Mortgage – HousingWire |
- Mortgage applications dipped 6% continuing 3-week decline
- HUD’s small-dollar mortgage plan still hazy
- Higher mortgage rates, economic uncertainty behind declining home purchase applications
- FHFA opens fintech office and seeks feedback on mortgage fintech
- loanDepot sues CrossCountry for “poaching” high-performing LOs in New York
- State of the mortgage industry half-time report
- Milo reaches $10M crypto-mortgage milestone
| Mortgage applications dipped 6% continuing 3-week decline Posted: 20 Jul 2022 04:02 AM PDT Weakening economic outlook, high inflation and affordability challenges took a toll on buyer demand, leading to a drop in both purchase and refi applications last week, according to the Mortgage Bankers Association (MBA). The market composite index, a measure of mortgage loan application volume, declined 6.3% for the week ending July 15, the MBA said. The refinance index dipped 4% from the previous week, falling to a 22-year low, and the purchase index decreased 7%. "Mortgage applications declined for the third week in a row, reaching the lowest level since 2000," Joel Kan, associate vice president of economic and industry forecasting at MBA. "The decline in recent purchase applications aligns with slower homebuilding activity due to reduced buyer traffic and ongoing building material shortages and higher costs." New U.S. home building activity fell 2% to a seasonally adjusted annual rate of 1.56 million units in June, marking a nine-month low since September 2021, according to the U.S. Department of Commerce. Permits for future homebuilding fell 0.6%, to a rate of 1.69 million units, also the lowest since September. While the refinance share of all mortgage activity slightly increased from 30.8% the previous week to 31.4% of total applications, the refi index was 80% lower than the same week a year ago. "With most mortgage rates more than two percentage points higher than a year ago, demand for refinances continues to plummet," Kan said. Mortgage rates have been volatile in recent weeks, following the Federal Reserve's interest rate hike of 75 basis points last month. After falling 40 bps two weeks ago to 5.30%, purchase mortgage rates climbed back last week to 5.5%, according to the latest Freddie Mac PMMS. A year ago at this time, 30-year fixed-rate purchase rates were at 2.88%. The trade group estimates the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) rose to 5.82%, from the previous week's 5.74%. Jumbo mortgage loans (greater than $647,200) also increased to 5.31% from 5.25%. The Federal Housing Administration‘s (FHA) share of total applications rose to 12.4% from the previous week's 11.7%. The United States Department of Agriculture‘s (USDA) share also increased to 0.6% from the week prior's 0.5%. Meanwhile, the Veterans Affairs‘ (VA) share of total applications fell to 10.6% from 11.2%. The share of adjustable-rate mortgages (ARM) applications also declined, accounting for 9.5%. According to the MBA, the average interest rate for a 5/1 ARM decreased to 4.6% from 4.71% a week prior. The survey, conducted weekly since 1990, covers 75% of all U.S. retail residential mortgage applications. The post Mortgage applications dipped 6% continuing 3-week decline appeared first on HousingWire. |
| HUD’s small-dollar mortgage plan still hazy Posted: 19 Jul 2022 03:08 PM PDT The Department of Housing and Urban Development said it is “looking very hard” at how to make it easier to finance small-dollar mortgages, but has yet to spell out how it will accomplish that goal. In April, HUD signaled it would take on the issue. But a senior HUD official in mid-July stated the obstacles to providing small-dollar mortgages, instead of giving solutions. “It’s hard to get lenders to make small mortgages, because quite honestly the economics of the whole business depends on percentages,” the HUD official said. HUD did not respond to a request seeking clarity on their plan to boost small-dollar mortgages. Industry practitioners have some ideas for how HUD might make financing such loans more feasible. Small-dollar mortgages, typically with balances less than $200,000, are hard to find. Lenders avoid them, because originating a small-balance loan is as expensive as a larger loan, but the compensation, which is about 1% of the loan balance, is lower. Michael Loftin, CEO of Homewise, whose work revolves around sustainable homeownership, suggested HUD take a cue from the government-sponsored enterprises. Fannie Mae and Freddie Mac, although they rarely back small-dollar loans, subsidize lenders for originating them. "Freddie Mac and Fannie Mae give [lenders] a little bump on their origination fee to encourage small-dollar lending," said Loftin. "It's an acknowledgement that you're making less on a small-dollar loan." He added that non-traditional