JPMorgan lays off mortgage staffers, Flagstar data breach revealed and more of this week’s top stories
June 25, 2022 12:07 PM
ANDREW HARRER/BLOOMBERG NEWS
JPMorgan lays off hundreds in mortgage business after rate surge
More than a thousand workers are affected by the decision, with about half moving to a different division. Wells Fargo, the biggest mortgage lender among U.S. banks, has also been laying off and reassigning employees.
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Flagstar Bank says hack impacted 1.5 million customers
The company is offering two years of complimentary Kroll credit monitoring services to affected customers. The breach is the latest in a series of banks and nonbanks being hit by cyberattacks.
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Jason Alden/Bloomberg
Meta settles claims that ads violated fair housing laws
The lawsuit by the U.S. Department of Housing and Urban Development said Meta’s algorithms allowed marketers to violate the law by limiting certain groups of people from seeing housing ads. The company will build a machine learning technology to ensure ads reach people that reflect the overall potential audience and not just a subset of the group. The new system, which will also be used for employment and credit ads, will start running by the end of the year.
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LoanCare lays off undisclosed number of workers
Mortgage subservicer LoanCare conducted a round of layoffs on June 17, as the need to assist borrowers affected by the pandemic continues to decline. LoanCare did not disclose how many positions it eliminated, though it is listed as having 982 employees on LinkedIn. The headcount grew 19% in the past two years, but it had no additions in the last six months.
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UWM's latest promo slashes pricing by 50 to 100 bps
United Wholesale Mortgage new Game On makes a 0.5 percentage point to 1 percentage point cut across all product types UWM offers. If past cycles are an indication , some of UWM's competitors are likely to drop their own pricing ; but leadership from Rocket Mortgage's competing channel was unperturbed.
"While others have incentives that bring them inside and outside of the market, one of the main reasons we are the fastest growing lender serving brokers is because we are one of the most consistently competitive priced lenders in America," executive vice president of Rocket’s wholesale division Austin Niemiec said in a statement. "One of the ways Rocket Pro TPO stays competitive is by making adjustments to make sure our broker partners are in a position to win against others in the market and we will continue to do that."
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"While others have incentives that bring them inside and outside of the market, one of the main reasons we are the fastest growing lender serving brokers is because we are one of the most consistently competitive priced lenders in America," executive vice president of Rocket’s wholesale division Austin Niemiec said in a statement. "One of the ways Rocket Pro TPO stays competitive is by making adjustments to make sure our broker partners are in a position to win against others in the market and we will continue to do that."
Price cuts hit the pandemic’s hottest housing markets: Redfin
More than 25% of home sellers dropped their asking price in half the markets studied, according to a Redfin report. As the markets continue to slow, the regions with the most significant drops were homebuying hotspots during the pandemic. Although cuts are expected to continue, prices will adjust as sellers get adjust to the changes in the market
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Mortgage rates inch higher amid inflation control measures
The 30-year fixed-rate mortgage average hit 5.81% for the week ending June 23 compared to 5.78% a week ago. The rate growth is already reflected in the housing market as previously-owned homes fell to a two-year low and sellers cut their prices. The 15-year fixed mortgage jumped 11 basis points.
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Reverse mortgage lenders vie for baby boomers amid rate surge
Home equity conversion mortgage endorsements fell 3.7% month over month in April as retail/direct lending and wholesale/broker channels dropped. Proprietary products could grab some of the HECM shares as the older population look for more favorable options to tap into their home equity. Although endorsements decreased overall in April, six of the leading ten reverse-mortgage lenders increased volumes that month.
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Two reports present very different pictures of appraisal bias
No signs of racial bias were found on automated valuations tested in 50 ZIP codes in Chicago on a new Veros Real Estate Solutions study. However, a different study found greater AVM error as a percentage of the property’s sale price where Black residents make up a majority, according to research conducted by the Urban Institute. The differences in findings reflect the challenges the mortgage industry faces, given proposed rules from the Consumer Financial Protection Bureau on ensuring fairness.
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Mortgage activity increases for second straight week
The recent activity, which clocks in at a 4.2% rise compared to the week before, comes largely from an increase in purchase activity driven by conventional applications. Price reductions are evident as purchase-loan sizes shrunk. Fannie Mae’s Refinance Application Level Index found a week-over-week decrease of 6.3% in total refinance volume.
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Housing construction is near a 49-year high, but is it enough?
Around 1.64 million homes were under construction in April, even as supply chain issues slowed deliveries. Although there are worries about a downturn, some construction firms see new builds as a differentiator from the conditions during the Great Recession. However, Ginnie Mae President Alanna McCargo noted that the country still needs at least 1.5 million more affordable homes.
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First-mortgage default rate rises to high not seen since March 2021
The pace was up from April to 0.36%. Second-lien default rate fell to 0.39% from the previous month but is up from the same month last year. The surge in the first-mortgage default rate matches broader trends. Rising default suggests increased strain on the ability to repay.
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How technology will reshape mortgage jobs of the future
Technology specialists will be more in demand as new technologies improve efficiency and compliance in the mortgage industry. Real estate brokers and agents are estimated to grow only 4% between 2020 and 2030, while information security analysts are expected to surge by 33% during the same time. Even as technology jobs increase, there will be a need for people who understand the business and the know-how within the mortgage industry. “It’s never human versus machine. It’s always a machine to help propel that person to be better,” Jina Choi, chief operating officer at Candor Technology, said.
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As home flipping skyrockets, profit margins sink to 2009 levels
Return on sales dropped 25.8% in the first quarter from 27.3% at the end of 2021. The decrease might signal a slowdown in activity for flippers and other buyers. Investors are more likely to become more selective on the markets they choose to invest in as reports signal overvalued markets. Exiting investors might benefit first-time home buyers who will no longer have to compete.
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Increased hurricane damages likely in 2022
Nearly 7.8 million homes are expected to be damaged by hurricanes, costing more than $2.3 trillion in estimated reconstruction costs, according to a CoreLogic report. It is also estimated nearly 33 million homes are at risk of hurricane wind damage, a surge from its 2021 projection addition. In addition, the National Oceanic and Atmospheric Administration predict 65% chance of an above-normal hurricane season.
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Lennar starts cutting prices in cooling U.S. housing market
Although the building company still plans to deliver 68,000 homes in its full fiscal year, it is now offering incentives to boost sales. Lennar has seen new orders slow down and deal cancellations rose in June. Although supply chain problems seem to be alleviating, broader economic trends continue to signal a fall in housing prices.
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Sergio Flores/Bloomberg
Little consensus to be found on comprehensive flood insurance fix
The National Flood Insurance Program provides $1.3 trillion in coverage for American homeowners and businesses and is set to expire in September. At a Congressional hearing, the Federal Emergency Management Agency urged senators to adopt reforms to the program. However, Republican and Democratic lawmakers expressed concern, including increased uninsured people and higher costs for families and small businesses.
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