More Wells layoffs, LoanDepot cuts, Better's SEC probe and more mortgage news you may have missed
July 17, 2022 10:38 PM
Eric Thayer/Bloomberg
More Wells Fargo mortgage layoffs are likely, executives say
Layoffs in Wells Fargo’s mortgage division will likely continue over the next few months as rising interest rates erode the bank’s refinancing business, executives said Friday.
Income from home lending fell to $972 million during the second quarter of 2022, a 53% decrease from more than $2 billion during the same quarter last year. Further declines in the third quarter are possible since the “mortgage market is expected to remain challenging” in the near future, Chief Financial Officer Mike Santomassimo said Friday in a call with analysts.
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Income from home lending fell to $972 million during the second quarter of 2022, a 53% decrease from more than $2 billion during the same quarter last year. Further declines in the third quarter are possible since the “mortgage market is expected to remain challenging” in the near future, Chief Financial Officer Mike Santomassimo said Friday in a call with analysts.
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Better.com discloses another massive loss, new SEC probe
The lender lost $327.7 million in the first quarter and cut 72% of its workforce over six months, according to a disclosure by the Securities and Exchange Commission. Additionally, the merger of Better.com with Aurora Acquisition Corp. that would take the company public is now expected in the third quarter. The reported loss in the first three months of the year exceeded the net loss of $303.8 million over the entirety of 2021. Last week, Better announced a new slate of executives following a tumultuous year after the massive layoffs over Zoom in December.
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LoanDepot to cut 2,000 workers through the end of the year
The lender unveiled its Vision 2025 Plan, in which it will spend between $34.5 million to $40.5 million in total to trim payroll, shed real estate, reduce spending and restructure operations. The change will save the company approximately $375 million to $400 million in annualized savings, it said. In its latest earnings report, LoanDepot reported a net loss of $91.3 million in the first quarter. In this new plan, a total of 4,800 employees will lose their jobs by the end of the year. Executives said it will increase investments into servicing operations, which are expected to increase in the face of an economic downturn.
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Republicans urge FHFA to crack down on Fannie, Freddie activities
House Republicans called on the director of the Federal Housing Finance Agency to bolster its oversight of Fannie Mae and Freddie Mac, urging the regulator to take more steps to ensure the government-sponsored enterprises do not overstep their legal bounds.
In a letter addressed to FHFA Director Sandra Thompson, Republicans led by Rep. French Hill of Arkansas suggested that the undercapitalization of Fannie and Freddie posed a considerable risk to the broader financial system. They also urged Thompson to prevent the GSEs from expanding into new areas of finance.
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In a letter addressed to FHFA Director Sandra Thompson, Republicans led by Rep. French Hill of Arkansas suggested that the undercapitalization of Fannie and Freddie posed a considerable risk to the broader financial system. They also urged Thompson to prevent the GSEs from expanding into new areas of finance.
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LendingTree denies it’s the source of a data breach affecting 200,000
The company has acknowledged two data breaches: one in January, which affected 643 consumers, and another in June which compromised the information of just under 70,000 customers.
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Real estate commission change may hurt borrowers, brokerage argues
While currently, real estate commissions are paid from the sellers' proceeds at the closing, with the buyer's agent and the listing agent splitting the money, some groups have argued that this has led to an outsized commission. They say that the buy and sell sides should each pay their share separately in order to drive down those costs. However, a paper funded by HomeServices of America said that this kind of change would have a detrimental effect on Black, Hispanic, first-time, and low- and middle-income buyers.
"Requiring buyers to pay their agent's fee directly would result in reduced homeownership opportunities for cash-constrained families and lower net proceeds for many sellers. These outcomes would create negative ripple effects across the entire housing market," Ann Schnare, the author of the report, said in a press release.
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"Requiring buyers to pay their agent's fee directly would result in reduced homeownership opportunities for cash-constrained families and lower net proceeds for many sellers. These outcomes would create negative ripple effects across the entire housing market," Ann Schnare, the author of the report, said in a press release.
