Mortgage – HousingWire |
- UWM will pay $2.75M to settle unpaid overtime claims
- Opinion: Why HELOC demand will surge
- Nonbanks deliver a wishlist to the FHA
- Homepoint and UWM decry GSE fees on wholesale loans
- Paul Garrigues named CFO of Waterstone Mortgage
- MBA: Mortgage apps decline 2.3% to four-year low
- HousingWire Magazine: June 2022
- 2022 Rising Star Morgan Salama: The intersection of strategy and real estate
- Some mortgage companies expanding despite challenges
- CFPB wants lenders to disclose reason for denial of credit
| UWM will pay $2.75M to settle unpaid overtime claims Posted: 01 Jun 2022 03:27 PM PDT United Wholesale Mortgage will pay $2.75 million to settle claims, dating as far back as 2018, contending it didn't compensate its account executives for working overtime. Former and current UWM account executives eligible for a portion of the settlement must have worked at the wholesale lender between Oct. 12, 2018, and Dec. 23, 2021. An additional requirement: an executive must have had a total gross compensation of less than $100,000 annually before Jan. 1, 2020, or less than $107,432 annually after Jan. 1, 2020, according to a memo sent to UWM’s employees last week. The number of employees eligible for a share of the settlement wasn’t disclosed. Detroit Free Press first reported on the settlement Wednesday. A spokesperson for the Pontiac, Michigan-based lender did not respond to a request for comment but it shared a letter sent to employees last Thursday by Executive Vice President Allen Beydoun. Beydoun said UWM is "extremely confident" its account executives were accurately compensated for their work, but the lender "made the choice to stop spending additional time and money with attorneys, and solely focus on growing the business and the wholesale channel." UWM will not move to implement changes to its policies or practices, the letter said. “We have always treated our account executives and team members correctly but made the decision to settle this case as is,” UWM’s executive said. Beydoun added litigation is “very expensive” and the lender would rather “see the money we would spend proving our position go to team members, instead of litigation attorneys.” The Detroit Free Press reported nearly $930,000 will cover attorneys’ fees and the size of each individual’s settlement was based on how long they worked at UWM during the eligibility period. The post UWM will pay $2.75M to settle unpaid overtime claims appeared first on HousingWire. |
| Opinion: Why HELOC demand will surge Posted: 01 Jun 2022 02:20 PM PDT Between February 2020 and January 2022, we witnessed something in the mortgage industry that we thought we'd never see — 30-year fixed-rate mortgages under 3.5%. These rates drew a record number of people refinancing their homes, with cash-out refinances reaching $1.2 trillion in 2021. Then, in what felt like an instant, in Q1 2022 mortgage rates skyrocketed and the refi boom ended. As people look for alternate means to access the equity in their homes, home equity lines of credit (HELOCs) are poised to make a comeback. Here's why: Homeowners will still want to use the record levels of equity in their homesThe residential real estate industry faces an interesting dynamic of rising mortgage rates while, at the same time, homeowners have record equity in their homes. According to CNBC, homeowner equity is an aggregate $9.9 trillion. The average homeowner has about $185,000 in equity they can access while still keeping a 20% stake in their home. Taking out a HELOC is a viable option for homeowners who want to keep their primary mortgage, and still tap the equity in their home. A HELOC is now cheaper than a refiWhile the interest rate on a HELOC you'll find today is probably higher than the rate on a primary mortgage, you're likely to find that refinancing no longer makes mathematical sense. Most household have a nice, low rate on their primary mortgage, doing a cash-out refi is going to yield a higher monthly payment than keeping the mortgage they already have and adding a HELOC on top.
