Rohit Chopra shakes up leadership at CFPB

Rohit Chopra shakes up leadership at CFPB

Barely a day after Rohit Chopra took office as director of the Consumer Financial Protection Bureau (CFPB), the agency announced a leadership shakeup.

The agency said that the four senior roles will be filled by a Biden campaign alum, two former Obama-era CFPB officials and a long-time Bureau official with a fair lending expertise.

Zixta Martinez will serve as the CFPB’s deputy director, and will oversee the operations division. Martinez helped set up the CFPB when it was founded in 2011, and has since been senior advisor for supervision, enforcement and fair lending, associate director for external affairs and assistant director for the office of community affairs. She previously held positions at Freddie Mac, the National Fair Housing Alliance, the Mexican American Legal Defense and Education Fund, Inc. and the National Council of La Raza. The deputy director role was open.

Karen Andre, who will be associate director for consumer education and external affairs, was previously special assistant to the president for economic agency personnel. She also worked on President Biden’s 2020 campaign and, following his election, was the COVID-19 engagement team lead. Previously she was the White House liaison for the Department of Housing and Urban Development.

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Closing costs are up, but there’s a catch

Closing costs are up, but there’s a catch
The average closing costs for a single-family home increased 12.3% during the first six months of 2021, according to a report published this week by analytics vendor ClosingCorp. And significantly higher home prices were the culprit.

According to ClosingCorp, the average closing costs nationally came in at $6,837 including taxes and $3,836 excluding taxes. The report also found that refi closing costs increased by 4.87% to $2,398 from the reported 2020 average of $2,287.

But things are not always as they seem. Bob Jennings, CEO of ClosingCorp, said that closing costs as a percentage of purchase prices actually declined this year to 1.03% from 1,06% in 2020.

“So, in addition to keeping up with high demand, the mortgage industry is doing a good job in holding down the costs it can control,” Jennings said.

He also added that in June, the average national price hit $373,664 and in July “leading home prices indices registered their highest ever year-over-year gains.”

“Although the average home price increased by nearly $45,000, the closing costs, excluding taxes, on that property only increased by $400,” he added.

The report also shows that states with the highest average closing costs, including taxes, were District of Columbia ($30,352), Delaware ($17,831), New York ($17,582), Washington ($13,909), and Maryland ($12,056).

Meanwhile, states with the lowest closing costs, including taxes, were Missouri ($2,102), Indiana ($2,193), North Dakota ($2,321), Kentucky ($2,355) and Wyoming ($2,509), the report said.

In order to come to these conclusions, the tech vendor “analyzed data on more than 1.9 million single-family purchase transactions that ran through [their] ClosingCorp Fee platform,” said Dori Daganhardt, chief data officer at ClosingCorp.

“We are reporting ‘market-specific’ rates and fees not just network averages charged by the most active settlement services providers in each geographic area,” Daganhardt said.

ClosingCorp also noted in their report that it uses home price data from CoreLogic to estimate closing costs at the state, core-based statistical area and county levels.

In June, CoreLogic announced that it entered into a definitive agreement to acquire all outstanding shares of ClosingCorp.

The transaction was expected to close in the third quarter of 2021, however since then, no updates have been made public.
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Most single women households say homeownership out of reach

Most single women households say homeownership out of reach
After the workplace disruptions of the past two years, most single women heads of household now think homeownership is not for them.

In a research brief, Freddie Mac found that 60% of single female heads of household renters don’t think they can ever afford a home, with 80% citing insufficient savings for a down payment or closing costs. About 75% of the 2,000 respondents think that a mortgage would be more expensive than rent or that they don’t make enough to pay a mortgage.

“The COVID-19 pandemic has had disparate economic impacts nationwide, particularly on women who are heads of their households, such as single moms and caretakers,” said Pam Perry, single-family vice president of equitable housing.

The Biden administration has sought to ease barriers to homeownership by offering down payment assistance options for first-time homebuyers. As Congress looks to cut costs of the social infrastructure bill, whether it will pass such a measure is unclear.

In the past two years, parts of the economy where women are overrepresented, such as the hospitality and service industry, were hit hardest. Single female heads of households are also more likely to bear the brunt of childcare, which might explain why of those that have left the workforce, 75% have not returned.

A lot of uncertainty remains, even as the economy gets back on track, said Leonard Kiefer, deputy chief economist at Freddie Mac. For single women who are the head of their households, that uncertainty varies by region, sometimes tied to specific school districts.

“If you have primary childcare responsibilities, it makes it tough to go and take on a job where you may not have as much flexibility,” Kiefer said.

It’s also getting harder for sole-person households to find suitable housing, much less achieve the goal of homeownership.

Even before the pandemic, the number of sole-person households was on the rise — creating more demand for the increasingly hard-to-find affordable, modestly sized home. In the past four decades, sole-person households have almost doubled. According to the 2020 Current Population Survey, 36 million households or 28% of all households are sole-person, up from 18.2 million households in 1980.

