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Full Court Press
By Jeff Walton & Kelly Guest
January 13, 2025
Notable in the current flurry of legal actions around the industry is a decision from the Supreme Court as to whether they will get involved in the dispute between the National Association of Realtors and the U.S. Department of Justice. That decision is expected today. The number of lawsuits challenging mandatory NAR membership is growing, and the National Association of Home Builders joined 15 state attorneys general to go after HUD. Get up to speed in the Chatter section below.
On another note, the CFPB finalized a rule to remove medical debt from credit reports, a move the bureau says "will lead to the approval of approximately 22,000 additional, affordable mortgages every year." The rule will remove approximately $49B in medical debt from the credit reports of about 15 million consumers.
Whether they're fleeing taxes or wildfires, Americans on the move in 2024 mostly headed to the southeast according to United Van Lines. The state with the highest number of outbound moves was New Jersey. South Carolina, Alabama, and Arkansas all saw healthy influx, but the highest number of movers said, "Country roads, take me home" and fled to West Virginia.
CHATTER
MEMBERSHIP MUTINY? Add plaintiffs from MI, PA, LA, TX to a growing pile of lawsuits challenging mandatory NAR and other agent association memberships.
NAR APPEALS TO SCOTUS: Decision Expected 1-13
This legal battle focuses on whether the federal government must uphold contractual agreements as private parties are required to.
NAR argues the DOJ’s actions violate a 2020 settlement agreement, threatening the fairness and stability of contracts with the government.
BUILDER BATTLE: NAHB + 15 Attorneys General Sue HUD Over "Egregious Regulation"
The National Association of Home Builders joined an effort to stop adoption of energy-efficiency standards for single-family and multifamily housing programs that NAHB says can add up to $31K to the price of a home. NAHB is the only private entity joining the suit, and says "[ ] home builders can document how this egregious regulation will needlessly raise housing costs and hurt the nation’s most vulnerable home buyers and renters."
BUREAU ON BUREAU ACTION: CFPB Sues Experian
The regulator sued the credit bureau for "for unlawfully failing to properly investigate consumer disputes."
The CFPB alleges that Experian does not take sufficient steps to intake, process, investigate, and notify consumers about consumer disputes, resulting in the inclusion of incorrect information on credit reports.
“When consumers disputed errors on their credit reports, Experian conducted sham investigations rather than properly reviewing the disputes as required by federal law.” - CFPB Director Rohit Chopra.
BUFFET BUFFETED: CFPB Sues Berkshire Hathaway Subsidiary Over Manufactured Home Loans
The Consumer Financial Protection Bureau (CFPB) sued Vanderbilt Mortgage & Finance for setting families up to fail when they borrowed money to buy a manufactured home, alleging that Vanderbilt’s business model ignored clear and obvious red flags that the borrowers could not afford the loans. “Vanderbilt knowingly traps people in risky loans in order to close the deal on selling a manufactured home.” - CFPB Director Rohit Chopra.
REDLINING IN FL: DOJ Settles with The Mortgage Firm
The Justice Department announced that The Mortgage Firm Inc. agreed to pay $1.75M to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining predominantly Black and Hispanic neighborhoods in the Miami MSA. The money will fund a subsidy program that may provide lower interest rates, down payment assistance, closing cost assistance or payment of initial mortgage insurance premiums.
PASS IT ON: HW Reports on New CA Insurance Rule
The state will allow insurers pass on the costs of reinsurance to consumers in an effort to increase homeowners' coverage in wildfire-prone areas.
FAR-FITCHED? Fitch Ratings Says Fannie & Freddie Still Might Get A Ratings
The GSEs’ ratings are likely to decline in the event that they’re released from conservatorship, but the extent of the decline will depend on terms of the release.
Fitch Ratings disclosed Wednesday that if the federal government reduces its backing of Fannie Mae and Freddie Mac, their ratings could decline from AA+ to somewhere in the A-level.
ALLY TO CEASE MORTGAGE LENDING…Calls It “Right-Sizing”
Ally says they will consider strategic alternatives for its credit-card business as borrowers have struggled to pay down costly debt.
“We’ll continue to be diligent in our expense management going forward.” Ally spokesperson Peter Gilchrist
DPA AVAILABLE, NOT GETTING USED: HUD/FHA
21.58% of FHA loans had DPA in the form of gift funds from eligible family members
16.90% of loans had DPA from government sources
There were 2,444 Down Payment Assistance Programs as of Q324
MOVING & SHAKING
Director Sandra Thompson to depart FHFA in apparent case of presidential ping pong: The Biden appointee who replaced a Trump appointee is leaving on the eve of #47’s inauguration.