HELOCs offer flexibilityIn the current market, here are a couple of aspects of a HELOC homeowners will find most attractive: First, HELOCs are arguably more flexible than a traditional cash-out refi. Once approved for a HELOC, they can access the line of credit as needed, as opposed to having cash sitting in a savings bank from a refi. In cases where they end up needing to take only the minimum required draw from a HELOC, they would only end up paying back that part of the loan. In contrast, when you do a cash-out refi, they’re committed to paying the new principal and interest balance for the duration of the mortgage — likely 15 or 30 years. Second, and very much related, the monthly payback amounts on HELOCs are more flexible. During months where you need additional capital to finance a home repair, or a move, you can choose to pay the interest only part of the loan. For the foreseeable future, I anticipate HELOCs being the equity-access vehicle of choice for many U.S. homeowners. Much like 2021 was a record year for refinancing, 2022 could be a record year for HELOCs. David Friedman is CEO and co-founder of Knox Financial. This column does not necessarily reflect the opinion of HousingWire's editorial department and its owners. To contact the author of this story: To contact the editor responsible for this story: The post Opinion: Why HELOC demand will surge appeared first on HousingWire. |
| Nonbanks deliver a wishlist to the FHA Posted: 01 Jun 2022 01:53 PM PDT A coalition of independent mortgage banks want the Federal Housing Administration (FHA) to take steps it says would significantly improve access to credit for underserved borrowers. The Community Home Lenders Association (CHLA), backed by 41 IMBs, sent a letter urging the FHA to streamline its servicing guidelines, increase permissible lender fees for executing an assumption of an FHA loan, and make changes to FHA's condo rules. This is the second letter sent to the FHA by the 41 IMBs, which includes South Carolina-based Movement Mortgage, Cherry Creek Mortgage, Texas-based Thrive Mortgage and Draper & Kramer Mortgage. Two weeks ago the same group urged the administration to cut mortgage insurance premiums by 30 basis points to .55% and get rid of its life of loan premium policy. The FHA did not immediately respond to a request for comment. In urging the administration to make changes to its servicing guidelines, the trade group said that FHA's debenture interest servicing penalties are too harsh compared to other housing agencies. The letter notes that if a servicer misses a servicing deadline on an FHA loan in default, interest is automatically curtailed on that loan. The penalty "is wildly disproportionate to the financial harm done to the FHA by servicers missing a deadline for a short period," the letter said. The CHLA said that the administration should model the penalty for missing a deadline after Fannie Mae and Freddie Mac, “which use milestones to track progress and do not assess penalties until the total allotted period.” Stakeholders in the industry have long argued that streamlining FHA’s servicing guidelines could convince depository institutions to return to servicing FHA loans. (After the financial crises, depositories pulled out of originating and servicing FHA loans after they were slammed with a flurry of lawsuits brought under the False Claims Act.) The trade group also wants the FHA to raise the permissible lender fee cap, which it dubbed as “arbitrary and wholly inadequate” to a lender fee of up to 2% plus a $500 underwriting fee. According to the CHLA, the current FHA cap of $900 discourages lenders from carrying out a loan assumption on behalf of a buyer. Additionally, lenders want the administration to streamline the process for approval of condominium projects. The letter said that streamlining the process does not require further rule making and instead could be solved through operational and technology-based changes that make the process more efficient. “Action is needed to streamline and improve the actual approval process for individual In response to CHLA’s original letter in mid-May urging the FHA to cut premiums, the Department of Housing and Urban Development said it continues to monitor seriously delinquent loans in its portfolio as it weighs premium pricing, and that to date, they have been "pleased." "We have taken the time in the first part of the current calendar year to evaluate outcomes for delinquent borrowers as a component of our review of current mortgage insurance premium pricing. We will continue to be judicious about if, when, and how we consider changes to FHA's mortgage insurance premiums,” a HUD spokesperson said. The post Nonbanks deliver a wishlist to the FHA appeared first on HousingWire. |
