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2024 was an eventful year in the mortgage industry, with mortgage interest rates tipping down from recent highs, numerous court battles involving the likes of NAR and UWM against other entities, the passing of Mortgage Bankers Association leader David Stevens and Fannie Mae and Freddie Mac undergoing significant changes. Learn more about the top items for the year below.
Andrew Harrer/Bloomberg
David Stevens, mortgage icon, dead at 66
Article by Brad Finkelstein
David Stevens, a mortgage industry figure who held a wide range of positions during his career, passed away at 66 in January.
A statement from the Mortgage Bankers Association, the industry trade group he headed up for seven years, said Stevens’ death was unexpected.
However, it was well-known that he had been battling cancer for many years, although at the time he announced his retirement from the MBA in August 2018, he added he was in remission.
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Top producer and assistant charged in “large-scale” mortgage scheme
Article by Maria Volkova
A top loan originator and his aide are facing up to 30 years in prison after the Department of Justice indicted the pair for a “large-scale” mortgage fraud scheme in April.
Christopher J. Gallo, a former top loan officer at NJ Lenders Corp., and his assistant, Mehmet A. Elmas, are accused of orchestrating a ploy in which the two mortgage professionals falsified loan origination documents, while they both worked at the New Jersey-based company.
Specifically, from 2018 through last October, the originators did not disclose to their employer and other lenders when a borrower was buying a second property, thereby securing lower mortgage rates for consumers. In reality, some of these properties were being bought to be used as rental or investment properties, a complaint by the DOJ reads.
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UWM files suit against creator of Facebook group for brokers
Article by Maria Volkova
United Wholesale Mortgage is sued Ramon Walker, owner of brokerage Client Direct Mortgage and creator of a Facebook group dubbed “Rocket Pro TPO vs. UWM,” for trademark infringement and not paying an outstanding early payout balance of $124,011.37.
In December 2023, UWM sent a cease-and-desist, warning Walker that it was closely monitoring the Facebook group he created and asking the broker to remove all improper use of the wholesale lender’s intellectual property. Simultaneously, UWM demanded that Walker pay the amount due.
The wholesale lender followed up with a suit filed Feb. 14 in Michigan federal court accusing Walker of using its logo in the Facebook group’s banner. Doing so has intentionally caused confusion in the mortgage marketplace and among customers of UWM’s products and services, the wholesale lender claims. (The group removed it as of Jan. 5.)
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FHA makes long-awaited changes to 203(k) program
Article by Brad Finkelstein
A long-awaited upgrade for the Federal Housing Administration’s 203(k) program finally hit the books in July, as its parent agency issued a mortgagee letter detailing changes designed to increase use.
“The changes we are announcing today for the 203(k) program are long overdue and will support greater use of this program where it is needed most – in neighborhoods where homes are affordable but need repair,” said Federal Housing Commissioner Julia Gordon in a July 9 press release. “Increased use of 203(k) mortgages will help modernize and revitalize homes, which supports affordable housing supply and strengthens neighborhoods.”
Gordon was speaking during a Philadelphia event at a home rehabbed using the loan.
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Judge finds UWM employment contract violated workers’ rights
Article by Andrew Martinez
An employment contract United Wholesale Mortgage made employees sign in the past few years violates numerous labor laws, a judge with the National Labor Relations Board found.
Administrative Law Judge Susannah Merritt ordered UWM to rescind unlawful portions of the contract and distribute a revised version to current and former workers in a Jan. 11 decision. The ruling, still pending final approval by the 4-member NLRB board, would apply to the lender’s contracts in effect any time since Dec. 21, 2021.
Merritt agreed with federal prosecutors that large portions of the contract were “overly broad, ambiguous and/or discriminatory.” Employees would read many of UWM’s terms as unlawfully prohibiting them from discussing workplace conditions, disputes, wages, union efforts and more, the decision said. The judge also found language around arbitration, social media use and media contact in violation of labor laws.
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UWM slams investigative report, racketeering lawsuit
Article by Andrew Martinez
United Wholesale Mortgage is defending itself from explosive allegations in a media investigation and class action suit that the lender defrauded borrowers by billions of dollars.
The first-ever report by Hunterbrook, a venture capital-backed outlet, claims UWM holds independent brokers captive and overcharged borrowers by hundreds of millions of dollars. The publication’s editorial board suggests the wholesale giant is at risk of wide-ranging consequences, and shared its findings with regulators and a law firm that filed a class action suit.
The lengthy article and its attached research pointed to over 8,000 independent mortgage brokers who sent 99% or more of their loans to UWM, volume that powered the company to the top of the industry. The lawsuit accused “corrupt UWM loyalist” brokers of breaching their fiduciary duty to home buyers, part of racketeering charges against the firm in a new Michigan lawsuit.
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NAR settlement might lead to more dual agents, but LOs are skeptical
Article by Maria Volkova
During the Mortgage Bankers Association’s advocacy conference in March, Bob Broeksmit, the trade group’s president, floated the idea that the recent National Association of Realtors settlement, which will change the commission structure for real estate agents, may result in more dual licensed agents. What came after was a loud groan from the crowd.
“There will be market reactions to the settlement and it will create openings for other business models where we want the buyer represented, but the seller may not want to pay 3% for a buyer’s agent,” he said. “One of those models could be that you, as lenders, license your loan officers as real estate agents and offer the buying agent service for less than 3% fixed fee.”
He admitted it would not appeal to all. “Some of you will say ‘I want nothing to do with that.’ Others of you will say that is a great retention opportunity for my loan officers and the market will figure all this out.”
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How Project 2025 would change U.S. mortgage policy
Article by Maria Volkova
The conservative Heritage Foundation has rolled out a proposed blueprint for federal change that includes some drastic housing items, and some think it reveals more details of Trump campaign goals not necessarily in its official Agenda 47.
The think tank’s plan, dubbed Project 2025, overhauls and shrinks many federal agencies, while simultaneously eliminating swaths of career support staff, reprising some ideas previously floated during Trump’s first term. The foundation estimates Trump’s actions have been in line with its agenda about two-thirds of the time.
These hypothetical initiatives impact all agencies that govern the financial services space, including the Department of Housing and Urban Development, the Federal Housing Administration and the Consumer Financial Protection Bureau. Ben Carson, who headed HUD during Trump’s first term, contributed to the report.
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Condos, HOAs set to grow as Fannie, Freddie add transparency
Article by Bonnie Sinnock
Condominium and homeowner associations are on track to grow in 2024, adding to a constrained supply of housing, and making financing for units increasingly important.
The number is set to increase from 365,000 in 2023 to as much as 370,000 this in 2024, and they account for almost one-third of U.S. home inventory, according to a recent Foundation for Community Association Research study and forecast.
Community associations also account for a significant share of the new homes that have become a key part of total for-sale inventory given that many existing owners loath to sell homes that many of them financed at relatively low rates.
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Congress must act to fix Fannie Mae and Freddie Mac, FHFA says
Article by Brad Finkelstein
Congress must act in order to ensure the secondary mortgage market is safe, sound and equitable, the government-sponsored enterprises regulator said in its annual report to Congress.
Apart from imposing capital requirements on Fannie Mae and Freddie Mac, the Federal Housing Finance Agency does not possess such authority, it noted in the report that primarily addresses activities it undertook in 2023 to, among other things, improve the GSEs’ financial health.
The FHFA highlighted specific issues that only Congress has the power to alter, including “changes to the Enterprises’ charter acts, adjustments to their statutory business model, the nature of any government guarantee and the creation of reserves funded by Enterprise guarantee fees to be accessed in the case of losses” and other structural reforms.
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