Friday, February 11, 2022

Mortgage – HousingWire

Mortgage – HousingWire

Latest Better exit? It’s the head of real estate

Posted: 10 Feb 2022 05:44 PM PST

Back in August, Christian Wallace spoke effusively about her future at Better.com. The digital lender generated so much money through mortgage refinancing that it bankrolled a formidable real estate division. And Wallace, a former Sotheby’s agent and Opendoor manager, was charged with ensuring the division blossomed.

But on Thursday, Wallace said that she gave Better her three-weeks notice of resignation. Wallace worked at Better for less than two years, and served as head of real estate services since March. In a phone interview, Wallace faulted company culture, while declining to go into details.

Wallace’s imminent departure follows reports last week that Sarah Pierce, the executive vice president of customer experience, and Emanuel Santa-Danato, senior vice president of capital markets and growth, are no longer with the New York City-based outfit.

And those reported departures come after three top communications executives departed in December.

The exodus would appear to center around the leadership of Vishal Garg, Better.com’s founder and CEO. Garg took a leave of absence in December after he laid off 900 people, or about 15% of the workforce, in a dystopian Zoom call. However, the company’s board of directors has since reinstated Garg.

Messages left with Better on Thursday were not returned. The company still plans to go public through a special purpose acquisition company, Aurora Acquisition Corp.

Wallace was put in charge of a fairly novel business model, a real estate arm in which agents are paid almost entirely on salary and monthly bonuses, instead of sales commissions. Among major real estate brokerages today, only Redfin classifies its agents as employees, and even Redfin agents mostly make money from sales bonuses.

Better has recruited hundreds of agents and expanded into 30 states, Wallace said. But the outgoing real estate head also acknowledged the company has dealt with significant agent attrition.

Wallace has split time the past year between New York and her home city of Dallas, she said, and is not certain of her next professional move.

The post Latest Better exit? It’s the head of real estate appeared first on HousingWire.

Licking its wounds, Zillow bets on a ‘housing super app’

Posted: 10 Feb 2022 04:49 PM PST

Rich Barton - HW+
Zillow CEO Rich Barton.

When Zillow stunned the housing world last November by announcing a wind down of its iBuying program – and beginning the process of laying off a quarter of its workforce – the question became what's next. Suspense built as Zillow has kept a low profile since.

On Thursday, we got an answer – A super app.

"We are focused on building the 'housing super app' – an integrated digital experience in which Zillow connects all the fragmented pieces of the moving process and brings them together into one transaction platform," wrote CEO Rich Barton and Chief Financial Officer Allen Parker in a letter to shareholders.

The 'housing super app,' according to investor slides filed with the Securities and Exchange Commission, will provide mortgage pre-approval, "immersive shopping," facilitate in-person touring, and home financing.

How Zillow would make money from the app was preliminarily discussed in an earnings call that captured a digital age company in transition.

Zillow lost $528 million in 2021, the company reported, compared to losing $162 million in 2020. The loss came amid a historically robust year for U.S. real estate, where housing prices went up, and up and up, and "How to become a real estate agent" was one of the most frequent Google searches.

Zillow did report $8.1 billion in revenue, more than double its $3.3 billion total in 2020. But 73% came from homes sold in the very iBuying program Zillow is shuttering.

Of the over 18,000 homes in inventory when Barton announced the beginning of the end for iBuying, 8,353 are sold.

Zillow has found a buyer for 85% of the remaining properties, the company said. Barton also declared Zillow would be "cash flow positive" after completing the sales. Presently, Zillow reports $3.1 billion in cash and investments and $4.8 billion in debt.

For 2021, the company lost $881 million before taxes on iBuying. The company exited the business model because Barton said that home price forecasting models are too volatile.

Despite 2021 being one of the best years in history for the mortgage industry, Zillow lost $52 million before taxes last year on its mortgage segment, Zillow Home Loans, which posted $246 million in revenue.

The company's silver lining is a division dubbed "Internet, marketing, and technology," which generated $545 million in income before taxes and $1.9 billion in revenue. The lion's share of this revenue came from Premier Agent, Zillow's popular if polarizing advertising program for buyer's agents.

On the earnings call, Barton discussed a conundrum that has dogged him since replacing Spencer Rascoff as CEO in 2019 – the yawning gap between Zillow's popularity and its ability to make money from that popularity.