Freddie Mac forecasts that the baby boomer share of sole-person homes — now nearly 40% of such households — will continue to grow, driven by divorces, or deaths of spouses or partners. Baby boomers are also staying in their homes longer.

The growing prevalence of sole-person households is adding to demand for smaller, more affordable homes. But builders are making fewer of them: four-bedroom homes that account for 44% of all new construction, compared to 29% in 1990, per the U.S. Census Bureau’s Survey of Construction. The share of homes with two bedrooms or less declined from 15% to 10% during the same period.
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JPMorgan Chase reports jump in mortgage profits in Q3

JPMorgan Chase reports jump in mortgage profits in Q3

JPMorgan Chase originated $46.1 billion worth of mortgages from July to September, up 5% from the previous quarter and up 43% year-over-year, the bank announced on Wednesday.

Jeremy Barnum, chief financial officer at Chase, said during the company’s third quarter earnings call that the increase reflects “record purchase volume and share gains in the refi market.”

Year over year, home lending at the bank rose 27.3%. Mortgage fee and related income came in at $596 million, up from the $548 million JPMorgan Chase generated in the second quarter. In the second quarter of 2020, at the height of the mortgage boom, JPMorgan Chase reported $1 billion in revenue.

The depository bank’s third quarter report also revealed an increase in its gain-on-sale margin, which rose 17 basis points from the previous quarter to 148 bps.

This is perhaps the most notable development since the second quarter of 2021 saw key players in the mortgage banking space such as loanDepot, United Wholesale Mortgage, and Better.com, report declines in their GOS margin- a sign that the refi wave was likely nearing its end.

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Interfirst Mortgage raises $175 million

Interfirst Mortgage raises 5 million
Chicago-based mortgage originator Interfirst Mortgage Co. has raised $175 million to accelerate growth and fund new technologies, just 16 months after relaunching its operations.

Principals of the private holding company StoicLane led the round, the firms said on Wednesday. Funds managed by Oaktree Capital Management, MFA Financial, various family offices, and other strategic investors invested through a StoicLane’s special purpose vehicle, StoicLane said.

Interfirst was founded in 2001 as a retail originator but expanded to the wholesale channel in 2008 and the correspondent channel in 2011. The company ceased operations in July 2017 after years of declining volumes. The originations went from $14.1 billion in 2012 to $2 billion in 2016.

Last year, Interfirst relaunched its services with a new proprietary loan origination technology platform. The company applies artificial intelligence to origination, traditionally a complex process, to eliminate upfront fees and cut interest rates. It’s also made a push to hire teachers and first responders to be loan officers. The company does not offer their LOs commission splits; instead new LOs receive a salary between $44,000 and $68,000 annually.

Interfirst told HousingWire in August that it originated $1.65 billion in loan volume between June 2020 and June 2021. The company doesn’t currently offer FHA, VA or USDA loans, just conventional and jumbo products. But Interfirst’s tech bend has undoubtedly attracted some sophisticated investors.

“The mortgage industry is fragmented and ripe for disruption by tech-enabled, customer-centric platforms,” Al Goldstein, CEO of StoicLane and one of the investors in the round, said in a statement.

Last September, the executive launched the private holding company StoicLane with Matt Foran and Jake Nice. The focus is to invest in finance, insurance, and real estate businesses.

The team co-founded several businesses, such as the fintech Enova, real estate investment trusts (REIT) Pangea Properties and New Lake, and the online lending company Avant. Since 2004, they claim to have created $4 billion in equity value to investors.

“Al and the team share our strategic vision for the long-term,” said Dmitry Godin, CEO of Interfirst.

Following the capital injection, Interfirst board of directors will have new members: Brian Laibow (co-head of North America for Oaktree’s Global Opportunities strategy), Jeffrey Hecktman (founder and CEO of Hilco Global) and Brian Brooks (former CEO of Binance.US and former U.S. Acting Comptroller of the Currency).
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Homebuyers brush off higher mortgage rates

Homebuyers brush off higher mortgage rates
Mortgage application activity was largely flat for the week ending Oct. 8, despite mortgage rates reaching their highest level since June.

That’s according to the latest mortgage application survey from the Mortgage Bankers Association, which said applications overall increased just 0.2% from the prior week.

“An increase in home purchase applications offset a slight decline in refinances,” said Joel Kan, the MBA’s vice president of economic and industry forecasting. “The increase in purchase applications was welcome news, but was primarily driven by a 2% gain in conventional purchase applications, which kept the average loan size elevated.”

The refinance index decreased 1% from the previous week and was 16% lower than the same week one year ago. The seasonally adjusted purchase index increased 2% from the prior week; the unadjusted purchase index was 10% lower than it was a year ago.

