Mortgage – HousingWire

With landmark GSE equity plans, FHFA confronts legacy of redlining
Xactus targets lenders through active listing data
Ginnie Mae teases new enhancements to eNote program
United Wholesale Mortgage launches platform for brokers

With landmark GSE equity plans, FHFA confronts legacy of redlining

Posted: 08 Jun 2022 02:38 PM PDT

The Federal Housing Finance Agency (FHFA), under the leadership of Director Sandra Thompson, on Wednesday unveiled landmark equitable housing finance plans for Fannie Mae and Freddie Mac.

The plans establish a flexible framework for the government-sponsored enterprises to address barriers to sustainable housing and close the racial homeownership gap. The 2022 to 2024 plans will be updated annually, FHFA said in a statement, and will pay special attention to barriers to homeownership in Black and Latino communities.

The FHFA also unveiled a pilot transparency framework for the Enterprises, requiring them to publish and maintain a list of pilots on their websites.

"The Equitable Housing Finance Plans represent a commitment to sustainable approaches that will meaningfully address the racial and ethnic disparities in homeownership and wealth that have persisted for generations," said FHFA Director Sandra Thompson. "We look forward to working with the enterprises, lenders, and other housing industry participants to further develop the ideas described in these plans."

Both plans rely heavily on special purpose credit programs, which allow lenders to target lending to protected classes without violating the Equal Credit Opportunity Act.

"A central element of our plan is the deployment of special purpose credit programs aimed at enabling access to credit and encouraging sustainable homeownership for Black consumers," the Fannie Mae plan said. Special purpose programs will be focused on people living in formerly redlined and other underserved areas with majority Black populations, per Fannie Mae's plan.

"We do hope the GSEs start exercising market leadership [on special purpose credit programs]," a FHFA official said on a press call today.

A September 2021 request for input ahead of the equitable housing finance plans indicated the FHFA would implement the plans by January 1, 2022. The more than six-month delay, FHFA officials said, was due to the development of the pilot transparency program, and the time it took to scrub proprietary information from the plans.

The Fannie Mae plan includes five special purpose credit program pilots: one for down payment assistance; another for expanded eligibility features, a program to reduce closing costs for Black homebuyers; a program to test ongoing education and counseling; and another for "add-on features," which would help borrowers deal with unexpected expenses and repairs, or temporary disruptions to income.

In its plan, Freddie Mac said it would purchase loans made with special purpose credit programs by lenders. It will also develop a special purpose credit program of its own, which may include down payment assistance, improved pricing or reduced fees, expanded underwriting, reserve funds for borrower hardship and expanded loan servicing.

Fair housing advocates, including the National Fair Housing Alliance, have long called for the GSEs to spur adoption of special purpose credit programs.

NFHA senior vice president of public policy Nikitra Bailey, upon an initial read, called the plans "promising," and said they were a "major, significant step forward."

Bailey said she was especially excited to see special purpose credit programs featured so prominently in both plans, as well as the importance of incorporating rental payment history into underwriting, support for first-generation down payment assistance and data transparency around pilot programs.

"We applaud FHFA for its leadership working to make sure [the GSEs] produce the plans, and for recognizing that these financial giants have an affirmative responsibility to further fair housing," Bailey said.

Mortgage industry stakeholders, including the Mortgage Bankers Association, have also pushed for the adoption of special purpose credit programs.

"The use of SPCPs will be particularly important for core mission borrowers, especially minority groups who may not have generational wealth to use to save for a down payment," said Bob Broeksmit, CEO of the MBA.

So far, lenders have been slow to adopt special purpose credit programs, although they have been legal since 1976. Lenders have balked at the possibility of increased regulatory scrutiny if they develop the programs, since lenders must provide a rationale for the targeting — which some view as an admission of guilt.

Earlier this year, the Department of Housing and Urban Development pointedly told lenders that the programs do not violate fair lending law.

Selling mortgages made under special purpose credit programs to Fannie Mae and Freddie Mac would alleviate much of the regulatory risk, according to David Dworkin, president of the National Housing Conference, a mortgage trade association.

"Fannie Mae and Freddie Mac as successor organizations to the Federal National Mortgage Association have a historic responsibility for redlining," said Dworkin. "And they can fulfill that responsibility to right past wrongs, that is part of the spirit of [the Equal Credit Opportunity Act], without unrealistically expecting modern banks to volunteer mea culpas."

Freddie Mac will also conduct research on formerly redlined areas, to more effectively target its equity plan.

