Mortgage – HousingWire

Freddie Mac single-family division chief announces resignation
Opinion: A more balanced approach to manufactured home energy efficiency
Financial institutions jump into ARMs amid high rates

Freddie Mac single-family division chief announces resignation

Posted: 27 May 2022 10:45 AM PDT

Donna Corley, head of the single-family division at Freddie Mac, is stepping down from her post at the government-sponsored enterprise.

Corley will stay on until Nov. 25 as executive vice president and special advisor, reporting to Michael Hutchins, president of Freddie Mac. Hutchins will take over active management responsibilities for the single-family division until the company finds a replacement for Corley.

Hutchins won't get a pay bump for the extra responsibilities, a Securities and Exchange Commission filing shows. In his role as president, Hutchins oversees the division heads of single-family, multifamily, investments and capital markets, enterprise operations and technology, human resources and administration. He reports to Freddie Mac CEO Michael DeVito.

Corley's departure first was reported by Inside Mortgage Finance. Corley's responsibilities as head of the GSE's single-family business included managing the company's relationships with lenders and servicers and the performance of Freddie Mac's guarantee book of business, as well as sourcing, servicing, risk management and business operations. She has been with Freddie Mac for more than 25 years.

It was not immediately clear why Corley is stepping down; Freddie Mac has not responded to a request for comment.

Many high-level executives have left Fannie Mae and Freddie Mac in recent years.

Fannie Mae's CEO, Hugh Frater, and Sheila Bair, the chair of its board, both announced they would resign from the mortgage finance behemoth May 1. Fannie Mae COO Kimberly Johnson left the enterprise in April.

Former GSE officials say that a stifling work environment under conservatorship, as well as limits on executive compensation, have contributed to the executive exodus.

The post Freddie Mac single-family division chief announces resignation appeared first on HousingWire.

Opinion: A more balanced approach to manufactured home energy efficiency

Posted: 26 May 2022 01:52 PM PDT

The Manufactured Housing Institute (MHI) appreciates that the Biden administration has created a White House Task Force on Manufactured Housing. We also commend the administration for the White House initiative announced a week ago Monday to "Ease the Burden of Housing Costs," which a Housing Wire article noted is designed to reduce regulatory hurdles.

So, it is disappointing that the final rule for manufactured housing energy standards that the Department of Energy (DOE) released just two days later does precisely the opposite. It would actually increase the burden of housing costs. The final DOE rule even acknowledged that it would raise new manufactured home prices.

Manufactured housing is by far the most affordable homeownership option in America. The industry is building quality affordable homes that are already energy efficient and resilient. However, by any objective analysis based on the real-world impact on actual homebuyers, the annual cost burden from those price increases will exceed the speculative energy savings that DOE hopes will take place.

Both the standards and the underlying methodology used to develop them are fundamentally flawed. EISA, the underlying statute behind the standards, was clear. The standards were required to take into consideration current manufactured housing construction methods and transportation requirements for homes built in a factory and transported to the site. At best, this was merely given lip service.

EISA was also clear that the IECC, the site-built building code, could only be used if proposed energy standards were "cost effective," and further that DOE was required to consider iterative proposals to find the standard that is most cost effective. But this too did not happen.

Instead, the DOE standards relied on speculative home price appreciation assumptions a decade later — while ignoring that in the real world, increased annual mortgage costs to actual homebuyers as a result of the higher prices would exceed projected energy savings. It ignored that in the real world many potential homebuyers would no longer qualify for a mortgage to buy a home because of the higher prices.

Arguably, these flaws stemmed from DOE's failure to follow the EISA statutory requirement to consult in a meaningful way with HUD — the federal agency with housing expertise — in developing the standards.

Fortunately, there is still time to sort these issues out. The DOE rule established a one-year implementation period. More importantly, HUD — the very agency DOE should have relied on for affordability expertise — should have the final say before the standards can become effective.

Under the 2000 Manufactured Housing Act, all manufactured housing construction and safety standards (including energy requirements) are governed by the HUD Code. And, HUD, acting on recommendations by its Manufactured Housing Consensus Committee, has exclusive authority under the HUD Code.

So, under the 2000 Act, the DOE standards should not become effective until HUD adopts them as part of the HUD Code, potentially with revisions. Moreover, they shouldn't take effect until the DOE standards and the HUD Code are reconciled, since manufacturers should not have to sort through two standards.

There is even a bill in Congress – H.R.7651, the "Manufactured Housing Affordability and Energy Efficiency Act of 2022" – that clarifies all these points. Adoption of this bill would further ensure that these new manufactured housing energy standards do not come at the expense of manufactured housing homeownership affordability.

