Q1 2020 Earnings Call
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In our energy margins in April.
Okay.
They will.
Our innovation.
Yes.
Good good story servicing course is how we manage costs as customers going from there, which I'll take you through alone.
Looking at our expectations for pre tax income.
It was really exciting application store.
And the books in huge wins with third party homes.
In the short term profitability will be impacting our foreclosure moratoriums. Once they are lifted we expect them to be going gangbusters across.
Its verticals.
We will file Germany was giving an update on how dependent is impacting our customers.
We strongly supported the forbearance program included indicators acts.
Which we believe we'll make it possible for services like Institute to declare millions of people in their homes until the economy recovers from Asia.
If you'll turn SaaS revenue.
See that will help in total of 194000 customers initiate remains financing for which amounts to 5.6 person our total customer base.
The Blue line in the path, we're projecting to total take away of almost 20% value.
This path.
Hello. These projections, obviously is a very fluid environment, and we would expect taker becoming ways a modeling.
We'll face employing issues.
Our variants strategy emphasizes customer education and digital delivery.
We started amassing a virtual training classes weren't higher customer facing team.
When we rolled out a digital sell serves to program, consisting omnichannel SNG and created a pandemic resource center on the way.
Right.
Which includes a video recording explain key point on from areas.
Including the fact that it's not to say as for years.
Now, let's turn to slide eight and talk about our strategy for this environment.
Last quarter, we talked about some of the pillars of our strategic plan.
For any mortgage from a strong balance.
Costs.
Digital delivery for variance is relatively efficient process drones.
After world.
There's many customers will go through modifications.
Good news for US is and we've already made significant investments to automate the modification passes as part of our project type initiatives.
So you may recall begonia camp and harbor.
Transforming feedback.
We learned a lot from those programs, including the fact that modifications gaming stressful similar Omar.
So we started by reengineering the customer experience for example by creating a dashboard with a simple fitbit tracker, which shows where are you on the process and what you need to do next.
We also reengineering experience for our customer service agents.
Redeveloping workflow management tools for the critical toll gates, mainly applications annually and fulfillment.
The key for us and other major Servicers is to quickly thousands of customers once they're ready to exit homeowners intellectually modified loans.
We reported net loss of 171 million.
$1.84 share.
The biggest driver was.
The noncash mark to market Ami and resort, which is due to declining rates for operating results were roxanne.
Right.
They were even higher in the fourth quarter.
So let me start by digging through the adjustments, we customarily make recalculate operating.
Earnings and point out some other notable items may want to consider.
Adjustments included $4 million.
There is Georges in reserves user as we close the facility we acquired solicitors acquisition early last year.
As a good example, the Lilly corporate actions we've been taking.
To standardize our operations are achieved positions.
For Georges would reverse some of the revenues we booked on our pipeline during the quarter, we took out 21 million.
In revenues to reflect lower gain on sale margins for certain products and we also reverse 30 million in revenues for loans will issues with the bars employment good past.
We pose a risk the closing.
And then finally, the quarterly segment included an $8 million charge associated.
And with the shutdown of an ancillary businesses you there wasn't past profitable.
And as just another example of corporate.
Action, which is focused on improving our efficiency.
To sum up there were approximately $60 million in onetime items that impacted our income.
Actually those charges.
Our pretax operating income would have been closer to $200 million.
And our fully traxler DC.
I will then approximately 30%, which demonstrates the enormous potential willingness to Google business model when you combine a customer focused culture.
World class operational skills in financial discipline.
Now, let's turn to slide 10, and discuss the 383 million dollar mark to market and we booked in the quarter.
Which reduced the value of the MSR portfolio by 10%.
From 118 basis points view PV 200, Sir.
The mortgage viewed.
Probably have expected.
It was.
Driven by the significant decline in interest rates in the quarter.
As you know mortgage rates were extremely volatile and lean down 24 basis points, which led us to raise the lifetime CPR assumption from 13 point, 113.4%.
Short term rates declined by over 100 basis points, which negatively impacted the outlook for net interest income.
Otherwise, we didn't make any major changes to our model on the core.
We've updated our table on the refinancing channels and as you wouldn't be surprised.
You'll see that occurred rates a large portion of the portfolio is refinanced.
Despite all of the distractions or customers are dealing works, we continuously very strong.
