Wednesday, June 22, 2022

Mortgage – HousingWire

Mortgage – HousingWire

UWM drops rates 50 to 100 basis points in bid for brokers

Posted: 22 Jun 2022 12:51 PM PDT

United Wholesale Mortgage (UWM), the nation’s largest wholesale lender, wants to beat rival lenders by offering competitive pricing to brokers, a move designed to navigate a shrinking mortgage market with compressed margins.

UWM dropped rates by 50 to 100 basis points across all loan types, the company said in a release. The new program follows UWM’s two-month price-match trial that ended Wednesday. In May, the firm said it will match competitors’ 30-, 45-, or 60-lock pricing by 1 basis point to a maximum of 40 basis points. 

UWM's price-matching guarantee included competitors such as Amerisave, Amwest Funding, NewRez/Caliber Home Loans, Cardinal Financial, Carrington Mortgage Services, Citizen Bank/Franklin American, CMG, Equity Prime Mortgage, Finance of America Mortgage, Flagstar Bank, Freedom Mortgage Corp., Homebridge Financial Services, Home Point Financial, Kind Lending, LoanDepot, Nations Direct Mortgage, Paramount Residential Mortgage Group, PennyMac Financial, Plaza Home Mortgage and Union Home Mortgage Corporation.

"This strategic pricing move is two-fold; it takes the guesswork out of where a broker should place a loan and accelerates retail loan officers joining the wholesale channel as it further extends independent mortgage brokers’ advantage over retail," said Mat Ishbia, president and CEO at UWM.

UWM has aggressively put pressure on competitors. In June 2021, UWM announced a price-match up to 30 bps with 15 competitors on any conventional loan for a primary residence, after it told brokers they could not work with Rocket Pro TO and Fairway Independent Mortgage if they wanted to work with UWM. 

The move likely contributed to lower margins in the short term but in the first quarter of this year UWM saw gain-on-sale margins rise to 0.99%, compared to 0.80% in the fourth quarter of 2021. 

In the first three months of this year, UWM reported a profit of $453.2 million, up 89% from the $239.8 million in the last quarter of 2021. While loan originations dropped 29.7% from the previous quarter to $38.8 billion in the first quarter of 2022, purchase loans grew to consist of 49% of the total origination volume to $19.1 billion.

Moody's projects intense competition among lenders over the next 24 months in which gain-on-sale margins will drop even further. In March, Moody's analysts wrote profitability may resemble the market in 2018 when about one-third of nonbank lenders reported a loss. 

"Companies with above-average capitalization, strong market positions, and scale will be better able to navigate the challenging operating environment," the Moody's analysts said. 

The post UWM drops rates 50 to 100 basis points in bid for brokers appeared first on HousingWire.

OCC used “outdated, unclear” guidance for redlining exams

Posted: 22 Jun 2022 12:41 PM PDT

A congressional watchdog determined a federal agency responsible for overseeing national banks — the Office of the Comptroller of the Currency (OCC) — has followed procedures “inconsistently” and used "outdated" and "unclear" guidance when examining banks for potential instances of redlining.

Democratic lawmakers Rep. Joyce Beatty of Ohio, Rep. Gregory Meeks of New York and Rep. Emanuel Cleaver of Missouri asked the Government Accountability Office (GAO) to review the OCC's fair lending oversight. The GAO found that the regulator followed policies when it reviewed banks' underwriting, including credit decisions, and interest rates and fees. But when it came to redlining exams, the congressional watchdog found irregularities.

"Our review of selected examinations found that examiners followed procedures inconsistently when assessing potential redlining, and OCC's examiner guidance is outdated and unclear on the steps examiners need to take when conducting redlining reviews," the GAO wrote.

The GAO also tracked the number of fair lending examinations the OCC performs each year, finding they have dropped off significantly since 2018. In the seven years leading up to 2018, the OCC performed about 140 exams, on average, per year. In the years since, that has declined to 50 per year, on average, with only 23 exams performed in 2021.

The decline in fair lending examinations coincided with changes the OCC made to the way it screened banks for potential lending disparities. Before 2018, any banks with a statistically significant number of potential lending disparities evident in its public mortgage lending data disclosures wound up on the screening list. Starting in 2018, however, the OCC only included banks with potential disparities for three consecutive years.

In 2018, the OCC also stopped randomly selecting lending activities for annual screening lists.

The GAO report said, "while OCC's updated process contributed to more targeted examinations, it also led to fewer opportunities to examine smaller banks' fair lending practices and identify deficiencies."

In a statement, an OCC spokeswoman said the 2018 changes allowed the agency to be more efficient.

"The changes made to our annual process for screening bank retail lending activities enabled the agency to provide more targeted examinations and to better deploy resources to identify weaknesses and wrongdoing," an OCC spokeswoman said. "This risk-based approach has resulted in more focused examinations on activities that have an elevated fair lending risk."

In response to the GAO report, the OCC said it would update guidance for redlining examinations and develop examiner training. The training will include live, multi-part, agency-wide webinars, which it will hold by the end of September. The OCC also said it would develop a centralized process and procedures to analyze fair lending activities, including examination selection decisions and outcomes, by year end.

