More fintech M&A: SimpleNexus acquires LBA Ware

More fintech M&A: SimpleNexus acquires LBA Ware
Homeownership platform provider SimpleNexus acquired LBA Ware, a software firm that offers incentive compensation management and business intelligence software for the mortgage industry, the companies announced Friday.

The acquisition is a first for SimpleNexus and brings together 325 employees in 29 states from the two companies. SimpleNexus will now serve 425 distinct lender customers and dozens of mortgage technology integration partners, the company said in a release. Terms of the deal were not released.

“Bringing LBA Ware into the SimpleNexus homeownership platform gives mortgage lenders an unprecedented array of competitive advantages across borrower engagement, loan origination and closing as well as operations and business intelligence,” said SimpleNexus CEO Cathleen Schreiner Gates.

Schreiner Gates assumed the CEO mantle in June after founder Matt Hansen stepped down to lead a team of software developers and sales staff for upcoming research and development tactics within SimpleNexus. Schreiner Gates had served as president at SimpleNexus since September 2020. Prior to that, she served as the executive vice president of sales and marketing at Ellie Mae, now ICE Mortgage Technology.

LBA Ware CEO Lori Brewer will join SimpleNexus as executive vice president and general manager. Brewer founded LBA Ware in 2008 and has grown the company rapidly in that time. LBA Ware made the Inc. 5000 list of the fastest-growing companies for the last three years, most recently averaging 213% growth. SimpleNexus has made the Inc. 5000 list for the last four years, notching 433% growth over the last three years.

LBA Ware is best known for its incentive compensation management software CompenSafe and mortgage business intelligence platform LimeGear.

“Together, LBA Ware and SimpleNexus will be able to offer mortgage lenders even more than the sum of our parts and redefine not only the digital mortgage experience, but also the mortgage BI category,” Brewer said. “As consistent forces for innovation in the mortgage space, our firms have remarkably compatible cultures and complementary products. We look forward to a bright future as a unified team.”

“As a company that values our partnerships with SimpleNexus and LBA Ware, we recognize this as an exciting moment for both firms and an opportunity for two market-leading teams to come together to push the boundaries of innovation on behalf of mortgage bankers,” said Randy Allen, CIO of nationwide lender Fairway Independent Mortgage Corp.

There has been a flurry of fintech M&A activity over the past year, with notable deals including:

Covius‘ acquisition of Nationwide Title ClearingStewart Title‘s acquisition of Informative Research CoreLogic‘s acquisition of ClosingCorp.Volly‘s acquistion of Home Captain

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There’s no sign of the typical fall slowdown in home buying

There’s no sign of the typical fall slowdown in home buying
One-third of homes that went under contract had an accepted offer within one week of hitting the market, a new report from Redfin found. This is up from 30% during the same period a year prior and 2.2 points from a month earlier.

The report is based on data from the four-week period ending Oct. 10.

In addition, the number of homes that went under contract within two weeks of listing rose to 46% from 42% during the same period in 2020. While the median number of days a home is on the market rose to 22 days, which is a full week longer than the all-time low of 15 days in June and July, it is still 10 days less than a year earlier.

This increase in the share of homes selling this quickly is unexpected for this time of year when we typically see a seasonal slowdown.

“Most sellers who are on the market now are very motivated to move: landlords with vacant homes, families who already upgraded and need to sell their previous homes, couples splitting up,” David Palmer, a Redfin listing agent, said in a statement. “As home-buying demand declines into the fall, I’m only encouraging people who have urgency to sell now. Otherwise, I’m advising them to wait until the new year.”

Another sign of continued strong demand is the 4% year-over-year increase in pending home sales. This also represents a 46% increase compared to the same time period in 2019, according to Redfin.

While demand has remained high, inventory continues to drop with new listings of homes down 8% from a year prior and the total number of active listings down 21% from 2020.

As a result of this high demand and low inventory, the median home-sale price rose 13% from a year prior to $355,600. Asking prices of newly listed homes also rose, reaching a median of $362,047, marking a 12% increase from a year ago. However, this is 0.7% lower than the all-time high set during the previous four-week period ending Oct. 3. Decreases like this are typical for this time of year, according to the report.

