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Back in Black!
By Jeff Walton & Kelly Guest
Kelly Guest
August 26, 2024
August 26, 2024
IMBs post first quarterly profit in 2 years: MBA's Quarterly Performance Report
IMBs and mortgage subsidiaries of chartered banks reported a pre-tax net profit of $693 on each loan they originated in Q224, an increase from the reported loss of $645 per loan in Q124. MBA’s Vice President of Industry Analysis Marina Walsh had this to say about the numbers: “Net production income was positive in the second quarter of 2024 – a welcome sign after eight consecutive quarters of net production losses. With a pickup in quarterly volume, productivity, and closings-to-applications pull-through, production costs dropped by about $1,800 per loan. These developments contributed to better net results, even as production revenues decreased from the previous quarter. After two of the most challenging years in the mortgage business, many companies are seeing light at the end of the tunnel.”
Just like 818,000 non-farm jobs vaporized in the BLS' preliminary benchmark revision, Fannie Mae’s ESR Groupadjusted their home sales forecast downward. The GSE revised their total home sales forecast for 2024 down to 4.78 million from 4.81 million and to 5.19 million from 5.26 million for 2025. Fannie's team also adjusted their GDP growth forecast up for 2024 and down for 2025, and predicts mortgage rates won't break 6% until the end of next year.
CHATTER
POWELL SAYS “IT'S TIME” - BOWMAN, "NOT SO FAST"
Fed Chair Jay Powell said "The time has come for policy to adjust," at the symposium last week in Wyoming, but Fed Reserve Gov Bowman wasn't as definitive when she spoke in Alaska, saying "I continue to view inflation as somewhat elevated. And with some upside risks to inflation, I still see the need to pay close attention to the price-stability side of our mandate while watching for risks of a material weakening in the labor market."
CREATIVE FINANCING? The Federal Savings Bank rolled out a "Smart Loan" that can be used for buyers' agents' commission among other things. The unsecured loan is available to qualified borrowers who get their mortgages from the bank in the states where they operate.
ROCKET BOOSTS CERTIFIED COMMUNITY LENDER (CCL) EFFORTS:
Rocket Pro TPO launched the Certified Community Lender (CCL) Certification Program, covering the $395-$495 fee for brokers to earn their CCL certification through the National Association of Minority Mortgage Bankers of America (NAMMBA). The announcement came during NAMMBAConnect last week in FL.
LDI OFFERS 1ST-LIEN HELOC TO 38.5% OF HOMOWNERS WITHOUT MORTGAGES
loanDepot has expanded its equityFREEDOM product suite to include a first-lien home equity line of credit. The equityFREEDOM First-Lien HELOC allows such borrowers to access the equity in their homes with flexible terms which include a 3-year draw period, and, in most states, a 10-year interest-only payment period followed by a 20-year amortizing repayment term.
$7M SLAP: CFPB SANCTIONS FL-BASED SERVICER, THREATENS CEO’S PAYCHECK
The bureau says that Fay Servicing violated a 2017 order that found that Fay Servicing failed to provide mortgage borrowers with the protections against foreclosure required by law, kept borrowers in the dark about critical information about the process for applying for foreclosure relief, and moved forward with the foreclosure process while borrowers were actively seeking help to save their homes.
SENIOR SUPPORT IN FL, ME & MA: HUD ANNOUCES $3.7M IN GRANTS
HUD made the grants to two nonprofit organizations and a local housing authority to enable low-income elderly persons to remain in their homes through low-cost, low barrier, high impact home modifications. “It is important that our homes stay safe, healthy, and easy to live in, and this program does that, empowering older adults to age in place with dignity," said Matthew Ammon, Director of HUD’s Office of Lead Hazard Control and Healthy Homes.
SUDDEN LOSS: HW reports on the death of Sue Buswell at the age of 58, noting FinLocker President and COO Brian Vieaux said Buswell wrote Chapter 25 in the book “Rethink Everything: You ‘Know’ About Being A Next Gen Loan Officer,” which he co-authored with Kyle Draper. The book will be dedicated to her memory.
MOVING & SHAKING
NAR MAKES INTERIM CEO PERMANENT: Trade group names former Chicago Sun Times CEO Nykia Wright to lead organization, saying she has "demonstrated an unwavering commitment to making NAR a more inclusive, welcoming and agile organization." No word if she's ever had a real estate license.
AMERIHOME named Jordan Higgins VP of Correspondent Sales.
RALPH ARMENTA joined Incenter Lender Services as President of Lending-in-a-Box.