On the high application volumes, which are right in line with the volumes we saw prior to the crisis.
And as a reminder.
Pointed out that while we recognize the mark to market on our MSR portfolio immediately.
Incremental profits from our origination business will flown over time.
No no no, let's turn slide 11.
I will talk a little bit more about the origination segment, which reduced really strong results in the quarter.
We funded 12.4 billion annual margin 1.2%.
That was despite the $34 million in revenue reversals I commented on earlier, otherwise the margin would've been approximately 150 basis points.
The originations being built an outstanding job navigating the market disruptions as Jay mentioned, we quickly move their teammates to work from home status and after just a few days of adjustment for productivity is return returned to normal levels and in fact, if anything it's even a little bit higher.
And this includes the Homeadvisor teams.
Which continue to deliver excellent results.
By the way, we're continuing to grow our home advisor unit.
And it's up from 180 team members at year end to 286 as of now.
And we continue to recruit and higher.
To add to their team.
At same time, we made the decision to shutdown the wholesale channel, which is quite small and allocate those resources through the DTC channel in order to maximize our profitability.
With April nearly complete we're estimating total fundings for the month.
At around 3.5 billion and a margin above 150 basis points.
With mortgage rates, having fallen another 20 basis points so for this quarter.
We'd expect to have very robust profits.
In the second quarter.
As a company is originations businesses focused on helping existing customers refinancing save money is platform is highly efficient and extremely profitable.
We believe who is well positioned as anybody in the industry to deal with this current environment.
Now, let's turn to slide 12.
I will review the servicing portfolio.
So you BB ended the quarter at 629 billion, which was down slightly from the fourth quarter, primarily due to sale than lessors.
Which was finalized in the fourth quarter, but which the boarded in the first.
The composition of the portfolio hasn't changed materially.
And as you know in recent years, the company's focus focused on growing sub servicing in order to economize on capital and liquidity and in hindsight that was a very good decision as our sub servicing contracts provide us with healthy incentives to manage troubled loans and we get reimbursed probably heard advances.
Okay.
Our replenishment rate remained roughly 100% recorded.
On a gross basis.
Okay vein is down slightly but our excess spread goals also declines on a net basis the portfolio remained essentially static.
The only short term slower portfolio growth slightly shrinks slightly towards flat has really not our prime consideration rather we want to be in position to take advantage of accretive opportunities should they emerge, which we measure in terms of earnings cash flow.
And return on equity.
Let's turn our attention reserves the margin on slide 13.
Excluding the four mark the servicing margins 3.9 basis points down from 5.5 in the fourth quarter.
There were two drivers of that impression.
First there were no special onetime revenue items this quarter, where is the fourth quarter included $19 million recovery.
Second as previously mentioned the margin was impacted by $15 million loss in the reverse portfolio, what you'll notice in the appendix as a reduction in revenue mortgage interest income.
In which relates to the impact of lower interest rates on the amortization of purchased accounting marks.
Going forward.
We expect reverse the continue had some variability to our results were on average you should expect it to be relatively neutral to earnings and cash flow.
Looking ahead.
I want to highlight the potential for some temporary compression in the margins starting in the second quarter after which we should see a strong rebound later in the year.
The biggest driver will be a sharp decline in net interest income, which is where you see the credits we earned per custodial deposits, which will be impacted by the decline in rates and with $10 billion deposits. That's a quarterly hill close to $40 million.
So far in April.
CPR rates or continue to run at elevated levels. Just like we saw in March and that suggests that amortization will rise slightly in the second quarter.
Ancillary income may also be pressured as we'd expect to improve our fewer late fees in the quarter.
Now finally to address the modifications surge, we're adding thoughtfully to capacity we have plans the higher 200 people to supplement our contact centers and back office and that should translate into roughly $2 million to $3 million in quarterly incremental expense.
Thanks.
While the second quarter margin, maybe close to breakeven.
Cash balance for the second half for much brighter once we start to accrue modification fees.
Now turning to zone on slide 14.
We were very pleased with another quarter of strong performance with pretax operating income of 13 million and an uptick in third party revenues.
From 51% to 55%.
The zone team.
As one several new contracts from third party clients and title and exchange.
We're very excited about.
You can see a pipeline of Oreo properties has nearly tripled over the last six months from an average of 6000 in the third quarter two an average of almost 18000 for the first quarter. This year.
