Los Angeles Times - 05.03.2020

C4 THURSDAY, MARCH 5, 2020 LATIMES.COM/BUSINESS

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of preliminary loans, a sin-
gle-day record for the com-
pany, said Alex Elezaj, its
chief strategy officer.
The drop in rates, coming
as Treasury yields plunge, is
taxing an industry that was
operating near capacity and
setting off a battle for talent.
Eric Mitchell, an execu-
tive at Michigan-based Gold
Star Mortgage Financial, is
luring underwriters with
signing bonuses and the
chance to make big money,
assuming they’re willing to
work long hours.
“If you’re not making $1
million this year as a loan of-
ficer, you’re grossly incom-
petent,” Mitchell said. “I tell
them, ‘We’re not working 40
hours a week; kiss your fam-
ilies goodbye.’ ”
For many, there’s never
been a better time to borrow.
Donny Schulze, a Haup-
pauge, N.Y.-based loan offi-
cer for Embrace Home
Loans Inc., said one of his cli-
ents on Monday locked a
2.75% interest rate on a Fed-
eral Housing Administra-
tion-insured 30-year mort-
gage. The borrower’s down
payment was just 3.5%. That
was a day before the yield on
the 10-year Treasury
plunged below 1% for the
first time ever.
Other firms were also
booking loans below 3%,
mortgage executives said.
Interest rates for the typical
30-year mortgage should fall
below 3.25% and remain
there for the rest of the year,
said Mike Patterson, chief
operating officer at New Jer-
sey-based Freedom Mort-
gage Corp.
Mortgage investors
Tuesday were privately dis-
cussing how to price a new
Ginnie Mae 30-year fixed-
rate mortgage security that
would yield just 2%, a first,
Patterson said.
Fears that the virus out-
break will stall growth have
hammered stocks and
raised fears of a recession.
The Federal Reserve on
Tuesday slashed its bench-
mark rate by half a percent-
age point in its first emer-
gency move since 2008. And
with the Treasury yields
that guide mortgage rates
sliding, loan officers are jug-

gling a mountain of refinanc-

ing applications, which

soared last week to the high-

est level since May 2013.

Quicken expects to hire a

few hundred new employees

a month this year. United

Wholesale Mortgage, a divi-

sion of United Shore Finan-

cial Services Inc. and the na-

tion’s third-largest home

lender, plans to hire an addi-

tional 2,000 people in 2020 af-

ter it doubled in size last year

to roughly 5,400 employees,

Elezaj said.

Underwriters there have

been clocking overtime

hours over the last few days,

he said, in part to keep the

company’s average mort-

gage processing time to

about 12 days. In just three

months, the company is on

track to originate nearly half

as many mortgages as it did

all of last year.

Sanjiv Das, CEO of

Texas-based Caliber Home

Loans Inc., the nation’s sev-

enth-largest mortgage lend-

er, said his company nearly

doubled its call center staff

over the last six months and

anticipated hiring at least

25% more loan officers and

back-office workers in the

coming months to handle

the coming surge in mort-

gage applications.

JPMorgan Chase & Co.

told its home-equity staff

last week that half the team

would be transferred to

mortgages to keep up with

demand, according to an in-

ternal memo seen by

Bloomberg.

The mortgage industry,

riding a roller coaster over

the last few years, has been

forced into cycles of hiring

and firing.

Companies shed employ-

ees in 2018 as borrowing

costs for 30-year loans

spiked to almost 5%, killing

off the lucrative refinancing

business and causing a mini-

slump in home sales.

But 2019 was a banner

year, as trade wars and signs

of a global economic slow-

down resulted in cheaper fi-

nancing. And just as rates

were drifting up again this

winter, the coronavirus

struck.

Many remain cautious af-

ter the slowdown in 2018 and

are unsure how quickly the

latest crisis will resolve itself.

They’re keeping rates rela-

tively high compared with

bond market yields.

There’s also a major cave-

at to the current rate plunge:

A global recession would be

bad for business.

