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- Accelerating Intensely
Accelerating Intensely
By Jeff Walton & Kelly Guest
Kelly Guest
September 16, 2024
September 16, 2024
We're on the precipice of a likely Fed rate cut, but potential buyers seem content to sit on the bench until after the election. Still, the industry hasn't stopped innovating in anticipation of the market moving - or rather, in various attempts to get it to move. UWM has released "KEEP," an AI-driven client retention tool that scans closed loan databases for refi opportunities. The automation does the legwork, notifies the borrower of potential savings and can also connect refi candidates with their brokers.
On the real estate side, Zillow came out with a "natural language search feature" for its app that allows people to search without the arduous task of typing. While UWM's new tool eliminates busywork to free brokers up to do the work that requires their expertise, Zillow's new feature brings to mind what author Mark Kennedy said: "All of the biggest technological inventions created by man - the airplane, the automobile, the computer - says little about his intelligence, but speaks volumes about his laziness." Talking to an app to look for homes that sound awesome is easy; gathering bank statements, paystubs, and tax returns takes a little more commitment.
CHATTER
SCALING UP AND DOWN: US Bancorp's first investor day in 5 yrs.
NMN reports on the rise of the company's assets from $482B in 2019 to $666B today, as well as the downsizing of 800 branches, decrease of business lines from four to three, and vision for the future.
CONSUMERS GET $7.76M, GOVERNMENT GETS $20M
The CFPB ordered TD Bank to pay $7.76 million to tens of thousands of victims of the bank’s illegal actions this week, alleging that, ”For years, the bank repeatedly shared inaccurate, negative information about its customers to consumer reporting companies. The information included systemic errors about credit card delinquencies and bankruptcies. In addition to the redress, the CFPB is ordering TD Bank to pay a $20 million civil money penalty.”
ICE BOMB: James Kleimann on possible “kicking and screaming” over Encompass changes
ICE will be sunsetting legacy integrations for its flagship Encompass platform by Oct. 31, 2025, which will modernize the mortgage market:
In an email to partners on Tuesday, ICE said that it will be closing down the Encompass SDK (Software Development Kit) on the same day it sunsets the program’s Technology Partner Network, Total Quality Loan Services, PSDK and ePass.
In doing so, ICE is pushing companies to Encompass Partner Network and Encompass Development Partner Connect, which use a more secure, cloud-based open application programming interface (API) structure that launched in 2018.
ROCKET RACES TO RELEASE LOAN LIMITS AHEAD OF FHFA
Limits are up about 4.71% over last year.
Baseline conventional loan limits (also known as conforming loan limits) for 2024 increased roughly 5.56% compared with 2023, rising $40,350 to $766,550 for one-unit properties. Limits in high-cost counties are set on a county-by-county basis. The upper limit in high-cost counties is 1,149,825.
FHFA will make official announcement in November.
BUH-BYE BASEL III? MBA supports re-proposal of rules
The following from MBA President and CEO, Bob Broeksmit, CMB: “It appears that common sense has prevailed with the decision to re-propose the flawed Basel III Endgame proposal, a move that we have consistently called for since last summer in testimony before Congress, speeches, comment letters, and ongoing conversations with federal regulators. We support Vice Chair Barr’s recommendations to recalibrate some provisions that would have had negative impacts on single-family housing and commercial real estate finance markets. This includes removing the 20-percentage point risk-weighting add-on for single-family mortgages, which would have further diminished banks’ participation in mortgage lending while reducing credit availability for low- and moderate-income homebuyers.”
SOCIALLY UNACCEPTABLE: HW on expanded complaint in video privacy lawsuit vs. Redfin
The amended complaint expands on Redfin’s prior acknowledgement of its potential legal exposure for using technologies like tracking pixels.
The suit accuses Redfin of violating the Video Privacy Protection Act and the California Invasion of Privacy Act by allegedly sending consumers’ personally identifiable data — including names and email addresses — to third-party firms Facebook parent Meta and Google parent Alphabet after they viewed agent-created video home tours.
According to the suit, this data was sent to Reddit Inc., Meta Platforms Inc., Microsoft Corp., Alphabet Inc., Snap Inc. (Snapchat) and Oracle Corp.
ALLY BANK HIT WITH TWO LAWSUITS: Action stems from data breaches
Both suits filed in North Carolina claim Ally Financial "failed to thwart cyber-attacks to secure sensitive personal customer information and provide timely notification to customers."
ON CALL: MITCHELL SANDLER weighs in monthly
The D.C.-based financial services and financial technology-focused legal powerhouse offers monthly calls to help lenders navigate the changing landscape. The latest call focused on how the NAR settlement and new buyers' agent practices might affect them and their partnerships. Partners Daniella Casseres and Ari Karen discussed the increasing prevalence of a dual employment real estate agent-loan officer model as well as a possible shift in alliances where lenders would partner more closely with sellers' agents who handle both sides of transactions.
MOVING & SHAKING
FREDDIE MAC NAMES DIANA REID NEW CEO: Freddie's non-executive board chair Lance Drummond said this in the announcement: “Diana’s proven track record and vast experience in housing finance, real estate and capital markets make her an excellent choice to further Freddie Mac’s mission-driven work. I have the utmost confidence that she is the right person to take Freddie Mac into the future.”
Discover and Bank of the West alum Hope Mehlman joins ALLY to lead newly-created Legal & Corporate Affairs Office.
PMG appointed Hector Amendola, CMB as President.
loanDepot appointed Nancy Smith to lead its Colorado and Wyoming branches as Regional Vice President, In-Market Retail.