| Homepoint and UWM decry GSE fees on wholesale loans Posted: 01 Jun 2022 11:21 AM PDT Two top wholesale lenders are up in arms as a result of charges on loans sold to the government-sponsored enterprises (GSEs) arising from a recession-era idea that those loans are riskier. The lenders, Homepoint and United Wholesale Mortgage, say Fannie Mae and Freddie Mac started tacking on an extra 15 basis point charge for third-party originated, or wholesale, loans in mid-2021. The amount paid by wholesale lenders has now reached at least $279 million, according to an analysis provided by Homepoint, at a time when rising mortgage rates are already shrinking lender profits. "The original pretext for having a differential on the capital charge is no longer applicable," said Willie Newman, CEO of Homepoint. "One segment of the business is being treated differently." A United Wholesale Mortgage spokesperson said the extra surcharge is part of an "old school 2007/2008 viewpoint that has become outdated." The charge is not specifically dictated by the Federal Housing Finance Agency, but the agency's attitude toward third-party loans from a capital risk standpoint provides the rationale for it. A spokesperson for the FHFA said that the GSEs have discretion to set their own prices, as long as they meet FHFA's minimum pricing guidelines. FHFA declined to comment on whether it views wholesale loans as inherently more risky, or provide data to support that stance. What Pennymac TPO's rebrand means for the wholesale channel The mortgage industry is coming out of back-to-back amazing years, and while 2022 still holds great opportunity for the industry, it also signals a pivot point for market participants. In recognition of the transitions ahead, Pennymac is making changes to ensure that 2022 forms the foundation for long-term value for its wholesale partners. Presented by: PennymacFannie Mae said it prices loans to comply with the FHFA's Enterprise Regulatory Capital Framework, the rule that governs the GSEs capital standards. The rule defines a risk multiplier of 1.1 for wholesale loans that is higher than that for loans originated in other channels. Single-family loans cannot have a total risk multiplier — a composite of many risk factors — exceeding 3. A Fannie Mae spokesperson said that the GSEs are charged a higher capital charge for wholesale loans. "In order to stay compliant with the required capital return thresholds, Fannie Mae adjusts pricing for the mix of collateral it receives, with TPO being one of the characteristics for which it prices," a spokesperson said. Homepoint said that both GSEs are charging the extra fee. But a spokesperson for Freddie Mac, which is governed by the same rule, said that they do not assess a 15 basis point surcharge on wholesale loans. Freddie Mac declined to provide a rationale for their pricing on wholesale versus other origination channels, and did not answer questions about how they pass on the capital rule's 1.1 risk multiplier for wholesale loans. The wholesale lenders argue that data on wholesale loan delinquencies and loan quality dispel the idea that wholesale loans are riskier. That was not the case in the lead up to the Great Recession, when mortgage brokers were faulted for many of the riskiest underwriting practices in the marketplace. Default rates for nonbank and bank wholesale loans originated from 2005 to 2008 were 14.9% and 16.3%, a Homepoint analysis found. Defaults on loans that were not originated by third parties meanwhile never topped 13%. An analysis of defaults in recent years provided by Homepoint, which the company has used to explain the issue to its own mortgage brokers, shows that default rates for loans originated from 2018 to 2019 have hovered around 0.2% for all channels. "Specifically, the data on delinquencies and the quality of loans through the wholesale channel supports that brokers' loans are not only equal to retail, but in many cases better," a UWM spokesperson said. One differentiator both Homepoint and UWM drew attention to is the wholesale channel's performance with minority borrowers. They are hoping it will provide rationale to revise the capital rule, especially given FHFA's focus on advancing equity in mortgage finance. The top 10 wholesale lenders account for fewer conventional conforming 30-year mortgage borrowers than the top 10 non-bank retail lenders do, making only 725,000 loans versus 1.12 million by nonbank retailers. But more than 25% of those borrowers are minorities, versus just 16% for the retailers. So, Homepoint and UWM argue that the surcharge is not just impacting their bottom lines — which it most certainly is — but is also penalizing the borrowers who the GSEs must serve. If the FHFA wants to further equity in the mortgage market, it doesn't make sense to penalize the wholesale channel, UWM and Homepoint contend. "The most concerning part of this surcharge is its impact on affordable purchase lending which is where brokers and wholesale lenders do significant business," a spokesperson for UWM said. "We fully expect FHFA and all industry parties to treat wholesale and retail loans equal in the near future." The post Homepoint and UWM decry GSE fees on wholesale loans appeared first on HousingWire. |
| Paul Garrigues named CFO of Waterstone Mortgage Posted: 01 Jun 2022 09:47 AM PDT Pewaukee, Wisconsin-based lender Waterstone Mortgage Corporation named Paul Garrigues as the company's new chief financial officer. Garrigues will oversee all corporate accounting functions and provide financial direction for Waterstone Mortgage's branches nationwide. The executive brings more than 40 years of accounting experience in the financial services, banking and mortgage industries. Before landing at Waterstone Mortgage, Garrigues served as a chief financial officer at Solarity Credit Union for three years. Before that, he held positions at Midwest Equity Mortgage, Coastal Banking Company and Seacoast National Bank. "With his impressive financial services background, we are confident that Paul will continue to reinforce Waterstone Mortgage's reputation as an elite, retail-exclusive lender while fostering our company's continued growth and serving as an invaluable resource for our sales leadership," Jeff McGuiness, president of Waterstone Mortgage said in a statement. Founded in 2000, Waterstone Mortgage is a wholly-owned subsidiary of Waterstone Bank SSB, which is a wholly-owned subsidiary of Waterstone Financial. The firm, lending in 48 states, focuses on purchase loans and offers home loan programs including conventional and government loans and specialty programs for medical professionals and first-time homebuyers. In 2021, the firm helped more than 17,000 individuals and families achieve their homeownership goals, according to a statement from the company. The post Paul Garrigues named CFO of Waterstone Mortgage appeared first on HousingWire. |
