Mortgage – HousingWire

FHFA brings foreclosures to a screeching halt for borrowers who applied for Treasury assistance
Mortgage applications fall amid low inventory, rising rates
Black Knight is exploring a sale: report
In volatile market, Angel Oak sets 30-day rate lock period
CFPB adds two cents on Wells Fargo class action lawsuit
Fannie hits $5 billion in risk-sharing with latest CRT deal
Julia Gordon gets one step closer to FHA commissioner
Rocket promises brokers 15-day loan closings

FHFA brings foreclosures to a screeching halt for borrowers who applied for Treasury assistance

Posted: 06 Apr 2022 12:10 PM PDT

Borrowers with Fannie Mae or Freddie Mac-backed mortgages have been granted an additional two months to avoid foreclosure if they've applied for assistance from the Department of the Treasury.

An announcement by the Federal Housing Finance Agency on Wednesday notified servicers that they must halt foreclosure activities for up to 60 days if a borrower with a GSE-backed mortgage applied for assistance from the Treasury's Homeowner Assistance Fund (HAF).

Under the American Rescue Plan Act of 2021, HAF provides close to $9.96 billion in financial relief for homeowners, with at least 60% of the funds being targeted to lower-income homeowners. This money is allocated to states, territories, and tribal entities and then distributed to homeowners to address housing-related costs.

Sandra Thompson, the acting director of FHFA, said in a statement that giving borrowers extra time to apply for financial relief is one of the ways that the agency is supporting sustainable homeownership.

"Today's action will provide borrowers who need temporary mortgage assistance with additional time to be evaluated for relief through their state's approved Homeownership Assistance Fund," she said.

The Treasury funds can be used for mortgage payment assistance, mortgage principal or interest rate reductions. Homeowners can also use the funds to pay for flood or mortgage insurance, homeowner's association expenses, or broadband internet.

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Regarding purchases, Kan said the hot job market and rapid wage growth continue to support housing demand. However, surge in rates, home-price appreciation, and insufficient for-sale inventory is restraining purchase activity.

"Additionally, the elevated average purchase loan size, and steeper 8% drop in FHA purchase applications, are both indicative of first-time buyers being disproportionately impacted by supply and affordability challenges."

The MBA found that the adjustable-rate mortgage share of the activity increased to 6.8% of total applications from 6.6%. The FHA share of total applications dropped to 9.2% from 9.3% a week earlier, and the share of VA applications increased to 9.8% from 9.5%. The USDA share remained unchanged at 0.5%.

The survey, conducted since 1990, covers over 75% of the retail residential mortgage applications.

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Black Knight is exploring a sale: report

Posted: 05 Apr 2022 06:44 PM PDT

Top mortgage lending software and analytics provider Black Knight is exploring a sale following takeover interest from several private equity firms, according to a report from Bloomberg.

The Jacksonville, Florida-headquartered firm hasn’t decided whether it would be sold or remain independent, unnamed sources told the financial news publication.

Black Knight’s stock, like many in the mortgage space, has struggled in the last year, losing 21% of its value. But on the news of a potential sale, it surged 12% on Tuesday, closing the day with a market cap of $10.3 billion.

According to the company's most recent earnings report, net earnings in 2021 reached $207.9 million, down from $264.1 million in 2020. That's down 21%, which executives largely attributed to bookkeeping associated with the 2020 investment of Dun & Bradstreet Holdings. Black Knight said that in 2020 it recorded a $62.1 million non-cash gain because of DNB's public offering and private placement.

Business was good for Black Knight in the fourth quarter due to strong sales of Empower and MSP, Black Knight's originations and servicing platforms. Profits in Q4 totaled $60.7 million, up 29% from the same period in 2020.

Revenue reached $386.2 million from October to December, an increase of 13% compared to the same quarter of 2020. Black Knight recorded $1.48 billion in revenue in 2021, an increase of 19% compared to 2020.

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Software solutions represented 84.7% of the revenues last year, with an operating margin of 46.6%, compared to 46.5% in the previous year. The remaining revenue came from data and analytics, a segment with an operating margin of 28.7% in 2021, compared to 25% in 2020.