lenders, such as Community Development Financial Institutions (CDFI’s) and credit unions, should be key players in any plan by the federal government to make small-dollar mortgage loans more accessible. "There are CDFI's and credit unions that want to do this work, but maybe they need an operating subsidy or cheaper capital to make this work," said Loftin. "Having a product alone will not address the problem — you still don't have people doing the work on the ground." Loftin also suggested a subsidy for real estate agents, because "they can't make a living selling $40,000 homes.” A recent report from researchers at The Pew Charitable Trusts underscored the challenges of small-balance mortgage lending. The report found that fixed mortgage origination costs lead lenders to “focus on higher-balance loans.” Small mortgages are less profitable, because lender compensation is commission-based, but they come with the same regulatory and compliance risks, the researchers wrote. Tara Roche, who co-authored the report, said that making small-dollar loans more accessible would help curb buyers’ reliance on riskier and costlier alternative financing. Instead of mortgages, borrowers looking to finance more modest properties turn to land contracts, seller-financed mortgages, lease-purchase agreements, and personal property loans. That financing is often more expensive and lacks the consumer protections that come with mortgages, Roche said. “In some arrangements, the deed or the title to the property isn’t handed over until much later in the transaction, sometimes not until final payment is made,” Roche said. Those borrowers “have the responsibilities of homeownership but not all of the benefits.” The use of alternative financing is also not equitably distributed. Hispanic borrowers are almost twice as likely to use alternative financing than any other race or ethnicity, Pew researchers found. Roche said that small-dollar lending is an overlooked area for mortgage lending, but that it has a lot of potential. Although it’s not yet clear how HUD will tackle the issue, Roche said she is encouraged that HUD is focused on the problem. “In order to really get at the challenges in the smaller mortgage space, whether that’s lenders’ difficulty originating these profitably or the ability for buyers to access them, it’s going to take a multi-pronged effort,” said Roche. “HUD even identifying this as challenge is an important step.” The post HUD’s small-dollar mortgage plan still hazy appeared first on HousingWire. |
| Higher mortgage rates, economic uncertainty behind declining home purchase applications Posted: 19 Jul 2022 01:50 PM PDT New home purchase applications dropped 12% year over year in June due to higher mortgage rates and economic uncertainty, according to the builder application survey from the Mortgage Bankers Association (MBA). Month over month, application volume dipped by 10%. New residential construction and permitting activity weakened from March through May, which reduced the number of homes available for home buyers, according to survey results. MBA estimates about 620,000 new single-family homes were sold in June at a seasonally adjusted annual rate, marking a 15% drop, or more than 100,000 homes, compared to May. "Higher mortgage rates and heightened economic uncertainty cooled borrower demand in June, leading to new-home purchase applications declining to the lowest level since April 2020," said Joel Kan, associate vice president of economic and industry forecasting at the MBA. Mortgage rates have been volatile in recent weeks, following the Federal Reserve‘s interest rate hike of 75 basis points last month. After falling 40 bps two weeks ago to 5.30%, purchase mortgage rates climbed back last week to 5.5%, according to the latest Freddie Mac PMMS. The average loan size dropped to $426,966 in June from May’s $430,855, MBA said. How to make digital marketing easy and effective for mortgage professionals The shift to a purchase market makes effective digital marketing even more important, and collaborative marketing technology can generate more demand while reducing time spent on marketing. This white paper explains what collaborative marketing is and how forward-thinking lenders are already using it to drive growth. Presented by: EvocalizeConventional loans accounted for 73.7% of loan applications. Federal Housing Administration (FHA) loans made up 15%, Veterans Affairs (VA) loans were 10.7% of total applications and Rural Housing Service (RHS) and United States Department of Agriculture (USDA) loans contributed 0.5%. The survey tracks application volume from mortgage subsidiaries of homebuilders across the country. Using this data, MBA provides an early estimate of new home sales volumes at the national, state and metro level. The post Higher mortgage rates, economic uncertainty behind declining home purchase applications appeared first on HousingWire. |
