Mortgage Applications Down, Layoffs Beginning, Ripple Effect Thread

@not_a_mouse (can someone please tag as I seem to have forgotten discourse handle) was going to elaborate on her post on TF so i thought i’d just keep a marker. i’m sure all of us have our eyes glued to Russia but it would be prudent to keep an eye on the real estate market right now too imo.

also, @TheMadBeaker originally brought up the post about mortgage applications being down.

this is just Not_A_Mouse responses to articles about the decrease in mortgage applications as her experience in the industry is valuable and insightful:


Some starter reading material:

We all remember the infamous mass layoff by Zoom

Layoffs in mortgage companies:


wow it is a lot worse than I thought - I did a quick search google news for - “Mortgage industry layoffs”

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right? i was surprised by the initial searches. and one article was saying how it was harder to shift loan brokers to new applications from refinancing as it requires more supporting documentation and the timeline is much longer for new mortgages.

trying to reconcile with the fact that Zillow just surprised during earnings. and DakkJaniels just mentioned OPAD released good numbers too. we all know higher rates are coming just wondering how much of a chiller effect it will have on the industry as a whole and where potential fallouts might begin.

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Thinking out loud a little but Zillow may be a lagging indicator in its sales as it primary derives revenue through subscriptions and ads? So I would expect a stark drop to follow during next earnings if all this is adding up as we may be predicting.

One take I was reading is that demand is very high still but supply is low and there is a bigger barrier to entry to first homebuyers compared to seasoned buyers. Mortgage lenders aren’t as willing to sign a first time buyer over a “second” time or refinancer.

Fwiw I constantly get mailers from agents letting me know there are a number of prequalified buyers looking in the area should I want to sell my house. Supply is thin here.

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This article focuses on the the Commercial Real Estate market and potential defaults.
What’s interesting is The CARES act allowed lenders to not report defaults for 18 months. Then grants 60 days to report. That means we will get default data on commercial real estate by March 1st, 2022.

This could cause some big problems because as lenders report defaults, collateral requirements change dramatically, most especially if lenders are barrowing against commercial real estate on their balance sheet.

“Through the Troubled Asset Deferral Program, which is part of the CARES Act, nobody has reported on these for 18 months. We have 18 months of defaults that are all going to start hitting now. That happened, that program terminated as of January 1, 2022, and they’ve got 60 days to report it. So by the second quarter of this year, those things are going to start to come out and banks are going to have to deal with that. So that’s going to be a huge crisis in and of itself. And then obviously, we know that the banks, when they start to take on defaulted assets, they’re not really in a position to make loans. And so, so many of those assets that did stabilize but have now been hurt are going to be hamstrung by their balance sheets because 3 years of historic operating statements won’t really be there to support new debt with values plummeting.”


It’s interesting the conflicting stories, especially when both articles were published today…

CNBC - Mortgage applications drop to lowest level in over 2 years

Bloomberg - Bidding Wars Hit Record as U.S. Housing Market Shows No Signs of Slowing

I think the Bloomberg article illustrates more the lack of inventory (still) and buyers willingness to pay a premium to be able to get something now. Overall sales might be down though simply because there aren’t as many homes going up for sale (which the article doesn’t mention).


If you look at it from the perspective that there is still a housing shortage, the articles actually corroborate each other. With lack of inventory there will be bidding wars on available inventory, but not all of these bids will be with traditional financing, many of them will be cash deals.

As inventory remains low, we’ll see a lack of mortgages. In addition to rising rates and low inventory, mortgage industry may be facing some troubles ahead.


Speaking from a Florida perspective, there is still very much a housing shortage. Builders can’t keep up with the demand. There are new communities popping up every month. They have waitlists for upcoming houses and open them up for bidding wars. A majority of the purchases are cash deals. It’s easy to see why there is a decline in mortgage applications.


I think a big contributor to this is probably blackrock and friends buying up so many houses now, which I assume they have no need for a mortgage. This article says 20% are now going to investors.

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$RKT is having their Q4 EC tomorrow AH. They should be looking to provide guidance for 2022 and with the thesis in this thread, it may be lower than expected. Along with weakness in the general market due to rising rates, inflation, and the Ukraine situation this may be primed for a good bear play.

Rocket is also a meme stock which may swing this drastically. Curious if anyone has any bull cases for RKT


Here’s an article re: January new home sales are down due to rising interest rates:

Mortgage rates in February have continued to rise beyond January’s rates. The chart in this article shows monthly rates over the past 31 months:

Loan originators will continue to feel the adverse impact of elevated mortgage rates and will most likely result in revised (downward) guidance for 2022.

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This is an interesting read. I live in Florida, which was one of the hardest hit areas in 2008. One thing that was unmistakable during that time was how many housing developments were going up. Builders were building full developments with seemingly 100’s of homes everywhere. When the crisis hit, many of these developments were left unfinished.

I say that to say that my wife and I have been commenting on how similar things look now-a-days. Tons of developments with many more houses than they could possible have sold already.

Eerie vibes. This is something to watch.


Tons of new builds in Austin, TX as well….but from my understanding, more & more people moving here. :man_shrugging:t2:


If anyone was playing $RKT earnings, the financials are as follows:

  • Adjusted revenue of $2.4 billion in the quarter, miss of consensus estimate of $2.63 billion

  • Quarterly earnings of 32 cents per share, which missed the consensus estimate of 37 cents by 13.5%

  • Special dividend of $1.01 per share. The dividend will be paid on March 22 to all shareholders as reported at the close of business on March 8. I’m not sure if this guidance is good or bad

  • Rocket Companies also announced it has purchased 20.7 million shares at an average price of $15.08 since the end of the fourth quarter. The share repurchases are part of a $1 billion repurchase program authorized in 2020. This means they still have $700M left dedicated to share repurchasing

  • Closed loan volume of between $52 billion and $57 billion. The company also sees net rate lock volume of between $50 billion and $57 billion for the first quarter.

All in all, I am surprised there was not a bigger movement AH. Maybe this will move in the AM since everything rallied today.

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~10% dividend. Would this not be wise to buy for March 8th, receive the dividend, then sell? What am I missing?

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Dividend is not free. When a dividend is issued, the stock price is reduced by the amount of the dividend.

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OPEN is down. I vaguely remember that 2008 crash’s final nail in the coffin was the rising interest rate environment, so whatever this is, could be yearly play…

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From OPEN’s earnings: “Its inventory balance of 17,009 homes, representing $6.1B in value rose 1,208% Y/Y.”

Was Z that bad at what they were doing, or will OPEN turn out to be the actual bag holder? :thinking:


My understanding of $Z was that they thought they could do exactly what $OPEN does but $Z didn’t have any of the technology that $OPEN has. Kind of like AOL and YAHOO in the early 2000s thinking that they could just buy everything for inflated prices and it would make them money. Turns out when you buy homes for more than they are worth and expect to sell them for an even higher price that doesn’t work.


wow OPEN is down MASSIVELY.