In February, Black Knight announced changes in its C-suite: Anthony Jabbour will assume the role of executive chairman of the board; Joe Nackashi, the current president, will be the CEO; Kirk Larsen, the chief financial officer, will take the role of president.

Black Knight has a number of well-capitalized rivals in the mortgage lending software and analytics space, including ICE Mortgage Technology, which in 2020 bought Ellie Mae in a deal valued at $11 billion.

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In volatile market, Angel Oak sets 30-day rate lock period

Posted: 05 Apr 2022 02:06 PM PDT

Atlanta-based non-QM wholesale lender Angel Oak Mortgage Solutions has updated its rate lock policy to a 30-day lock period due to the fast-rising interest rates landscape.

"Angel Oak, along with the rest of the non-QM industry, has been forced to make rapid adjustments to ensure liquidity during this highly volatile market," a company spokesperson told HousingWire.

Lenders offer borrowers to lock the mortgage rates for a period between the offer and the closing date, which vary according to their policies.

However, during periods of instability, locking the rate for a long period puts downward pressure on lenders’ margins, hurting earnings. That's been playing out over the last few months due to massive rate increases. And more are expected to follow – the Federal Reserve signaled six additional rate hikes this year, with at least three more in 2023.

The latest weekly Freddie Mac PMMS survey, released Thursday, showed that the average purchase mortgage rate touched 4.67% early last week, up 25 basis points from the week prior and the highest reading since December 2018. Black Knight's Optimal Blue OBMMI pricing engine, which considers refis and data from the Mortgage Bankers Association (MBA), reported that rates on Monday averaged 4.86%, up around 80 basis points in one month.

"The sharp rise of the 2-year swap rate along with the rapid increase in credit spreads of the securitization market have led to an unusually fast increase in non-QM rates that the industry has not seen before," Angel Oak’s spokesperson said.

Angel Oak Mortgage Solutions announced the change in its lock policy on March 31, which caused "confusion and stress" among brokers and borrowers, according to a company's post on its LinkedIn page.

The company retracted the changes the following day, saying it was in the "process of making the appropriate system updates to reflect the original information of borrower's loans." After that, the spokesperson for the company told HousingWire on Tuesday that it will honor all current locks, with the new policy valid only for loans moving forward.

With mortgage rates now hovering around 5%, compared with 3% or lower for much of last year, lenders are investing more in non-QM products. UWM recently rolled out bank statement loans targeting the self-employed as well as investor loans. Likewise, Homepoint is unveiling bank-statement loans as well as non-QM cash-flow loans for real estate investors. (Several other big nonbanks have investor loan products as well.)

Investors' appetite for non-QM loans also increases in a higher interest rate landscape, as they are seeking for more return on their investments. So far, this year, the non-QM volume numbers are impressive: year to date as of March 25, a total of 29 non-QM securitizations were completed or underway valued at $12 billion, compared to 17 deals valued at $4.8 billion over the first full three months of 2021, the most recent Kroll Bond Rating Agency's data show.

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CFPB adds two cents on Wells Fargo class action lawsuit

Posted: 05 Apr 2022 01:41 PM PDT

The Consumer Financial Protection Bureau chimed in on an appeal to the McCoy vs. Wells Fargo Bank case, arguing that a borrower should be able to get information about their loan from their loan servicer.

The CFPB filed its amicus brief on Monday, in a class action lawsuit before the Ninth Circuit Court of Appeals, alleging that Wells Fargo flouted its obligations to answer questions about two loans it serviced in 2020. The CFPB said the alleged oversight amounted to a failure to comply with the Real Estate Settlement Procedures Act (RESPA) and Regulation X, which the agency has jurisdiction over.

According to the lawsuit, in 2018 and 2019 Wells Fargo declined to provide information to either borrower because both accounts were in active foreclosure ligation.

Wells Fargo and the CFPB declined to comment.