Of the 6.1 million U.S. home sales in 2021, Barton said, 4.1 million – or 67% — involved homebuyers who utilized Zillow at some point in the transaction process. However: Only 3% — or about 180,000 – of those purchases were monetized by Zillow.

Barton expressed hope that the new app and Zillow's October purchase of ShowingTime would open up opportunities to monetize more aspects of the home sale.

Unclear is whether the company is on the right monetization track. Ryan McKeveny of Zelman & Associates asked whether Zillow increased the number of transactions it monetizes year-over-year.

Parker replied that he did not have such figures, "But I have seen growth."

Barton added that part of the problem is that has not been diligently tracking those numbers. After McKeveny's question, the call wrapped up, but not before Barton's parting words.

"This is a really fun and entertaining industry, real estate," the CEO said. "Maybe not quite as entertaining as Netflix, but not too far off."

The post Licking its wounds, Zillow bets on a ‘housing super app’ appeared first on HousingWire.

ReverseVision acquired by Constellation Software

Posted: 10 Feb 2022 11:33 AM PST

Reverse mortgage software solutions and loan origination system (LOS) provider ReverseVision announced on Thursday morning that it has been acquired by a division of Toronto-based Constellation Software, a holding company that bought another mortgage LOS in 2019.

Staff at San Diego-based ReverseVision was informed of the sale this morning. Terms of the deal were not disclosed.

The acquisition includes the components of ReverseVision's full product suite including its core platform, ReverseVision Exchange (RVX), RVDOC Composer (RVDOC) that provides customized compliant reverse mortgage documents, and ReverseVision Sales Accelerator (RVSA) which includes advanced loan modeling and comparison tools.

Leadership on the acquisition

ReverseVision leadership described the acquisition as a major component of expanding its overall footprint and availability of its platforms and services.

"The ReverseVision team is excited to join Constellation Mortgage Solutions and looks forward to the next chapter of the ReverseVision story under Constellation's stewardship," said Joe Langner, former CEO and President at ReverseVision in a statement announcing the deal. "Constellation has a proven track record for supporting its businesses and empowering them to advance the industries they serve. Our team looks forward to building on our shared principles to continue collaborating with lenders in their mission to help borrowers achieve their financial goals."

Leadership at Constellation Mortgage Services, Inc. (CMS), the division of the Constellation parent company that is overseeing the acquisition of ReverseVision, describes an alignment in the goals of both entities as one reason for the acquisition.

Mortgage Cadence Releases Next Generation Loan Origination Software

Today, it's not just about creating the mortgage asset. It's about doing it faster and cheaper. With timelines expanding and cost-to-close still too high, if your LOS is not helping you manage your time and money, it's not doing its job and it's time to seek out a new solution.

Presented by: Mortgage Cadence

"Constellation and ReverseVision share a dedication to the industries and customers we serve, making this a big win for all," said Stephen Ryczek, general manager of CMS. "ReverseVision's commitment to meeting the evolving and unique needs of their customers is demonstrated by the immense recognition both their products and team have received in the industry. This acquisition expands our footprint in the digital mortgage ecosystem, and we are thrilled to have them join us as we continue to develop innovative and streamlined technology solutions in the lending space."

ReverseVision marks the second mortgage software provider acquired by CMS in the last couple of years. The company previously acquired forward LOS provider Mortgage Builder in 2019.

Recent ReverseVision history

The sale comes after a dedicated growth period for the LOS platform provider. The company has been hiring for several key positions in recent months, most recently including a new marketing lead just last week. In November 2021, the company added Mitchell as CRO, followed soon after by key hires in its IT development and financial management departments. In January, the company also added a new director of business development.

ReverseVision currently serves a number of leading reverse mortgage lenders including American Advisors Group (AAG), Finance of America Reverse (FAR), Mutual of Omaha Mortgage, Longbridge Financial, Fairway Independent Mortgage Corp., Reverse Mortgage Funding (RMF), Open Mortgage and many others. The company also serves "100%" of reverse mortgage investors, according to the sale announcement.

In 2021, the company unveiled a new pricing model for its services. Langner, who first hired as the company's new president in 2020, was promoted to an expanded role of president and chief executive officer (CEO) shortly thereafter. Langner told RMD at that time that ReverseVision would aim to build out its partnerships with third-party software companies to leverage those APIs to streamline loan processes, while an expansion of existing offerings was also a stated company priority.

