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- Electing to Wait
Electing to Wait
By Jeff Walton & Kelly Guest
Kelly Guest
September 09, 2024
September 9, 2024
JUDGE SELF-POLICES: In a not-oft seen move, HousingWire reports that the judge in the Chicago-based U.S. District court overseeing three real estate commission lawsuits recused herself due to a potential conflict of interest. The judge disclosed that "a spouse of a person related to her within the third degree of relationship is a partner at a law firm that represents a defendant in the suits."
THE NUMBERS VARY, BUT THEY'RE DOWN ALL AROUND: Recent rate shifts have lowered the average mortgage payment for new applicants, but how much depends on the source. The latest MBA Purchase App Payment Index (PAPI)dropped $127 m-o-m in July to $2140, while Redfin says the average is $2534 for the four weeks ending September 1. Even though payments are down, sales aren't going up in spite of a 35.8% y-o-y increase in inventory according to Realtor.com's August Housing Market Report. NAR's latest pending home sales index confirms the market malaise, coming in at the lowest point since the trade org began keeping track. NAR's Chief Economist Lawrence Yun speculated that we may be stalled for a bit longer: "A sales recovery did not occur in midsummer. The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming U.S. presidential election." A recent survey by Mphasis confirms Yun’s theory, with 40% of respondents saying they are waiting to buy until after November 5.
CHATTER
GOOD LUCK WITH GOLIATH: NMN reports Crosscountry Mortgage is taking the IRS to court over the agency's claim it underpaid taxes in 2019, resulting in $1.4M in additional taxes owed + $559K in penalties.
NON-QM + QM: OCMBC completes acquisition of HomeStar Financial Corporation: The self-proclaimed #2 non-QM originator – OCMBC - expands its reach with nationally licensed, Fannie Mae, Freddie Mac, and GNMA-approved HomeStar.
UWM RALLYING BROKERS WITH BPS: “Refi75” is available now through 10-31. The wholesaler is giving an added 75bps incentive on all conventional, FHA and USDA rate and term refinances; FHA Streamlines; and VA IRRRLs, as “a great way to create [their] own refi boom.”
MR. COOPER SETTLES WITH ACI: This comes just a couple months after the CFPB smacked the payment processor with a $25M fine for yanking mortgage payments out of consumers' bank accounts who had loans serviced by Mr. Cooper - without authorization. The CFPB described ACI's offense as "$2.3 billion in unlawful mortgage payment transactions." HW reports that Mr. Cooper “won’t be commenting beyond what is available in the public filings.”
FLAGSTAR and Hometown Lenders are waiting to see if the bankruptcy court approves their settlement; if so, the suit Flagstar filed over default on a $60M warehouse line disappears without prejudice.
MOVING & SHAKING
ROCKET PRO TPO hired former Sagent and Cloudvirga CEO Dan Sogorka as General Manager. The company says the newly created role makes Sogorka responsible for establishing the end-to-end vision and growth of Rocket’s broker business.
MBA appoints 20-year industry vet David Menke Director of Member Relations. Menke hails from CapStar and Franklin Synergy Banks and is a former President of the Tennessee and Nashville MBAs.
FIGURE CEO Michael Tannenbaum said he's "thrilled to welcome" Ronald Chillemi as their first Chief Legal Officer and Corporate Secretary, saying “In just a few years, Figure has become the number one non-bank HELOC provider [ ]. Having a CLO of Ron’s caliber will be invaluable to Figure as we enter our most ambitious chapter yet.”
MAURICIO UMANSKY sure has been busy: He's launching a live real estate coaching network on the Mark Cuban-backed Fireside network. This comes after he launched a NAR competitor - the American Real Estate Association - with fellow agent Jason Haber in earlier this year.
MARKET/INDUSTRY
BODNAR'S BULLETS: From Bill Bodnar’s latest Master the Markets
In short - not a good jobs report: Fewer jobs were produced than expected; manufacturing saw losses and many of the jobs created were in the government sector.
With the Fed meeting in two weeks, the focus turns to the CPI numbers coming up, and it's a tenth of a percent tightrope: If the CPI swings one tenth of a percent either way from expectations, that could move the market.