In a blog posted on the CFPB's website this week, Seth Frotman, general counsel for the bureau, argued that Wells Fargo's reasoning for not responding to the plaintiffs was not justified.

"A pending lawsuit does not take away a borrower's right to a response from their loan servicer under Regulation X," Frotman wrote. "When this case got to court, Wells Fargo didn't even try to argue that it was entitled to ignore the borrowers' requests because of the foreclosure proceedings.

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“Instead, Wells Fargo argued that even after the CFPB's 2013 amendments, Regulation X didn't require it to respond to the borrowers' requests, which asked for things like transaction histories and the identities of their loans' owners."

Additionally, Frotman wrote that Wells Fargo has misinterpreted CFPB's amendments to Regulation X, which requires servicers to provide information requested by borrowers. He said the depository is working under an outdated interpretation of the law.

"But that's not what Regulation X says, that's not what the CFPB intended, and that's not what mortgage borrowers need in the modern mortgage market," Frotman said.

RESPA, which was originally passed in 1975, and most recently amended in 2008, requires mortgage servicers to respond to borrowers seeking information about a mortgage loan within 10 business days. The CFPB amended the law’s Regulation X rule in 2013 broadening servicers’ obligations, requiring them to respond to requests for information even if it does not specifically relate to servicing.

The class action suit was dismissed in September 2021 based on a failure to state a claim, but a month later the plaintiffs appealed the decision, sending it to the Ninth Circuit.

In the class action lawsuit filed on Jan. 31, 2021, in the U.S. District Court of Oregon, the two plaintiffs alleged that Wells Fargo failed to comply with the RESPA and Regulation X by not providing information that plaintiffs sought.

The lawsuit also claimed that after Wells Fargo received qualified written requests in the form of a notice of error, it did not investigate the errors as required by Regulation X.

The two named plaintiffs, Donald McCoy and Maximiliano Olivera, said in the class action suit that they sent numerous request for information letters to Wells Fargo from 2018 to 2019 seeking information about their mortgage loans. The requests ranged from a payoff statement to contact information of the loan's assignee, court papers show. McCoy and Olivera claim they did not receive the information that they asked for.

Eight months later, on Sept. 28, 2021, the court dismissed the case because the plaintiffs failed to state a claim for relief and that their inquiries were not related to servicing, but instead pertained to the validity and origination of their respective loans.

In December 2021, oral arguments were held to appeal the decision.

The case could impact the basis for determining the CFPB’s authority, as well as the interpretation of regulatory language, according to Richard Horn, partner at Garris Horn LLP.

Horn is currently involved in litigation against the CFPB which will test the agency’s interpretation of another statute, and its authority to police redlining. In the Wells Fargo case, Horn said that although the CFPB expanded the scope of qualified written statements in its 2013 servicing rule to include requests for information, the court disagreed.

“There is confusion about this requirement, in part because the regulatory text is not the clearest about whether requests for information include qualified written requests, or if qualified written requests include requests for information,” he said.

He noted that from the CFPB’s amicus brief it becomes clear that the bureau intended to expand the scope of qualified written requests.

The CFPB has been outspoken in the past year about heightened scrutiny of servicers. So far, however, there has been little public enforcement action.

Most recently, the CFPB warned that it is closely monitoring how servicers conduct themselves to help borrowers avoid foreclosures.

In January 2021, the bureau put the industry on alert, warning that it would direct its attention to how mortgage servicers were helping borrowers with COVID-19 forbearance. At the time, the bureau promised aggressive action. Soon after, it told servicers that "unprepared was unacceptable," as the end of forbearance approached.

"Instead of a direct relationship between banks and their customers, the modern mortgage market is a complex web that often also involves securitized trusts and multiple servicers,” wrote Frotman in the blog post. "People need a banking system that provides high-quality customer service, and banks should focus on relationship banking by treating customers fairly and attending to their needs.”

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Fannie hits $5 billion in risk-sharing with latest CRT deal

Posted: 05 Apr 2022 10:30 AM PDT

Fannie Mae has priced its fourth Connecticut Avenue Series (CAS) credit-risk transfer deal of 2022, a $1.14 billion note offering backed by a reference pool of some 118,000 single-family mortgages valued at $36 billion.