Even with high asking prices, due to the highly competitive nature of the market, 46% of home still sold for above list price, which is up from 34% during the same time period in 2020, but also the smallest share since April 2021. Additionally, the average sale-to-list price ratio fell to 100.7%, also the lowest level since April.

Although there are numerous indicators of a still red-hot market, one indicator of a possible seasonal cooling off is the percentage of homes for sale each week undergoing a price drop rising to 5.1%, the highest level it has been since the four-week period ending October 13, 2019.
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Are you ready for the new CFPB director?

Are you ready for the new CFPB director?

Over the last month, two of the biggest housing regulators either changed or were rumored to change leadership. In mid-September, there were talks that the Biden administration would nominate Mike Calhoun, president of the Center for Responsible Lending, as the new FHFA director, and at the end of September, Rohit Chopra was officially confirmed as director of the Consumer Financial Protection Bureau (CFPB) for a five-year term.

According to coverage from Senior Mortgage Reporter Georgia Kromrei, a lot remains to be seen with both of these leadership changes, leaving the industry looking for answers. The following Q&A helps shed some light on these changes, as Kromrei answers questions on what is going on with the federal regulators. 

The following Q&A is from the HW+ exclusive Slack channel and has been lightly edited for length and clarity. To join future HW+ Q&As, you can join our premium membership program here.

HousingWire: To begin, could you give us more insight on what will Rohit Chopra’s focus be at the CFPB?

Georgia Kromrei: So, I think for the mortgage industry, in trying to predict what Chopra’s focus will be… the good news is that there has been quite a long time since Biden nominated Chopra back in January and when he was finally confirmed by the Senate, a couple of weeks ago.

The CFPB typically runs analyses of lenders’ performance and compares it to their peers — so lenders who want to avoid a redlining investigation will be looking to strengthen their internal data monitoring. That includes assessing their own performance, making sure they know who their peer group is, and who the CFPB may think their peer group is.

We can also glean a little bit about what the CFPB is working on in terms of redlining from their semi-annual report, which they released a few days ago. Don’t worry, I read it so you don’t have to!

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Which of the competing housing bills will make the cut?

Which of the competing housing bills will make the cut?
Recently, Politico ran a story titled, “Democrats Clash Over Aid To First Time Homebuyers,” which laid out the debate over three competing bills with support from various Democrats in both the House and the Senate. The real question is, given the reality that the Build Back Better and budget bills in play are likely to end up far smaller than the original ask from President Biden, where will these housing bills end up, and will any of them make it off the cutting room floor into final legislation?

To be sure, what began as a $3.5 trillion proposal will most certainly be whittled down, perhaps to less than half of what was asked for. And with the housing market booming relative to other budget and infrastructure needs, will congressional leadership understand the efforts here to improve opportunities for first-time homebuyers (FTHB) and particularly mostly minority, first-generation homebuyers?

Rep. Maxine Waters and Sen. Ralph Warnock, with support from Senate Banking Committee Chairman Sherron Brown, have a bill that would provide up to $25,000 down payment assistance for first-time homebuyers who are first in their family’s history (parents and grandparents) to have owned a home. This has drawn support from a coalition of civil rights and consumer advocates as it directly funds the down payment for a home purchase to those who have mostly been left on the sidelines of ownership opportunity for decades.

Sen. Wyden, the chair of the powerful Senate Finance Committee, has proposed a $15,000 first-time homebuyer tax credit similar to but larger than the FTHB tax credit program implemented during the Obama administration. This proposal is more consistent with the Biden plan that was published as part of his campaign platform, but has drawn criticism from the civil rights community for two reasons.

First, tax credits help as you get it back when you pay taxes or at minimum after the transaction has settled. But you still need to have some sort of “loan” or gift for the down payment until that tax credit can be returned. The likelihood that the population who would be able to accomplish this is likely whiter and less in need than the Waters/Warnock legislation and could be perhaps more wasteful.

Additionally, but similarly, a tax credit for all FTHBs likely sweeps in some who would already have other resources available for a down payment — either through a parent or relative, or from savings. Thus, taxpayers might be paying the down payment for some who simply don’t need the help.