MARKET/INDUSTRY
BODNAR'S BULLETS: In his latest Master the Markets segment, Bill Bodnar called out what the industry needs to watch:
Fed Chair Powell said Friday that "inflation is moving sustainably toward 2%" and signaled a rate cut, which dulled the pain from the BLS' jobs revision earlier in the week.
Will it be a 25 or 50 bps cut in September? Depends on the upcoming inflation and jobs data…
The devil is in the debt: Treasury is getting ready to unload $187B of 2, 5 and 7-yr. notes.
GDP UP, HOME SALES DOWN: Fannie Mae’s ESR Group Adjusts Forecasts
Upwardly revised their 2024 GDP growth forecast to 1.9% from 1.6%, while downgrading 2025 from 2.0 percent to 1.8%.
Revised their total home sales forecast for 2024 downward to 4.78 million (previously 4.81 million) and in 2025 to 5.19 million (previously 5.26 million).
They project the 30-year fixed rate mortgage rate to end the year around 6.4% and move toward 5.9% by the end of 2025.
THE 30-YEAR FIXED-RATE MORTGAGE LINGERS JUST UNDER 6.5%: Freddie 8-22-24
Although mortgage rates have stayed relatively flat over the past couple of weeks, softer incoming economic data suggest rates will gently slope downward through the end of the year. Earlier this month, rates plunged and are now lingering just under 6.5%, which has not been enough to motivate potential homebuyers. Rates likely will need to decline another percentage point to generate buyer demand.
MORTGAGE APPLICATIONS DECREASED 10.1% FROM ONE WEEK EARLIER: MBA Weekly Survey for the week ending 8-16-24.
The Market Composite Index decreased 10.1% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 11% compared with the previous week.
The Refinance Index decreased 15% from the previous week and was 90% higher than the same week one year ago.
·The seasonally adjusted Purchase Index decreased 5% from one week earlier. The unadjusted Purchase Index decreased 7% compared with the previous week and was 8% lower than the same week one year ago.
EXISTING HOME SALES CURB 4-MONTH SLIDE
4-months of existing home sales declines stopped with a 1.3% increase in July; but they’re still down 2.5% y-o-y
Median home sales price jumped 4.2% y-o-y to $422,600
Inventory inched up 0.8% m-o-m, stands at 4-month supply at current sales pace
"Despite the modest gain, home sales are still sluggish. But consumers are definitely seeing more choices, and affordability is improving due to lower interest rates." - NAR Chief Economist Lawrence Yun.
7th STRAIGHT MONTH OF SLOWING HOME PRICE GROWTH: FIRST AM's JULY HPI
First American Financial’s monthly Home Price Index showed m-o-m increase of 0.3%, y-o-y gain of 5.3%.
The report also notes that home prices are 55% above their defined pre-pandemic level as of February 2020.
HOUSING STARTS AT 4-YR LOW: US CENSUS/HUD
Overall starts were down 6.8% m-o-m in July and down 16% y-o-y. Single-family starts were down 14.8% y-o-y.
LAW-LAPALOOZA:
Commission Lawsuits Still in the System, New Angles Emerging
SAME SUSPECTS, DIFFERENT SUIT: ANTICOMPETITION CLAIMS IN UT
Homie Technologies accuses UT agents of boycotting their listings because they offered buyer broker commission of 1.5%. HW reports Homie entered text messages into evidence allegedly from agents, one that said, “I could always show it and then negotiate up the BBC in the contract but figured, why go through the hassle when we have three other great listings paying 2.5-4%. Anyway. Please tell your sellers for me." Homie picked up the gauntlet and lawyered up.
NOT JUST NAR: HW TRACKING MULTIPLE COMMISSION SUITS
Batton 1 and 2, Gibson, Umpa, now Lutz... Recent high profile commission suit settlements have focused on seller claims; the Lutz suit is coming at the issue from the buyers' side. Meanwhile, the appeals court upheld 25-35% attorneys' fees.
POST-SETTLEMENT PROFIT WATCH: AccountTECH Report Says Brokers Need to Get Efficient
An analysis by real estate accounting software company AccountTECH found that 62% of the brokerages analyzed achieved a positive net operating profit in the first six months of 2024 - a modest increase from 60% for the full year 2023.
"While these results show a slight positive trend, they also highlight challenges for the industry in the coming year. Many brokerages are failing to create adaptive business models that can adjust expenses in response to fluctuating gross profits. Faced with the possibility that the NAR settlement may drive commission rates generally lower, brokerages may need to accelerate their efforts to streamline overhead costs to attain or maintain profitability." – AccountTECH CEO Mark Blagden