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Vaultedge newsletter - UWM to accept bitcoin. Makes sense or is it just vanity?

August 30, 2021

Dear Friends, Colleagues & Customers:

  • Do you think any of your borrowers would fancy paying their mortgage payments in bitcoin? United Wholesale Mortgage seems to think so. UWM announced plans to accept crypto currency for home loans. They said that they will initially accept bitcoin, but are also evaluating other crypto currencies too. Does this really make sense?

  • Say you are a lender or servicer and you accept payments in bitcoin. You would then have to convert them into dollars so that you can pay your bills. When you do that, you have to pay capital appreciation tax on the bitcoins converted because US government treats bitcoin as property. So who will bear that cost? More than that, bitcoin is highly volatile. You will have to take a hedge against the volatility in bitcoin and that is going to cost you a bomb. So unless you are taking a bet that value of bitcoin will keep going up it doesn't seem to make sense. But at that point you are not in mortgage business ; you are betting on bitcoin. I think this move from UWM is just for vanity. What is your take?

  • There was a Refi boom in 2020 and early part of 2021 and most borrowers actively looking for a refi, got one. But that does not mean, there are no more borrowers for who refi would make sense. Accordingly to a survey by Bankrate, 38% of mortgage holders don't know their interest rate. Only 19% of homeowners refinanced the mortgage they obtained before the pandemic. So there is plenty of opportunity for borrowers who know where to look.

  • Another survey by Mphasis Digital Risk found that 52% of prospective homebuyers feel anxious or sad. Low inventories and high prices are leaving them with few choices and that is taking a toll on people. I think this is a great opportunity for old style selling - Sit with the customer, understand his needs, discuss the constraints & challenges and be their counsel and coach. Wholesale lenders with a broker network that is embedded in local communities will have an upper hand. I am betting that wholesale lenders will have better growth compared to overall market this year.

  • Airbnb Inc. announced that its second-quarter revenue nearly quadrupled from previous year, rebounding from the lows of the pandemic and exceeding pre-pandemic levels. Take note, their revenue exceeded pre-pandemic level. That is a great news. I am very happy that people are traveling, taking a vacation, attending conferences and doing stuff what we all love doing.

  • Of course, that dos not mean covid is completely behind us. I don't think it will ever be completely behind us. We just have to live with it. In that context, Employers telling their employees to get shots or to get out out may not be a bad thing. What do you say?

  • Last week my colleague Sanat sat down with Jay Promisco, President of Originations at Sierra Pacific Mortgage for our wide ranging discussion. Jay has over decades of experience in the mortgage industry and has been key in implementing several technology initiatives at Sierra Pacific including a custom LOS for retail & TPO - ExpressLoans. Jay talked about the key areas where technology implementations can help lenders become more nimble while reducing their cost of production. He also shared his framework of evaluating a new tool or integration to ensure that it delivers a handsome ROI in near to long term. Dive into this episode to get practical insights on how you can avoid the 'shiny new thing' syndrome while assessing technology implementations within their business.

  • I want to share this guide from NfX, a VC firm based in SFO. From the title - 23 Habit-Making Insights for Product-Minded Founders - it sounds like it is just for tech startup founders like me. But it is for everyone who considers technology to be an integral part of their business. If you have time to read only one in-depth article this week, I would recommend you to read this.

Have a great week.

United Wholesale Mortgage announced plans this week to accept cryptocurrency for home loans, in what is being billed as a first for the national mortgage industry.

While the company's mortgage originations saw a 46% annual drop in gain on sale margin, it anticipates that annual volumes will exceed 2020 levels.

Experts have been calling for a return to a purchase money mortgage market for some time now and it finally appears to be happening. For closed mortgage loans in June 2021, new home purchases...

Homeowners may be missing out on the chance to save up to thousands of dollars a year through refinancing, a new Bankrate survey found. Only 19% of homeowners reported refinancing mortgages that they obtained prior to the pandemic since the beginning of the outbreak, according to the report.

A combination of record-high home prices and historically-low inventory is causing more than half of prospective homebuyers, 52%, to feel "anxious and/or sad," according to a nationwide housing...

The home-sharing giant projected record revenue in third quarter despite the impact of the new Covid-19 Delta variant on bookings and cancellations.

Vaccine mandates are beginning a march across the U.S., constricting the places that people who have shunned the shots can work, shop and play.

Jay has decades of experience in the mortgage industry and has been key in implementing several technology initiatives at Sierra Pacific including a custom LOS for retail & TPO - Express Loans

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