While initially beginning operations in 2003, the company of ReverseVision was founded in 2007 by Thomas Martignoni during a time when there were only three primary lenders that were actively offering reverse mortgage loans in the United States. Over the years, the company continued to evolve its LOS product offerings aiming to streamline the operations of the reverse mortgage business and modernize the space's implementation and use of technology solutions.

This is a developing story. HousingWire and/or Reverse Mortgage Daily will share more information when it becomes available.

The post ReverseVision acquired by Constellation Software appeared first on HousingWire.

In wake of scandal, LOs give continuing education programs failing grade

Posted: 10 Feb 2022 11:23 AM PST

HW+ mortgage workforce

If you're a mortgage loan officer with a decade of experience in the industry, you have likely spent over 80 hours taking continuing education courses.

Per regulations put into place by the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 ("SAFE Act") and enforced by the Nationwide Mortgage Licensing System and Registry, every loan officer must spend an average of eight hours on an annual basis to recertify their national license.

The hours spent on continued education should be useful. Tricky situations can arise in mortgage lending, especially when navigating less-common products or originating non-agency loans. Continuing education classes represent an opportunity for LOs to sharpen skills. 

But a 26-state federal investigation that penalized 400-plus LOs for effectively cutting class raises questions about the effectiveness of the continuing education programs. 

Roughly a dozen LOs and instructors told HousingWire that current continuing education courses teach the same mortgage ethics and regulation guidelines that they already know cold, and do very little to teach them skills they need for day-to-day work. In short, they say, the classes are not particularly relevant, and represent a big missed opportunity. 

Teaching by the book

The very people responsible for delivering the classes say the material could use some updating.

CE instructors say that the NMLS – owned and operated by a subsidiary of the Conference of State Bank Supervisors – requires them to annually recite and cover regulations such as the Truth in Lending Act, Equal Credit Opportunity Act, and the Real Estate Settlement Procedures Act (RESPA).

John Jeha, an LO at Stonecastle Mortgage who also works as a CE instructor, said that after new regulations were introduced in 2011, it took about five years for them to be fully implemented and that educators were happy to "flesh it out and instruct the loan officers."

"All the rules and regulations have pretty much been implemented and now we’re just rehashing the same rules and regulations," Jeha said. LOs often lose focus during CE classes, he told HousingWire.

Meanwhile, Ken Perry, funder of the Knowledge Coop, a continuing education company, agreed that educators simply aren’t keeping it fresh. “They’re doing the same exact training every single year, ” he said. ” They aren’t delivering the latest information.”

Rich Madison, vice president of credentialing and accreditation programs at the Conference of State Bank Supervisors, wrote in an email that his experience with MLOs "is that the vast majority take CE requirements very seriously" and that if some LOs are not "getting enough out of a school, [they should] shop around and find another one that will better suit [their] career needs.

"We're always pushing schools to make courses more relevant and engaging," Madison said. "It would be interesting to see scenario-based learning where the content of a course is delivered around discovering the needs of a customer and how the customer scenario presents challenges in the areas of loan products available, fair lending, qualifying requirements, or any number of other potential real-world factors. We would welcome the opportunity to approve courses with a creative take on how they design and develop content."

Loan officers and instructors alike say that apart from learning regulations, LOs should also be equipped with "esoteric financial knowledge" and an understanding of how to work with borrowers.

"The curriculum is not directly relevant to ensuring the licensed individual possess the intellectual tools needed to create informed consumers when dealing with the professed 'largest financial transaction' of their lives," said William Kidwell, a loan officer at Intelligent Investments, LLC.  

Kidwell added: "The federal law and the law as adopted by the states set a woefully low bar and certainly has little education related to being in a position to advise consumers on difficult balance sheets, cost versus debt, and debt service parameters."

Different year, same teacher

CE classes are taught by private companies that set up their own educational platforms, which then get approved by the NMLS and the states. According to instructors who teach CE classes, the price for taking these classes ranges between $20 to $150 and the courses are taught based on a "laundry list" of topics that the NMLS supplies. To access the NMLS platform, LOs must also pay a $30 annual fee.

"The whole premise of CE was in response to the Great Recession [and] was introduced in part because of issues with housing [and the need] to protect consumers," said one California-based LO who requested anonymity to speak freely. "And in order to protect consumers you need to make sure that LOs are ethical, hence the implementation of background checks and credit reports."

The SAFE Act, apart from requiring continuing education, implemented requirements that all MLOs must submit fingerprints to the NMLS for a criminal background check. LOs must also provide authorization for NMLS to obtain an independent credit report.