| MBA: Mortgage apps decline 2.3% to four-year low Posted: 01 Jun 2022 04:00 AM PDT Mortgage apps dropped 2.3% for the week ending May 27, decreasing to the lowest level since December 2018, as measured by the Mortgage Bankers Association's (MBA) Market Composite Index. "Mortgage rates fell for the fourth time in five weeks, as concerns of weaker economic growth and the recent stock market sell-off drove Treasury yields lower," said Joel Kan, MBA's associate vice president of economic and industry forecasting. "Mortgage applications decreased to its lowest level since December 2018, as the purchase market continues to struggle with supply and affordability challenges." The decline was propelled by the shrinking refi market led by larger decreases last week for the Federal Housing Administration (FHA) and the Veterans Affairs (VA) refinance applications, according to the MBA. The refinance index dropped 5% from the previous week and was 75% lower than the same period in 2021. Refinance share of the mortgage activity declined to 31.5% of total applications from 32.3% from the previous week. Purchase applications last week were 14% lower than last year, with more activity in the larger loan sizes, said Kan. “Demand is high at the upper end of the market, and supply and affordability challenges are not as detrimental to these borrowers as they are to first-time buyers." The results are consistent with the MBA's May forecast, which shows a significant drop in mortgage originations and home sales in 2022 than a year ago. Total originations are expected to tumble more than 35% to $2.5 trillion this year, from last year's volume of $4 trillion. The MBA expects 5.93 million home sales this year, compared to 6.13 million in 2021. Gaining an Unfair Advantage in a Challenging Mortgage Market: A Data Driven Approach With total originations expected to shrink 35%, (from $4 trillion in 2020 and 2021 to $2.5 trillion for the next three years), some lenders will be on the losing end of the equation. But what if you had an unfair advantage in this climate? This white paper will cover how you can tap into an unfair advantage that helps you not only survive, but thrive. Presented by: TeraverdeThe average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($642,000 or less) fell to 5.33% from 5.46% in the prior week. The average contract interest rate for a 30-year fixed-rate mortgage with jumbo-loan balances (greater than $642,000) also dropped to 4.93% from 5.02% a week earlier. According to the MBA, the adjustable-rate mortgage (ARM) share of activity dipped to 8.7%, the FHA share of all applications fell to 10.8% from 11.3% the prior week, and the VA loan share dropped to 10.2% from 10.4 % a week earlier. The USDA share remained unchanged at 0.5% from the prior week. The survey, conducted since 1990, covers more than 75% of the retail residential mortgage applications. The post MBA: Mortgage apps decline 2.3% to four-year low appeared first on HousingWire. |
| HousingWire Magazine: June 2022 Posted: 01 Jun 2022 03:00 AM PDT  Director of HW+ and Events I've been a fan of the CliftonStrengths's assessment for more than a decade, applying my own top strengths and learning the strengths of my teammates to see how we can operate with our talents in the workplace. While my top 5 have slightly shifted over the years, "strategic" has been one of my most consistent strengths, which is exactly why meeting 2022 Rising Star Morgan Salama felt so impactful. Featured on the cover of this issue, Salama serves as the head of growth and partnerships at Realogy Title Group. And fun fact, it's a role she was promoted to shortly after being nominated for the award, which isn't too uncommon or surprising for our Rising Stars. But going back to my point around strategy, a quick conversation with Salama shows how much strategic thinking is one of the strengths at the core of who she is. Talking to her feels like you could solve some real issues in the real estate space over the dinner table, especially when you have a group of like-minded people around you! That's the type of energy and passion I hope we all can apply to our respective fields. From her role in helping build the Realogy Leads Group a few years ago to how she helped the company find ways to be more strategic after COVID-19 shut down the country, she has made a noticeable and lasting mark in how Realogy remains competitive. Starting on page 22, you can learn more about her impact in the space, along with this year's full list of 50 Rising Stars. Congrats to this class of up-and-coming leaders who are already starting to leave their legacy in the space. This month also featured a June Supplement, go here to see more.