SIZE MATTERS: The industry might be hoping for a 50bps rate cut at the upcoming FOMC meeting, but MBA Chief Economist Mike Fratantoni's commentary on the August jobs report shows he believes the cut will be 25, saying, “Federal Reserve officials have recently pivoted from a primary focus on inflation to a more balanced view, with concerns both about inflation and employment. This report highlights that such a pivot makes sense, and that a 25-basis-point cut at its September meeting is a sensible first step at this time.”
MORTGAGE RATES REMAINED FLAT THIS WEEK: Freddie 9-5-24
Mortgage rates remained flat this week as markets await the release of the highly anticipated August jobs report. Even though rates have come down over the summer, home sales have been lackluster. On the refinance side however, homeowners who bought in recent years are taking advantage of declining mortgage rates in order to lower their monthly payments.
MORTGAGE APPLICATIONS INCREASED 1.6% FROM ONE WEEK EARLIER: MBA Weekly Survey for the week ending 8-30-24.
The Market Composite Index increased 1.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.2% compared with the previous week.
The Refinance Index decreased 0.3% from the previous week and was 94% higher than the same week one year ago.
The seasonally adjusted Purchase Index increased 3% from one week earlier. The unadjusted Purchase Index increased 1% compared with the previous week and was 4% lower than the same week one year ago.
“Most mortgage rates moved lower last week, with the 30-year fixed rate edging down slightly to 6.43%. Purchase applications increased more than 3% over the week and are inching closer to last year’s levels, with government purchase applications leading the increase. The refinance share of applications averaged almost 46 percent in August, the highest monthly average since March 2022.” - Joel Kan, MBA’s VP Deputy Chief Economist.
HOME PRICE GROWTH TO SLOW – BUT NOT A TON: Fannie & "the experts"
Fannie’s Home Price Expectations Survey (HPES), polls over 100 experts across the housing and mortgage industry and academia for forecasts of national home price percentage changes in each of the coming 5 calendar years.
In the Q3 2024 Fannie Mae HPES, the panel predicts home price growth of 4.7% in 2024 and 3.1% in 2025.
The panel's latest estimates of national home price growth are higher than last quarter's expectations of 4.3% for 2024 but lower than the previous quarter's expectations of 3.2% for 2025.
"Recent measures of home price growth, including our own, have continued to come in stronger than previously expected, as reflected by the 100-plus HPES panelists who, on average, once again modestly upgraded their home price outlook for 2024.” - Mark Palim, Fannie Mae VP & Deputy Chief Economist.
WORRY & WISHFUL THINKING: Mphasis reveals consumers' fears and fantasies
40% of prospective buyers are postponing a purchase until after the presidential election.
48% of 1818 U.S. adults surveyed said they are challenged by home-related expenses, including taxes, insurance, maintenance, utilities and fees.
47% said insurance rates would affect where they choose to live.
64% are very encouraged that mortgage rates will drop soon, 43% are somewhat encouraged.
42% said their “mortgage rate magic number” that would compel them to buy is 5%, compared to 20% who said it was 6%.
CLEAR REVERSAL: NAHB's Q224 Home Building Geography Index (HBGI)
Lack of resale homes and pent-up demand drove solid growth in single-family permits across nearly all regions in the second quarter. In contrast, multifamily construction permit activity experienced declines across all regions for the second quarter of 2024.
All markets for single-family construction saw higher growth in the second quarter compared to the first quarter. In contrast to the second quarter of 2023, which experienced declines across all markets, this year shows a clear reversal.
In the multifamily sector, the HBGI year-over-year growth continued to post declines for all markets in the second quarter.
CLEARING FHA HURDLES: Consumer Federation of America releases report on financing “stigma”
The report focuses largely on the high usage of FHA by minority and low income borrowers, and the CFA says difficulty in getting FHA-financed offers accepted disproportionately affects those demographics. The report made four basic recommendations:
More states and cities should pass “source of income” or “source of financing” anti-discrimination statutes and enforce them to protect home buyers
The FHA should critically evaluate and simplify FHA inspection criteria
Real estate trade organizations can better educate real estate agents on source of financing discrimination
Congress/HUD should increase funding for Fair Housing Centers to investigate FHA home buying trends and bring cases against lenders, brokers or real estate agents that perpetuate source of financing discrimination
Three of the CFA's four recommendations focus on accusations of discrimination and bias regarding "source of income and financing." Only one of their suggestions addresses potentially higher costs to sellers resulting in lower net proceeds, the unpredictability of appraisal repair requirements, and process issues.