They are in mind, it takes a few quarters or properties to move through the pipeline internally or sales and that because that's where we earn commissions.
Having said that the foreclosure process has gone on hold for the moment with moratoriums in place across the nation.
Accordingly, We guide you to expect zone to be running a plus or minus breakeven in the short term because the Oreo changed single biggest contributor to the bottom line.
Once the moratoriums are lifted.
Well look for zone is very bright.
Its economic recovery is slow.
There is widespread variation in barb performance than the default related services, including the exchange in field services.
Should enjoy elevated profitability.
At the same time zone is doing extremely well with title and valuation services, which are more appealing to the originations market.
It's low interest rates and a strong refine market. These units have a lot of room to grow.
Now I'll wrap up and talk.
A little bit about liquidity on slide 15.
Focus my comments on our strategy for funding advances as Jay mentioned, our current planning model is based on economics, a shock were forbearance taker reaches 20% of our portfolio.
We feel we're very well positioned for that scenario.
As you know we have extensive experience financing advances as well as long standing relationships.
With the major banks that are active in the market.
And then last downturn refinanced billions of dollars advances through bank lines and Securitizations.
Since then.
Our advances have been steadily declining in fact, they were down nearly 30% year over year. The 812 million as of March 30, Onest inline with the steady decline in our delinquencies.
Not only ever customers benefited from strong economic growth in the last few years, but we've managed asset quality through strict underwriting controls and portfolio management.
Now turning to the composition of advances you'll notice our PXI advances were quite small as because prepayment speeds are running at elevated levels. When payoffs are high we benefit from those unscheduled payments, providing short term flow for which during the remainder scheduled.
Yes.
At March 30, Onest advances for Fannie and Freddie totaled 213 million.
And then subsequent to quarter end.
We expanded our committed capacity.
Too early in the new facility of 875 million.
Which we regard as very robust and more than sufficient for the advances that we expect.
At quarter end advances for Ginnie Mae totaled 186 million.
Many advantages are more difficult to finance because historically Jenny is not allowed the advances to the bifurcated.
Finance separately from the MSR.
Jay has started to change these rules and we're exploring whether weaken structure align your securitization facility on that new basis held for now we expect to finance Ginnie Mae advances with existing MSR lines and corporate cash flow along with Ginnies pass through assistance program as a backup.
You'll notice that we had.
$277 million event in advances in our private label portfolio.
This is a highly seasoned.
Uhhuh collateral, which dates back to our experience in the prior downturns.
We get reimbursed for advances npls relatively quickly.
And that should limit growth imbalances, even with higher forbearance take up rates.
Subsequent to quarter end.
We expanded our committed capacity.
Yes to a total of 425 million.
And we believe that will be more than sufficient for our expected needs.
Additionally, you may have noticed or filings that refinanced some of our private label advances through a.
A structured transaction.
There are approximately $400 million and advances, which has been sold to a special purpose entity, which are not shown on our balance sheet.
That special purpose facility has its own financing and we also believe that to be more than sufficient for any increase in advances that it is consistent with our forecast.
So with that I'll stop and turn it back the can force on June.
Thanks, Chris I'm going to ask our operator has started the kunaev session.
Thank you as a reminder to ask a question you will need to press Star. One are you telephone again that star one on your telephone to ask a question to withdraw your question press the pound key please standby, while we compile the culinary roster.
Our first question comes from the line of Doug Harter of Credit Suisse. Your question. Please.
Thanks.
Okay on sticking on the on the servicing advances.
I guess can can you talk a little bit about the cost of those facilities the advance rate on those facilities and.
To the extent that you needed to add more kind of how readily available and of financing is.
Especially on the GRC.
Collateral right now.
Okay.
Good morning, Doug It's Chris.
I think first of all I think its readily available I think people view.
As he advances as.
As very strong collateral.
Lance rates tend to.
In the range of 90, 95%.
And the cost of those facilities.
And as I think we mentioned on the call we just.
You are going to the new facility 875 million the cost of that facilities LIBOR plus 275.
So again I think there's.
Availability of financing for GRC advances.
We've never had an issue with that in the past.
And I think more importantly, though looking out over our projections.
And and looking at what eventual take up rates can be so far are.
Our sizing has proved to be very conservative.