The LO who requested anonymity said that instead of focusing on regulations, continuing education should drill down on topics that can help LOs in their day-to-day jobs, such as teaching them customer service, and going over niche products such as asset depletion on conventional loans, delayed financing and renovation products.

Cutting class

Continuing education came under the spotlight after a multi-state investigation determined more than 400 mortgage loan originators falsely claimed to have completed an annual continuing education requirement.

As a result, LOs in 42 states who settled with state regulators will have to dole out an average of about $2,700 each — $1,000 for each state they are licensed in — for skipping the annual eight-hour course. They must also surrender their licenses for three months and take additional educational programs.

The 26-state investigation, which the California Department of Financial Protection and Innovation led, picked up on the discrepancies using a digital tool to check fulfillment of NMLS requirements. The 426 LOs implicated in the investigation all paid for educational programs from Carlsbad, California-based firm Real Estate Educational Services (REES), headed by Danny Yen.

Yen was accused of concocting schemes in which he either took the classes in exchange for compensation, or gave LOs class credit without requiring them to show up to class. Part of the penalty stems from REES offering online courses — like a three-hour one on fair housing and discrimination laws — but only being licensed to give in-person classes.

However, officials said there was no evidence consumers were harmed by LOs skipping the continuing education courses. 

Yen did not respond to a request for comment.

Jeff Anderson, a broker/owner based in California, said it doesn't mean broader malfeasance didn't occur.

"There are rules in every facet of the mortgage business that loan officers and lenders must follow. Some don't follow the rules and/or they look for shortcuts to circumvent them," he said. "These 400 loan officers are just the ones that got caught in a specific scam. If an LO is willing to cheat on CE it's logical to me that they're cheating in other areas as well. It's nice to hear the regulator say 'there's no evidence that any loan generated by these 400+ LOs caused consumer harm.' But, I'm not convinced it's true just because the regulator said so. How can they be sure? Did they audit 100% of the loans originated by these loan officers during the past year? Did they interview every borrower? Did they investigate their referral relationships for possible RESPA violations? I doubt they did any of these things."

The California Department of Financial Protection and Innovation did not respond to request for comment.

One LO told HousingWire that he's not surprised that some opted to quickly settle, stay on ice for three months and then move on. 

Continuing education "is nothing but a big waste of time and a money grab," he said. 

James Kleimann contributed reporting to this story.

The post In wake of scandal, LOs give continuing education programs failing grade appeared first on HousingWire.

Freddie Mac posts $12.1B income in 2021

Posted: 10 Feb 2022 09:53 AM PST

Freddie Mac reported a net income of $12.1 billion for 2021, a 65% increase from 2020.

The government-sponsored enterprise saw a 20% growth in its single-family mortgage portfolio from 2020 to 2021, driven by soaring home prices and an increase in the average size of loans it acquired. Freddie Mac's net worth is now $28 billion, more than three times what it was pre-pandemic.

It reported $2.7 billion in net income in the fourth quarter, a 6% decrease year-over-year, which the GSE attributed to an increase in credit-related expenses.

Overall, Freddie Mac purchased $1.22 trillion in single-family loans in 2021, about two-thirds of which were refinances. Freddie Mac also reported that its serious delinquency rate, which has been consistently lower than the rest of the market, is now 1.12%. That figure includes loans in forbearance, if they are past-due based on the loan's original terms.

The average credit score for loans Freddie Mac purchased also fell slightly, from 759 in 2020 to 753 in 2021.

The Federal Housing Finance Agency has prioritized expanding access to credit while prioritizing safety and soundness. Part of that effort has centered on including rental payments in underwriting at both of its regulated entities.

Freddie Mac updates risk mitigation requirements for the industry due to elevated cybersecurity threats

As the mortgage world becomes more technologically interconnected, the risks to cybersecurity, data and infosecurity increase. These risks should be top-of-mind for mortgage professionals, as evidenced by recent changes at Freddie Mac that emphasize risk mitigation and cybersecurity efforts.

Presented by: FundingShield

Freddie Mac CEO Michael DeVito gave an update on progress for Freddie Mac’s on-time rental payment initiative.

In November, Freddie Mac announced it would encourage landlords to provide access to rental payment data, by recouping a portion of closing costs for properties it finances. In exchange, the landlord would use a platform to report on-time rent payments to the credit bureaus.

