Mortgage – HousingWire

Fannie Mae unveils $952 million CRT note offering
Interfirst to lay off 140 employees
The last time houses were this unaffordable was 2006

Fannie Mae unveils $952 million CRT note offering

Posted: 02 May 2022 11:58 AM PDT

Fannie Mae has priced its fifth Connecticut Avenue Series (CAS) credit-risk transfer deal of 2022, a $952 million note offering backed by a reference pool of single-family mortgages valued at $38.5 billion.

The offering is slated to close May 11, according to a presale review by the Kroll Bond Rating Agency (KBRA). A credit-risk transfer deal involves transferring a portion of the reference loan-pool risk to private investors through the CAS real estate mortgage investment conduit, or REMIC.

This latest transaction, CAS 2022-R05, involves a reference pool of 127,166 single-family mortgage loans. The states with the largest concentrations of mortgages in the loan pool for the latest offering are California, 12.8%; Texas, 8.3%; Florida, 7.8%; Washington, 4%; and Georgia, 3.8%, according to KBRA.

"The reference pool exhibits significantly more geographic diversification than most prime jumbo RMBS pools," the KBRA presale report states. "Geographic diversity helps mitigate the risk that a regional economic recession or natural disaster will have an outsized impact on default rates."

The leading originators for the loans in the offering and the percentage of loans originated in the reference pool are United Wholesale Mortgage, 8.7%; Pennymac, 7%; Rocket Mortgage, 6%; and Wells Fargo, 3.7%.

The loans in the reference pool have an average balance of $303,100, the KBRA report shows, with the maximum loan balance exceeding $1 million. The KBRA report also notes that only 4.1% of the loans in the reference pool were granted appraisal wavers.

By contrast, in Fannie's CAS credit-risk transfer (CRT) offering in early April, CA S 2022-R04, 32% of the loans in the reference pool were granted appraisal wavers. That resulted in KBRA applying "a broad valuation haircut" to those loans, according to the bond-rating firm's presale report on that CRT deal.

Earlier this year, a Fannie executive said the agency, subject to market conditions, expects to issue $15 billion in notes through CAS transactions in 2022. This latest deal will bring the agency to about $6 billion in CAS notes issued to date.

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 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.

CAS 2022-R04, which closed last month, was a $1.14 billion note offering backed by a reference pool of some 118,000 single-family mortgages valued at $36 billion.

With the completion of this fifth transaction, Fannie Mae will have brought 49 CAS deals to market, issued more than $56 billion in notes, and transferred a portion of the credit risk to private investors on more than $1.8 trillion in single-family mortgage loans, according to Fannie Mae's tally of deals.

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Interfirst to lay off 140 employees

Posted: 02 May 2022 10:34 AM PDT

Six months ago Interfirst Mortgage Co. issued pink slips to over 350 non-commissioned loan officers, a workforce reduction that former workers claimed to represent more than half of Interfirst’s entire staff.

It was not enough: the Rosemont, Illinois-based business plans to lay off 140 more employees in May, a Worker Adjustment and Retraining Notification Act (WARN) the company filed in early March reveals.

Interfirst plans to lay off at the lender’s facility in Rosemont beginning on May 13, 2022, or within two weeks of that date. The company’s job cuts include human resources, technology, talent acquisition, and executive assistant positions.

The workforce reduction is also focused on mortgage loan production. The lender is scheduled to lay off 26 processors, 20 originators, and 15 mortgage account executives in junior and specialist job positions. The company is also laying off four people with the title of vice-president.

Interfirst did not respond to requests for comment left by HousingWire.

Some mortgage lenders reduced their workforce in the second half of 2021 and are now implementing new layoff rounds, such as Interfirst and Better.com. Interest rates are rising fast, reaching 5.10% last week, compared to 2.98% a year ago, according to the latest Freddie Mac PMMS. Higher rates are depressing refi volumes by 71% year-over-year, a Mortgage Bankers Association (MBA) report showed.

Interfirst is a mortgage business founded in 2001 by Dmitry Godin that has been harmed before by market downturns.

In 2012, the historically low interest rates led to a boom in refinances, and the lender grew to $14.5 billion in origination volume, cementing its place as the 15th largest originator in the country.

But Interfirst struggled to maintain volumes in the following years as the market turned to purchase. The company reduced its origination to $2 billion in 2016 before shutting down altogether in 2017.

Godin relaunched the business in late 2019 as a lender focused on both wholesale and retail channels. It was just before refinance volumes started to grow again due to rates at historically low levels to deal with Covid-19’s impact pandemic on the economy.

Interfirst boasted of its ability to train people with no background in mortgage through a rigorous training course.

In October 2021, a $175 million investment from principals at the private holding company StoicLane was used to grow operations and refine and develop new technologies. StoicLane and the executives did not respond to a request for comment about the additional layoffs.

In November, Interfirst laid off 77 employees in Charlotte, North Carolina (including 50 LOs), and 274 in Rosemont.

According to former employees, the layoffs indicate that Interfirst, having shed much of its retail operation, may turn to mortgage brokers and hope that they feed the company deals.

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The last time houses were this unaffordable was 2006

Posted: 02 May 2022 09:55 AM PDT

Surging interest rates and home price appreciation made March one of the most challenging months for prospective homebuyers looking to make purchases, according to a recent report.

Annual home price gains saw 19.9% annual appreciation in March, down from an upwardly revised 20.1% in February, which was the first month to see price growth greater than 20%, according to Black Knight's monthly mortgage monitor report. While the annual home price growth reflects a slowdown in March after accelerating for the previous four months, home prices are up about 6% nationwide year-to-date and the 30-year mortgage interest rate of 5.11% as of April 21 continued to propel a lack of affordable homes.

"As measured by the share of median income required to make the principal and interest payment on the average-priced home bought with 20% down, U.S. housing was the least affordable ever back in July 2006 when it took 34.1% to make that P&I payment," Ben Graboske, president of Black Knight Data & Analytics, said in a statement.

"As of April 21, that payment-to-income ratio has now climbed all the way to 32.5%, within just 1.6 percentage points of the prior record," Graboske added.

A rate increase of 50 more basis points or a 5% increase in home prices would push affordability to its worst level on record, according to the report. Since the start of 2022, rates have gone up 200 basis points and housing prices have surged 5.9%.

Adjustable-rate mortgages, which typically have lower interest rates than fixed-rate mortgages, have become an attractive option for borrowers in a challenging housing market. The spread between 30-year and ARM offerings is the widest it’s been since 2014 and within 20 basis points of an all-time high.

The ARM share of purchase rate locks by volume spiked from 2.5% in December to about 8% in March – the highest share since 2017. As of mid-April, applications for ARM mortgages jumped to 8.5% of total mortgage applications, the highest level since 2019, according to the Mortgage Bankers Association.

About 95% of the 100 largest markets are now less affordable than their long term benchmarks from 1995 to 2003, up from just 6% at the start of the pandemic. Markets in a third of the country are now the least affordable they've ever been.

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