“If we have a sharp reduc-

tion in trade and economic

activity, you will start to see

people not qualify for a

mortgage,” said Michael

Jones, chief financial officer

of Thrive Mortgage in

Georgetown, Texas. “That is

the biggest risk right now.”

Schulze of Embrace

Home Loans is advising

some of his customers to

wait before agreeing to rates

being offered now, telling

them that 30-year mortgage

rates could drop to 2.5%.

“There’s not a lot telling

me that rates will move up,”

Patterson of Freedom Mort-

gage said.

Nasiripour and Gopal write

for Bloomberg.

Lenders ramp up for deluge

“IF YOU’REnot making $1 million this year as a loan officer, you’re grossly in-

competent,” a mortgage executive said. But don’t expect a 40-hour week, either.

David ZalubowskiAssociated Press

[Mortgages,from C1]

Stocks on Wall Street

soared Wednesday as gov-

ernments and central banks

around the globe took more

aggressive measures to fight

the coronavirus outbreak

and its effects on the econo-

my.

The Dow Jones industrial

average leaped 4.5%. The

Standard & Poor’s 500 index

rose 4.2%. The tech-heavy

Nasdaq climbed 3.8% and

now has a slight gain for the

year.

The gains more than re-

couped the market’s big

losses from Tuesday as Wall

Street’s wild, virus-fueled

swings extended into a third

week.

Stocks rose sharply from

the get-go Wednesday, led by

big gains for healthcare

stocks, after Joe Biden solid-

ified his status as a contend-

er for the Democratic presi-

dential nomination. In-

vestors see him as a more

business-friendly alterna-

tive to Sen. Bernie Sanders.

The rally’s momentum

accelerated after House and

Senate leaders reached a

deal on a bipartisan $8.3-bil-

lion bill to battle the co-

ronavirus outbreak.

Investors were also ex-

pecting other central banks

to emulate the Federal Re-

serve’s Tuesday surprise

move to slash interest rates

by half a percentage point in

hopes of protecting the

economy from the virus out-

break’s economic fallout.

Canada’s central bank cut

rates Wednesday.

Some measures of fear in

the market eased. Treasury

yields rose but were still near

record lows, a sign that the

bond market remains con-

cerned about the potential

for economic pain. Compa-

nies around the world are al-

ready saying the virus out-

break is sapping away earn-

ings via supply-chain dis-

ruptions and weaker sales.

Healthcare stocks in the

S&P 500 jumped 5.8%, the

biggest gain among the 11

sectors that make up the in-

dex. UnitedHealth Group

and Cigna both jumped

10.7%. Anthem soared 15.6%,

the biggest gainer in the

S&P 500. A Biden nomina-

tion would be more welcome

on Wall Street than a nod for

Sanders, who is campaign-

ing on a proposal to enact

“Medicare for All.”

Data released Wednes-

day painted a U.S. economy

that was still holding up, at

least as of last month. The

country’s services indus-

tries grew faster last month

than economists expected,

according to a report from

the Institute for Supply

Management. Hiring at pri-

vate employers was stronger

than expected in February,

according to a report from

payroll processor ADP,

though slower than Jan-

uary’s pace.

The yield on the 10-year

Treasury rose Wednesday to

1.06% from 1.01%. The two-

year Treasury yield fell to

0.69% from 0.71%.

Benchmark crude oil fell

40 cents to $46.78 a barrel.

Gold fell $1.40 to $1,643 an

ounce.

Index

Dow industrials

S&P 500

Nasdaq composite

S&P 400

Russell 2000

EuroStoxx 50

Nikkei(Japan)

Hang Seng(Hong Kong)

Close

Daily

change

Daily % YTD %

27,090.86 +1,173.45 +4.53 -5.07

3,130.12 +126.75 +4.22 -3.12

9,018.09 +334.00 +3.85 +0.51

1,899.66 +64.47 +3.51 -7.92

1,531.20 +45.12 +3.04 -8.23

3,173.67 +63.12 +2.03 -6.74

21,100.06 +17.33 +0.08 -10.81

26,222.07 -62.75 -0.24 -6.98

Major stock indexes

change change

Associated Press

MARKET ROUNDUP

Stocks leap again

amid virus fight

associated press