| FHFA opens fintech office and seeks feedback on mortgage fintech Posted: 19 Jul 2022 12:35 PM PDT Fannie Mae and Freddie Mac's regulator imagines a future where, perhaps through artificial intelligence and machine learning, errors in mortgages are identified in real time before a loan is closed. Automating compliance could make eligibility, as well as pricing and pooling decisions, and verify and validate that information. But that scenario is a long way off. Although investors have poured an increasing amount of money into fintechs — $1.7 billion in 2021, up from $0.4 billion five years ago, per the Federal Housing Finance Agency — closing a mortgage loan has since gotten more expensive, not less. The FHFA this week launched a new Office of Financial Technology, which it said will be the main point of contact for fintech matters. At the same time, the agency is seeking feedback on how to incorporate technological advancements into the mortgage lifecycle. Through a request for information, the FHFA said it would like to better understand the "potential innovations throughout the mortgage lifecycle and related processes, risks, and opportunities." The FHFA asked the public to help it identify “barriers” to implementing fintech in the housing finance ecosystem. It also emphasized the importance of balancing housing equity with technological innovation. How mortgage lenders are qualifying the value of fintech solutions HousingWire recently spoke with Sue Woodard, senior advisor to Total Expert, about the ways lenders can measure the effectiveness of their fintech solutions and what they can do to keep pace with the digital mortgage revolution. Presented by: Total ExpertThe FHFA said it was following in the footsteps of other financial regulators by establishing its own fintech office. Agencies with existing fintech offices include the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau. The broadly used term "fintech" encompasses digital innovation in many parts of the mortgage finance ecosystem, the FHFA wrote. The agency offered three narrower categories for fintech as it relates to mortgage finance: "mortgage tech," which includes digital processes applied to mortgage origination, underwriting, servicing and investment; researching, transacting and managing real estate, or "prop tech," and regulation and compliance, also known as "regtech." The agency said it is interested in the role of fintech in the "ecosystem" of residential mortgages, its role in the secondary mortgage market, the risks of using fintech and its application to compliance and regulatory activities. In terms of risks, the FHFA highlighted a number of examples that it is taking into account. Those include inadequate regulation of the fintech sector, cybersecurity vulnerabilities due to "complex, poorly understood, or poorly managed innovations," consumer privacy threats, fair lending violations, and legal, compliance and reputational risk. The agency also raised the possibility that algorithms may have differential and negative impacts on minorities or underserved markets, and that fintech platforms could "erode the accumulated wealth of individuals and firms" that participate in them. There is much in the mortgage process that fintechs might improve, but so far, the FHFA wrote, it has not made producing mortgages less costly. Full production costs per loan totaled almost $9,500 in the fourth quarter of 2021, up from a little over $7,500 five years earlier. The time it takes to close a mortgage loan is still lengthy — on average, 46 days from application to closing. During that time, the average prospective borrower has 30 interactions with sales representatives, the regulator wrote. Those costs, and the timeline to close a loan, are not equitably distributed, according to the FHFA. "Underserved populations are often most cost and time-burdened due to historical and ongoing structural and systemic barriers," the agency wrote. But the agency is optimistic that fintech innovation can eventually make mortgage processes more equitable, as well as more efficient. Although the efficiencies and savings haven't yet materialized, FHFA cited research from McKinsey and Company claiming that a "reengineered, digitalized mortgage origination process could reduce costs by 10%, reduce timelines by 15 to 40%, and reduce interactions with borrowers by 15% to 40%." The post FHFA opens fintech office and seeks feedback on mortgage fintech appeared first on HousingWire. |