The facility, we just entered into will be more than sufficient to handle our our peak needs.
Thank you for that Chris I guess, along those lines and since Prepays kind of factor into kind of the advanced needs. I guess, how are you thinking about kind of what the pacing of of refinances or in the portfolio kind of in the coming months kind of given.
The kind of given the forbearance challenges, but combined with low rates. So earnings how are you thinking about that are what's gone on.
And that's that's a 64000 dollar question.
Theres been some depending where you get yes.
Hi, producer, who know US some question about.
What CP ours, we're going to be.
Clearly that factors not just in prepayments spinoff and advances, but also into our the MSR Mark we think CP ours will remain.
Hi at least through.
The second quarter, we're expecting them to and clearly.
Our originations activity is at record levels. So we expect people to take advantage of low rate environment and we hope that continues through the year. We right now we expect GPRS to modestly trail off in the back half of the year and we're still expecting forbearance.
And I don't want to say expecting it we're planning for forbearance.
At higher levels of essentially now clearly that's something we have to plan for but it's going to turn on.
The length of the pandemic the success of.
Reopening the country, what the shape of the recovery looks like things that are well outside of our ability to forecast.
So we're planning for.
Higher levels and if that happens that certainly will have an impact on CPR over the balance of the year, but right now we're expecting CPR to remain high through the quarter and then.
Drop off moderately over the back half of the year in some way reflecting seasonality.
Great. Thank you Chris.
Thank you.
Thank you. Your next question comes from Bose George of KBW. Your line is open.
Good morning Bose.
Now you mentioned your line is a meeting.
Hey, sorry, good morning, guys hope everyone sake.
The guidance you gave on the.
On earnings are the servicing.
Roughly breakeven in the second quarter and zone, roughly breakeven as well is that correct.
Yes, the second quarter, you should expect two things first of all we're expecting short term rates to stay very low through the quarter and that has a very large impact on our servicing margin. The other thing you should expect to see is it will began adding more.
A more expense in anticipation of.
The modification surge so second quarter is going to be a little unusual.
Given just the timing of adding expense before we start to actually book.
Add book modifications and record the income so second quarter would be down.
Third and fourth quarter, you should see a nice rebound.
Okay, but you're still with 12% that target ROTC, it's still good it's just a.
Compared to history, just given what's happening second quarter.
Yes, I feel very good about our results I think overall.
This is probably the best on just step back and look at the company.
Really on a blended basis, so going back to the question from Doug.
CP ours are incredibly high and that is really pressuring.
The servicing margin.
In addition to the very sure low short term rates, but at same time, our origination segment is producing incredible value at very strong margins. So overall, we expect the company to perform very well during this period now clearly it's an unusual period.
And there are questions about forbearance and CBR advances, but.
We don't see a scenario.
Where we're going to have any liquidity issue.
And we don't see any scenario, where our ability to operate.
Profitably in a hit those ROTC goals.
It's going to be affected in anyway.
And then switching to the MSR Mark yes.
Noted rates continue to go down in the second quarter and and also just mortgage rates remain obviously pretty high relative to treasury.
If those spreads conversion and primary mortgage rates start heading down.
What we see more meaningful marks on your MSR.
And we'll see marks where they would be more meaningful I think the mark we took in the in the quarter was quite large.
If we were to Mark our book.
Today further rates in the quarter would be anywhere close to what we experienced last quarter.
I am guessing a b not guessing if I.
Look at par rate mark through yesterday being less than half of what we saw significant less than half. So there will be marks of rate if mortgage rates continue to come down.
Lengthened clearly, we'll see the effect of that there. There's a lot of question right now regarding the cost to service delinquent accounts.
And clearly we're going to see high delinquency rates and historical terms, ignoring the fact that loans on forbearance.
They may be categorized.
Differently, but.
I think the industry has done a lot to automate some of those costs and clearly the loans that gone forbearance will be different than typical delinquencies.
That has an all been sorted through but I don't expect to see.
Marks on the order of what we just saw in the quarter.
Bose.
And I believe scenario there so okay, great I can just one follow up on that point you made on forbearance earlier.
Slide seven.
Okay. Thanks.
Hi.
That kind of plays out the existing servicing advance funding you guys have is sufficient to meet the yes.
The forbearance takeup reaches those levels.
Yes, absolutely.