“The 30-year fixed rate reached 3.18% last week and has risen 15 basis points over the past month, resulting in an 11% drop in refinance applications during this time,” Kan noted. “Government refinance applications fell over 3% last week, driven by a decline in FHA refinances and an eight-basis-point increase in the average FHA mortgage rate. We continue to expect weakening refinance activity as  rates move higher and borrowers see less of a rate incentive.” 

Overall, the share of refi mortgage applications decreased to 63.9% from 64.5% the prior week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 3.4% of total applications; the share of FHA applications decreased to 10.2% from 10.5% the week prior; and the VA share of total applications decreased to 10.2% from 10.3%.  

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater  than $548,250) increased to 3.22% from 3.20%.

Many lenders these days are also bringing back loan products that they shelved during the pandemic, including non-QM jumbo loans.
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Out-of-state buyers take on local renters in Manchester, NH

Out-of-state buyers take on local renters in Manchester, NH
Manchester, New Hampshire, the state’s biggest city and economic hub, seldom makes national headlines. The Granite State itself typically only garners nationwide attention every four years when it kicks off the presidential nomination process with its early March primary.

But over the past few months Manchester has been making a name as one of the nation’s hottest real estate markets. In August, the metropolitan area was listed as the fourth hottest market in the country by Realtor.com.

“We are in a market like I’ve never seen in 30 years and I’ve seen a lot of different markets obviously, but this is very unique,” Laurie Norton a local Better Homes and Gardens agent said. “I kind of compare it back to ’05, but with double the activity.”

While the market in Manchester has cooled since the start of fall, which agents said was typical for the area, prices are still higher than they were this time last year. Bidding wars are still very much the norm. Houses, on average, are still selling for 2.8% above list price, according to a Redfin report.

Earlier this year, however, agents in the metro were seeing houses go into contract within five days of being listed and properties with desirable features – such as single-story living and an updated kitchen and bath – bringing in 20 to 30 offers. Local agents and brokers pointed to a number of factors that resulted in this surge in demand.

“Low interest rates and high rent prices are certainly partially responsible for the strong demand we have seen,” local eXp Realty agent Tiffany Lee said. “Of course there are also a lot of people relocating around the country because they can work remotely. I have been getting buyers from Ohio, California and all over.”

For individuals looking to relocate due to newfound job flexibility, New Hampshire has many desirable features including a lower cost of living, and no state income or sales tax. For its part, Manchester has its own appealing features, including bustling nightlife and a strategic location roughly an hour from Boston, the ocean, the lakes region and the White Mountains.

“Manchester is a beautiful city,” Norton said. “You have a lot of Industry. You also have a lot of restaurants and downtown, and it is really centrally located.”

The city’s one-hour commute to Boston has long made it appealing to out-of-state buyers looking to save some money. But with the rise of remote work, demand has soared. For local buyers, many of whom are first-time homebuyers, this has resulted in serious competition.

“There’s still a lot of local renters out there that still want to buy,” local eXp agent Doug Danzey said. “I have a few clients right now and they’re looking in the $400,000 range. In the past two weeks they have lost out on three properties in the Manchester area because there were 11, 12 offers. So it is still a really tough market.”

Also making things challenging is – as is true virtually everywhere – a lack of inventory.

“Before COVID, in Manchester, we would have an average of about 150 houses on the market at all times,” Norton said. “Two months ago, we only had 25 houses. Now we are up to 45 houses listed from about $300,000 to $800,000.”

This lack of inventory, coupled with rising demand, has led to a rapid increase in home prices. As of September 2021, the median sales price in Manchester was $320,000, down from $340,000 a month earlier, but still an 8.5% year-over-year increase, according to Redfin.

In 2016, local eXp agent Scott MacFarland and his family bought their home for $450,000, today their home is worth roughly $700,000. “It’s unbelievable,” he said. “We couldn’t even afford our own house that we are currently living in. It is really wild.”

Skyrocketing prices and lack of inventory have left many buyers discouraged, resulting in an increase in the median number of days a home is sitting on the market. In September, this metric reached its highest level since January 2021, with homes sitting for a median of 27 days up from 12 days a month prior, according to Redfin.

“So one of things that I’m finding is that pricing a listing is the most important element right now,” Danzey said. “Listings have been going up so quickly and if a listing agent isn’t considerate of looking at a snapshot of the last months in the neighborhood or community, they may overprice the property. Buyers are more educated and they are weary of jumping on a property that may by priced $20,000 to $30,000 over the property that sold next door last month. A smartly priced property will bring in far more interest and offers and you’re going to end up selling for a lot higher than if you attempt to reach for the stars with your list price.”

Despite the relative cool-down, local agents remain optimistic that the market will pick up again in the spring, but they doubt we will see such dramatic price increases.

“We’re still not seeing a ton of inventory, but the slowdown is pretty much right on par for what we normally see,” Chris Pascoe, a local RE/MAX agent said. “Mortgage rates did start to go back up recently, which typically means that we will start seeing prices come down as buyers will have less purchase power and maybe that’ll kind of encourage anyone who is on the fence about selling and buying to do so.”
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