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Rocket expands and rebrands in Canada
The nation’s top mortgage lender is taking its name across the northern border. Windsor, Ontario based Edison Financial, a monoline lender part of Rocket Companies, will rebrand next month as Rocket Mortgage Canada, the firms announced this week. Edison began serving customers in 2020 with seed funding from Rock Holdings and has since reached $1 billion in Canadian dollars in annualized submitted volume.
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Housing permits down, sale inventory up in reversal from early 2022
While single-family permit issuance ran ahead of last year’s pace in the first quarter, it is now coming in below 2021’s rate, according to the National Association of Home Builders.
NAHB’s latest findings come as other new data from Redfin also revealed the supply of for-sale properties increasing on an annual basis for the first time in three years, providing more signs of falling home-buying momentum this summer.
NAHB reported 473,997 single-family housing permits issued this year through May, a 2% decrease from 483,878 a year ago. As recently as March, year-to-date permits were still above 2021’s pace.
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NAHB’s latest findings come as other new data from Redfin also revealed the supply of for-sale properties increasing on an annual basis for the first time in three years, providing more signs of falling home-buying momentum this summer.
NAHB reported 473,997 single-family housing permits issued this year through May, a 2% decrease from 483,878 a year ago. As recently as March, year-to-date permits were still above 2021’s pace.
Radian starts non-agency mortgage conduit
Radian Group is entering the conduit business with the launch of Radian Mortgage Capital, which will aggregate loans to be securitized in the private label market.
This business is an extension of what Radian's mortgage insurance and real estate data operations already offer clients, said CEO Rick Thornberry.
"We will not do subprime loans," he added. "Our focus is on high quality loans where we can evaluate the credit and leverage our expertise."
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This business is an extension of what
"We will not do subprime loans," he added. "Our focus is on high quality loans where we can evaluate the credit and leverage our expertise."
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LoanDepot slams CrossCountry in poaching suit
LoanDepot is suing CrossCountry Mortgage for raiding its New York workforce, slamming the lender for its alleged history of poaching and theft of trade secrets.
At least 32 loanDepot employees bolted for CrossCountry since February, taking with them thousands of confidential documents, according to the complaint filed Wednesday in the Southern District of New York U.S. District Court.
Read the full story here.
At least 32 loanDepot employees bolted for CrossCountry since February, taking with them thousands of confidential documents, according to the complaint filed Wednesday in the Southern District of New York U.S. District Court.
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U.S. inflation quickens to 9.1%, amping up Fed pressure to go big
The consumer price index came in at the highest levels since 1981, as inflation increased across the entire economy. The data will push Fed officials to take an even more aggressive policy to combat high prices; they have suggested a second 75 basis-point hike later this month. Economists started warning that a potential recession is coming within the next 12 months. While home sales have slowed, rental inflation continues to increase.
Reath the full story here.
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Home-sale cancellations jumped in June as buyers backed away
Across the country, nearly 15% of transactions that went into contract fell through in June. It is the highest share since April 2020, when early COVID lockdowns froze the housing market. The sudden run-up in borrowing costs has started to cool the market, making some buyers step away as mortgage rates on an average 30-year-loan have nearly doubled what they were at the beginning of the year. Meanwhile, in June 2021, when buyers were waiving contingencies, the canceled transaction was only 11%.
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FHFA makes translations of language preference form available
The Supplemental Consumer Information Form is now available in the six most-spoken languages in the U.S. The Federal Housing Finance Agency ordered that all lenders selling loans to Freddie Mac and Fannie Mae will have to submit this form starting March 1, 2023. The SCIF is available in Spanish, traditional Chinese, Vietnamese, Korean and Tagalog.
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New state law requires purge of property records' ‘racial covenants’
Under a new California law, counties must now work to remove decades-old racist language on property records that once banned people of color from buying homes in the state. In addition, real estate agents and servicers have to notify homebuyers if any bans are known to be tied to the property and help redact the unlawful rules.