It is one message only get across because of the we've gotten a lot of questions from investors up till now we spent a lot of tunnel last month working with our.
Bank partners, and we think we put in place facilities.
That will handle.
Scenarios that have proven to be too conservative.
So we think.
That plus the combination of our cash balances which are up.
Upfront, even where we ended the quarter.
I think we have more than enough capacity to handle forbearance.
Within the scenarios that we planned for and again those scenarios are proving to be significantly higher.
And significantly faster.
And what our experience has been.
Okay, great. Thanks, a lot.
Thank you. Our next question comes from Kevin Barker of Piper Sandler Your line is open.
Thank you good morning.
Hey, good morning, Kevin.
So in regard to the guidance around breakeven.
You mentioned there was 40 million dollar head interest income from lower rates on custodial deposits.
And with that $40 million from the fourth quarter or some of that already embedded in the first quarter.
And.
How should we think about the puts and takes to get to that.
That that breakeven rate give or take in the second quarter.
So that would be.
The the.
That would be a continuation of.
What we saw in the first quarter some of it.
So in terms of rates that $40 million.
Yes.
If we went back in the beginning of the year and looked at where.
Okay. The five year swap rate is down 100 basis points. That's a good proxy for the interest income we would earn in addition, there that are normal ancillary fees.
Would be about $15 million quarter, most of which are late fees, we wouldnt experience any of those in the quarter, where some impact from forbearance just the amount of servicing fees that we want experience.
And there is added expense in the quarter. So it's the totality of those things, Kevin and I think are going to point us towards a breakeven quarter with the variable the.
How much expense, we add how quickly we're going to do that.
Thoughtful way, but we clearly want to be completely staffed and trained.
To handle.
Any modification.
Volumes that that we have to deal.
Okay. So so just coming through some of those it seems like.
We're going to have the operating expense from the forbearance programs and staffing up and then.
The ancillary fees will eventually come through in the second half.
If interest rates stay low we'll continue to see headwinds from.
Lower interest income on kind of cost or the deposit that figure way to think about yes, that's exactly right. Okay and then.
Regards to your comments about profitability in the origination segment in April.
Sort of magnitude can we expect.
Given what you've seen so far this quarter in the second quarter for origination gain on sale and just overall profitability within the with any origination segment.
Well.
I can amplify too much on what we have in the charts here, but if you look at the fourth quarter and the first quarter.
You should expect our originations business to continue to perform as you've seen it and maybe even a little bit better as I said it. It really is remarkable that the efficiency of the business productivity the business actually.
Little bit higher than it was before we start working from home so.
What that says about our.
Yeah.
Team, they just performing incredibly well, but we expect originations volume could be somewhere approaching 3.5 billion in the quarter could be slightly higher slightly lower than that but the margin hanging in at 1.5% or even higher.
That's what we see right now in the month Hey.
Give me too much guidance because things can change quickly in originations, but right now we don't see any reason why that will continue through the end of quarter.
And we're expecting occur.
Okay, and then when you think about what the mix will look like how much would you expect direct to consumer to be of the total mix.
I think.
The refi an opportunity direct to consumer will be more than.
It has been historically because like a lot of people a lot of.
All of our competitors, we've been a little more disciplined about what we're doing in the correspondent channel.
If you go back to the beginning of the pandemic land.
There was.
Extreme volatility in the TV market.
That was.
Time, when we were reassessing, what we should be locking what kind of changes there are going to be in terms of agency in government rules for.
Things like appraisals are notaries, so we turned down our correspondent business fairly significantly and then turn it back on but we're not doing as much business would do I'd say, it's a much more disciplined.
Business and so that's probably the wrong word to use.
It's a narrower business right, we're buying in a narrow a narrower stream of product.
And so for that region alone you should expect the DTC to make up more of our overall mix.
Okay. Thanks for taking my question and as soon as you know Kevin a margin on the DTC businesses.
Quite large and so I think.
While Christmas right to say that.
What we suggested in the presentation is appropriate.
The margins in DTC are much stronger than that much stronger than that right now.
I'm just thinking you would lean in.
Much harder on direct to consumer just given the.
Profit margins that could be.
Created there.
Given the refinance opportunity and then decrease correspond to just because of.
The cash intensive business, the capital and cash intensive business.