A third bill from Sen. Mark Warner with similar focus on low-income, first-generation homebuyers would provide a 20-year mortgage to borrowers at a payment approximately the same as a 30-year mortgage. The focus here is in recognition that the ability to build equity quickly, early in the term of a homeowner’s experience, significantly lowers default risk and builds wealth rapidly. The expected outcome is a more durable borrower with better long-term prospects for sustainable homeownership.

While some of the same groups object to this bill, as it does not address the down payment road block that many prospective minority homebuyers face, advocates argue that this bill, combined with the Waters/Warnock DPA bill, could solve both the down payment and equity creation objectives together. Others argue that by combining the two, if used by the same homebuyer, only doubles the taxpayer outlay to each respective family.

The real question is whether any of these have a chance of making it, given the challenged legislative agenda, and if not, what the options are for first-time homebuyers going forward.

Clearly, down payment has been identified by many, including HUD, as one of the most critical barriers to first-time homebuyers. The good news is that, should this legislation not move forward at this juncture, there are scaleable solutions to provide DPA for FTHBs via a plethora of providers from state Housing Finance Agencies (HFAs), other housing agencies, and governmental entities that are available in every state in the nation.

The downside to these programs compared to the legislation proposals? DPA provided by most HFAs and governmental entities today uses secondary marketing gains to provide the down payment, mostly in the form of either a slightly higher rate and a repayable second, or forgivable second, depending on the structure and borrower profile.

These programs work today without any direct subsidy required from taxpayers and, while not as inexpensive as the DPA legislation proposals, can get families on the road to homeownership. And the results are clear. Per Stockton Williams, executive director of the National Council of State House Agencies (NCHSA), “HFAs provided DPA to more than 122,000 borrowers last year, at an average amount of $7,500 – a total of almost $1 billion in assistance.”

HFAs and other entities including governmental entities, and more, specialize in DPA solutions — this is what they do. They work with HUD-approved housing counselors and apply strong oversight to better ensure a long-term sustainable outcome. And they have results that are empowering minority borrowers with homeownership opportunities. Tai Christensen, the diversity, equity and inclusion officer at CBC Mortgage, states, “In 2020, the diversity rate at CBC Mortgage was 59% of the DPA we provided. Of that 59%, just over 60% identified as Hispanic.”

Clearly, Democratic legislators are united in the need to improve the outcomes of homeownership, especially for minorities. African Americans today have homeownership rates in the low 40% range, relatively unchanged versus those of decades ago. The focus here by legislators and regulators alike is an important step. After all, recognizing the problem is step one.

But should this legislation not make it to the final round, the good news is that there are DPA solutions in the market. Lenders and consumers need to be aware of these and leverage them in an effort to make sure all opportunities are provided, especially to those that are disenfranchised historically from the ability to become a homeowner.

While the equity building solution provided under Sen. Warner’s 20-year term mortgage legislation cannot be solved by the programs in place today, it could certainly be one to augment existing DPA programs, likely at a lower taxpayer cost in total. It’s not the perfect outcome to be sure, but it could be one way of thinking about federal budget options in an environment where there is so much competition for limited federal budget dollars looking forward.

David Stevens is the former CEO of the Mortgage Bankers Association as well as a former FHA Commissioner at HUD. He is currently CEO of Mountain Lake Consulting, Inc.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the author of this story:Dave Stevens at dave@davidhstevens.com

To contact the editor responsible for this story:Sarah Wheeler at swheeler@housingwire.com
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Roostify launches first of many AI-powered APIs on home lending platform

Roostify launches first of many AI-powered APIs on home lending platform
Image courtesy of Roostify

Home lending proptech Roostify is releasing the “first of many” APIs on its existing lending platform built to automate document validation and data extraction in the lending process. The latest tech, coined Roostify Document Intelligence (RDI) Service, will use AI to classify, validate and extract data from mortgage-related documents.

Roostify CEO and Co-founder, Rajesh Bhat, told FinLedger that RDI operates as an API microservice, so it can be integrated at any stage in the lending process that works for a lender, regardless of whether Roostify is part of the lender’s tech stack or not.

The development teams inside of a lender’s business can implement the capabilities anyway they like, and configure it to their current digital experience, tech stack, and use case, Bhat explained.

The tech can also give users automatic feedback when they upload incorrect or ineligible documents and flag errors before they become a data-entry error.

