Each year, I am proud to participate — and oftentimes help coordinate — the Annual Western Secondary. This year marked the 43rd year of the event, and attendance was off the charts with 600 registered attendees and another 100+ there, but not registered!

Some fly in for a quick visit, while others come in early and stay a day or two more. The event has those who try to attend it all and those who decide they can gain more by walking the halls of the conference hotel. What all attendees have in common is, they are there to share where they think we are headed and listen to the thoughts of others.

Overall, the mood was extremely positive and optimistic about the future. Everyone is either looking to expand and/or acquire other operations as a way to meet their volume objectives for the coming year.

Here are just some of the takeaways overheard for those who may not have been able to make it.

  • Some lenders have 10-12+ investors, but a major theme at the conference was to reduce the number they sell to and form more strategic partnerships
  • Mandatory delivery versus a 7-day delivery spread has narrowed, but mandatory usually always wins in a best-sales-execution model
  • Among warehouse banks, there will be some early adopters who will embrace eNotes by the first quarter of 2016; most fully expect more market acceptance within 12 to 18 months!


o   TRID will have a major impact on originations. Lenders will need to have centralized disclosures to minimize mistakes associated with locking in wrong loan parameters and/or locking with different investors than originally planned. This can result in “changed circumstance”.

o   Effects from TRID implementation on servicing will be none, other than sellers needing to certify TRID compliance to buyers

o   Appraisal Management Companies (AMCs) are viewing TRID as business as usual. Some have mentioned offering a flat price (regular fee + mark up) after doing the analysis of what price adjustments typically occur and how to make it simple for their customers


o   Current Non-QM yield requirements are 8%-10%. Unless there is a nonprime borrower, volumes are difficult to obtain. Good, creditworthy borrowers seem to be more accepting of 50 to 100 bps over conforming rates for these near misses

o   The issuers/investors need at least $1 billion per month in originations to securitize the non-QM; thus far, there is not enough activity in this space

o   The large money center banks like and want more of the higher net worth/wealth client which shows no sign of slowing down. They continue to offer very aggressively priced I/Os (Interest Only Mortgages) up to 45% DTI for their portfolio. The result will be that many of the non-QM participants are left with the lower FICO score borrowers and higher DTIs


  • Many believe there is still too much contingent liability in the business to bring in more private capital. The regulations, combined with recent enforcement actions, have made the risk-reward component an easier decision for many to stay on the sidelines
  • There is no “true” market volatility due to Fed involvement, even after qualitative easing. We may still have some level of stability for another couple of years
  • There has been consistency in seeing a $1 trillion+ origination market, forecasted to be similar in 2016
  • All industry experts agree that mortgage companies today need to be aligned with Fannie Mae, Freddie Mac and Ginnie Mae so they can have multiple options on how best to sell their loans — whether it’s through a cash window, AOT, co-issue, sending bid tapes out, etc. Some of these tools include keeping the servicing when advantageous to do so, as well as helping in monthly cash-flow needs
  • The private label securitization market for prime jumbos is still not considered “healthy” or robust by many of the larger issuers. They feel we are a few years away from it potentially going back to some of what it used to be
  • Subservicers, who traditionally served the agency market, now see growth where the specialty servicers are, which is the non-GSE space
  • Some of the more common requests from retail mortgage bankers were to identify construction outlets, as well as looking for additional co-issue investors
  • There are a couple of new prime jumbo REITs planning to enter the market in 2016. Some are former executives who are setting up a similar platform to what they had before the financial crisis
  • Correspondent investors are starting to tap into the emerging banker sector, as some will offer delegated underwriting with as low as $1 million net worth! Most investors today still require $2.5 million minimum net worth for delegated underwriting authority
  • Small- and medium-sized mortgage bankers were all complaining about how difficult it is to retain key production personnel, as well as recruiting for new ones!

As always, the mortgage industry is ever-changing; however, based on the discussions coming out of this year’s Western Secondary, it certainly would seem there is a lot of optimism out there. Here’s hoping they are right, and 2015 finishes strong and continues into next year.

Lloyd San

Lloyd San - Retired MGIC Mortgage Market Manager

A 30-year mortgage industry veteran, retired in 2021, Lloyd San served as Mortgage Market Manager for Mortgage Guaranty Insurance Corporation (MGIC). Overseeing a national effort, he was responsible for managing all client-related capital market activities in the areas of bulk and correspondent loan referrals, investor introductions, structured products, whole loan sales, as well as product and personnel introductions.

In addition, he is chairman of the California Mortgage Bankers Association, Secondary Marketing Executive Committee and also serves on the Western Secondary Conference Committee.

A graduate of San Diego State University in California, Lloyd received his MBA in Financial Management from National University. He also holds a California Real Estate Broker’s License.

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