Insignia Mortgage Appoints Jay Robertson to Associate Broker 

Posted on by Admin

BEVERLY HILLS, CA – June 22, 2023 

As of June 22, 2023, Insignia Mortgage is thrilled to welcome Jay Robertson to our team of brokers. Jay has over 30 years of experience in the mortgage industry. As the former president of First Capital and Luther Burbank Mortgage in Los Angeles, he has overseen or personally originated over $20 billion in loans in Southern California. 

Jay’s deep knowledge of the industry, combined with his commitment to exceptional customer service, makes him a perfect fit for Insignia Mortgage. We know that his expertise will help us to continue providing our clients with the best possible service and advice.  

In his new role at Insignia Mortgage, Jay will work closely with clients to help them secure the right mortgage for their needs. He will use his extensive network of industry contacts and his in-depth knowledge of the mortgage market to help our clients navigate the complex process of securing a mortgage. 

Damon Germanides, co-founder of Insignia Mortgage commented that “Jay brings such a unique perspective to Insignia Mortgage as he has been both a CEO of a large mortgage company as well as a loan originator. He knows better than most what it takes to win over clients and how to create long-term partnerships with referral partners. His knowledge will be great to our boutique firm.” 

When asked to describe his customer relationship style, Jay stated that “I believe in taking care of my clients.” He is known for being a trusted advisor who always puts his clients’ needs first. “It’s not about the volume of business I do. It’s about arming my clients with the most current information so they can make educated decisions about their future,” he explains. Jay’s honest and expert guidance, backed by decades of experience in real estate finance and luxury residential real estate sales, continues to define his personalized white-glove approach to service.  

About Insignia Mortgage 

At Insignia Mortgage, we understand that what works for one client does not always work for everyone. Especially when your financial picture doesn’t adhere to the strict model that many conforming lenders demand. Even under the most complex circumstances, our team of loan experts can quickly navigate through the process to deliver the most highly competitive loan solutions. We’ve successfully closed some of the largest and most complex transactions in the country for high net-worth clients, many of whom are self-employed and have significant assets but fluctuating incomes; and, for foreign nationals who receive income outside of the United States or are buying in the United States for the first time. 

Market Commentary 6/16/2023

Posted on by Damon Germanides

The Fed Delivers A Hawkish Pause

The Federal Reserve’s dot plot strongly suggests that interest rates will continue to rise in increments of 0.25 basis points, with potential hikes in both July and September. This trajectory would bring the Fed Funds terminal rate to 5.75%. However, accurately predicting the impact of further rate hikes on the economy is a difficult task. There are valid arguments both for raising interest rates and for taking a pause.

Despite some concerning economic data, the US equity market has recently experienced significant growth. Even a hawkish Fed has had little influence on cooling off this recent rally. In the face of such data, this rally creates a wealth effect and eases financial conditions. Such does not align with the Fed’s intentions. Additionally, the US consumer remains strong, evidenced by better-than-expected retail sales. The housing sector, particularly in more affordable segments, has seen a surge. Multiple offers are becoming common in spite of mortgage rates hovering around 6.00%, with rates having doubled compared to over a year ago.

The State Of The Economy

Regardless of these small successes, several manufacturing reports indicate a weakening economy. The yield curve has steepened again and weekly jobless claims have risen, all of which support the argument for a pause by the Fed. It’s worth noting that labor is a significant cost for most businesses. With a tight labor market, wages have moderated yet continue to rise. The Fed considers wage inflation and a tight labor market as factors that justify ongoing rate hikes.

The current expensive stock market, fueled by AI mania and investors trying to catch up after anticipating a market downturn, may have a positive effect on residential real estate. Investors recouping losses or utilizing gains to purchase homes can contribute to this result. Nonetheless, mortgage underwriting remains challenging. Banks are not giving money away despite higher interest rates. Our office diligently surveys over 20 lenders daily to find the best execution for prospective borrowers. With almost 20 years of experience in the industry, we can confidently say that these are some of the most challenging times. The main cause of these current challenges is the combination of a tight housing supply, the limited amount of new construction in our primary market, and the overall high cost of coastal housing markets. 