For example, if a borrower uploads their bank statements, the data extracted can pinpoint a large deposit that would require a letter of explanation. Once a large deposit is flagged, a task can be automatically created for the borrower that explains to them what is needed, why, and how to provide the required information. A super useful tool, given the tech can trigger additional steps if needed in what would typically be a paper-leaden trail.

“The way we are using the Document Intelligence Service at Roostify is just an example of one use case,” Bhat told FinLedger. “Since this is an API, it can be integrated anywhere in the lending process and support many use cases benefitting from automated identification and extraction of data contained within the mortgage document set.”

A number of proptechs are working towards the eventual fully digital documentation experience in lending (see Blend, Snapdocs or Docutech), but Bhat sees key differences in the San Francisco based company’s mission.

“That ease of integration at every stage, and the ability to carry extracted information forward throughout the entire process really sets it apart. What also sets it apart is that it’s already boosting FI scores,” Bhat said.

Add to that the fact that the service already supports all major income verification documents and bank statements—and is constantly being updated with new supported documents, including assets and debts, identity, and other mortgage documentation. Even in its relatively early stages of training the AI models, it is already turning out FI scores between 0.83 and 0.99.

Roostify’s newest launch arrived on the back of a massive year for not just Roostify but for the housing and lending industry overall. In 2020 alone, Roostify saw a 250% increase in the number of applications submitted through its system and processed just under 1.5M loan applications through its current platform.

The tech currently powers digital mortgage platforms of JPMorgan Chase, TD Bank, Guild Mortgage, HSBC Bank USA and more, allowing different lending parties to bring in data and information from online sources that then tailors the homebuying process. They also offer a home equity platform for home equity loan applications and HELOCs under the same umbrella.

In January, the proptech raised a $32 million Series C bringing Roostify’s total funding to $65 million at the start of the new year. At the time, Roostify suggested that its latest cash injection would go towards investing in AI – now they are delivering on that promise.

“In order to thrive in a digital-first world, mortgage lenders need critical digital transformation initiatives, such as cloud-based technology, self-service solutions for consumers, and meaningful AI deployments,” Bhat said. “We see the Document Intelligence Service as a really important early step in that process, and more broadly, our API platform as being the foundation for future developments.”

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Altisource accepts cryptocurrency through Premium Title

Altisource accepts cryptocurrency through Premium Title
Altisource Portfolio Solutions S.A. teamed up with ForumPay, a cryptocurrency payment and conversion service, to allow customers to buy real estate listed on equator.com and hubzu.com with cryptocurrency. Buyers who select Altisource affiliate Premium Title as their title and escrow provider will be given the option to purchase property using cryptocurrency. Read on for more about the new arrangement.
Source: thetitlereport.com

RedfinNow launches in North Carolina

RedfinNow launches in North Carolina
RedfinNow has expanded into North Carolina, launching in the Charlotte and Raleigh metro areas. So far this year, RedfinNow has expanded to 11 markets and is serving homeowners in 29 markets in 14 states and the District of Columbia. Read on for more.
Source: thetitlereport.com

Fitch upgrades Fidelity’s outlook to positive

Fitch upgrades Fidelity’s outlook to positive
Fitch Ratings affirmed Fidelity National Financial’s (FNF) long-term issuer default rating of ‘BBB+’, senior unsecured rating at ‘BBB’ and insurer financial strength rating at ‘A’ (Strong). The rating outlook for FNF and title insurance subsidiaries has been revised to positive from stable. Read on for more.
Source: thetitlereport.com

Title direct premium growth more than doubles

Title direct premium growth more than doubles
The title insurance industry saw direct premium growth of 16 percent in 2020, the largest year-over-year increase since 2012, according to a new AM Best report. The growth in direct premiums written more than doubled the 6.6 percent growth seen in 2019, according to the report. Read on for more.
Source: thetitlereport.com

Doma names Pennsylvania agency manager

Doma names Pennsylvania agency manager
Doma (formerly known as North American Title Insurance Co.) added an agency manager for Pennsylvania. The licensed title agent in Pennsylvania and New Jersey supports Doma policy-issuing independent title agents and secures new business. Read on for more.

 

Source: thetitlereport.com