MHI supports energy-efficient manufactured homes. In MHI's comment letter, we did not just criticize the DOE draft rule, we offered a cost-effective alternative proposal that balances homeownership affordability and energy efficiency. As HUD considers energy efficiency standards generated by DOE, we strongly urge adoption of a more balanced proposal along the lines MHI put forth in our comment letter.

As this process goes forward, MHI would also like to see other loose ends tied up. A recent court case, Louisiana vs. Biden, raises serious questions as to the legal validity of the DOE standards, since they seem to be based on the same methodology that the judge in that case ruled were invalid.

The DOE standards also failed to address a fundamental flaw in the underlying EISA statute, which is that the enforcement mechanism authorizes penalties that are based on the term "retail list price." No such metric or term exists in manufactured housing, and the final rule did not address this flaw. Confusion among manufactured home manufacturers and retailers about issues like this would impede the use of manufactured homes as our nation's most affordable homeownership option.

Another question: is DOE going to be responsible for determining whether the standards are being complied with, even though HUD has responsibility for manufactured housing and construction safety standard compliance under the HUD code? Or is HUD responsible for determining compliance for DOE standards?

This are just a few examples of the folly of making critically important housing affordability decisions without a direct, active role for HUD, the federal agency which has housing expertise and housing affordability as its mission.

MHI looks forward to working with HUD and other parties to get this important standard right as we face the twin challenges of housing affordability and energy efficiency.

Lesli Gooch is the Chief Executive Officer of the Manufactured Housing Institute (MHI), the only national trade group that represents all sectors of the manufactured housing industry.

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

To contact the author of this story:
Lesli Gooch at mhigov@mfghome.org.

To contact the editor responsible for this story:
Sarah Wheeler at sarah@hwmedia.com

The post Opinion: A more balanced approach to manufactured home energy efficiency appeared first on HousingWire.

Financial institutions jump into ARMs amid high rates

Posted: 26 May 2022 01:48 PM PDT

At least two financial institutions brought back adjustable-rate mortgage (ARM) products this week amid surging mortgage rates and double-digit home price growth.

Michigan-based wholesale lender Homepoint rolled out a jumbo ARM product offering a maximum loan amount as much as $2.5 million, with a maximum loan-to-value ratio of 80%. Homepoint’s jumbo ARMs have a seven- or 10-year fixed-rate period and the loan adjusts every six months, according to Homepoint.

Credit Union of Southern California’s interest-only ARMs, in which the borrower delays paying down any principal for a period of time, are now available as purchase or refinance loans. The rates are offered in five- and seven-year terms for primary residences $3 million and under, or for second homes for $2.5 million and under, it said.

"Homebuyers today have a stronger interest in adjustable-rate mortgages because they provide a solution to affordability issues caused by the recent increase in interest rates," Phil Shoemaker, president of originations at Homepoint, said in a statement.

Applications for ARMs rose 10.8% this month, a 14-year high, compared to just 3% at the beginning of the year, according to the Mortgage Bankers Association. MBA's most recent data showed ARMs represented 9.4% of overall applications last week.

“As rates have moved higher, ARM loans have gotten more attractive to borrowers because it gives them a lower monthly payment,” said Joel Kan, associate vice president of economic and industry forecasting at the MBA. “Borrowers are certainly looking to gain any kind of advantage they can.”

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While financial institutions are taking note of the increased attention for ARMs, some loan officers said many consumers think the cost to get ARMs is not worth the risk compared to a 30-year mortgage rate.

"The conventional 30-year mortgage rate would have to be in the mid- to high-5% range for the ARM to be in the high-3% range," said a loan officer in Washington. "That’s where it would make sense for a 5/1 ARM. If we can get that, to me saving a percent, yes, that’s beneficial. But is it really worth the cost of it?"

The interest rate for a five-year ARM averaged 4.20% the week ending Wednesday, according to the Freddie Mac PMMS. A conventional 30-year fixed rate purchase mortgage was just 90 basis points higher at 5.1%.

Applications for ARMs rose this year for the first time since interest in ARMs waned due to the role they played in the housing crash of 2008. Leading up to the housing crisis, many subprime lenders provided borrowers with interest-only ARMs, which initially offered low rates. Some buyers who couldn’t qualify for a conventional mortgage turned to an ARM to make lower monthly payments.

But when rates began to soar starting in 2005, increased foreclosure rates led to a housing market crash in 2008. During the mid-2000s housing boom, about 35% of all mortgages were adjustable-rate, according to Ali Wolf, chief economist at homebuilding prop-tech company Zonda.

After the housing market crash, new underwriting guidelines were issued for ARMs to make it harder for borrowers to end up in foreclosure, industry experts have said.

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, created in direct response to the financial crisis, also makes the mortgage industry different from 14 years ago, according to market watchers. The Dodd-Frank Act requires lenders to check a buyer’s ability to repay, which protects them from predatory lending practices.

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