This morning I head to Orange County, which has the same population as Arkansas or Nevada, for the CAMP conference where the economy will be discussed. The stock market is not the economy. Lower mortgage rates? Splendid. Critics would say, “No inventory + lower rates = even more pressure in the starter home market for people with jobs.” Meanwhile, capital markets groups everywhere have dusted off their renegotiation policies and are busy reminding loan officers and brokers what EPO stands for: Early Pay Off. When investors buy mortgage loans, and the servicing rights to those loans, they expect to have them on their books for a while, not paying off four months later. Originators always seem puzzled why, when rates move higher, investors are very hesitant about paying 103 or 104 for a loan with a rate above the prevailing market. This is why: to be blunt, they kiss this 3- or 4-point premium goodbye when rates drop. The good news for lenders, and vendors, is that because so many costs have been eliminated, any modest increase in profits might give a big boost to their profitability. (Today’s podcast is found here and this week’s is sponsored by PHH Mortgage. If you are looking for a Correspondent Lending partner or an experienced, award-winning subservicer who can manage your forward and reverse, residential and commercial, and performing and non-performing loans, look no further than PHH. Hear an interview today with Private Eyes Background Checks’ Sandra James on how verification services are helping originators close loans faster.)