Former Treasury official Craig Phillips joined Freddie Mac as EVP corporate strategy and external affairs. Freddie Macalso named James Whitlinger EVP & CFO.
MBA announced the promotion of Jamie Woodwell to SVP of Commercial/Multifamily Policy and Strategic Industry Engagement.
Nanci L. Weissgold of Bird law firm's Financial Services Group has been appointed chair of the Mortgage Bankers Association Political Action Committee (MORPAC) for 2025-2026.
William Nelson, EVP, Secondary and Mortgage Operations of Standard Mortgage Corporation, has been appointed Chairman of the MBA's Mortgage Action Alliance (MAA).
Arc Home announced the addition of John Gibson as Chief Production Officer and Eamon Cantwell as Chief Operations Officer.
loanDepot JV Ridgeland Mortgage appointed Teresa Carlile as President.
Waterstone promoted Traci Husslein to SVP of Capital Markets.
Mungo Homes announced that Geoff Shiley has assumed the role of Chief Executive Officer. Shiley succeeds, Steven Mungo, who will become the company’s Executive Chairman.
Steve Landes joined OptiFunder as President.
Gateway Mortgage named Jeff Schmidt President of Mortgage Banking.
Valerie Haertel has joined Onity as Vice President, Investor Relations.
Figure appointed Macrina Kgil as Chief Financial Officer.
MARKET/INDUSTRY
JOBS BUY HOMES…But They Can Also Really Screw with Mortgage Rates
In his latest Master the Markets segment, Bill Bodnar channels Led Zeppelin; see what he says about that levee breaking…
MORTGAGE RATES CONTINUE TO TREND UP: Freddie 1-9-25
In the first full week of the new year, the 30-year FRM remained elevated at just under 7%. The continued strength of the economy has put upward pressure on mortgage rates, and along with high home prices, continues to impact housing affordability. The lack of entry-level supply also remains an issue, especially for those looking to become first-time homeowners.
MORTGAGE APPLICATIONS DECREASED 3.7% FROM ONE WEEK EARLIER: MBA Weekly Survey for the Week Ending 1-3-25. This week’s results include an adjustment for the New Year’s holiday.
DECEMBER JOBS REPORT COMMENTARY: MBA's Mike Fratantoni
“The job market strengthened in December, with payrolls increasing by 256,000 for the month and capping a year of faster-than-expected job gains. The unemployment rate decreased to 4.1%, and wage growth decreased slightly to 3.9%.”
“In recent months, there had been increases in the share of workers who were unemployed for longer spells. Although other data continue to report that hiring rates remain quite low, in December, the number of long-term unemployed individuals decreased.”
“The December employment report is a picture of a strong job market. While the FOMC had indicated that they could slow the pace of rate cuts as we enter 2025, these data make at least a pause in cuts much more likely, which will push mortgage rates higher in the near term.”
HOME PRICES UP MOM/YOY: CoreLogic November HPI
Home prices nationwide, including distressed sales, increased YoY by 3.4% in November 2024 compared with November 2023.
On a MoM basis, home prices increased by 0.06% in November 2024 compared with October 2024.
The CoreLogic HPI Forecast indicates that home prices will drop by -0.2% from November 2024 to December 2024 and increase by 3.8% on a year-over-year basis from November 2024 to November 2025.
REALISTIC? HPSI Up Due To “Rate Optimism”
The Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased 1.9 points in December to 73.1 but remained substantially higher than year-ago levels due in part to ongoing mortgage rate optimism.
A plurality of consumers continues to expect mortgage rates to decline over the next 12 months; while December’s 42% share was lower than last month’s 45%, it remains meaningfully improved compared to last December’s 31%.
Likewise, the shares expressing optimism toward homebuying and home-selling conditions, respectively, declined slightly month over month, but both components remain up year over year. Overall, the HPSI is up 5.9 points compared to this time last year.
UNHAPPY INVESTORS: RCN Capitol/CJ Patrick Company Winter Investor Sentiment Index
Real estate investor sentiment fell by 27 points from the prior quarter to its lowest point in a year.
35% of investors viewed today's market as better or much better than it was a year ago, compared to 68% in Q3, and the number of investors who felt conditions had worsened over the course of the year almost doubled, from 13% to 25%.
Investors were somewhat more bullish on where the market is headed over the next 6 months, with 42% expecting the market to improve, while only 19% expected it to decline.