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| 2022 Rising Star Morgan Salama: The intersection of strategy and real estate Posted: 01 Jun 2022 03:00 AM PDT 2022 HousingWire Rising Star Morgan Salama, pictured above, is portrayed on the cover of the June HousingWire Magazine issue. Photo credit: Chris Plavidal Strategy is the foundational element in building the future of the housing sector. And, if strategy is the foundation, we'd say that Morgan Salama is one of the key people building that foundation. First joining Realogy in 2017 under the company's chief strategy officer, Salama, who now serves as the head of growth and partnerships her strengths in strategy and critical thinking to build partnerships and drive growth in the company. But what really stands out about Salama is how she, from a young age, has learned to always find the power in connecting with people — whether that's learning what growing in your career looks like from her parents or even diving into a group think tank to brainstorm potential partnerships in the housing space. Salama met with the HousingWire team in Dallas to shoot the cover of this month's magazine after being selected as a 2022 Rising Star, and during our time together, it was easy to see how she is capturing the attention of the housing industry as a force to be reckoned with. For her interview, she shared that the best piece of advice that she's ever received is to "listen up close," and it's that same advice that we share with you as you read through this interview. HW: First off, congrats on being named a 2022 Rising Star. If you were standing on a stage giving an acceptance speech, who would you want to thank for helping you get where you are today? Morgan Salama: First, if there's anything that I have learned in my career, it's that nobody gets anywhere alone. Not even sort of, and that's probably a cliché thing to say, but I truly believe it. I'd say the first two people I would have to thank who I would be almost nowhere without is first my friend and mentor, Eric Chesin, Realogy chief of strategy, who was my very first boss at Realogy and without fail has made me better and believes in me. He is such an amazing and intelligent person who has shaped my career. I always joked that these two people make up my personal board of directors. The other is Kristin Aerts Bourgoin, who serves as vice president of strategy and integration at Realogy and who I worked with for like six or seven years now. She's a close friend and a force of nature. Whenever I'm in a spot with my career, where I either don't know what to do or I don't know how to solve a problem, she's one of the first people I call just to get that advice and perspective. Of course, I have to thank my parents and my close friends, they're really my family as well, because they have built this space for me to have such a joyous career. Learning from my parents from a very early age that work is something that you can get a lot of joy from, that numbers can bring joy, that it's this great part of life, and not just this thing that you have to do, shaped who I am, and shaped my ability to understand workplaces. When everybody else was sort of just sitting in high school classes, I was always involved in their life. HW: You've accomplished a lot in your career, and yet, I still think this is the beginning of even more for you. What would you say is your "why," meaning what keeps you motivated and passionate in your field? Morgan Salama: I have a deep belief that kind of like hiking, living is a responsibility to leave things better than you found it. I think at work, and specifically working in an industry with such a responsibility to other people's lives and livelihoods, I am motivated every day by the ability to have some small impact on other people's experiences and housing and what it means to own something and to have a place where you belong. It motivates me. I am passionate about it, and it's a huge part of the reason why I can wake up every day and be really excited to do this work. The second part of my why I think people actually talk about a little bit less and that is the workplace side of it. I am very, very motivated by being a part of, in any way, making workplaces better. I think when people talk about impact in your career, you get so focused on customers that you forget that, especially at a large employer like Realogy. Thousands of people have 40 hours a week affected by what this workplace is like, and I'm very motivated by building positive, inclusive, funny and kind workplaces. And, I deeply believe that both make the customer impact bigger and is a big part of the footprint we all have on the world around us if you're in any industry. HW: What's one of your proudest accomplishments so far in your career? Morgan Salama: I'd say the creation and building of the Realogy Leads Group a few years ago. I was really lucky to get to be a part of conversations with our CEO and business leaders about where we needed to focus strategically, and I got a chance to advocate and build a business case and be a part of the forming leadership team for Realogy Leads Group. The group is Realogy's business unit that really focuses on the consumer and just on the consumer. But unlike a lot of folks out there that are just starting to focus on the consumer now, this Realogy Leads Group business unit was built on the back of 30 years of serving consumers directly and providing excellent experiences. I think by far, the fact that I