Addressing the legacy of redlining, which was formally outlawed more than 50 years ago, recently has become a key focus of federal housing policy discussions.

In recent years, community groups such as National Community Reinvestment Coalition have negotiated community benefits agreements with banks totaling $500 billion since 2016, by seizing on regulatory reviews of mergers to allege the banks redlined.

The federal government also has signaled it will intensify its focus on redlining enforcement. The Department of Justice, the OCC and the Consumer Financial Protection Bureau in October 2021 announced a joint effort to combat “modern-day redlining.”

The DOJ also has begun pursuing redlining enforcement actions, without first waiting for a banking regulatory agency to make a referral, according to reports from Inside Mortgage Finance.

Regulatory changes that could address the affects of redlining also are underway.

All three federal banking regulatory agencies recently proposed a major update to the Community Reinvestment Act, which originally was passed to combat redlining. It would be the first significant update to the law in decades.

The post OCC used “outdated, unclear” guidance for redlining exams appeared first on HousingWire.

JPMorgan Chase starts to cut mortgage jobs

Posted: 22 Jun 2022 09:14 AM PDT

JPMorgan Chase, the nation's largest bank, has started a workforce reduction of its mortgage lending business this week after having been struck by a tightening monetary policy that drove mortgage rates to over 6%.

"Our staffing decision this week was a result of cyclical changes in the mortgage market," a spokeswoman for JPMorgan wrote in a statement on Wednesday. 

"We were able to proactively move many impacted employees to new roles within the firm and are working to help the remaining affected employees find new employment within Chase and externally."

The spokeswoman did not confirm how many employees were laid off or moved to different divisions and their job positions. Bloomberg reported first on the topic. Citing sources, it mentioned the total affected will be about 1,000 workers, with about half target of a layoff and the other half moving to different divisions within the bank. 

The Jamie Dimon-led bank layoffs come two months after competitor Wells Fargo & Co., the top depositary mortgage lender in the country, cut jobs in its home lending business, among them hundreds of mortgage processors. 

Nonbank lenders such as Pennymac, Mr. Cooper, loanDepot, Guaranteed Rate, Fairway Independent Mortgage, Interfirst Mortgage Co., Movement Mortgage, and Better.com all conducted at least one round of workforce reductions this year as mortgage rates surged past the 5% mark.

With mortgage rates jumping to the 6% level after the Federal Reserve raised the federal funds rate by 75 basis points last week, a rate hike not seen since 1994, more layoffs are expected by industry observers.

At JPMorgan, the fifth-biggest mortgage lender in the country, the mortgage business shrank in the first quarter.

Origination volume totaled $24.7 billion from January to March, a decline of 41% compared to the prior quarter and down 37% in comparison with the first quarter of 2021. Home lending net revenue reached $1.2 billion in the first quarter, down 20% compared to the same quarter in 2021. However, compared to the fourth quarter of 2021, it increased 8%.  

Dimon, chairman and chief executive officer at JP Morgan, told analysts after the first-quarter earnings came out that he expected some difficult days ahead due to factors such as inflation and the war in Ukraine. "Those are storm clouds on the horizon that may disappear; they may not. That's a fact," he said.  

On the bright side, he said customers still have $2 trillion in their savings and checking accounts, businesses are in good shape, home prices are up, and credit is extraordinarily good, which will continue in the second and third quarters. 

The post JPMorgan Chase starts to cut mortgage jobs appeared first on HousingWire.

Flagstar reports data breach affecting 1.5 million clients

Posted: 22 Jun 2022 08:08 AM PDT

Hackers stole the personal information of 1,547,169 clients of Michigan-based Flagstar Bank in December, according to a document sent by the financial institution to the Office of the Maine Attorney General.

The cyberattack occurred on Dec. 3 and Dec. 4, 2021, but the company discovered it on June 2, 2022, the document shows. The external data breach resulted in hackers accessing customers' social security numbers. 

"For those impacted, we have no evidence that any of their information has been misused," Flagstar's spokesperson Susan Bergesen said in an email. "Nevertheless, out of an abundance of caution, we are offering complimentary credit monitoring services." 

Flagstar Bank said they activated a response plan, engaging some external cybersecurity professionals experienced in handling these incidents, and reported the matter to federal law enforcement. 

The company is notifying individuals who may have been impacted directly via U.S. mail. 

The data breach happened amid the acquisition of Flagstar. In April 2021, New York Community Bank, one of New York City's largest multifamily lenders, announced the acquisition of Flagstar Bancorp, the parent company of Flagstar Bank, in an all-stock merger valued at $2.6 billion.

After one year, in April 2022, the banks announced they mutually extended their merger agreement to Oct. 31, 2022, to provide that the combined company will operate under a national bank charter.

Under the new agreement, the merger needs the approval of the Federal Reserve Board and the Office of the Comptroller of the Currency (OCC). 

New York Community Bank essentially exited the residential mortgage banking business in 2017 after selling its origination and servicing platforms. With Flagstar, it is entering a shrinking mortgage market. 