| loanDepot sues CrossCountry for “poaching” high-performing LOs in New York Posted: 19 Jul 2022 10:49 AM PDT  Even in a downturn, the loan officer recruiting wars remain fierce. Beleaguered nonbank lender loanDepot is suing rival lender CrossCountry for allegedly dozens of poaching high-performing loan officers from its New York branches. They’re at least the third lender to sue CrossCountry for poaching over the last two years. The lawsuit, filed in federal court in New York last week, alleges that since February 2022 “CrossCountry improperly poached no fewer than 32 loanDepot employees from loanDepot branches in Manhattan, Brooklyn and Fishkill, New York by interfering with loanDepot’s contractual and other legal rights.” Employees who left for CrossCountry accounted for about 81% of the loan volume generated by loanDepot’s New York operations in the past year, the suit said. "CrossCountry’s focus on loanDepot’s New York operations is hardly surprising" as loanDepot’s New York branches produced an average of $846 million of loans in volume annually, loanDepot said in court filings. Some employees worked at loanDepot for more than 10 years before leaving for CrossCountry, loanDepot alleged. The lawsuit said that other loanDepot employees plan to leave the lender to join CrossCountry. loanDepot accused CrossCountry of breach of contract, violating the trade secrets act, interfering with contracts and unfair competition, among other claims. The accusations come amid loanDepot's pledge to cut 4,800 jobs in 2022 to return to profitability. loanDepot reported a net loss of $91.3 million in the first quarter of 2022, with origination volume falling significantly due to a sharp rise in rates. Poaching allegedly started on Feb. 23 when Michael Secor, a loan consultant, and defendant Emeline Ramos, Secor’s production assistant, abruptly resigned. Nine loan consultants and three managers followed them over the next two weeks, the lawsuit claimed. (Secor, Ramos and 10 others were named as defendants in the lawsuit.) Since then, CrossCountry recruited 18 additional loanDepot employees including loan consultants, managers and production assistants, loanDepot claims. The lawsuit claims that former employees took “valuable loanDepot trade secrets" and "proprietary customer information" when they left for CrossCountry and that Cross Country is actively using this information to capture loanDepot business and customer relationships. loanDepot alleges Cross Country's CEO Ron Leonhardt is willing to “absorb such litigation and injunctive relief as a cost of doing (illegal) business” and even offered to pay a $50,000 bounty to anyone who is able to co-opt an entire loanDepot branch. To help fund a strategy of “employee raiding,” CrossCountry raised $400 million in outside funding in November 2021, which Leonhardt crowed at the time that the financing positions CrossCountry for growth as it "expand our platform, geographical footprint and residential mortgage offering," the lawsuit said. loanDepot declined to comment citing ongoing litigation and CrossCountry didn’t respond to requests for comment. Guild Mortgage and Caliber Home Loans have both sued CrossCountry on similar grounds. Caliber, now a part of New Rez, said CrossCountry had snagged 80 top-producing LOs who originated $2.3 billion in business. In October 2021, Guild Mortgage sued CrossCountry for allegedly engaging in similar practices. loanDepot also sued seven former loan officers from the Meredith-Rogers team in September for joining CrossCountry and allegedly transferring loans in the pipeline to their new employer. The post loanDepot sues CrossCountry for “poaching” high-performing LOs in New York appeared first on HousingWire. |
| State of the mortgage industry half-time report Posted: 19 Jul 2022 09:30 AM PDT Adjusting to today's market can be dizzying after the last few years of historically low interest rates and high refinance business. However, the lenders and loan officers who will be most successful in the second half of 2022 will be those who pivot quickly, understanding both the nuances of the market and the best strategies to help solve problems for today's homeowners, homebuyers, homesellers, Realtors and financial advisors. We interviewed more than 25 mortgage industry experts to gather the best insights, strategies, and recommendations to pivot and win in today's market. We partnered with HousingWire to release a few excerpts from the report. Notable trends in a new era of salesMillennials make up 44% of home purchases today. In a purchase-heavy market, understanding these consumers’ challenges and perspectives has never been more important. Generational nuances. As a generation, millennials have been groomed to expect the "press button, get mortgage" experience, but they are also terrified to make a wrong move with the biggest financial decision of their lives. In a survey of over 3,000 NextGen homebuyers, we found that lack of education and distrust hit the top of their list of challenges, while a demand for personalized information was key to winning them over.
