For our Clients, Colleagues, and Friends,
How much was the production income per loan over the past several years? We remind you that production income is your pretax income excluding any net income from servicing or MSR valuation adjustments. Here from the MBA’s Quarterly Performance Report are some numbers showing production income:
Boy, this has been a tough business.
I kept a kind of career diary for many years, and I was just looking at it, and in 1981, it shows that Fannie Mae’s net required yield hit 18.4%. That seems so strange that I wondered if I wrote it down wrong. I looked up the Federal Reserve Bank of St. Louis website (30-Year Fixed Rate Mortgage Average in the U.S. – FRED), and for those of you think rates couldn’t have been that high, sure enough, their table shows that they hit 18.44% on October 30, 1981.
I was just starting my career and was doing subdivision forwards for national builders, and they were really aggressive on the concessions. When rates were 18%, many builders offered 5-4-3-2-1 buydowns, bringing the first year down to 13%. So, next time you hear one your low producers complain about rates, tell them about 1981 and 18.5% mortgage rates.
Speaking of low producers, Ted Ray at Banc of California once told us this about low producers: “I spend very little time with the top producers. I make certain they get the support they need, but they don’t need me to take them to lunch or play golf with them. Where I spend most of my LO time is with the lowest producers. The lowest producers are killing us. I call them in, give them a tough plan that will be hard for them to meet, and when they don’t meet the plan, I let them go.”
This is the opposite of those lenders who don’t mind LOs who close only one loan a month. One unnamed company owner told us, “I’m fine with the loan officer who closes only one loan a month. That one loan could make the difference between being profitable or losing money that month.” We’ve observed over many years that companies that tolerate low producers invariably underperform those that don’t tolerate them.
Last week, we asked, " How many mortgage loan officers are there? The NMLS Registry has reported that there are 82,500 MLOs in 2025, down from a high of almost 125,000 MLOs in 2021. As for the 42,500 who are no longer loan officers, what do you think they're doing?" Per my brother Clyde, here's what one of them is doing: "I got a job as a mortgage loan officer': Ben Griffin's journey from a member-guest to the PGA Tour." Keep hitting 'em straight, Ben!
Speaking of Banc of California, what a dumb name. I heard a few people, uncertain of what looked like a French word, Banc, who pronounced it as the Bonk of California.
Congratulations to our friends at CWDL, who have just rebranded and strengthened their auditing practice as Advisent. Mark Wilson, Dustin Pfluger, and their team are among the top auditors and related advisory firms to the mortgage industry and are always on our very short list when clients ask for a list of auditors whose work we recommend.
An old Rodney Dangerfield joke: “I told my wife she should embrace her mistakes, and she gave me a hug.”
Did you know that Johnson & Johnson has raised its dividend every year for 63 consecutive years? The last time they didn’t raise their dividend was when John F. Kennedy was president.
Did you know that Alphabet pays Apple $20 billion a year to keep its search engine as the default option on Apple devices?
Thinking of subscribing to the MBA Performance Reports? If you tell them that you read the weekly Garrett, McAuley Report, you’ll get a discount on your initial order. Very cool.
Jack Clark, legendary varsity rugby coach at the University of California, Berkeley, has led the Golden Bears since 1984, securing 30 national collegiate championships. Entering his 43rd year as head coach this year, he boasts a record of 962-129, for a winning percentage of 88.1%. His teams have produced 157 All-Americans, and a score of 106-0 against top schools like UCLA or Oregon is very typical. Scroll down a bit to see coach Clark talk about his teams: The Forum with Jack Clark: The Game They Play in Heaven (In-Person) - Grace Cathedral.
Maybe ten years ago, 12 of the rugby players lived in a house two doors up from me. Every so often, I’d get some mail meant for them, so I’d go up to give it to them. They’d always open the door wearing shorts, no shirt, all six-pack abs, and always with a beer in their hands. They’d thank me in their Australian or New Zealand accents and were just all around nice guys. One time, my daughter Hannah and her friend Lily were going through the mail, and when Hannah saw a letter meant for them, she excitedly volunteered to deliver it to them. I told her that if she wasn’t back in an hour, I was calling the police.
My assistant last year was an All-American in field hockey and was friends with the rugby team. When I was in the hospital for six weeks with sepsis, she got the rugby guys to put together a very nice video with all of them wishing me well.
