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Regulatory Relic?
By Jeff Walton & Kelly Guest
October 28, 2024
Just ahead of arguably the biggest, most-attended industry conference of the year, the Mortgage Bankers Associationsaid the quiet part out loud by releasing a white paper entitled, "RESPA at 50: Key Reforms to RESPA Section 8 to Better Serve the Modern Mortgage Market." In the announcement for the piece, MBA President and CEO Bob Broeksmit said in the most professional, white papery, all-due-respect wording, "…there appears to be little evidence that the law’s intention of lowering settlement costs has ever occurred, and new marketing technologies and reforms since the passage of the Dodd-Frank Act have rendered it obsolete and costly with few consumer benefits." (Mic drop.)
In an apparent effort to bond with brokers, HousingWire reports that Mutual of Omaha's reverse division has issued their "Broker Protect" program that pledges to: Not solicit borrowers established within the broker network, exclude broker-network borrowers from its outbound marketing campaigns, notify brokers when payoffs are ordered, and add the broker's name to the servicing statement in an effort to help them capture refi opportunities. Will the TPO titans follow suit in the forward market? It's an interesting question for the servicing universe. On one hand, loan officers may appreciate having a presence on monthly statements; on the other hand, mortgage servicers rank FAR below car dealers in customer satisfaction according to J.D. Power, and Inside Mortgage Finance reported this week that the majority of mortgage complaints at the CFPB were related to servicing. So…is loan officer promotion by the servicer support - or sabotage?
MBA UNDERWAY
The Mortgage Bankers Association brought good news to kick off the annual convention in Denver: The association announced its 2025 forecast, predicting that mortgage origination volume is expected to increase to $2.3 trillion in 2025 from the $1.79 trillion expected in 2024.
In other upbeat news, HW's James Kleimann reports from the conference floor that MBA VP of Industry Analysis previewed the not-yet-published Q3 Industry Performance Report, saying that the positive profit trends of Q2 will continue into Q3.
MBA swears in 2025 Chair, Lennar Mortgage President Laura Escobar at their annual conference in Denver. She joined Ursula Burns on stage at mPowering You: MBA's Summit for Women in Real Estate Finance:
Actress and activist Jane Fonda joined mPower founder and COO Marcia Davies.
CHATTER
CAN’T HOG DATA: CFPB Finalizes New Data Privacy Rule
The Consumer Financial Protection Bureau finalized a rule giving consumers more rights surrounding their data. Financial institutions, credit card issuers, and other providers will be required to release individuals’ personal financial data and transfer it to another provider at the consumer’s request for free. Large companies will have to comply starting 4-1-26, smaller companies have until 4-1-30.
Mr. Cooper Group Inc. reported Q3 2024 income before income tax expense of $112 million and a net income of $80 million, down from a strong second-quarter net income of $204 million.
PrimeLending had a 9.9% YoY decrease in net gains from sale of loans and other mortgage production income and mortgage loan origination
Penny Profits: PennyMac reported net income of $69.4M for Q324. Pretax income was $93.9M, down from $133.9M in Q2 and $126.8M in Q323. Production segment pretax income was $107.9M, up from $41.3M in Q2 and $25.2M in Q323.
Pulte Group announced Q3 earnings of $639M. "…we increased home closings in the period by 12% over last year.” - PulteGroup President and CEO, Ryan Marshall.
NVR, Inc. saw 7% YoY homebuilding revenue increase over Q323.
Taylor Morrison reported $251M in net income in the third quarter. That was a 25% quarterly jump and 47% growth from the $171M profit in Q323.
Startup servicer Valon raises $100M in Series C funding.
MOVING & SHAKING
MBA Chief + Veep: The Mortgage Bankers Association announced that Astrid Vermeer joined the association as Senior Vice President, Chief Financial Officer.
Fairway Independent Mortgage Corp. promoted David Lazowski to the position of President of National Recruiting and Growth.
Tech-enabled investor lender Kiavi announced the promotion of two seasoned leaders to drive continued growth and innovation. Tim Lawlor was promoted to Chief Financial Officer (CFO) and Jonathan Muller was promoted to SVP, Product and Technology.
Guaranteed Rate Affinity - a joint venture between Guaranteed Rate, Inc. and Anywhere Integrated Services announced the appointment of Mark Rawls as Vice President of Mortgage Lending.
Hometap welcomed Tom Egan as Chief Financial Officer; he will report directly to Hometap CEO Jeffrey Glass.
Douglas Elliman CEO Howard Lorber retires.