The offering is slated to close April 8, according to a presale review by the Kroll Bond Rating Agency (KBRA) and involves transferring a portion of the reference loan-pool risk to private investors through the CAS real estate mortgage investment conduit, or REMIC.

"With the completion of this transaction, Fannie Mae will have brought 48 CAS deals to market, issued over $55 billion in notes, and transferred a portion of the credit risk to private investors on just over $1.8 trillion in single-family mortgage loans, measured at the time of the transaction," a Fannie Mae s ummary of the latest transaction states.

Earlier this year, a Fannie executive said the agency, subject to market conditions, expects to issue $15 billi on in notes through CAS transactions in 2022. This latest deal brings the agency, after slightly more than three months into the year, to about $5 billion in CAS notes issued — or about one third of the way to its annual goal.

The states with the largest concentrations of mortgages in the loan pool for the latest offering, dubbed CASE Series 2022-R04, are California, 20%; Florida, 6.2%; Texas, 6.0%; Washington, 4.6%; and Colorado, 4%, according to KBRA. The leading originators for the loans in this latest offering and the percentage of loans originated in the reference pool are United Wholesale Mortgage, 6.9%; Rocket Mortgage, 6.1%; Homepoint, 5.3%; and Pennymac, 4.9%.

Fannie, in announcing this latest CAS offering, notes that "the loans included in this transaction are fixed-rate, generally 30-year term, fully amortizing mortgages and were underwritten using rigorous credit standards and enhanced risk controls." The loans in the reference pool have an average balance of $309,086, the KBRA report shows, and were acquired between April and May in 2021, according to Fannie.

KBRA's review of the offering notes, however, that nearly 32% of the loans in the reference pool were granted appraisal waivers.

"It should be noted that while the acceptability of a property value or sales price based on the use of proprietary models and market data is assessed, it does so without Fannie Mae having performed a property review or having obtained a valuation of the property," the KBRA report states, referring to the appraisal waivers. "As a result, KBRA applied a broad valuation haircut to such loans."

KBRA also dinged the reference pool's average loan-to-value (LTV) ratio relative to recent offerings made through the private label market.

"The underlying reference obligations are characterized by original LTV ratios that are greater than 60%, but less than or equal to 80%," the KBRA report states. "… While the reference pool's weighted average LTV and combined LTV represent significant borrower equity and provide a margin of safety against potential home-price declines, both leverage ratios are somewhat higher than most of the recent non-agency prime RMBS transactions that KBRA has rated.

"KBRA views higher levels of equity in the property to be among the best deterrents of default, particularly when home prices come under stress."

The initial Fannie CRT deal of 2022, CAS 2022-R01, involved a $1.5 billion note issued against a reference loan pool of 180,002 residential mortgages with an outstanding principal balance of $53.7 billion. CAS Series 2022-R02, the second offering this year, involved transferring loan-portfolio risk to private investors via a $1.2 billion note offering backed by a reference pool of 149,393 residential mortgage loans valued at $44.3 billion.

CAS Series 2022-R03 involved transferring a portion of the agency's loan-portfolio risk through a $1.24 billion note offering backed by a reference loan pool of 150,395 primarily single-family mortgages valued at $44.4 billion.

"The FHFA has encouraged credit-risk transfer transactions as part of portfolio credit risk management, promoting partial reallocation of mortgage risk to private-market participants, and ultimately, reducing taxpayer exposure to borrower default and mortgage guaranty obligations," the KBRA presale-rating report states. "… In most of those credit-risk transfer transactions, Fannie Mae transfers a significant portion of the losses they expect would be incurred in a stressed credit environment."

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Julia Gordon gets one step closer to FHA commissioner

Posted: 05 Apr 2022 09:47 AM PDT

The Federal Housing Administration (FHA) took a definitive, if procedural, step toward a Senate-confirmed commissioner this morning.