Flagstar Bancorp has reduced its mortgage staff by 20% this year, laying off 420 employees amid a significant drop in origination volume and margins. 

The bank's net income in the first quarter of 2022 dropped 60.4% from the prior quarter to $53 million. Mortgage revenue decreased $36 million in the same period to $74 million from January to March.

The post Flagstar reports data breach affecting 1.5 million clients appeared first on HousingWire.

Purchase mortgage apps defy surging rates

Posted: 21 Jun 2022 03:18 PM PDT

Despite mortgage rates reaching the highest level in 14 years, mortgage applications increased 4.2% from the prior week, according to the latest Mortgage Bankers Association (MBA) survey for the week ending June 17.

"Mortgage rates continued to surge last week, with the 30-year fixed mortgage rate jumping 33 basis points to 5.98% – the highest since November 2008 and the largest single-week increase since 2009," Joel Kan, associate vice president of economic and industry forecasting for the trade group, said in a statement. 

Rates for mortgage loans were strongly impacted by tightening monetary policy to combat rising inflation. On June 10, the U.S. Consumer Price Index showed an 8.6% increase year-over-year in May, the highest level in four decades. Consequently, the Federal Reserve raised the federal funds rate by 75 basis points last week, a rate hike not seen since 1994. Another 0.75% hike is expected from the Fed’s meeting in July.

With mortgage rates now at almost double what they were a year ago, refinancing applications decreased 3% from the prior week and were 77% lower than the same week in 2021. Refis were 29.7% of total applications last week, decreasing from 31.7% the previous week, the survey shows.

Meanwhile, the seasonally adjusted purchase index ticked up 8% from the prior week but was 9.4% down from the same week a year ago. According to Kan, purchase applications increased for the second straight week, driven mainly by conventional applications. 

Higher rates usually cool off prices, and Kan noted a potential trend in this week’s data. "The average loan size, at just over $420,000, is well below its $460,000 peak earlier this year and is potentially a sign that home price growth is moderating," the economist said. 

The adjustable-rate mortgages (ARM) share of applications jumped to over 10.6%, demonstrating continued popularity among borrowers. The average interest rate for a 5/1 ARM rose to 4.78% from 4.57% a week prior, according to the MBA

The FHA share of total applications increased to 12% from 11.8% the week prior. Meanwhile, the VA share went from 11.7% to 10.7%. The USDA share of total applications declined to 0.5% from 0.6% the week prior. 

The trade group estimates the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased to 5.98%, from 5.65% the previous week. For jumbo mortgage loans (greater than $647,200), it went to 5.49% from 5.25%.

The post Purchase mortgage apps defy surging rates appeared first on HousingWire.

Forbearance rate continued to drop in May

Posted: 21 Jun 2022 02:22 PM PDT

Fewer homeowners paused or reduced their mortgage payments in May, continuing the decline from April when the total number of loans in forbearance fell to a level below 1% of servicers’ portfolio volume.

The share of loans in forbearance dropped by 9 basis points to 0.85% in May from April's 0.94%, according to the Mortgage Bankers Association (MBA).

The largest decline came from the portfolio loans and private-label securities (PLS) category, declining 29 basis points to 1.86%. Ginnie Mae loans in forbearance fell 4 basis points to 1.25% of the servicers’ total portfolio volume. Fannie Mae and Freddie Mac loans dropped 5 basis points to 0.38%. 

At the end of May, 425,000 homeowners were in forbearance plans.

The pace of monthly forbearance exits in May reached a new survey low since June 2020, when the association first started tracking exits.

“Most borrowers exiting forbearance are moving into either a loan modification, payment deferral, or a combination of the two workout options," said Marina Walsh, vice president of industry analysis at the MBA.  

Mortgage servicers: If you're not obsessed with customer service, you're falling behind

In a world where disparate physical spaces are steadily merging in the central hubs of mobile devices, consumers consider their mortgages one more digital service in need of perfecting. To take full advantage of the current market conditions, lenders and servicers must obsess over customer service. 

Presented by: TMS

Exits represented 0.19% of servicing portfolio volume in May and total forbearance requests represented 0.1%. The survey shows 28.2% of total loans in forbearance were in the initial plan stage last month and 58.6% were in a forbearance extension. The remaining 13.2% represented forbearance re-entries. 

During the past 22 months, 29.4% of exits resulted in a loan deferral or partial claim, the MBA data shows. Less than 19% of borrowers continued to make their monthly payments during their forbearance period. About 17% of borrowers did not make their monthly payments and exited forbearance without a loss mitigation plan. 

The overall servicing portfolio performance that is not delinquent or in foreclosure, posted 95.85% in May, 21 basis points higher than April’s 95.64%. 

While it’s a positive sign to see improvement in shares of loans serviced, Walsh said it is worth monitoring if the rapid increase in interest rates for all loans “complicates post-forbearance workout options and puts additional pressure on borrowers in existing post-forbearance workouts.”

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Mortgage – HousingWire

Mortgage – HousingWi...