Yes, that's exactly that's exactly what we're doing I mean, I think you could see.
PCB and 80% of the.
Volume in the second quarter, depending on what we ultimately we continue to evaluate correspondent business.
As you know, we like that business and we've grown at considerably but to Chris is point we.
Tap the brakes event on certain products and.
And.
Thanks ends in different places so right now DTC is.
Frankly, the majority of the volume and profits.
Thank you very much.
Yes.
Thank you. Our next question comes from Mark Hammond of Bank of America. Your line is open.
Thank you Hi, Jay Chris in that Ken.
Hi, Mark.
Hey, I appreciate all of that the down forbearance and advance.
Passing unit you have as just putting those two together accident forbearance.
The business planning scenario, where you have forbearance, peaking around 19% leased going to 19% and then combining that with the financing capacity for advances that you had in place added after the quarter.
So how much confidence in covering advances under that business planning planning scenario rely on.
Any sort of prepayment.
Prepayments and Ginnie and Fannie advances.
Our ginnie and Fannie servicing to kind of cover some of those advances for forbearance.
Well.
I guess I'd answer the question two ways.
First we have.
Complete confidence that we have the facilities from cash resources Nate.
The forbearance levels, we planned for.
Clearly they could be higher than that but to date.
Our experiences that are actual forbearances well below.
What we planned for and then emphasize it's well below.
So again, we have.
Complete confidence that we have the.
The necessary resources to meet those needs.
With regard to pre payments and we forecast prepayments along with our CPR.
Conns constantly.
And I don't know up I would say theres a dependence on peaks, we factor in certain levels of prepayment.
Okay.
When we forecast our remittances.
I don't see any anything unusual on how we do that are any reason why.
A scenario, where prepayments may drop off when indicate we would now.
Pasadena handle advances if thats what you are suggesting your question I, just don't see any scenario like that that more poser as an issue to us.
Got it yet trying to get a sense for I guess, how much the clarity currently you're getting four.
Payoffs and using that slipped to cover advantage now rather than your.
Corporate liquidity.
Yes, well.
Right, yes, given prepayments or.
Quite high there is quite a bit of that so I think you see that across the industry. Anthony Gurnee any we're not unique in any way I think you'll see advances.
The take up.
Bill.
Occur later than people might have originally expected.
Because prepayments and CPR have remained so high but beyond that I don't I don't see any anything unusual on our forecasting that.
Gotcha.
And is there you have to handler and dollar amount that you have basically been able to use.
Prepayments to fund what is currently advanced that we don't see on slide 15 out of the slope other than yours.
Your own money.
I don't have that number market.
Readily available, but we could follow up with the market.
Okay cool.
My last one on is just on the Fannie and Freddie and servicing right, where you have the obligation now for four months.
When will that come back here after those four months is there any sense on timing.
Yes.
There is and I think we'll wait for Fannie Freddie to formally announce.
What there what the rules will be there.
We've been in dialogue with them very close dialogue for the last month and I think.
Forecasts are all consistent with what they're going to announce but there is.
I'll just leave it as there's a slight difference between the two agencies.
And.
We're forecasting in line with the discussions we've had up till now, but there hasn't been a formal announcement and I expect that will happen in the next week or two.
Okay, I'll be able account will take us and Ken thanks, So much.
Thank you.
Thank you. Our next question comes from Henry Coffey of Wedbush.
Your line is open.
Good morning, and thanks for taking my call Slide 15 is really helpful.
Considering what we're going through here can you help us understand how the equation works a little bit.
GRC advances after four payments you're not on the hook for PNM high.
But I you still having to advance on the taxes insurance component of that.
There are different rules for.
How fannie and Freddie handle that.
And some of that is still.
Being finalized Henry so I will.
I'll go back to what I, just said, we expect that to be formerly announced in the there are some.
There are some precedence for being able to claim.
He and I advances early in the process.
But rather than go through it in detail here all can wait till the agencies make their formal announcements.
So it's still a little murky there is no simple formula we can apply.
And let the rent on that I'm going to go through on the call, but there there is.
There has been discussion about how that will be handled and we factored that into our forecast.
Very confident that.
We have done that accurately.
I just don't want to jump ahead of our.
Our investors with them.
Announced later.
Also as part of that will they be likely to come out and explain how forbearance what the catch up is going to look like if there's going to be a specific.