In this month in history, The Troggs’ Wild Thing hit #1 in 1966. This song is right up there with Louie, Louie as a song that everyone sings along to, at least when they’ve had too much to drink, but unlike Louie, Louie you can actually understand the lyrics: “Wild thing, you make my heart sing, you make everything…. Groovy.”
Someone should videotape drunken college kids singing along to Louie, Louie. Everyone knows the first few words (“Oh, Louie, Louie…”) and the more intellectual ones know the next line (“Yeah, we gotta go now…”), but after that, no one knows the lyrics, and it’s funny watching people fake it. By the way, the FBI investigated Louie Louie in 1964 after a public outcry and a letter to Attorney General Robert F. Kennedy suggesting the lyrics were obscene. The two-and-a-half-year investigation, which involved playing the record at different speeds and interviewing the songwriter and band, ultimately concluded that the lyrics were too unintelligible to be obscene. The FBI officially closed the case in May 1965.
Quote of the Week, from Cary Grant on being charming: “It’s two-thirds being a good listener and one-third remembering what’s been said.”
Northern California update: The Napa Valley wine country may be losing some of its appeal. People are drinking a lot less, and alcohol consumption just hit a 90-year low. Napa Valley has 100,000 tons of grapes that are being left unpicked to rot on the vines because of a lack of demand.
An anniversary we somehow missed: On July 14, 1789, the Bastille prison in Paris fell, as French revolutionaries stormed the Bastille, a royal fortress and prison symbolizing the tyranny of the French monarchy. This act marked the beginning of the French Revolution, as it represented a decisive victory of the people over the monarchy. The event is celebrated annually in the way we celebrate the Fourth of July.
All the prisoners were freed, but I just read up on who the freed prisoners were. First, there were only seven prisoners freed. There were four counterfeiters, two mentally ill, and one man, a “deviant“ young aristocrat who was put there by his father for committing incest.
Gossip ‘n Stuff: Martha Stewart and Dolly Parton are in a catfight over Snoop Dog…. Rumors were spreading about Orlando Bloom and Angela Merkel after the two were photographed at an intimate candlelit dinner, but it turns out it was a doctored photo…. 63-year-old Tom Cruise is determined to look his best for his 30-something girlfriend, but he can’t get rid of his man boobs and may resort to surgery…. Burt Reynolds died with an estate worth only $5 million, almost nothing for the actor who was once the #1 box office star… Lindsay Lohan’s dad is back in jail, this time serving a nine-month sentence for some kind of fraud scam… rocker Kurt Cobain’s suicide is being reviewed by Seattle detectives who think it may have been a murder, with the suicide note forged…. not to be outdone, the 98-year-old L.A. coroner who performed the autopsy on Marilyn Monroe in 1963 is now saying she was murdered.
Another important anniversary is coming up: On October 7, 1777, Patriot forces defeated the British in the Battle of Saratoga, and it was this battle that caused the French to decide to back the patriots against the British.
Most leaders in baseball stats are just barely above the second-best guy… with Rickey Henderson being the one big exception. Pretty amazing how much better he was than #2.
Warren Buffett believes in investing in companies that dominate a sector, and if that's your investing style, you might look at U-Haul Holdings (UHAL). They have a market share in moving well over 50%, have a fleet of 200,000 trucks and also have 137,000 trailers you can hook up to your car. They also have 23,000 U-Haul locations, in all 50 states, putting 90% of the population within five miles of one of their rental facilities.
What’s not to like about it? You’d think it would be a perfect Warren Buffett stock, but let’s look at how its stock has actually done:
And by the way, it doesn’t pay a dividend. Thanks, but no thanks.
Here’s a response to people who put down America, people on the left as well as the right, for lack of progress on race relations. As recently as 1960, four black college freshman students in North Carolina sat down at the local Woolworth’s lunch counter. It was for whites only, and as usual for the time under Jim Crow laws, the black students were refused service. These food counter sit-ins spread, and young black men and women were arrested. In the South and other areas, blacks couldn’t stay in most hotels, and there were separate drinking fountains for blacks. When I used to produce shows in Berkeley, lots of the older black performers stayed with me at my studio apartment, as many told me, “I couldn't stay in no white man’s hotel.” If slavery was America’s original sin, the Jim Crow segregation in the South was right behind it. America has definitely improved in the area of race relations.