was able to be a part of that conversation, be a part of that focus on the consumer, and then help and be part of the early leadership team building it out is something I'm really proud of. I remember the Word documents that I was writing out in the beginning, just talking about why and building these numbers-based cases. There was always a lot of passion behind it for me and all the other awesome leaders of that business unit. I think as more and more players coalesce around the consumer as a key focal point in our industry, it's just something that I'm really proud of. HW: Knowing there's exciting room for growth and innovation in housing, why do you think strategy is a critical skill to have in this space? Morgan Salama: I'll start by defining what strategy means to me, because I've learned that everybody has a different version of that in their head. Strategy, to me, is putting real intent and listening and data behind how an organization prioritizes and focuses. It's being thoughtful and intentional about that focus. I would say the reason why I love strategy and the reason why I believe it's absolutely critical, especially in this space and now, is because strategy becomes the focus when there's a lot of potential things you could focus on. There are a lot of options in this industry of how to spend your time, and there's hundreds of millions of dollars of funding coming in to solve different problems or improving different experiences. And with all that transformation and change, I really believe that you have to spend the time that is a real investment in listening and planning before you jump in and decide what's going to be the highest impact. Especially when you're at a company like Realogy, where we are the largest player in residential real estate in the United States. This comes with not only high stakes, but also a responsibility to ourselves, to our agents, to our consumers for focusing on what's really important. It's strategy that helps you get to that right focus for all of those involved. HW: How have you witnessed the power of strategy in action? Morgan Salama: Honestly, I'm very biased here — but I think the creation of my new role at Realogy Title Group is a great example! For the first time, Realogy has a role 100% dedicated to building simple and high-impact joint ventures with our franchisees. It's a classic strategy story: Realogy has a clear competitive advantage in our title and mortgage expertise, we have this incredible group of more than 1,900 affiliated brokers, and clear industry focus on the intersection of primary services and the consumer experience. So we're going big on it. HW: How have you seen this industry come together through partnerships to create change? Morgan Salama: The best part about partnerships is you can acknowledge what you do well and where you really want to invest time and energy. Ultimately, your partners have got to be focused with you on something that you have all decided is really high impact. One of those that I'm most excited about is our partnership with Home Partners of America and the creation of our RealSure joint venture. I've watched as the company has really rallied around this amazing value proposition. I was a part of it from the Realogy Leads Group perspective, as we decided that not only did we want another partner in it, but we wanted to create a third-party joint venture whose sole focus was going to be on this pretty incredible consumer experience that unlocks accessibility and homeownership for people who can't carry a balance in between buying and selling a home and unlocking a truly different experience, instead of just playing around the edges of the base consumer experience of buying and selling home. HW: What can we expect next from you? Morgan Salama: If there's one thing that I've learned over the last couple of years, it's that I am motivated by who I work with, and I am motivated by solving interesting problems with impact on all sorts of different constituents. I'm really excited about my new role at Realogy Title Group because it checks those boxes, and I really believe that ancillary services, and title and mortgage specifically, are a huge part of the experience. It's a huge part of what consumers are craving in the real estate experience — it's a really smooth, seamless and positive experience. Many people are a little scared off from title and mortgage because they're complicated, but I think that's exactly why it's exciting to me. It's complicated, and it's high impact. And the team here has built a world-class business that I am learning and becoming more and more a part of. If you ask me, I will continue to build on those principles of what's important to me and continue to focus on whatever I can do to make a small, positive dent in this real estate universe we're all in. HW: Is there anything else you would like to add? Morgan Salama: I'd add that there are so many people out there that are just starting careers, and it's so easy to focus on what you're doing and not who you're doing it with. If there's one piece of learning that I would love to share, it's that it's all about the people you work with, not just because you will have more fun every day and every week, and not just because they will teach you tactical things, but because they will make you better. And, they will affect the way you look at the world, whether it means your work world or your home world or a combination of both of them. This matters so much, and I am so grateful for the ability to have worked with the people that I work with, and just look forward to all the people I get to meet in the next 5, 10, 20 or however many years in my career. It's a real joy, and I hope everybody gets that chance and builds in space to find those chances to work with great people. To see the HousingWire June Magazine, go here. To see the June 2022 Supplement, go here. To see the full list of HosingWire 2022 Rising Stars, go here. 