Market Commentary 6.9.2023

Posted on by Damon Germanides

Markets In Rally Mode Heading Into Fed Week

Various markets are displaying unpredictable behavior as the US financial landscape presents challenges. Despite concerns expressed by many public companies regarding earning growth, inflation, and increased capital costs, several AI-focused tech giants have propelled equities back into a bull market. Residential real estate, too, remains resilient. Despite higher mortgage rates, housing stocks are near all-time highs and prices are holding steady in most market segments.

While leading economic indicators and sentiment readings suggest a potential recession, employment data continues to surpass expectations. The most recent weekly unemployment figures were higher than anticipated. Credit conditions remain tight, with further tightening observed. Currently, default rates remain relatively low, primarily concentrated in commercial office spaces to date. The likelihood of a soft landing in the economy has improved. The recent substantial equity rally prompts speculation about the potential for a different outcome this time despite the memories of significant market downturns (the 2000 tech bubble and the 2008 financial crisis) still resonating among older generations.

Looking Ahead: Inflation & Rate Hikes

The upcoming Federal Reserve meeting carries significant weight as investors eagerly anticipate insights from Chairman Powell and the committee. The consensus points to a hawkish pause in rate hikes, with another potential increase in July. That being said, recent equity market strength and surprise rate hikes in countries like Australia and Canada suggest that a 0.25 basis point hike in June cannot be entirely ruled out. The release of important inflation reports early next week may further influence the committee’s decision, especially if it reveals a higher-than-expected inflationary environment.

Market Commentary 6/2/2023

Posted on by Damon Germanides

All Eyes Focused On Upcoming Fed Meeting As Jobs Report Exceeds Estimates 

Another positive May Jobs Report has exceeded expectations, reflecting the current strength of the US economy. This places additional pressure on the Fed and its data-driven policies. Recent Fed messaging has hinted towards a potential pause in short-term interest rates. Now, the robust jobs report, growing housing demand, and improved GDP forecast may push the Fed towards another rate hike in June (odds are at 33% for a rate hike at the moment so this is a non-consensus view).

In the non-ultra luxury local housing market (which we internally categorize as those homes priced under $3mm) we are witnessing a surge in multiple offers, with all-cash and no-contingency offers becoming increasingly common. Despite the recent rise in interest rates, the lack of housing supply is pushing buyers to compete and bid higher for their purchases. This trend is not limited to our local market, as similar situations are being observed in other markets as well. There is a concern that a resurgence of higher inflation will occur if the Fed does not proactively address the situation,  as housing and related services comprise a significant portion of the economy. Although higher interest rates can be challenging, failing to address inflation adequately is akin to only partially treating an ailment with antibiotics.

The counterargument for raising rates is that several leading indicators are showing signs of a slowing economy including lower commodity and energy prices and anemic global growth. This is why some are in the wait-and-see camp. When it comes to interest rates, there are a number of factors to consider. Firstly, the resolution of the debt ceiling may push bond yields higher as the Treasury introduces a substantial amount of fresh debt into the market. Additionally, bank balance sheets remain constrained. Recent reports indicate that lending to smaller businesses needs to be reduced or delayed due to high financing costs. Lastly, the inverted yield curve is currently at -82 basis points, which historically raises concerns and keeps us vigilant about a potential recession.

Brokerages Over Bankers

In the residential lending landscape, mortgage brokerages like Insignia Mortgage, with access to diverse funding sources (ranging from private banks to no-income verification financing, investment property financing, foreign national financing, and various government programs) enjoy a significant advantage over mortgage bankers and retail bankers. This dynamic environment highlights the importance of a well-connected and versatile mortgage brokerage in today’s fragmented banking world.