Program that everyone's expected to follow and I know when you read the press.
Yes.
Individual consumers are calling up and getting different messages.
And obviously people like to shout about whatever sounds like the least fair but.
And then I've seen some of your own comments.
But as they are likely to be a formal plan as to if you for if you give up if you're not paying your mortgage for three months you roll that under the back end of the mortgage or you reset the m. schedule or something like that.
Yes, I think Thats go ahead will be part of there.
That will be part of the announcement as well they'll come out with what are the options at the end and I think today. It is confusing for customers, but if you look at our scripts you look at our portal of what's on line look at our blogging you're trying to over educate and over communicate that the customer does have ops.
Yeah.
Which include even today.
Some type of modification to put the payments on the end, but we fully expect to Chris is point that when a week or two they're going to come out with some formal guidance, which will include what happens at the at the end of the forbearance period.
If we have all these different metrics, we look at to kind of understand what's going on with the mortgage market every week every month.
And those kind of went out the window in March is is it fair to say when we're thinking about gain on sale margin.
It's okay to start looking at primary secondary spreads again, when we think about volumes. We can start looking at things like the EMEA index for guidance or maybe look at CPR is in the month monthly remittance reports.
That whole bag of tricks, we've always fall.
Funds falling back on is it fair to say the markets kind of working more normally again.
I think so I mean, if you look at.
Kind of the level of volume that we're seeing in the direct to consumer channel as Chris pointed out it's.
It's a it's really high we're seeing a ton of customers.
Tonnage bloxom submissions everyday.
Higher than we had expected and so and if you look at payoff request kind of month over month for us it's pretty flat.
Which tells you that they're still CPR as you're going to snake on at these current levels for.
At least the upcoming markets.
And then and when you look at the overall MBS market volatility certainly has gone down considerably and so I think it's fair to say, it's returned from Florida normal.
The ultimate question will be forbearance plans what happens in there.
Yeah, we're not seeing we had we had originally forecasted.
To hit.
You know the levels that we shared being early in the earlier in the year you just don't see that happening now we think it's going to take longer so.
Chris if you want anything to that.
Yes, I think it's a good question Henry.
When we started the year Dnbi a.
And other sources, all sort of converged around the scenario that said this year, we're going to see very strong purchase.
And we're going to see a decline in rifai.
If you looked at the estimates today they'd say purchases really been impacted.
And re Fi building its double what the forecast watch.
And we certainly that resonates with us.
If you step back and look at our company, who I think among the Nonbanks did by far and away more modifications than anyone in the industry and weve pretty damn good at it.
And with them, we've invested a ton of money last year and tightened to.
Fully automate the modification process.
You couple that with doubling of the.
Estimates for refinance.
And our ability to refinance very efficiently.
I think were is well positioned as anybody in industry to thrive in this environment.
Still some things that are unknown, so going back to your question about the metrics. Some of these things are going to emerge over the next weeks or months, but the going back and looking at that data that you are you referenced I think thats exactly.
Right and.
I think all that data would point to the fact that we're very well positioned.
To do very well and produce very strong results through the remainder of the year.
As Ken could you I thought I think one thing and Ray sorry, I'd add is.
I think this is going to me a little different forbearance, and then coming out of forbearance. When you look at the for Barents plans that.
We have.
Put in place today.
Over half of those have come through our digital channel.
And so they're not even.
Engaged with customer service, they're able to.
Basically get a covariance plan via the portal and we're working very closely listing and trading having an equity today frankly, an evolving.
Fantastic partners and I think when when you come out of the back all of us.
I think it's going to me when you come out of covariance plan I think it's going to be a encounter.
Friction free process as well I don't think it'll be like you saw happening in some of those other programs and we've already started and we got our digital plan put in place we presented it to contain for any ethnic Jay and now again, we're waiting on the final rules there but I.
I think it's going to be.
Less intensive process than you've seen the passage, that's probably one big differences.
On that people should consumer as you think about commonalities plans.
So thats really notable and that's something we've been talking a lot about if if you had Canada. If Ken has been sharing with you most of my paused to help move in freight Billy frantic.
About liquidity in questions about cash balances et cetera, et cetera, and now it sounds like you.
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Robert Jon Groberg over 200 word for closing remarks sure.
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This concludes today's conference call. Thank you for participating.
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