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| Some mortgage companies expanding despite challenges Posted: 31 May 2022 12:43 PM PDT Mortgage lenders and real estate investment firms this month entered tight housing markets in the Midwest and the Northwest to better reach prospective homebuyers, despite a challenging mortgage market. While many lenders laid off some of their staff to cut costs, others continue opening offices to capitalize on demand from homebuyers. Among them are Geneva Financial, a mortgage lender headquartered in Arizona, which opened a branch location in Chicago, and New Western, a real estate investment firm, which also launched its first office in Chicago, marking its expansion with its 43rd office location in its 19th state. Led by Irma DeLoen, Geneva Financial's Chicago branch will offer products including conventional and government loans, such as loans from the Federal Housing Administration (FHA), Veterans Affairs and U.S. Department of Agriculture (USDA). Geneva Financial, founded in 2007 by Aaron VanTrojen, has more than 130 branch locations in 46 states, according to the firm. Chicago's housing market started out hot in 2022. About 1,820 homes were sold in the city in January alone, a 7.2% increase from the same time a year ago, according to Compass. Nationally, there was a year-over-year decrease of 2.3% during the same time. "The spring market is already off to a strong start, particularly for single-family homes, with a 33.5% increase year over year for properties under contract, indicating that demand in the city remains strong," said Elizabeth Anne Stribling-Kivlan, Compass' senior managing director. The expansion comes amid a surge in mortgage rates and declining loan origination volume. Purchase mortgage rates last week averaged 5.1%, according to the latest Freddie Mac PMMS. The average rate on a 30-year fixed purchase mortgage rate was 2.95% in the same period a year ago. The Mortgage Bankers Association expects loan origination volume to drop to about $2.5 trillion in 2022, down significantly from last year’s $4 trillion. But that hasn’t been a deterrent for all firms. New Western, which specializes in distressed residential investment properties, aims to revitalize $543 million in residential properties in the Chicago market over the next five years. The company estimates there are about 3 million “aged properties” in the Chicago area alone, with almost 88% of them built before 2001. "Providing affordable housing, especially in large markets like Chicago, is vital," said Kurt Carlton, co-founder and president of New Western. When we help bring distressed properties back to the market, it's up to 31% less expensive than a new construction home." New Western calls itself "the largest private source of investment properties in the country," connecting more than 100,000 local investors looking to rehab houses with sellers. Since its establishment in 2008, the firm said it has bought and sold about $12 billion in residential real estate. Mortgage lender Planet Home Lending has a new team in Portland, Oregon, where it will focus on borrowers looking to work with homebuilders. Headed by sales managers Tim Hattan and Tom Bond, as well as loan officer Dalton Clark, the team has expertise in construction lending, which can help buyers determine whether a construction loan will be a viable option. "Planet is in a unique position because there are very few non-depository lenders offering a construction product," Hattan said. "That is only one of the great things I think Planet brings to the area that were not here before. We plan to open other offices in Salem, Eugene, Medford and the Bend/Redmond area and believe they will have a positive effect in the communities we want to serve." Realtor.com estimates that the median sold home price for Portland was $565,000 in April. Planet Home Lending's Oregon branch will provide conventional government loans as well as bridge loans that focus on bridging the gap between buying and selling a home, the company said. The firm also said its personal digital mortgage assistance program, Skymore by Planet Home Lending, will allow consumers to apply for a home loan via their mobile device. Borrowers and real estate agents can track the loan progress and submit paperwork electronically. Planet Home Lending delivers home loans backed by Fannie Mae, Freddie Mac, VA, FHA and USDA in 47 states, Washington, D.C. and Puerto Rico, according to the firm. Panorama Mortgage Group, a mortgage company headquartered in Nevada, added full-service mortgage lender Rely Home Loans, based in Utah, to the group's umbrella of brands. Rely Home Loans has plans to expand into Florida and Arizona. PMG, a firm that has more than five brands, will get new leadership as Rely Home Loans president Manfret Roesner takes the helm. Earlier this year, PMG added full-service lenders Prosperity Mortgage and Vision Mortgage Group. In 2019, PMG added two brands, one of which was Legacy Home Loans, which focuses on increasing the Black homeownership rate in America. UPDATE 5/31: The article was updated with the median home sold price in Portland, Oregon from Realtor.com. The post Some mortgage companies expanding despite challenges appeared first on HousingWire. |