Market Commentary 5/26/2023

Posted on by Damon Germanides

Mortgage Rates Rise As Economy Proves Resilient Amidst AI Mania

The recent surge in AI-focused technology companies has been caused by pure momentum. The soaring movement in these stocks raises concerns about a potential bubble. While AI is an exciting technology and its impact on businesses will undoubtedly be transformative, the current buying frenzy may lead to adverse outcomes for overvalued tech stocks. The combination of AI mania and the overall equity market rise may also give the Federal Reserve justification to raise short-term interest rates, once again. The betting market currently predicts a 60% chance of a rate hike in June. Despite tightened lending standards, the equity market exhibits resilience. Alongside an increase in PCE inflation data, the Fed will likely continue addressing inflation concerns. Given the persistent nature of inflation, a rate hike in June seems more probable than not, although we hope to be proven wrong.

The dichotomy between luxury and essential home purchases continues to define the housing market. Clients seeking homes under $3 million face multiple offers and even bidding wars for properties priced to sell. The hardiness of consumers and the overall economy is impressive. Nonetheless, the increasing demand for affordable housing, up to the upper-middle-class segment (homes under $2 million), necessitates attention. It is concerning to witness bidding wars in certain pockets of the market amidst economic uncertainty and epoch-making interest rates. Consequently, several homebuilder stocks are also reaching historical highs.

A Pivot In Purchasing Priorities 

Inflation remains a persistent issue. Retailers like Costco have indicated that consumers are making more selective choices when purchasing bigger or more expensive goods. This is one sign that the average American is being negatively affected by inflation. Be that as it may, consumers are still willing to spend on experiences and travel to compensate for a prolonged lockdown. They instead reduce their purchase of items like televisions and washing machines. On the higher end, Restoration Hardware reported poor sales as customers pull back.

Mortgage rates have quietly and significantly increased, with some conforming rates exceeding 7.00%. While the AI hype dominates headlines, Treasury yields have made an equally notable move, but unfortunately not in favor of borrowers. The 2-year Treasury yield has risen over 25 basis points this week, closing at 4.56%. This substantial increase suggests that the bond market anticipates further action from the Fed. In early May, the 2-year Treasury was trading around 3.72%. This drastic shift in yields and the resulting implications deserve close attention. Additionally, the 2-10 Treasury spread has re-inverted to -76, an indicator often associated with recessions. The inversion of the yield curve should be monitored closely.

Currently, equities are driving the market, obscuring concerns about a potential debt ceiling standoff, overpriced tech stocks, or higher interest rates. It is a fascinating yet challenging time to analyze these market dynamics.

Market Commentary 5/19/2023

Posted on by Damon Germanides

A Tale of Two Housing Markets As Rates Rise 

Even with the rise in interest rates, the limited supply of existing homes for sale is leading to multiple offers on the more affordable properties entering the market. This growth in demand is a key factor behind the surge in builder stocks reaching near all-time highs. New home construction is crucial as many homeowners are hesitant to sell their homes. This situation also highlights the importance of recognizing that real estate markets cannot be generalized. The ultra-high-end existing and new home market, particularly homes priced over $10 million, is not experiencing the same level of activity due to higher interest rates and concerns about the economy. 

Despite potential negative news such as debt ceiling talks and rising interest rates, the stock market remains unfazed, largely driven by the future of AI. A deeper inspection reveals a crowded trade, with eight stocks, including Microsoft, Google, and Meta, accounting for the majority of gains this year. Excluding these eight stocks, the market performance is relatively flat or slightly positive. 

The Federal Reserve remains vigilant as the June possibility of another 0.25 basis point interest rate hike starts to gain traction, although it remains uncertain. It is worth reiterating that inflation is a challenging problem to tackle. While goods and housing inflation are easing, the unemployment rate below 4% continues to exert pressure on wages and services, making a swift return to 2% inflation unlikely. Additionally, inflation remains persistent in most developed countries, with even Japan defying expectations by recording inflation well above 3%. 