Both GSEs also plan to take action to reduce bias in appraisals, in part by doubling down on appraisal automation. Freddie Mac will conduct research to “explore root cause(s) that contribute to [the appraisal gap], and to consider if, how and why automated valuation might be part of the solutions.” Fannie Mae will analyze “disparities in the frequency and severity of undervaluation relative to borrower race and neighborhood demographics.”

Freddie Mac will consider expanding its use of its automated appraisal platform for purchase transactions with higher loan-to-value ratios, which it said "should mitigate appraisal gaps for Black and Latino borrowers."

While the plans are wide-ranging, they do not address overall adjustments to risk-based loan pricing, which affordable housing advocates argue disproportionately impact borrowers of color.

"Broad pricing changes are outside the scope of this Plan," Fannie Mae wrote in its plan. Fannie Mae has in the past argued that risk-based pricing is not the largest contributor to the cost of homeownership.

Thompson, in 2021, indicated she would conduct a broad review of loan pricing at the GSEs, but that has not yet happened.

"Loan level price adjustments can have a disproportionate impact on families that are underserved," said Bailey. "FHFA has the ability to eliminate loan level price adjustments and should do so, especially in light of the reality that the enterprises have fully repaid the government for their initial bailout."

Banking regulatory agencies recently proposed an update to the Community Reinvestment Act, the most substantive update to the anti-redlining statute in decades, highlighting special purpose credit programs as a way to serve communities that have faced “systemic inequities.”

The post With landmark GSE equity plans, FHFA confronts legacy of redlining appeared first on HousingWire.

Xactus targets lenders through active listing data

Posted: 08 Jun 2022 02:07 PM PDT

Verification solutions provider Xactus wants to court more lenders through its active listing data in a tight housing market.

Xactus Wednesday announced its new active listing scan program, which will scan residential addresses for changes in listing status and the average number of days on market for a neighborhood. The monitoring program, covering all 50 states, includes MLS listing data as well as public records from data aggregators. Listing dates, prices and broker contact information also are available through active listing scan, according to Xactus.

"It's no secret — today's market is extremely tight and competitive," said Michael Crockett, chief data officer at Xactus. Solutions like active listing scan will help customers "close more loans more quickly," he added.

In May, the inventory of homes for sale rose 8%, marking the first inventory rebound since June 2019. Compared to May 2020, the inventory of active listings was still down 48.5%, meaning there are still only half as many homes available, according to Realtor.com's monthly report. The national median home price also reached an all-time high of $447,00 last month, jumping 35.4% year over year.

Other ways active listing scan will help lenders include reducing attrition and boosting retention as current customers buy new homes and new homeowners move into customers' recently sold homes. The monitoring solution also will enable the examination of current servicing customers as well as non-customer lists and alert loan servicers to possible short sales, the firm said.

Xactus, with its mortgage verification suite, aims to close more loans quickly and enhance profitability. Its proprietary platform Xactus 360 delivers credit reporting, verifications and settlement services and is integrated with Fannie Mae, Freddie Mac and credit bureaus, according to its website. Xactus has more than 6,500 clients, including banks and non-bank mortgage originators, and 12 service centers across the country.

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Ginnie Mae teases new enhancements to eNote program

Posted: 08 Jun 2022 01:56 PM PDT

Participants of Ginnie Mae's digital collateral program want commingling of eNotes and paper notes, and the agency is not saying no.

Currently, the program allows for digital only pools. But if the agency moves to allow commingling, then eNotes and paper notes can be bundled in the same pool.

Lynne Chandler, director of the digital collateral program at Ginnie Mae, said during a webinar hosted by Falcon Advisors last week that she “hears participants" and that the agency "wants to make these things happen.”

"Whatever our participants are interested in is a priority for me," Chandler said. "Restrictions have been in place for digital only pools because as a brand-new program, we didn't know how many participants would make it through to securitization."

Chandler said that the program now "has a great base of issuers" and that the number of participants is expected to grow, which will lead to more enhancements in the near future.

"We'll see that first leg of being able to offer commingling," she said. "Our programmers are busily coding."

The government-sponsored enterprises, Fannie Mae and Freddie Mac, allow for the commingling of digital and paper notes in securitized mortgage pools.

The Ginnie Mae executive said that issuers of the digital collateral program also expressed interest in the pool issued for immediate transfer (PIIT) program .

Chandler said that this is something the agency is working on and that “it will be available sooner rather than later.”

“We just have to do a little bit of modernization and we will be able to deliver that,” she said. The exact timeline was not disclosed.

The webinar coincided with Ginnie publishing updates to its digital collateral program and announcing that they will open the door for new participants starting June 21.

