall Street as a way to fund loans outside of Freddie Mac and Fannie Mae; this is important because these companies are having to justify why they are receiving high stock prices, so by not selling to Fannie Mae and Freddie Mac and funding the loans themselves, they will achieve that end.  That particular segment of the market is definitely in a growing phase and is expected to continue to keep doing so for the foreseeable future.  This week, Jeff's guests include: 

- Zack Harmon, the owner of Capital Energy, discusses solar energy options for homeowners.

- Tyler Sink from Berkadia Commercial has some news about multi-family real estate. 

- Tracy Madden of EXP Realty talks about the San Diego market.