The Mortgage Maze 

Quietly, interest rates have climbed back above 3.500% on the 10-year Treasury note. The future of rates will depend on how Congress addresses the debt ceiling and the potential for further flare-ups with regional banks. One thing is certain: obtaining financing for residential and commercial properties is becoming more challenging, requiring more expertise to navigate complex loan scenarios. Moreover, there is a significant divergence in rates among lenders, as illustrated by the discrepancy of 0.5% in the loan scenario priced today, emphasizing the value of a knowledgeable broker. 

In this dynamic market environment, we remain committed to providing our clients with expert guidance and solutions to successfully navigate the ever-evolving lending landscape. 

Market Commentary 5/12/2023

Posted on by Admin

Inflation and Slowing Economy Weighs Heavy on Consumer Confidence

The results of Friday’s University of Michigan Consumer Sentiment Report (UMCSENT) were lower than expected, emphasizing the impact of inflation and a slowing economy on consumer confidence. UMCSENT holds significance as it provides insight into the current sentiment of consumers, and the reading was not favorable. As we have previously mentioned, we believe that tackling inflation is always challenging. Although we anticipate short-term interest rates are approaching their peak, interest rates are not likely to decline as rapidly as some may hope. The Federal Reserve made a critical mistake by allowing inflation to exceed 9%. As a result, they will have to exercise caution in reducing interest rates until there is clear evidence that inflation has been effectively addressed.

In terms of the Consumer Price Index (CPI), overall inflation is showing signs of abatement. Regardless, super-core inflation ( which the Fed closely monitors) remains elevated. The Fed is prepared to accept a rise in unemployment and sustain potential market repercussions to bring down inflation. This strategy hinges on the recognition that inflation disproportionately affects the most vulnerable individuals. Additionally, it is important to consider that other factors continue to exert pressure on the prices of goods and services; like the post-Covid uncertainties in global supply chains and the absence of cheap labor from China. 

Housing Supply, Consumer Sentiment, and Lending Sources

The surge in interest rates has prompted a decline in existing home sales. Borrowers looking to upsize or downsize their homes are hesitant to give up their mortgage rates of around 3% in exchange for new rates of 5% to 6% or higher. This trend has contributed to the rise in stock prices of new home builders. The housing market remains constrained, particularly in larger cities, due to limited supply.

There are concerns surrounding regional banks as deposits flee and smaller banks face  balance sheet challenges. Stronger banks are positioned to acquire weaker ones. While these mini-regional bank crises are not systemic, they are creating a tighter lending environment. Many of these banks were involved in services like commercial office space as well as provided financing options for non-institutional sponsors, construction, and other specialized loans that larger money center banks often refused. We expect to witness further episodes of bank-related issues in the coming months.

At Insignia Mortgage, we are navigating this environment proactively. Our team of professional loan brokers has identified several interesting lending options, including credit unions, boutique banks, and larger private banks that offer excellent terms for the right clients. Here are some highlights:

  • Loans up to $4MM with loan-to-values up to 80%
  • Interest-only products available for high net worth borrowers up to $20 million
  • Bank statement loan programs up to $7.5MM with rates in the low 7s
  • Financing options with as low as 5% down payment for loans up to $1.5MM and 10% down payment for loans up to $2MM
  • Foreign national loans ranging from $2MM to $30MM

We remain committed to finding innovative solutions and serving our clients with exceptional lending opportunities amidst this challenging market landscape.

Market Commentary 5/5/2023

Posted on by Damon Germanides

Equities Surge Amidst Better Than Expected April Jobs Report 

Equities surged on Friday following the release of a better-than-feared April Jobs Report, calming worries of an imminent recession. Troubled regional banks rallied by over 70% in some cases, even as bond yields rose. Nonetheless, any optimism surrounding the regional banks may be short-lived as more bank failures are expected. This is due to the Federal Reserve’s decision to keep short-term interest rates higher for longer, which will put pressure on all but America’s biggest banks to raise deposit rates and scale back lending.