In a morning session, the Senate narrowly voted to advance Julia Gordon's nomination to be federal housing commissioner. Vice President Kamala Harris' vote broke a tie, placing Gordon's nomination on the Senate calendar. Senate leadership can now call a vote at any time, which would be the last step of what has been an arduous and controversial nomination process.

Gordon, in an email broadcast last week, said she would step down as president of the National Community Stabilization Trust, writing that the uncertainty of her nomination had been “a drag” on NCST since President Joe Biden nominated her in June 2021.

“The role of FHA Commissioner is critical to HUD's work and mission,” said a spokesperson for HUD, which oversees the FHA.

Gordon did not respond to requests to comment.

Republican lawmakers have opposed Gordon’s nomination from the outset, raising questions over tweets critical of the police — now deleted — she made the previous year. After Gordon's initial nomination hearings, the Senate Banking Committee voted not to advance her nomination, and returned it to Biden in early January 2022.

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But the nomination process restarted just days later, when Biden sent Gordon's nomination to the Senate for reconsideration. When Gordon’s nomination again fell short of approval from the Senate Banking committee, her nomination went to the full Senate for a vote on whether to allow the nomination to go forward.

The FHA, which insures single-family mortgages that disproportionately serve borrowers of color and first-time homebuyers, has been operating without a commissioner since early 2021.

Industry observers, former HUD officials as well as fair housing advocates have all said that the FHA, which oversees $1.2 trillion in single-family forward and reverse mortgages, sorely needs a commissioner.

A lobbyist who works with FHA lenders said that HUD Sec. Marcia Fudge is aligned with the Biden administration's push to reduce the racial homeownership gap. But the lobbyist said Fudge needs a leader at FHA to help set the agenda, in part because career staff are "cautious."

There are long-standing and acute challenges facing the FHA that a commissioner might address. Fair housing advocates and industry stakeholders have called for lowering the fees the FHA charges borrowers.

Systemic problems at the FHA include uncompetitive pay, a lengthy hiring process and an imminent wave of retirements, although the FHA got a modest budget boost for payroll and expenses.

Clinton-era HUD Sec. Henry Cisneros told HousingWire that not having a leadership team in place makes it hard to address even "sore thumb" problems at FHA.

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Rocket promises brokers 15-day loan closings

Posted: 05 Apr 2022 08:35 AM PDT

Rocket Pro TPO has launched a program that will guarantee financing to close in 15 days, a move to entice mortgage brokers and their real estate agent partners in a scorching-hot housing market. It also represents yet another sweetener designed to convince brokers to choose them over rival United Wholesale Mortgage.

Dubbed the “Fast 15 Guarantee,” eligible loans for conventional single family homes will be cleared to close in no more than 15 business days from the submission of a complete loan file, according to Rocket Pro TPO, the wholesale arm of the lending giant. Rocket Pro TPO, which plans to run the promotion until the end of the month, will award borrowers with a $2,500 lender credit if the loan does not close on its promised due date.

"We’re putting our money where our mouth is and saying we’ll get your loan ready to close quickly, or we’ll give you a pretty significant amount of money," said Kevin Randolph, senior vice president of operations at Rocket Pro TPO.

February and March were when the firm saw the best closing turn times for Rocket Pro TPO, Randolph said, though he would not disclose the average number of days it took to close a loan. Government, FHA, and VA loans do not apply and the program is not available in 16 states, including New York, Massachusetts, and Rhode Island.

The country's largest retail lender and second-biggest wholesale originator's new program launched following a drop in refinance application volume as few borrowers have an incentive to apply at rates that are higher than a year ago. Mortgage applications decreased 6.8% for the week ending March 25, from the previous week, according to the Mortgage Bankers Association.

While Rocket Mortgage capitalized on the pandemic-driven refi boom in 2020, notching an astounding $9.4 billion in profit on the strength of $320 billion in mortgage origination volume, the firm’s net income dropped 70% year-over-year to $2.8 billion in 2021, a year in which just 16% of its overall origination volume came from purchase mortgages, according to data from Inside Mortgage Finance.

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