By year end, he said, 73,000 tenant households across 284 properties had been offered the program, DeVito said. As a result of the program, 10,000 people established credit scores, and improved their scores by an average of 43 points.

During the balance of 2022, DeVito said, Freddie Mac would "continue to emphasize strategic priorities and a renewed focus on mission."

How it fulfills that mission will be determined, in part, by changes to its Duty to Serve plan for 2022 to 2024, which the Federal Housing Finance Agency asked Freddie Mac and Fannie Mae to revise. In its filings, Freddie Mac did not provide any timeframe for when it would have a new plan, or any details on the revisions its conservator requested.

Freddie Mac also announced the election of two new members to its 13-member Board of Directors, on February 7. Kevin Chavers and Luke Hayden will assume their roles effective February 15.

Chavers, who will serve on Freddie's audit committee and nominating and governance committee, retired as managing director, global fixed income investment team, at BlackRock in 2021. Previously, Chavers held positions at Morgan Stanley and Goldman Sachs & Company. Prior to that, from 1995 to 1998, Chavers was the president of Ginnie Mae.

Hayden, who will serve on the GSE's committees for operations and technology, as well as the committee on risk, started his career as a loan officer and loan purchaser. He was most recently CEO of Hayden Consulting, which advises mortgage banks, commercial banks, thrifts, REITs, and private equity firms. He was also vice chairman of Residential Mortgage Services Holdings from 2013 to 2021.

The post Freddie Mac posts $12.1B income in 2021 appeared first on HousingWire.

Investor accuses Rocket’s Dan Gilbert of insider trading

Posted: 10 Feb 2022 09:46 AM PST

Dan Gilbert is the target of a new insider trading lawsuit.

A Rocket Companies' investor filed a stockholder derivative complaint on Monday that accuses the company's chairman of using non-public information to sell stocks and avoid material losses.

In total, the lawsuit claims that Gilbert pocketed $500 million by selling company stock before reporting poor earnings and guidance. The lawsuit, first reported by Reuters, was filed in the Delaware Chancery Court by an investor, Christopher Vargoshe.

Aaron Emerson, a spokesperson for Rocket Companies, said the claim is "absolutely preposterous" and "completely frivolous and without merit." He added that Vargoshe holds three shares, invested no more than $130, and it is a "shame that the legal system allows this type of pointless litigation."

The plaintiff claims that on March 29 ­– six days after a board meeting and two days before the end of Rocket's Q1 2021 ­– Gilbert sold $500 million in Rocket stock, "despite having actual or constructive knowledge of material, non-public information about Rocket."

He sold 20.2 million Rocket shares at $24.75 per share, according to U.S. Securities and Exchange Commission (SEC) files.

On May 5, Rocket issued its Q1 2021 earnings and guidance for the second quarter. It reported that the company was on track to achieve a loan volume between $82.5 billion and $87.5 billion and gain-on-sale margins within a range between 2.65% and 2.95%.

"At the midpoint, this gain-on-sale margin estimate equated to a 239 basis points decline year-over-year and a 94 basis points decline sequentially, which represented the Company's lowest quarterly gain on sale margin in two years," the lawsuit said.

On this news, the company's stock fell to $19.01 per share on May 6.

According to the lawsuit, Rocket Corporation is controlled by Gilbert through his investment vehicle Rock Holdings Inc. (RHI).

The investor raised concerns about Rocket's board of directors, saying there is no majority of independent directors with respect to the claims. He alleges that four of the seven directors are affiliated with RHI, including Gilbert; his wife Jennifer; RHI's CEO Jay Farner; and Matthew Rizik, who provides consulting services for the company and serves as an officer at RHI.

Vargoshe said that Gilbert should compensate the company for any damage brought by the alleged misconduct and should also pay back any profits made by alleged insider trading.

This is the second lawsuit alleging that Gilbert engaged in insider trading. The first was filed in December in the Delaware Court of Chancery by the Police & Fire Retirement System City of Detroit and the Doris Shenwick Trust.

However, the pension fund in Detroit withdrew the lawsuit after two weeks, alleging that it was filed due to a "miscommunication" with a third-party law firm.

"The firm was authorized to review the case and do fact-finding but not authorized to file a lawsuit," the pension fund said in a statement. 

The post Investor accuses Rocket’s Dan Gilbert of insider trading appeared first on HousingWire.
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Mortgage – HousingWire

Mortgage – HousingWi...