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Rocket Resists
By Jeff Walton & Kelly Guest
December 9, 2024
Rocket Mortgage blasts HUD and DOJ: Rocket filed suit in Federal Court against the United States Department of Housing and Urban Development (HUD) to correct conflicts between the government’s regulations requiring appraiser independence and its enforcement actions seeking to hold lenders liable for the conduct of independent licensed appraisers. Rocket Mortgage also filed a motion to dismiss the claim the DOJ brought against the company, citing "misplaced blame for work done by an independent appraisal management company."
In a press release, Rocket Companies President Bill Emerson intimates that the DOJ incorrectly paints Rocket as a bad actor and the suit seeks to defend the company's reputation, saying, “It is notable that, in a case about the alleged actions of an independent appraiser that was contracted through an unaffiliated third party, Rocket Mortgage is listed first in the DOJ’s filing and is the only company mentioned by name in the headline of the government’s press release announcing the DOJ’s lawsuit. Rocket Mortgage has thousands of passionate team members who focus every day on doing the right thing. It would be an offense to our workforce if we let the DOJ’s and HUD’s wrongful actions go unchecked.” Rocket's resistance comes mere days after the DOJ filed an objection to the NAR settlement 48 hours before the approval hearing.
Dueling data: Chicago posted the highest YoY price gain in October of a group of Top 10 Metros in the CoreLogic December HPI, in spite of it being the murder capitol of the U.S. for the 12th straight year and having a projected budget deficit of $982.4M for 2024. Meanwhile, ATTOM Data's Q3 Special Housing Market Impact Risk Report puts Illinois in with California and New Jersey as states with high concentrations of the most-at-risk markets in the country.
CHATTER
Trigger Happy: HW reports trigger lead legislation stripped from senate's FY25 national defense authorization act.
Fitch has revised the outlook for mortgage origination & servicing in 2025 to improving from deteriorating, noting higher origination volumes and gains on sale supporting profitability amid normalizing asset quality.
November Jobs Commentary: MBA's Mike Fratantoni
“Although payroll employment rebounded in November with a gain of 227,000 jobs, and the prior months were revised upwards by a cumulative 56,000 jobs, the report overall shows more softening in the labor market. Fed officials have pointed to their ‘data dependence’ when it comes to decisions about future rate cuts. These data support a cut at the December meeting, and MBA forecasts that the Fed will continue to reduce short-term rates in 2025, although they are likely to slow the pace of cuts.”
Cardinal Dove In: The first MBS Trading Pool Decisioned on FICO 10 T Score Traded to Primary Dealer
Cardinal Financial formed and traded the first government-issued mortgage-backed security (MBS) pool featuring loans powered by FICO® Score 10 T on November 25. In the release, FICO says this sets "a new precedent for smarter lending decisions and increased borrower inclusion," and touts 10 T as a "more comprehensive understanding of credit behavior over time, enabling more accurate risk assessments while expanding opportunities for borrowers, including veterans and active-duty military personnel."
Expansion Before “Deletion?” CFPB Hired More & Enforced More in ‘24
The Consumer Financial Protection Bureau’s total outlays increased to $1.24 billion in fiscal 2024 from $789.5 million a year earlier. The increase was driven by a rise in distributions to harmed consumers of $364.5 million and an increase in salary and benefit costs of $52.2 million due to higher staffing levels compared to 2023.
At the end of fiscal 2024, the bureau had 1,758 employees, up 5% from a year earlier and up 17% from the end of fiscal 2020.
Additionally, the CFPB gave the largest-ever distribution from its Victims Relief Fund - $1.8B - to consumers affected by credit repair scheme involving Lexington Law, CreditRepair.com, and others.