As borrowers realize that a 5%+ short-term U.S. Treasury bill is a much better return than keeping money in their bank, we’re seeing a movement of money out of banks designed to slow economic growth and cool off demand. The question remains: how long of a lag does Fed policy come with? Some on Wall Street believe that inflation and interest rates will fall dramatically within the coming months. We take the more conservative view that it will take a longer time for interest rates to decline and inflation to move back down to 2.00%. We don’t see the need to raise interest rates further, but we are taking the Fed at its word that rates will remain elevated for longer.

State of the Mortgage Market

Despite the challenging market conditions, the mortgage market is functioning well. We’re creating many new relationships with lenders we’ve not pursued doing business with or known of until recently. Here’s a sampling of some interesting products on active deals we’re working on in both the residential and commercial space (yes, Insignia Mortgage does commercial loans too!):

  • Single-family home loans of up to $4MM at 80% loan-to-value with rates in the mid-5s for ARM loans
  • Single-family home loans of up to $30MM at 70% loan-to-value with rates under 5% with a banking relationship
  • Owner-occupied commercial loans of up to $10MM with rates in the mid-5s
  • Multi-family apartment loans of up to $15MM with rates in the mid-5s

Market Commentary 4/28/2023

Posted on by Damon Germanides

Economy Resilient As Fed Week Approaches 

The Fed’s preferred inflation gauge came in as expected. Inflation remains high despite showing signs of moderating, with the Fed planning to raise rates next week (on top of rumors of an additional hike in June). The rationale behind higher short-term interest rates is the economy is performing better than anticipated. Q1 earnings met the projected results, with consumer sentiment and PMI data being positive. Some parts of the country are even experiencing bidding wars on home sales. 

There are signs that indicate the next few months could be challenging. GDP growth is anemic. Some CEOs, including Amazon’s CEO, have spoken about slowing business spending in preparation for a downturn. The rally in the market has been led by a few large companies, as commercial real estate valuations remain uncertain and in decline, which could be problematic for banks. Overall, bank lending standards continue to tighten, creating opportunities for lenders with more expensive terms and rates. 

Supply & Demand, Homeowners & Mortgage Rates 

Housing supply remains a challenge, particularly in cities like Los Angeles. A decade of low rates allowed borrowers to secure manageable mortgage payments. Now that interest rates have doubled, homeowners may be deterred from wanting to sell because of the high mortgage rates relative to recent years, causing a strain on supply and putting a floor on housing values. The possibility of a recession could affect all asset classes at some point, but for now, home buyers must accept higher mortgage payments and prices. 

Next week will be critical, with the FOMC meeting and conference call on Wednesday, followed by the April Jobs Report on Friday. These events could significantly impact the equity and bond markets. 

Scott Sealey Joins Insignia Mortgage

Posted on by Admin

Scott Sealey is joining the Insignia Mortgage team! With several decades of experience in the mortgage business and hundreds of positive client reviews, we are confident that Scott will be an asset to our team and provide exceptional service to our clients. His dedication to providing personalized and professional service aligns with Insignia’s company values, and we are so excited to have them join our team. 

“We are thrilled to welcome Scott Sealey to the Insignia Mortgage team. With his extensive experience in the mortgage industry and commitment to putting clients first, Scott will be an asset to our company and help us further grow our conventional loan production. We look forward to working together to continue providing exceptional service and solutions to our clients.”

Damon Germanides, Co-Founder, Insignia Mortgage

More about Scott Sealey: 

With over 30 years of experience in the Southern California mortgage industry, Scott Sealey is known for his out-of-the-box thinking. Scott has secured over 750 million in home loans for his clients, ensuring that each one is closed with the utmost consideration and efficiency. Scott is extremely well-versed in FHA, VA, Jumbo, and Conventional loan programs, as well as alternative income products and Reverse Mortgage loan programs. Check out what Scott’s clients have to say about his lending approach, with over 240 all 5-Star reviews on Zillow, he has one of the highest rankings in California. 

Please join us in welcoming Scott to the Insignia mortgage team. Check out his client testimonials, successful transactions, and special dinner recipes here.

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