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Mortgage layoffs erase past year’s headcount gains for nonbanks
Estimates for the number of positions on mortgage banker and broker payrolls in May fell to 418,000 from 425,200 the month before. While some industry employees might be able to switch to a separate division that may grow with higher interest rates, like servicing, the broader employment numbers showed relative strength suggesting, laid-off mortgage workers may find jobs outside the field. In addition, the employment numbers indicate the Federal Open Market Committee will continue to raise interest rates as inflation increases and unemployment numbers remain low.
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MISMO's new dataset will map adverse action notices
The Mortgage Industry Standards Maintenance Organization has released a dataset standard that maps to a sample adverse action notification form.
This sample notice, called the statement of credit denial, termination, or change form, and its accompanying XML file, matches fields between various information systems that lenders can use when reporting negative decisions to applicants.
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This sample notice, called the statement of credit denial, termination, or change form, and its accompanying XML file, matches fields between various information systems that lenders can use when reporting negative decisions to applicants.
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Foreclosure activity nears pre-pandemic pace
Over 164,000 properties across the United States had foreclosure filings, such as default notices, scheduled auctions and repossessions in the year's first six months. That amount is just 1% below the number recorded in the first half of 2020 when a federal moratorium was implemented to protect homeowners. Foreclosure starts have also increased 19% from early 2020 and 219% from a year ago. The most significant number of foreclosure starts were from California, Florida and Tennessee.
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Are Sprout, FGMC failures a harbinger of hard times for non-QM?
The sudden closing of the two non-qm lenders Sprout and First Guaranty Mortgage might bring to mind memories of 2008, but the problems at might be more indicative of their warehouse line covenants and company liquidity, experts suggest.
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Title insurers are prepared for impending downturn: Fitch
The industry suffered in the 2000s as high levels from the Great Recession tested finances. However, at the end of 2021, insurance underwriters were well-prepared to survive the economic downturn, according to a recent Fitch Ratings report. The risk-adjusted capital ratio fell to 182% for 2021 compared to 204% in 2020. The expected decline in mortgage origination volume could have a net positive. Lower operating and expense leverage will reduce charges to earnings arising from claims activity or underwriting expenses that have a material impact on the targeted policyholder surplus.
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Consumer sentiment toward housing at lowest point since COVID onset
The Fannie Mae Home Purchase Sentiment Index, which measures the view of consumers on expectations of the housing market, dropped 3.4 points to 64.8 on a 100-point scale. The negative sentiment comes as home selling, job outlook and household income all trended negatively. The share of consumers who said it is a bad time to sell grew by seven basis points to 26%. On the buyer side, rising inflation and mortgage rates make it challenging for hopeful homebuyers.
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Mortgage activity comes in lower for a second straight week
Although refinances rose by 2%, that was offset by a drop in new purchase loans. According to the Market Composite Index, loan activity decreased by 1.7% over the week ending July 8. The reduction in both conventional and government loans can be attributed to higher mortgage rates and a worsening economic outlook. The loan size increased compared to seven days prior, rising 1% from $372,700 to $369,100.
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Vacation home purchases in high disaster-risk areas up 45%
Vacation property investment outlook is mixed as sales in May fell below pre-pandemic levels for the first time. Transaction were down 4% that month. Vacation houses are also garnering fewer bidding wars as new deterrents like higher insurance and financing rates have to be considered.
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Lenders' use of rent data in loan decisions helps homebuyers, but dangers lurk
Fannie Mae and Freddie Mac, among other lenders, are now willing to buy loans that rely partly on rent data. While this can open doors to people who have low or no credit score, it has the potential to harm consumers if not done correctly. The concern is that landlords are consolidating and becoming more prominent and more powerful. Tenants in dispute with their landlords over a missed payment or giving proper notice are the most affected. Consumer advocates worry that predators can use it to make decisions if rental data becomes available to credit bureaus.
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