CFPB to revisit QM rule, New Residential renames itself, Wells Fargo disputes suits and more of the week's top news
June 18, 2022 7:55 AM
Mortgage rates surge at fastest pace since 1987
Mortgage rates climbed 55 basis points from the previous week, even as they decreased a small amount after the announcement by the Feds. The higher rates reflect higher than expected inflation numbers and pessimism among consumers.
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CFPB plans to review Qualified Mortgage rule
In a blog post on Friday, Rohit Chopra, the director of the Consumer Financial Protection Bureau announced that the bureau will take a fresh look at Trump-era changes to underwriting standards in the QM rule. It plans to examine aspects of the QM rule’s “seasoning” provisions that allow some delinquent loans to gain QM status, considered the gold standard of mortgage underwriting.
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For some mortgage execs, the Fed hike is welcome
After the announcement, mortgage rates decreased to 5.67% on Wednesday and 5.53% on Thursday, compared to above 6% on Tuesday. However, several mortgage industry participants have expressed relief, regarding the Fed’s decision, praising its aggressive fight against inflation, saying that a long slow approach would be more painful for the mortgage banking industry.
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New Residential rebrands itself to Rithm Capital
New Residential Investment Corp., the mortgage real estate investment trust and parent company to nonbank lender Newrez, announced Friday that it is changing its name to Rithm Capital. At the same time, the REIT also announced an internalization of its management functions. Fortress Investment Group had been managing New Residential, providing personnel as well as corporate infrastructure. As Rithm Capital, the company will continue to be led by CEO, board chairman and President Michael Nierenberg and Nick Santoro remains as chief financial officer and chief accounting officer.
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Wells Fargo says discrimination suit plaintiffs lack standing
Wells Fargo denies the allegations of discrimination in two class action complaints and says some plaintiffs lack standing because they never sought the refinances in question. One plaintiff says it submitted four refi applications and the bank repeatedly told him the paperwork was lost. He eventually was approved after contacting the Department of Housing and Urban Development about the issue.
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Foreclosure starts outnumbered completions by nearly tenfold in May
The number of foreclosures is starting to climb after two years of government intervention that kept them at historically low levels. There are almost ten times more foreclosure starts than completions. Attom’s executive vice president of market intelligence Rick Sharga says that the difference suggests that “financially distressed borrowers may be finding ways to avoid losing their homes to a foreclosure sale.”
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Mortgage loan rate lock activity slips in May
Total activity, an indicator for future mortgage or origination, slowed by 4.8% in May compared to April. The most significant decline came from rate and term refinance loans. Cash-out refi locks went down by 119.9% from the prior month.
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Home renovation lending demand may get temporary boost from inflation
The average spending for a new homeowner is $11,900, according to a report by the National Association of Home Builders. The amount is twice as high for resale buyers, suggesting builder-home purchases also play a role in the demand for renovation financing. The increase in home renovations can be attributed in part to inflation, which has made commuting to work far less attractive.
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Notarize is the latest fintech to lay off workers
As it shifts to growing revenue from existing partnerships rather than customer and partner acquisition, the Boston-based company cut 110 jobs. Last spring, Notarize had raised $130 million in Series D funding and reached 1 million transactions in March. However, rising interest rates and the housing market cooldown have forced Notarize to join ranks with other mortgage lending-related companies in trimming its payroll.
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June mortgage mergers aim to fill industry gaps
As the market cools down, the mortgage industry, from lenders to vendors, will consolidate. Here are a few of the latest mergers and acquisitions that happened in June: Lower, a mortgage fintech in Ohio, acquired Hamilton Home Loans of Sunrise as a new division to its private label retail channel. Credibly, a fintech lender for small and medium-sized businesses bought ProApprove, which offers home improvement financing with prime credit. Doorway Home Loans and Priority Mortgage have merged to expand their respective geographic footprint.
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How servicers are putting available originators to work
Although economic uncertainty is already affecting the mortgage industry, some firms continue to diversify their staff and services. Loan modifications will continue to rise, and the companies who figure out how to retrain their workers to their parts of the business like a back officer, operations or default. Allen Price, senior vice president at BSI Financial Services, expresses that it is easier and cheaper to train someone who already knows the philosophical culture and the industry.
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The mortgage staffing outlook by loan channel and lender type
Nonbank consumer-direct companies are the most likely to be affected by higher mortgage rates. They will prioritize retention and recruiting of top producers of home purchase loans in retail, with less interest in call-center staff handling refis. Bank and nonbank retail could fare well, but banks may be in a better position if rates rise.
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Lower reveals data breach impacting 86,000 customers
The mortgage fintech notified state attorneys' general offices in a supplemental filing to an earlier February disclosure in which it relieved a cyberattack that affected 1,647 users. Lower has not disclosed the type of cyberattack, only describing it as a hack. It has offered those impacted 12 months of complimentary Experian fraud consultation and credit monitoring service.
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First Guaranty’s non-QM unit launches closed-end home equity loan
The company started experimenting with a similar loan before the pandemic and is now bringing it back as a standalone product. The introduction of the new second-lien is in line with renewed interest in standalone lines of credit and other home equity products since borrowers have become reluctant to refinance existing first liens with rates rising.
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The 10 most popular housing markets of early 2022
In the face of hybrid work schedules, workers are moving away from city centers, making the suburbs some of the hottest markets this year. A Zillow report analyzed page view traffic, home value growth and for-sale inventory of more than 1,000 cities. Some of the most popular housing markets include Golden, Colorado, Tustin, California, Edmonds, Washington, Burke, Virgina.
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