Way to Not Commit: Realtor.com Says "Maybe, It Depends"
"The size and direction of a Trump bump will depend on what campaign proposals ultimately become policy and when. For now, we expect a gradual improvement in housing market dynamics powered by broader economic factors. The new administration's policies have the potential to enhance or hamper the housing recovery, and the details will matter." Realtor.com Chief Economist Danielle Hale
Individual Indicator: Epiq AACER Says Chapter 7 BK Filings Up 14% YoY in November
“The velocity of new filings in November 2024 was down slightly from prior months, as expected, due to fewer business days and the holiday season. The recent rise of default rates in consumer loans, particularly credit cards and auto loans, reflect continued financial stress among households." - Michael Hunter, Epiq AACER VP
TD Bank Announced Earnings and Explanations: Net Income Down 27% Across Company
"Despite a challenging quarter, we are pleased with the Bank's underlying fundamentals, which were reflected in our revenue growth. This quarter, we delivered higher fee income in our markets-related businesses, volume growth in Canada, and stable deposits in the U.S. A key development this quarter was the resolution of our U.S. anti-money laundering matters, bringing important clarity to our stakeholders. Remediation is our number one priority, and we continue to make meaningful progress in addressing the failures." - Bharat Masrani, Group President & CEO, TD Bank Group
Queen Scheme: Dallas "Short Sale Queen" and accomplices charged with allegedly fraudulently submitting documents for at least 88 properties totaling over $8 million in sales, obtaining at least $390,000 in commissions and processing fees, and causing at least $2.5 million in losses to financial institutions.
MOVING & SHAKING
NMN reports that Former Ginnie Mae, Federal Housing Finance Agency and Treasury official Sam Valverde will join Freddie Mac this week as VP of mission and community engagement in Freddie's Single-Family Acquisitions Division.
President-elect Trump Nominates Fiserv CEO Frank Bisignano to lead the Social Security Administration (SSA).
Correspondent lender West Capital Lending crossed country and acquired Pennsylvania-based Red Tree Lending, who is licensed in 47 states.
MARKET/INDUSTRY
Mortgage Rates Continue to Decrease: Freddie 12-5-24
This week, mortgage rates decreased to their lowest level in over a month. Despite just a modest drop in rates, consumers clearly have responded as purchase demand has noticeably improved. The responsiveness of prospective homebuyers to even small changes in rates illustrates that affordability headwinds persist.
Mortgage Applications Increased 2.8% From One Week Earlier: MBA Weekly Mortgage Applications Survey for the week ending 11-29-24. Results include an adjustment for the Thanksgiving holiday.
Affordability “Ouch”: First American's October RHPI
Affordability fell by 2.6% on a month-over-month basis, snapping a four-month streak of improving affordability.
House-buying power declined by more than $14,000 due to the increase in mortgage rates since October.
If the average mortgage rate decreases to the year-end consensus industry forecast of 6.2% and annual house price growth remains stable, affordability will improve by 6% compared to one year ago.
Defied Forecast – A Little: CoreLogic December HPI Was 2x the .01% MoM Forecast
“…as we continue to bump along during this slower time of the year for the housing market, home prices are not expected to reveal much about what’s ahead for the spring homebuying market. In the last few years though, springtime has seen home prices jump higher than before the pandemic despite elevated mortgage rates.” Dr. Selma Hepp– Chief Economist for CoreLogic
Beating It To The Burbs: NAHB's Q324 Home Building Geography Index (HGBI)
All HBGI-tracked geographies continued to post growth in the third quarter as single-family starts are poised to be higher than last year. The HBGI is constructed using permit data, which has continued to post higher volumes than last year despite residential construction dealing with persistent structural issues.
By focusing on low-density areas, developers aim to lower some of the high costs associated with building in high density areas.
Currently about half of the U.S. population lives in the top 10% of the nation’s highest-density areas. Market share for new home construction in these locales fell from approximately 40% to 36% since the beginning of 2018, the NAHB reported. Between Q120 and Q122, the market share of new single-family construction declined to 35.5%. Since then, it has remained fairly constant in high density areas, hovering around 35.7% in Q324.
Redfin Roundup: Not Awesome 2025 Market Predictions
Mortgage rates will end ’25 around 7%
Home prices will rise 4%
Many Americans will remain renters or become renters: While the cost of buying a home will increase, rental affordability will improve.
RE industry will consolidate: “We’re likely to see more roll-ups of brokerages, lenders and title companies looking to generate more business from every customer.”
Realtor.com is Rosier: 2025 Forecast
Mortgage rates will average 6.3%, end year at 6.2%
Home prices will rise 3.7%
Housing inventory will rise 11.7%