 Blockchain and cryptocurrency. In an era of growing distrust, NextGen consumers are particularly attracted to a decentralized structure of currency and the potential for blockchain and crypto to increase the speed, safety, and ease through which they transact. Despite its volatility, it is clear that digital currencies are the future and not a fad. According to Jim Park, executive chairman of The Mortgage Collaborative, who has stayed at the forefront of the growing technology in real estate, 12% of first-time homebuyers used some form of crypto towards their down payment last year. Blockchain will create a lot more efficiency in all transactions, including real estate, said Park. For example, he explained that companies are converting real estate into NFTs and using a smart contract to close in a few days rather than weeks. They're also using the metaverse to tour homes from across the world, and there are many other applications that will likely change the way consumers purchase real estate in the future. "I think those are things that are going to force the industry to create more efficiency and some additional change, but also at the end of the day, it’s creating more transparency and more certainty to the consumers," said Park. Innovations in technology. Last year, we wrote an article in HousingWire about the recent shift in technology trends, which is even more evident in today's purchase market. While mortgage technology will always improve in optimizing time and costs, the innovation today is in consumer empowerment. The best lenders are utilizing technology to put the control in the hands of the consumer through transparency, digestible information, and personalized advice. Dave Savage, co-founder and CEO of Mortgage Coach, recently presented at the Modern Mortgage Summit describing the history of mortgage technology over 36-years. Today, loan officers are not only having borrowers start the application with mobile devices and presenting a personalized, digital presentation, but they’re automating it with big data and predictive analytics. For millennials, this is the way they expect to be empowered through technology and mobile devices.  The Move to hybrid. Most consumers don't care about meeting in-person anymore, but they do still care about human advice. The way to build trust and win more business with the largest segment of the purchase market is to empower them with personalized information through a hybrid experience. The future isn't human versus machine on home values. It's when to use which, according to the CFPB Director from the MBA Secondary Conference. "If I’m a customer, I don’t really care if you’re a broker, a loan officer, or I’m sitting in a call center… If I need you to help me, I'm going to want some human intervention at some point in the process because it’s too important a decision for me," said veteran mortgage executive Bill Dallas. For more trends and strategies aggregated from more than 25 of the mortgage industry's leading experts, see the full report. This column does not necessarily reflect the opinion of HousingWire's editorial department and its owners. To contact the authors of this story: Kristin Messerli at kmesserli@experience.com To contact the editor responsible for this story: The post State of the mortgage industry half-time report appeared first on HousingWire. |
| Milo reaches $10M crypto-mortgage milestone Posted: 19 Jul 2022 09:11 AM PDT Miami-based fintech Milo has closed $10 million in cryptocurrency mortgages since unveiling the product earlier this year, the company announced early Tuesday. The lender's 30-year crypto mortgage is designed to make it easy for investors to use their digital holdings to acquire homes in the U.S. Through the crypto-lending program, Milo allows borrowers to pledge cryptocurrency through regulated custodians — crypto platforms such as Coinbase or Gemini — and thereby finance as much as 100 percent of the property purchase price, with a cap of $5 million. "We have incredible momentum and see a fundamental need to help individuals diversify their wealth to generate real world yield through real estate," said Josip Rupena, founder and CEO of Milo. Milo's 30-year crypto-mortgage requires no down-payment, other than pledging the cryptocurrency as collateral, and is available at an interest rate as low as 6.95%. That rate, however, can change, according to Milo. The interest rate is reviewed annually to assess the ratio of crypto assets pledged as security to the total loan amount. "The higher the ratio is, the lower your rate will be," according to Milo's website. The lower the ratio, of course, the higher the rate adjustment will be for the crypto-mortgage. Milo's crypto-loan program, however, allows homebuyers to keep their cryptocurrency — Bitcoin, Ethereum and USD Coin all qualify for use as collateral — while acquiring property and potentially benefiting from price appreciation in both assets. "Given the current state of the market, we're extremely proud that we have not had any margin calls or negative counterparty exposure, all while continuing to originate mortgages," Rupena said. "As a licensed and regulated entity, we take our responsibility seriously to ensure our clients' crypto is safe and returned when requested." Milo also offers a tech-enabled non-crypto mortgage product that serves U.S. and foreign nationals who want to purchase a home in the U.S., or pursue refinancing. Milo, a licensed and insured direct lender, reports some $100 million in loans have been originated through its more traditional mortgage line — with applicants hailing from more than 90 countries, according to a news release announcing Milo's crypto-mortgage milestone. The company started rolling out its crypto-mortgage product in April of 2022 and has since added 20 employees, company representatives said, for a total of about 40 employees. Milo also has plans to soon introduce a crypto-mortgage refinancing product. "The success of our crypto mortgage over the past few months serves as a testament to our ability to pioneer and create a unique solution for the crypto community," Rupena said. The post Milo reaches $10M crypto-mortgage milestone appeared first on HousingWire. |
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