NMP reports top Contour LO Eric Braun moved to Interstate Home Loan Center, others expected to follow.
INTROS & INNOVATIONS
Rate unveils AI platform "Rate Intelligence," and touts it can instantly process borrowers' income documents, it calculates income and provides real-time automated underwriting approvals, AND delivers an average savings of $900 to $1,200 per loan.
Novaprime announced AI platform designed to improve the mortgage process by quickly evaluating loan integrity, reducing processing time from weeks to just days. “We believe that by embracing technology, we can fundamentally change the way loans are processed, making it faster and more cost-effective for lenders, investors and borrowers.” - Linus Petren, Novaprime CEO.
“I Still Want My Human”: CLOUDVIRGA SURVEY on Tech/AI in Loan Process
The survey asked recent homeowners, the majority of whom were first-time buyers, a series of questions about their experience during the mortgage application and closing process. Highlights:
71% said they were very satisfied with the technology provided by their lender for managing the application process.
94% said they were somewhat or very satisfied with how responsive the lender's online support was.
63% would have preferred their experience to be even more digital than it already was, and 77% of respondents expect their next mortgage or refinance to be totally digital.
60% said the use of AI in the loan process would cause them to select another lender.
46% said their loan officer contacted them directly via phone or email when additional information or supporting documents were required.
"The survey results highlight an important nuance in consumer expectations during the mortgage process. They want the ease and efficiency of automated platforms and a borrower-friendly user interface, but they are still relying on loan officer involvement. Clearly, while AI is an increasingly major component of digital mortgage, it's still not a trusted system for many borrowers.” - Maria Moskver, Cloudvirga CEO
MARKET/INDUSTRY
MORTGAGE RATES INCREASE ONCE AGAIN: FREDDIE 10-24-24
The continued strength in the economy drove mortgage rates higher once again this week. Over the last few years, there has been a tension between downbeat economic narrative and incoming economic data stronger than that narrative. This has led to higher-than-normal volatility in mortgage rates, despite a strengthening economy. In his latest Master the Markets segment, Bill Bodnar is watching the balancing act between the Fed's dual mandate heading into the "quiet period" before the election.
MORTGAGE APPLICATIONS DECREASED 6.7% FROM ONE WEEK EARLIER: MBA Survey for the week ending 10-18-24.
“Purchase applications continued to run stronger than last year’s pace for the fifth consecutive week. Even though rates have been on a recent upswing, they are over a full percentage point lower than a year ago, which has kept some homebuyers in the market. For-sale inventory has started to loosen, and home-price growth has eased in some markets, providing more options for buyers in combination with these lower rates.” - Joel Kan, MBA’s VP & Deputy Chief Economist
EXISTING HOME SALES ANEMIC: NAR
“Home sales have been essentially stuck at around a four-million-unit pace for the past 12 months, but factors usually associated with higher home sales are developing. Perhaps, some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election.” NAR Chief Economist Lawrence Yun.
SEPTEMBER NEW HOME SALES STRONG: HUD/Census Bureau
Sales of new single-family houses in September 2024 were at a seasonally adjusted annual rate of 738,000. This is 4.1% above the revised August rate of 709,000 and is 6.3% above the September 2023 estimate of 694,000.
$35T & COUNTING: FRED PUBLISHES Q224 HOME EQUITY LEVEL
OVERALL EQUITY DISTRIBUTION DIPS: ATTOM DATA’s U.S. Home Equity & Underwater Report
48.3% of mortgaged residential properties in the United States were considered equity-rich in Q3
That level was down from a recent peak of 49.2% hit in Q224. However, it was still up from 47.4 percent a year earlier and remained historically high.
MIXED BAG: Down Payment Resource Released Q324 Homeownership Program Index Resource Report
Q324 brought a 1.2% increase in the number of down payment assistance programs available, raising the number from 2415 to 2444. However, 4% have a waitlist for funding, 19% are not currently funded, 10% are inactive, and 5% are temporarily suspended.
FOREBEARANCE POPULATION TICKS UP: MBA
The Mortgage Bankers Association’s monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance increased to 0.34% as of September 30, 2024. According to MBA’s estimate, 170,000 homeowners are in forbearance plans.
“The percentage of loans in forbearance increased for the fourth consecutive month. Since May 2024, Ginnie Mae loans in forbearance increased by almost 40 basis points, compared to six basis points for portfolio and PLS loans and three basis points for Fannie and Freddie loans.” - Marina Walsh, CMB, MBA’s Vice President of Industry Analysis