Mortgage – HousingWire

Redfin closes $138M deal for mortgage lender
Are shopping signals the secret to mortgage marketing?
Homes for Heroes’ mission to inspire the housing industry
FHA unveils 40-year loan modification option

Redfin closes $138M deal for mortgage lender

Posted: 04 Apr 2022 01:57 PM PDT

Redfin completed its acquisition of Bay Equity Home Loans, paying $137.8 million for the mortgage lending operation in its quest to provide customers "a one-stop shop" where they can buy, sell, rent and finance a home, according to a news release from the company.

Seattle-based Redfin previously announced its intention to acquire the lender, but CEO Glenn Kelman said the move is particularly timely as buyers face bidding wars and high home prices, saying, "it's more important than ever for lenders and brokers to work together on every customer's offer."

"In dozens of markets, Bay Equity and Redfin field organizations have already met, and the difference in our agents' enthusiasm about recommending a Redfin mortgage to their customers is night and day: because Bay Equity has hundreds rather than dozens of loan officers, because Bay Equity supports every type of loan, because Bay Equity was already one of Redfin customers' top-rated lenders. But the biggest reason we expect to hit the ground running is just how much the two teams have already enjoyed working together," Kelman was quoted as saying in the news release.

The purchase price "represents a $72.5 million premium over Bay Equity's tangible book value" as of Feb. 22, according to the news release.The move allows Redfin agents in 91 markets to begin referring customers to one of 400 local Bay Equity loan officers as of Monday.

Bay Equity CEO Brett McGovern also touted the benefits of the acquisition, saying, "Being a part of Redfin will help us meet customers more efficiently, which means we can give Redfin homebuyers competitive rates while delivering a seamless experience from pre-approval to close."

Bay Equity will continue to operate under its own name and will retain its headquarters in California as well as its current leadership, according to the news release. Loan officers will continue "originating refinance and purchase loans for customers working with Redfin agents as well as customers working with other brokerages."

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Before the acquisition of Bay Equity was completed, Redfin laid off 121 staffers in its mortgage division.

McGovern said he doesn't expect "Redfin's agents to recommend us to customers because we're part of the same company, but because of the value and service we deliver. Aligning with Redfin recognizes our 14 years of strategic growth nationwide and puts us on a trajectory to become a top 10 lender."
In February, HousingWire published a deep dive into Redfin's unique business model, which features iBuying, search portals and, perhaps most interestingly, salaried real estate agents.

The post Redfin closes $138M deal for mortgage lender appeared first on HousingWire.

Are shopping signals the secret to mortgage marketing?

Posted: 04 Apr 2022 01:54 PM PDT

As we usher in a new era of galvanized homebuyers who are well-researched before making a move, personalizing the shopping experience is imperative to breakthrough. Educate your outreach by keying into shopping behavior and you can empower your mortgage marketing in the new year.

Market outlook

Although the rate of home price growth is slowing, appreciation remains robust. Supply shortages continue to put upward pressure on prices while rising 30-year rates continue to put downward pressure on refinance volumes. The refinance boom of 2021 has given way to the purchase market of 2022.

The 30-year fixed-rate average clocked its 2021 high just before Thanksgiving, and the first few weeks of the new year registered the highest average rate since the early months of the COVID-19 pandemic, according to consumer rate watchers. Though mortgage rates have gone up slightly, they still hover at bargain lows for consumers who are considering homebuying. Besides, we all know that buying a home is subjective, with personal finances and life events often weighing in more heavily than market conditions.

A new generation of buyers

Not only is the market pendulum swinging from refinance to purchase, but we are also seeing a marked shift in who is buying. According to CoreLogic, millennials accounted for 51% of home-purchase mortgage applications in 2021. In fact, millennials have made up the largest share of home purchase mortgage applications since 2016.

There is also an emerging influx of high-net-worth younger consumers buying high-end homes. Millennials, the 72 million Americans now ages 26 to 41 years old, are the most educated generation in history, have higher earnings than other generations, and are set to inherit more than any prior generation, according to Brookings Institute research.

For lenders looking to win this next generation of customers, it's more important than ever to understand the market and services this clientele needs. This younger generation of digital natives is entering one of the more expensive times of their lives with new higher-value homes and expanding families.

With the trend of younger Americans purchasing expensive homes set to continue, there is an untapped opportunity to serve this demographic as they make big life purchases and create valuable long-term customers.

At the other end of the spectrum, multigenerational and mixed family households have become more common, as Americans are increasingly "doubling up" to reduce housing costs. This trend is exacerbated perhaps by the aging of America and the growing desire to age in place. Regardless of the motivations behind the multigenerational trend, the traditional "nuclear family" is no longer the dominant household structure. And, sadly, the nation's housing supply hasn't kept up with demand.

