Mortgage – HousingWire |
- Bond investor PIMCO bets on home-equity market
- The case for (and against) lowering FHA premiums
- Homepoint launches ARM products for brokers
- Better.com forecasts another rough quarter
- Home price growth, low mortgage rates boost MMI fund
- Rocket cautiously wades into iBuying
| Bond investor PIMCO bets on home-equity market Posted: 16 Nov 2021 04:00 AM PST Rising home prices continue to fuel the growth of the nation's multi-trillion dollar home-equity market, a fact not lost on behemoth investment-management firm PIMCO. The Newport Beach, California company has so far this year issued three-private-label transactions backed by home equity lines of credit and home-equity loans tied to a mix of performing and reperforming loans. "The loans were originated or acquired by affiliates of Capital One, National Association (which exited the mortgage originations business in 2018) and subsequently purchased by an affiliate of a PIMCO-managed private fund in a bulk sale," states bond-rating firm Fitch Ratings in the presale reports for all three of the offerings in 2021, including the most recent deal reviewed by Fitch on November 10. "The loans are serviced by Rushmore Loan Management Services." PIMCO, founded in 1971, has a long history of aggregating residential mortgage loans as well as managing assets for corporations, sovereign wealth funds, pension funds and other investors. As of the end of September, it had some $2.2 trillion under management. Presale reports prepared by Fitch in March, May and November for PIMCO's three issuances to date show the deals involve a total of 13,858 loans valued at $773 million, with an aggregate maximum available draw amount of $400 million as of the cutoff dates for the deals. "Approximately 24.9% of the [loan] pool is concentrated in Maryland per the transaction documents," states the November 10 Fitch presale report for PIMCO's latest offering — issued through a conduit called BRAVO Residential Funding Trust 2021-HE3. For the earlier offerings, Maryland also ranked as the leading state for the loan originations, at 25.1% for 2021-HE1 and 23.8% for 2021-HE2. PIMCO is not alone in looking to tap into the trillions of dollars now tied up nationwide in homeowner equity. Mill Valley, California-based Redwood Trust sees the market sector as fertile ground as well. "There was a record amount of homes purchased this year with cash by investors and by consumers," CEO Christopher Abate said at the company's investor conference held this past September in New York City. "And if we can better bank those investors and consumers, it could be just a massive addressable market for the company." As part of that effort, Redwood Trust has partnered with Palo Alto, California-based Point, a fintech firm that markets a product called a home-equity investment contract, or an HEI. The HEI contracts provide homeowners with cash upfront in exchange for a contract providing Point with a slice of the homeowner's equity. In October, Redwood and Point announced that they had completed a first-of-its-kind securitization supported by those HEI contracts. The private-placement transaction, which closed in late September, involved issuing $146 million in securities through a conduit dubbed Point Securitization Trust 2021-1. "Homeowners across the country are turning to home-equity investments in record numbers to unlock more than $20 trillion in illiquid wealth tied up in their homes," said Eddie Lim, co-founder and CEO of Point. "This first-of-its-kind securitization is a testament to the investments we've made in Point's technology platform. …" Redwood's head of portfolio strategy and risk, Bo Stern, said the company hopes to be back in the market next year with similar HEI offerings, assuming market conditions remain conducive. The post Bond investor PIMCO bets on home-equity market appeared first on HousingWire. |
| The case for (and against) lowering FHA premiums Posted: 16 Nov 2021 03:00 AM PST  Soon after the Department of Housing and Urban Development released its Mutual Mortgage Insurance fund report, housing finance and policy experts opined on whether the Federal Housing Administration (FHA) should lower the fees it charges borrowers. The fund, which insures mortgages backed by the Federal Housing Administration, benefited from the same macroeconomic factors that have boosted the broader mortgage market. The MMI fund’s capital ratio at the end of September rose nearly two percentage points to 8.03%, driven by rising home prices and low mortgage rates. Although HUD could arguably lower its mortgage insurance premiums — which FHA requires its borrowers to pay — there is no sign it has altered its stance from earlier this year. In March, HUD Sec. Marcia Fudge said the agency had "no near-term plans to change FHA's mortgage insurance premium pricing." To explain the agency’s reasoning in light of the fund's stellar performance, HUD officials laid out uncertainties that could imperil it. There are still 660,000 seriously delinquent borrowers in the FHA portfolio, and the report raised the possibility that foreclosures could cause home prices to drop. Rising mortgage rates could also make loss mitigation options more expensive. But several industry groups who represent lenders think now is the time for HUD to at least consider lowering its mortgage insurance premiums. Bob Broeksmit, the CEO of the Mortgage Bankers Association, called on HUD to "expeditiously examine reductions" to the fees.  This content is exclusively for HW+ members.Start an HW+ Membership now for less than $1 a day.Your HW+ Membership includes: Already a member? log in The post The case for (and against) lowering FHA premiums appeared first on HousingWire. |
