Midyear Review: The 10 Hottest Mortgage Topics of 2016 (So Far)
June 15, 2016 3:40 PM
Midyear Review: The 10 Hottest Mortgage Topics of 2016 (So Far)
So far, 2016 has brought legal battles, election woes, and TRID-related headaches to the mortgage industry, among many other major issues. Here are the 10 biggest stories, trends and ideas that we've covered until now this year, in no particular order:
Major Companies Exit the Retail Channel
In early January, Ditech Financial announced it would leave the distributed retail mortgage production channel — cutting 200 jobs in the process — to focus on its consumer-direct channel and its retention and correspondent lending channels. Weeks later, BankUnited followed suit, with the Miami Lakes, Fla.-based company's CEO John Kanas saying that the bank "can't make money in the business." Roughly a month later, PHH announced plans to stop growing its retail mortgage origination business with the exception of its joint venture with Realogy Corp.
TRID Triggers W.J. Bradley's Demise
W.J. Bradley Mortgage Capital shut its doors completely in March after it was stuck with nonagency loans with TILA/RESPA integrated disclosure issues that it couldn't sell. The Centennial, Colo.-based lender, which was one of the first to create a non-qualified mortgage loan program, lost its warehouse funding because of jumbo mortgages with TRID problems stuck on its line of credit.
TRID-Related Woes Mount for Lenders
Though the TILA-RESPA integrated disclosure rules rolled out in 2015, lenders are still struggling to grapple with the major changes they ushered in and the higher costs that have resulted. Homebuyers also feel the pain, saying that the mortgage process is now harder and longer. And TRID has foiled efforts to revive private-label securitizations, as liquidity has dried up in its wake. But not everyone feels the pain equally: mortgage banks see more of a competitive advantage to TRID than other lenders.
Wells, B of A Debut Low Down Payment Loans
Bank of America teamed up with a Freddie Mac to offer a 3% down payment home loan back in February — and under the plan, the bank will sell loans and mortgage servicing rights to North Carolina-based Self-Help Federal Credit Union to reduce its risk. Wells Fargo followed suit last month with its own low down payment mortgage — though, in this case, Wells plans to sell loans originated in its program to Fannie and retain the servicing.
Quicken Loans Reignites 'Fast Mortgage' Debate
Quicken Loans rekindled the debate over how fast the mortgage origination process should take, with a 60-second commercial for its Rocket Mortgage product during Super Bowl 50. While many took to Twitter during football's big night to criticize Quicken, others argue that the commercial shows a renewed emphasis among lenders on the digital loan experience. Indeed, many lenders are looking to up their mobile game to meet customer expectations.
Mortgage Industry Nervously Watches Presidential Race
The presidential race thus far has been a nail biter for the mortgage industry. Economists have agreed that a November win by presumptive Republican presidential nominee Donald Trump would create a negative impact on the housing market. And Hillary Clinton, who appears to have clinched the Democratic nomination, seems to embrace the idea of merging Fannie Mae and Freddie Mac. The election also could have an effect on interest rates and the rollout of a single GSE security.
Guaranteed Rate Hit with $25M Judgment in 'Corporate Espionage' Suit
A jury awarded Mount Olympus Mortgage Co. more than $25 million in a lawsuit alleging "corporate espionage" by former employees and their new employer, Guaranteed Rate. The case renewed debates about lender recruiting tactics and who owns client data when a loan officer leaves a lender.
The Justice Department Continues Pursuit of FHA Lenders
In the first half of 2016, FHA lenders continued to face scrutiny from the Department of Justice. Quicken Loans lost the first round of its dispute against the DOJ over supposed violations of the False Claims Act, and Wells Fargo shocked the industry agreeing to pay $1.2 billion to settle the DOJ's claims. Meanwhile, the FHA revised its loan certification plan, after an earlier draft caused outrage for making it seemingly easier for the DOJ to pursue lenders over minor defects. Still, some question whether the DOJ has fatally wounded FHA lending.
CFPB's PHH Lawsuit Raises Constitutionality Questions
Judges in a federal appeals court pummeled the Consumer Financial Protection Bureau on questions related to the constitutionality of the agency's structure that came out of its case against PHH over alleged kickbacks. The court's ruling — which will likely be appealed to the Supreme Court — could have major implications for the agency. Meanwhile, "changing industry and regulatory dynamics" led PHH to hire financial advisors as it explores strategic alternatives, company Chairman James Egan said.
Lenders Plot Return of Subprime Securitizations
The mortgage industry is just beginning to securitize newly minted loans to lower-credit borrowers for the first time since the financial crisis. But subprime securitization isn't what it used to be — thanks largely to questions regarding the volume of new loans that are actually available to market.