Economic indicators tell us we may be able to expect more purchase activity. Tappable equity, the amount available to homeowners while retaining at least 20% equity in their homes, rose by 32% last year, surging to an all-time high of $9.4 trillion as cash-out refinance borrowers pulled the largest quarterly volume of equity in 14 years, according to Black Knight's October 2021 Mortgage Monitor. With the tsunami of refinance activity calming, it is worth noting that substantial equity also empowers new home purchases.

Using data to inform your marketing

Consumer shopping behavior has permanently changed, consumer expectations have changed, and our industry needs to adapt to those changes to stay competitive. Harvard Business Review conducted an oft quoted Lead Response Management Study a decade ago and follow-up studies by other organizations have since confirmed a whopping 78% of customers buy from the first company to connect with them, responding to their query. Are you familiar with the cocktail party analogy?

You may have a chance at earning someone's attention if they step in mid-conversation if the topic happens to be of interest to them. But your chances of earning their attention are much better if you talk directly to them about something they care about. This translates to the experiences consumers are having online with your brand. Behavioral data that informs lenders when their consumers are visiting mortgage-related websites can help "fill in the blanks" of information about clients and prospects to help you better understand their needs.

Meet qualified leads and current customers where they are. Today's homebuyers are in-market for what you are offering, and they're signaling (through comparison shopping and engagement) that now is the time to give them the information they need. Marketers that embrace external data like intent-based behavior, can meet consumers where they are to create well-tailored and well-timed online experiences that meet consumer's high expectations and drive positive outcomes for the business.

Keeping preferences and permissions in mind, mortgage marketers can shift from only knowing and using static, personal information to responding to actions and signals like page views, form submissions, sign-ups, etc. Lenders can improve on recapture rates by using consumer predictive data to determine when a borrower is likely to be mortgage shopping, and marketing to them with the right content, at the right time.

This behavioral data can inform lenders when their consumers are visiting mortgage-related websites, giving them the ability to better time their engagements, increase customer retention and capitalize on new acquisition opportunities.

Direct mail response rates, for example, are typically two to three times higher for consumers flagged as in-market versus those who are not. And a recent Forrester study suggests companies utilizing consumer insight tools increase customer engagement and consistently close new business, resulting in as much as a 191% ROI over three years. Our job as mortgage professionals is to help consumers when and how they need us.

This is especially important in a seemingly perpetual pandemic market where behaviors of both consumers and those in the housing industry are changing. Partnering with fintech companies that provide behavioral data can add value by informing lenders when their consumers are visiting mortgage-related websites, and lenders can see which of their consumers are in-market, approximately 100 days prior to a credit trigger or an MLS trigger and up to 180 days before a closed loan. These shopping signals are the earliest signs available indicating a customer has started their mortgage shopping journey. The investments made into marketing automation systems provide lenders the capabilities to customize messaging and marketing campaigns to individual consumers. Lenders also have the opportunity to substantially improve customer experiences by leveraging behavioral insights.

Combining privacy, consumer preference and the Golden Rule of Data — treating consumer data like you would want your own data treated — are the most critical parts of providing an exceptional customer experience. Marketers can be empowered to provide interactions when consumers want them most, while protecting the consumers' data.

Today's marketers face greater competition than ever to grow their customer base and retain existing customers. The new market demands that we create value for customers by providing them with timely and relevant services and information based upon their needs at the exact moment they need it.

The correct use of behavioral data can enable marketers to create exceptional consumer experiences. Marketers willing to utilize the latest tools to understand consumers' online shopping behavior, to look to actual intent rather than relying solely on modeled data and educated guesses based on static demographic segmentation, can improve consumer experiences and drive retention and ROI.

This was originally featured in the March Issue of HousingWire Magazine. To read the full issue, click here.

Natalie Mullen is the market leader of mortgage and banking at Jornaya.

This column does not necessarily reflect the opinion of HousingWire's editorial department and its owners.

To contact the editor responsible for this story:
Brena Nath at bnath@housingwire.com

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Homes for Heroes’ mission to inspire the housing industry

Posted: 04 Apr 2022 01:37 PM PDT

How do you celebrate helping 50,000 community heroes buy or sell a home? Well, according to Ruth Johnson, CEO of Homes for Heroes, you honor the massive accomplishment by giving even more. As one of the largest networks in the real estate and mortgage industry, Homes for Heroes was built to give back to firefighters, EMS, law enforcement, military, healthcare professionals and teachers and provide an easier route for them to buy or sell a home.

Founded shortly after 9/11, Homes of Heroes reached a milestone in late 2021, helping its 50,000th hero, an officer with the Knoxville Police Department who, along with his family, purchased a 3-bedroom, 3 – bathroom home, located in Knoxville, Tennessee.