| CFPB wants lenders to disclose reason for denial of credit Posted: 27 May 2022 01:18 PM PDT All lenders must explain their rationale when denying credit to loan applicants, the Consumer Financial Protection Bureau affirmed Thursday, after looking into whether companies claiming exemption because they rely on “complex algorithms” were in violation of federal anti-discrimination law. The requirement also applies to mortgage lenders, legal experts say. The CFPB, a government watchdog agency, said lenders aren’t absolved from adverse action notice requirements under the Equal Credit Opportunity Act if they use complex algorithms, which Rohit Chopra, the director of the CFPB, has dubbed "black-box models." The CFPB issued a statement to warn creditors that technology being "too complicated" is not an excuse for noncompliance. "Creditors who use complex algorithms — including artificial intelligence or machine learning technologies — to engage in credit decisions must still provide a notice that discloses the specific, principal reasons for taking adverse actions," CFPB said in a news release. "There is no exception," it added. The bureau also urged whistleblowers in the tech field to come forward with information about companies violating ECOA. According to Kris Kully, an attorney at Mayer Brown, the notice will affect mortgage lenders because many of the underwriting systems lenders use to measure default risk contain proprietary algorithms, or “black-box models.” How To Increase Production and Help Customers Achieve Wealth Through Homeownership This case study explores how Fulton Mortgage Company achieved its goal of delivering a more personalized, digital mortgage experience for borrowers, while also increasing production and return on assets. Presented by: Mortgage Coach"The designers historically have been unwilling to tell lenders all the factors used and how they are weighted," Kully said. "They often just say that they 'don't consider any prohibited factors, and it's very predictive of default,' and that's about as much information as the lender gets, making it difficult for lenders to tell a borrower the reasons why an application is denied." Kully expects tweaks will be made so the systems "start to provide information, so that lenders can make those required disclosures." In his own statement Thursday, Chopra said companies have "legal responsibilities when they let a black-box model make lending decisions." "The law gives every applicant the right to a specific explanation if their application for credit was denied, and that right is not diminished simply because a company uses a complex algorithm that it doesn't understand," Chopra said. The CFPB has raised concerns in the past that algorithmic models perpetuate discriminatory mortgage lending practices. In October 2021, a multi-agency effort to combat redlining was announced between the CFPB, the Department of Justice and the Office of the Comptroller of the Currency. At the time, Chopra said the effort also would include combating digital redlining. "These algorithms are black boxes behind brick walls," Chopra said during a press conference in 2021. "When families and regulators do not know how decisions are made by these algorithms, we are unable to participate in a fair and competitive market, free from illegal bias." What tangible results came to fruition because of the multi-agency effort remain unknown. The CFPB did not immediately respond to a request for comment. The government watchdog in February also announced a potential clamp down on the use of automated valuation models by lenders and appraisers. The CFPB said it is concerned automated valuation models may reflect bias in design and function. Specifically, the bureau said mathematical models may rely on biased data, resulting in inaccurate valuations. Without proper safeguards, these models could digitally redline neighborhoods and perpetuate historical disparities, according to the agency. To address those potential risks, the CFPB worked with other regulators — including the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration and the Federal Housing Finance Agency — to consider a potential interagency requirement. Under it, institutions would establish policies, practices, procedures and control systems to ensure their AVMs comply with applicable nondiscrimination laws, the bureau said. But before introducing the proposed rule, the CFPB, in accordance with federal law, convened a review panel to get feedback from small businesses that could be affected by the proposal. The feedback from the small business review panel was mixed, according to a summary published by the CFPB. Some panel members expressed concern about the cost of complying with the AVM rule and recommended the CFPB explore options for lowering compliance costs. Others expressed support for the use of AVMs, while some said they prefer valuations by licensed appraisers because it is easier to understand than AVM methods. Panel members also stressed the need for greater clarity about how the Government Sponsored Enterprises, the Department of Housing and Urban Development (HUD), The post CFPB wants lenders to disclose reason for denial of credit appeared first on HousingWire. |
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