The program has been in a pilot phase for close to two years with a limited number of approved participants.

Currently, the digital collateral program has 12 approved eIssuers, three eCustodians, and one eSubservicer. Chandler predicts that it will take close to 30 days for new eIssuers to be granted approval to participate in the program.

The agency prefers working with eIssuers who have previous eNote experience, but it is urging all to apply, Chandler said.

As of June 1, Ginnie Mae’s digital collateral program will allow participants to perform eModifications to eNotes and will accept eNotes via a power of attorney. These updates apply to all existing eIssuers, Ginnie said.

The digital collalteral guide also provides eligibility and technological requirements for aspiring applicants, the agency said.

Alanna McCargo, president of Ginnie Mae, last month said these enhancements are a result of experience gained from running a pilot of the program.

"The lessons learned during the initial pilot of the digital collateral program are now incorporated into the eGuide and resulting enhancements," McCargo said. "We are excited to expand access to this program.

Ginnie Mae launched its pilot program in 2020, paving the way for the agency to accept eNotes as satisfactory collateral for its mortgage-backed securities.

By early 2021, the agency announced the issuance of the first mortgage-backed security (MBS) backed by digital pools. The MBS were loans closed by Rocket Mortgage in December 2020.

Since the launch of the program, over $8 billion have been securitized in eNotes, according to the agency. All current participants in the Ginnie Mae program are existing Ginnie Mae issuers, a requirement under the program.

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United Wholesale Mortgage launches platform for brokers

Posted: 08 Jun 2022 01:08 PM PDT

Pontiac, Michigan-based lender United Wholesale Mortgage (UWM) Wednesday launched a new platform for independent mortgage brokers to access purchase leads, past clients and real estate agents — a move to entice and retain loan officers in a shrinking mortgage market.

UWM, the largest wholesale lender in the country, has been challenged by rising mortgage rates, decreasing refinancing volumes and fierce competition in the wholesale channel during the past couple of years, mainly from Rocket Mortgage.

Dubbed “Boost,” the new platform is a one-stop-shop allowing past clients to call on their previous brokers’ behalf, being transferred directly to them. The marketplace also provides purchase leads at a discount tailored to the brokers’ needs.

“Staying in front of past clients and building new connections are two of the most critical and challenging parts of any business,” said Mat Ishbia, president and CEO at UWM, according to a news release. “Boost will save brokers time while helping them establish and maintain relationships for short-term and long-term wins.”

The platform also will identify potential real estate agent partners in the mortgage broker’s area and schedule one-on-one personal meetings. Rocket Pro TPO, the wholesale arm of the lending giant, started connecting its broker partners with real estate agents through Rocket Homes, the company’s real estate listing platform, in October 2021.

UWM’s new platform launch follows a decline in the lender’s total production in the first quarter of 2022. UWM posted an increase in profits over the prior quarter, increasing its purchase volumes to record levels, but the total origination fell during the same period, mainly due to refinancings.

According to its earnings report, UWM originated $38.8 billion in mortgage loans in the first quarter of 2022, a 29.7% decrease compared to the previous quarter and a 20.8% decline year-over-year. Purchase loans grew from 24.9% of the total origination volume in Q1 2021 to 49% in Q1 2022 to $19.1 billion.

So far, the company has been proactive in rolling out new products. In March, UWM unveiled two new offerings in the non-qualified mortgages (non-QM) space: a bank statement loan product for self-employed borrowers and a product to qualify borrowers for investment properties based on the monthly rental income, rather than their current income.

UWM also is pressuring competitors via prices. In May, the lender said it will price-match loans up to 40 basis points with that of 20 different competitors, through June 30, to any conventional, government or jumbo loan on a primary, secondary or investment property.

The lender’s move comes at a time of increasing competition. In January, Rocket Pro TPO announced a program to pair each of its brokers with a team of in-house experts, made up of underwriters, closing specialists and purchase title coordinators, to help brokers navigate the loan closing process.

In April, Rocket launched a program to guarantee financing to close loans in 15 days, seeking to attract brokers. The promotion, valid until the end of the month, awarded borrowers a $2,500 lender credit if the loan does not close on its promised due date.

UWM’s most aggressive step, however, was in March 2021, when the company told brokers they could not continue to work with Rocket Pro TPO or Fairway Independent Mortgage and still work with UWM.

To reinforce the rule, the company this year sued three broker shops for sending loans to its rivals, among them America’s MoneyLine, Kevron Investments Inc. and Mid Valley Funding & Inv. Inc.

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Loans And Mortgage

Wednesday, June 8, 2022