| Homepoint launches ARM products for brokers Posted: 15 Nov 2021 03:38 PM PST Michigan-based wholesale lender Homepoint is the latest firm to announce that it is making five, seven and 10-year adjustable-rate mortgages available to its network of mortgage broker partners, a move designed to generate purchase business. Earlier in November, United Wholesale Mortgage also announced a roll out of prime jumbo ARM products for its broker channel. And it is likely that other wholesale lenders will follow suite. Homepoint on Monday said that the SOFR ARMs will adjust every six months after the initial rate expires and will feature a 1% cap at each adjustment to help minimize the rate fluctuation risk for borrowers. The lender noted that SOFR ARMS "based on the latest industry-standard Secured Overnight Financing Rate, with an initial fixed-rate" can help borrowers better "qualify for, and afford, a home in today's competitive market." "As the housing market continues to grow more purchase-heavy, we want to be on the front lines of offering mortgage brokers a greater variety of products so they can make more options available to a wider customer pool," Phil Shoemaker, president of originations at Homepoint, said in a statement. Shoemaker also added that "the availability of SOFR ARM products through Homepoint allows brokers to educate people on the potential advantages of adjustable-rate mortgages and strengthens brokers' position as the go-to experts in their communities." Homepoint's ARM options will be available on conventional and agency high-balance products, with a loan-to-value ratio up to 95% and interest rates, the lender said in a statement Monday. Recently, Home Point Capital, parent entity of Homepoint, reported its third quarter earnings, posting a net income gain of $73 million—a significant improvement from the reported $73.2 million loss posted in the second quarter. Homepoint also recently announced that it would be winding down its Ginnie Mae loan servicing business. In early November, Homepoint revealed that its third-quarter financials were boosted by $122 million in proceeds on the sale of mortgage-servicing rights, or MSRs, for an $11 billion portfolio of single-family mortgages serviced by Ginnie Mae. In a separate SEC filing made in September, the lender revealed that the $11 billion portfolio represented about 41% percent of Homepoint's "total Ginnie Mae mortgage-servicing portfolio as of June 30." The buyer for that $11 billion MSR portfolio was Freedom Mortgage Corp. The post Homepoint launches ARM products for brokers appeared first on HousingWire. |
| Better.com forecasts another rough quarter Posted: 15 Nov 2021 11:01 AM PST  Better.com is struggling to deal with the waning influence of refis in the mortgage market, with preliminary results published by their SPAC partner revealing that the digital lender expects a net loss between $85 million and $100 million in the third quarter. And the forecast looks even worse for the fourth quarter, documents show. According to an S-4 filed by Aurora Acquisition Corp. with the Securities and Exchange Commission last week, the digital lender expects further declines in the fourth quarter, that will likely "exceed third quarter losses." The filing noted that the fluctuations in interest rates – which affect refis more than purchase business – and a recent reorganization of Better's sales and operations teams has put pressure on the company's net income and will continue to do so for the foreseeable next quarter, as the company attempts to find footing in a purchase market. In the second quarter, the company also reported a net loss of $86 million. At the time, the company's spokesperson said that Better was impacted by "the same headwinds as everyone in the industry." Meanwhile, the New York-based lender predicts that its gain-on-sale margin will be in the range of 1.87% to 1.97% in Q3, up from 1.62% in the second quarter of 2021. This content is exclusively for HW+ members.Start an HW+ Membership now for less than $1 a day.Your HW+ Membership includes: Already a member? log in The post Better.com forecasts another rough quarter appeared first on HousingWire. |