INTROS & INNOVATIONS
DISASTER DASHBOARD: FHFA lets everyone become climate researchers
FHFA released an online risk analysis tool that provides geographic estimates for physical risks from various types of natural disasters as well as nationwide data on housing and the mortgage market.
The Mortgage Loan and Natural Disaster Dashboard gives property owners, community leaders, financial institutions, policymakers, and other stakeholders insight into which areas of the country are most likely to incur greater damages from hurricanes, flooding, wildfires, and other types of natural hazards. Users can combine FHFA’s Public Use Database with data on previous disasters and other analysis from the FEMA.
KEEP ‘EM IN THE FOLD: UWM announces AI client retention tool
UWM released KEEP - technology that utilizes AI to send pre-validated refinance opportunities as soon as a borrower is able to obtain meaningful savings on their monthly payment.
The KEEP system continuously checks and validates multiple borrower data points on previously closed loans to identify which borrowers across the country are eligible for impactful savings on their monthly mortgage payment.
Once the system identifies that a borrower can save on their monthly mortgage payment, KEEP will automatically communicate these savings to them through an email that provides a link to an easy-to-complete application. If borrowers have specific questions regarding rates or loan terms, they will be connected with their mortgage broker who can walk them through additional options.
AMPED UP AI: Zillow adds “natural language” search feature
The company says, “users can skip the filters and search in the Zillow app by simply describing their ideal home, just as they would when talking to a friend.”
People can search by commute time, affordability, schools and nearby points of interest, and specify details such as layout, location and style.
MARKET/INDUSTRY
BODNAR'S BULLETS: From Bill Bodnar's latest Master the Markets
Higher for longer is about to end; Fed rate cut expected this week. Will it be 25 or 50 bps?
Inflation intel came in slightly higher on a m-o-m basis and the Fed doesn't normally change monetary policy between the political conventions and election day.
Real retail sales come in this week - and the difference between those numbers and inflation will be a major portent of what's to come.
MORTGAGE RATES DROP TO THEIR LOWEST LEVEL SINCE FEBRUARY 2023: FREDDIE 9-12-24
Mortgage rates have fallen more than half a percent over the last six weeks and are at their lowest level since February 2023. Rates continue to soften due to incoming economic data that is more sedate. But despite the improving mortgage rate environment, prospective buyers remain on the sidelines, as they negotiate a combination of high house prices and persistent supply shortages.
MORTGAGE APPLICATIONS INCREASED 1.4% FROM ONE WEEK EARLIER: MBA
Survey for the week ending 9-6-24: This week’s results include an adjustment for the Labor Day Holiday.
The Market Composite Index increased 1.4% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 10% compared with the previous week.
The Refinance Index increased 1% from the previous week and was 106% higher than the same week one year ago.
The seasonally adjusted Purchase Index increased 2% from one week earlier. The unadjusted Purchase Index decreased 10% compared with the previous week and was 3 percent lower than the same week one year ago.
The refinance share of mortgage activity increased to 46.7% of total applications from 46.4% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 5.4% of total applications.
The FHA share of total applications increased to 14.7% from 14.6% the week prior.
The VA share of total applications decreased to 16.4% from 16.7% the week prior.
The USDA share of total applications remained unchanged at 0.4% from the week prior.
MORTGAGE CREDIT AVAILABILITY INCREASED IN AUGUST: MBA’s Mortgage Credit Availability Index (MCAI)
The MCAI rose by 0.9% to 99.0 in August. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.
The Conventional MCAI increased 1.8%, while the Government MCAI was unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 1.5%, and the Conforming MCAI rose by 2.6%.
“Credit availability increased in August, with the conventional credit index reaching its highest level since July 2022. This was driven by increased cash-out refinance and non-QM programs.” - Joel Kan, MBA’s Vice President and Deputy Chief Economist.
REALTOR.COM PUBLISHES AREAS WHERE CANDIDATE HARRIS’ $25K HOME BUYER ASSISTANCE IDEA IS A 10%+ DOWN PAYMENT
EQUITY UP: CORELOGIC
U.S. homeowners with mortgages (roughly 62% of all properties*) have seen their equity increase by a total of $1.3 trillion since the second quarter of 2023, a gain of 8.0% year over year, bringing the total net homeowner equity to over $17.6 trillion in the second quarter of 2024.
CURIOUS CREDIT SCORES: OPTIMAL BLUE’s August Market Advantage
Consumer credit rose again in July according to the Federal Reserve, but credit scores are in good shape: Optimal Blue reports that FHA and purchase borrowers’ credit scores are at highest in seven years. Throughout 2024, monthly average credit scores have been higher than average for FHA borrowers (675.3), as well as for borrowers seeking purchase loans (736.4), than any other month dating back to January 2018, when Optimal Blue started tracking the data. The average credit score across all production in August 2024 was 731.
Additionally in August, the average loan amount rose from $369.1K to $372.4K, while the average purchase price fell from $471K to $465.5K.
The report also highlights persisting challenges for homebuyers, noting purchase lock counts dropped 16% YoY due to continued affordability and inventory challenges. Purchase locks are down 45% over August 2019.
FORECLOSURES DROP M-O-M & Y-O-Y: ATTOM DATA‘s 8-24 Foreclosure Market Report
Default notices, scheduled auctions or bank repossessions — down 5.3% from a month ago and down 11% from a year ago.
SURPRISE: Demand for 2nd homes down
The demand for second-home mortgages has fallen to an eight-year low, plagued by higher home prices, interest rates, and loan fees.
Mortgage-rate locks for second homes fell 13.1% year over year in August, hitting their lowest level since March 2016, according to a Redfin report. That decline represents a 59.2% drop from pre-pandemic times.