"I am grateful to this hero for choosing a home in Knoxville, and I am thankful that with the help of Homes for Heroes, he was able to purchase a home and raise his family in the community where he works," said Nikki Moore, the officer's real estate specialist and a former law enforcement officer herself.

Public servants that are responsible for law enforcement should be able to live in the communities that they serve and protect," she added.

In honor of serving more than 50,000 heroes, Homes for Heroes announced it was doubling the traditional give-back and donated funds to support a national law enforcement foundation, providing the Tennessee Fraternal Order of Police chapter with a $3,000 donation on National First Responders Day to honor the service of the police and members of law enforcement.

According to the foundation's website, they have helped heroes save more than $93 million on their real estate transactions, sold more than $13 billion in real estate to heroes, actively partnered with more than 4,200 like-minded real estate and mortgage professionals who've joined in the mission and donated more than $1 million to heroes in need through the Homes for Heroes Foundation.

To get involved with the foundation, Johnson explained that real estate agents and mortgage lenders can go to the Homes for Heroes website and fill out a form to schedule an appointment with one of their account executives.

If they choose to become an active affiliate member of Homes for Heroes, Johnson said that they go through a 30-day onboarding journey where they are given the resources such as coaching, training and access to everything that they might need.

"We like to attract people that resonate with wanting to give back and serve heroes, so that's a big play for us because it weeds out the people who are just looking at lead generation or making it all about the dollar amount. The good news is that our message will really resonate with those who connect with our core mission and our cause," Johnson said. "It's important to us that we have a very controlled onboarding so all Heroes have the best possible experience," she added.

This was originally featured in the March Issue of HousingWire Magazine. To read the full issue, click here.

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FHA unveils 40-year loan modification option

Posted: 04 Apr 2022 01:02 PM PDT

The Federal Housing Administration (FHA) is moving to expand its COVID-19 loss mitigation "waterfall" by introducing a 40-year loan modification option and is asking the mortgage industry for input.

The proposed rule, published by the Department of Housing and Urban Development late last week, would change repayment provisions for FHA borrowers, allowing lenders to recast a borrower's total unpaid loan for an additional 120 months. HUD said that this option could prevent "several thousand borrowers a year from foreclosure."

By prolonging the length of the recast mortgage from 360 months to 480 months, borrowers will have more sustainable monthly payments, the department said. The proposed rule noted that a lower monthly payment will help bring a borrower's mortgage current, prevent imminent re-default, and of course, help borrowers retain their home.

The proposed rule will specifically be beneficial for FHA borrowers who recently exited government-mandated forbearance but are struggling to make their mortgage payments because of COVID-19 related financial hardships.

Alongside of benefitting borrowers, the rule would also reduce losses to FHA's Mutual Mortgage Insurance Fund as fewer properties would be sold at a loss in foreclosure or out of FHA's real estate owned inventory, HUD said.

A recent report published by the FHA revealed that as of December 2021, 7.28% of FHA loans were seriously delinquent, down from a seasonally adjusted high of 12.04% in March 2021. However, the rate is still elevated compared to pre-pandemic times.

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HUD added that borrowers who opt for a 40-year loan modification would be subject to slower equity accumulation and additional interest payments, but that the positive outcome of a borrower being able to retain their home should outweigh any negatives.

If implemented, the rule will align the FHA with other government entities, such as Fannie Mae, Freddie Mac, and the United States Department of Agriculture, which already provide a 40-year loan modification term option.

Comments from the mortgage industry are due by May 31.

FHA's 40-year loan modification option has been in the works for quite some time.

In June 2021, Ginnie Mae announced that it was set to introduce a 40-year mortgage term for its issuers, but that the terms and extent of use of the new pool type would be ultimately determined by the FHA.

Three months later, the FHA posted a draft mortgage letter proposing a 40-year loan modification combined with a partial claim.

However, industry stakeholders, including the Housing Policy Council and the Mortgage Bankers Association, sought more time to adjust to the change. HPC and the MBA asked the FHA to delay the implementing of the new term until the first quarter of 2022. They also asked the government agency for a 90-day window to start offering the loan modification.

"The demand on servicers to implement a wide array of policy changes over the last several months has been challenging and we expect this to continue well into the first quarter of 2022," they said in a letter to FHA.

In early February, Julienne Joseph, deputy assistant secretary in the Office of Single-Family Housing for FHA, said that the government agency is "almost there" and "getting warmer" in offering the option to borrowers.

"Of course, we feel time is of the essence, especially because the national emergency has been extended,” she said at the MBA's Servicing Solutions Conference & Expo 2022 in Orlando, Florida. On Feb. 18, President Biden extended the national emergency declaration for the COVID-19 pandemic beyond March 1.

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Loans And Mortgage

Tuesday, April 5, 2022