| Home price growth, low mortgage rates boost MMI fund Posted: 15 Nov 2021 07:57 AM PST The Department of Housing and Urban Development is taking a cautionary approach to changes to mortgage insurance premiums after a banner year for its Mutual Mortgage Insurance (MMI) fund. The capital ratio of the Federal Housing Administration's MMI fund reached 8.03% at the end of September, an increase of 1.93 percentage points from the previous year, when it was 6.10%. The report marked the sixth consecutive year the ratio has exceeded its 2.00% statutory minimum. As of yet, there are no plans to lower the mortgage insurance premium, which FHA borrowers pay to insure the credit risk for both single family forward and reverse mortgages. (Earlier this year, HUD Sec. Marcia Fudge said there were no near-term plans to change FHA's mortgage insurance premium pricing.) The FHA's MMI fund benefited from the same dynamics that the broader mortgage industry has enjoyed over the past 18 months. Home price appreciation, high refinance volume spurred by low mortgage rates and the financial performance of the reverse mortgage portfolio all drove the increase in the capital ratio, according to HUD. But HUD officials also raised concerns over the share of seriously delinquent borrowers and the impact of potential changes in the broader market. Top markets for affordable renovated housing inventory Despite the rapidly deteriorating affordability, there is some hope for homebuyers in the form of renovated homes: properties that have been rehabbed into move-in ready condition after being purchased at foreclosure auction or bank-owned (REO) auction. Presented by: Auction.comA large and concerning number of homeowners remain seriously delinquent, HUD officials said. Although HUD expects many of those borrowers to resume payments, officials said they are waiting for more data on their performance in the coming months. By the end of September, 660,000 homeowners in the FHA portfolio were still seriously delinquent, and of those, 350,000 were not in a forbearance plan. More than half of homeowners who are seriously delinquent have not made a payment in more than a year. The dollar volume of seriously delinquent mortgages is now $110 billion, compared with the pre-pandemic high of $96 billion in 2012, when the capital ratio turned negative. "The size of the seriously delinquent portfolio further magnifies the uncertain future MMI Fund performance," the report read. A number of other factors could also pose a risk to the MMI fund, the report noted. A surge of borrowers exiting forbearance and capacity constraints in the industry could delay resolutions in the coming year. Fast-rising mortgage rates could make home retention and loss-mitigation tools more expensive and would dampen homeowners ability to refinance with lower rates. Higher-than-anticipated unemployment would also threaten the health of the MMI fund. Covid loss mitigation options were modeled after tools originally used in natural disasters, but unlike the quick recovery after a natural disaster, many homeowners with Covid forbearance have not made payments in over a year. “Businesses that were once a source of employment may no longer exist. Borrowers may or may not regain employment, and if they do, may experience decreases in income from their pre-pandemic employment,” the report said. And, although not the most likely scenario, the HUD report notes that home prices could fall if the homes belonging to the 1.21 million borrowers in forbearance across the housing market, as well as the 1.18 million seriously delinquent borrowers not in a forbearance plan, were to come to market. The seriously delinquent rate for the FHA portfolio has been persistently higher than that of the government-sponsored enterprises, in part because of the disproportionate impact the pandemic has had on low-income households and people of color. Nearly 85% percent of FHA originations in 2021 were first-time homebuyers, a figure that has steadily increased for the past decade. First-time homebuyers account for 45% of originations in the broader mortgage market. That figure does not include Private Label Securities or portfolio lenders. The post Home price growth, low mortgage rates boost MMI fund appeared first on HousingWire. |
| Rocket cautiously wades into iBuying Posted: 15 Nov 2021 03:00 AM PST  When Rocket Companies announced in August that it would be dipping its toes in the iBuying space, the lender didn’t do so with its usual panache. There were no polished marketing promos or commercials featuring celebrities like Tracy Morgan. In fact, news that Rocket would be pushing into iBuying was barely a footnote in the August press release. Rocket’s low-key entrance might be explained by the company not envisioning itself as becoming a true iBuyer: it will not be buying homes with the help of an algorithm, throwing a new coat of paint on the wall, and then reselling the home for a markup. In fact, Rocket has no interest in buying homes at all. Rocket, instead, would be simply integrating third-party iBuying services on its Rocket Homes platform. The iBuying initiative is set to be launched sometime in the fourth quarter, though details have been sparse. Rocket declined to answer HousingWire’s questions about which iBuying companies it would be partnering with, the exact nature of its relationship with third-party iBuyers, or how it would generate money from the venture. What the company has said is that iBuying will be lumped in with several other services on the company's real estate platform, including "credit reporting, home search, the industry-leading ForSaleByOwner.com process, on-staff real estate agents, a nationwide network of trusted real estate professionals…along with direct connections to Rocket Mortgage." Rocket said its iBuying program will "provide a back-up offer” to sellers. This content is exclusively for HW+ members.Start an HW+ Membership now for less than $1 a day.Your HW+ Membership includes: Already a member? log in The post Rocket cautiously wades into iBuying appeared first on HousingWire. |
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