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Foreclosures saw another uptick in the third quarter this year, indicating potential growth strain on borrowers.More than 100,000 properties in the United States had a foreclosure filed from July through September, up less than a percent from the second quarter and up 17% from the third quarter a year ago, according to a new report from ATTOM, a curator of land, property and real estate data.Nearly 36,000 properties saw foreclosure filings in September, a decrease of 0.3% from August and an increase of 20% from a year ago, the report showed."In 2025, we've seen a consistent pattern of foreclosure activity trending higher, with both starts and completions posting year-over-year increases for consecutive quarters," said Rob Barber, CEO at ATTOM, in a press release Thursday. "While these figures remain within a historically reasonable range, the persistence of this trend could be an early indicator of emerging borrower strain in some areas."Properties that started the foreclosure process rose 2% from the previous quarter and 16% from last year to roughly 72,000 in the third quarter this year.Texas, Florida, California, Illinois and New York alone accounted for nearly half of the foreclosure starts, driven by each state's most populated city. Texas led the country with 9,736, then Florida with 8,909 and California with 7,862.Population adjusted, Florida had the worst foreclosure rates, as one in every 814 housing units had a foreclosure filing, well outpacing the national average of one in every 1,402 units. Nevada was not far behind at one in every 831, followed by South Carolina (one in every 867), Illinois (one in every 944) and Delaware (one in every 974).Among 225 metropolitan areas with at least 200,000 people, Lakeland, Florida (one in every 470 housing units), Columbia, South Carolina (one in 506), Cape Coral, Florida (one in 589) and Cleveland (one in 593) had the worst foreclosure rates.Additionally, bank repossessions increased 33% from a year ago and 4% from last quarter to 11,723 in the third quarter this year. Texas, California and Florida again led all states in repossessions, followed by Pennsylvania.The average time of the foreclosure process came in at 608 days in the third quarter, down 6% from the second quarter and 25% from the same time last year. While a rise in foreclosures may indicate worsening economic conditions, KBRA and Fannie Mae each bumped up expected gross domestic product growth for the upcoming quarter in their latest economic forecasts. The KBRA also signaled steady unemployment levels, but said the effects of tariffs will be felt to a greater degree in the fourth quarter.

Equifax is rolling out a new pricing strategy and incentives in response to FICO's program announced last week as the dispute between score providers heats up.   The credit reporting agency will offer the competing Vantagescore 4.0 metric from FICO's rival at a price of $4.50 through 2027, a cost it claims is more than 50% below what FICO will charge through resellers.  "Equifax plays an essential role in the financial lives of consumers and the mortgage industry, and we take that responsibility very seriously — particularly in the most challenging mortgage and housing market in 20 years," said Equifax CEO Mark Begor in a press release. "We are committed to holding the $4.50 score pricing for two years to give lenders the confidence they need to convert to the higher-performing Vantagescore," Begor continued, adding he believed "the best way to drive change in the marketplace, and to lower costs for consumers and our customers, is through open competition." The move comes in response to last week's announcement from Fair Isaac Corp., provider of FICO credit scores, that unveiled a direct license program to resellers, repricing delivery of its Classic offering to $4.95 per borrower, in addition to fees applied when mortgage loans using the product are closed. The direct licensing program gives resellers and loan originators access to FICO scores, effectively freezing out Equifax and the other credit reporting bureaus, from sales revenue. Equifax, along with peer credit reporting agencies Experian and Transunion, are co-owners of Vantagescore. Lenders also would continue to have the option to continue using FICO's per-score pricing of $10 offered through the resellers.    While Fair Isaac's change was initially met with some optimism by the lending industry, supporters of Vantagescore were quick to label the new FICO program as a price increase in disguise that offered little direct savings to lenders or borrowers. The lead-up to recent pricing changesOver the summer, FICO and Vantagescore found themselves at the center of a public spat after Federal Housing Finance Agency Director Bill Pulte said he would agree to immediately accept the latter's score in loans sold to government-sponsored enterprises, disrupting long-established norms. FICO Classic has been the sole credit score in use for conventional lending for decades. Vantagescore, in its analysis, said it tracks additional criteria, such as rent and other regular payments to determine what it claims is a more accurate reading of a mortgage borrower's ability to repay. Since Director Pulte's announcement, the ensuing months have been marked by regular back-and-forth between the two companies and their advocates about the merits and flaws of each scoring system. LOANTHINK COLUMNS ON CREDIT SCORING: Why AEI's VantageScore 4.0 critique misses the markVantageScore's 'future of credit' rests on shaky mathFair Isaac's white paper makes it clear it is raising pricesVantageScore 4.0's predictive power stands up to scrutinyFICO isn't the problem. A premature two-score system isCredit score competition reduces mortgage market riskPulte's tweet hands credit bureaus an unfair edgeCredit scores are not the issueResponding to Equifax's announcement, FICO also claimed the credit bureau might not be fully revealing charges behind its score delivery. "FICO introduced the mortgage direct license program to enhance competition in the distribution and pricing of the FICO score. Early bureau response to this program suggests they may charge a processing fee on top of the price of the FICO score, when they in fact do not process the FICO score," a Fair Isaac spokesperson said. "A bureau processing fee is unwarranted and ultimately increases costs for lenders and borrowers," they added.Other Equifax incentives on offer to boost adoptionIn an effort to encourage greater adoption and recognition of Vantagescore 4.0 within the mortgage industry, Equifax also rolled out additional incentives alongside its new score-price commitment. Mortgage, auto, payment card and other consumer finance customers purchasing FICO score products will also be given a Vantagescore 4.0 reading at no additional charge.  Equifax's Work Number employment and income verification report would also be provided alongside mortgage borrower creditworthiness data at no extra cost.Free income and employment indicators will also be available alongside Equifax credit reports for other types of consumer financing customers throughout 2026."By offering Vantagescore 4.0 credit scores to all Equifax customers who purchase FICO scores through the end of 2026, we are making Vantagescore more easily accessible for lenders of all types to evaluate," Begor said. 

Key insight: Identity theft victims who file extended fraud alerts often experience significant and persistent improvements in their credit profiles, becoming more creditworthy.What's at stake: U.S. banks and credit unions that understand the behavior of identity theft victims can land better credit lines.Supporting data: Extended alert filers saw their credit scores increase by an average of 11 points, lasting up to five years.Overview bullets generated by AI with editorial reviewA new working paper from the Federal Reserve Bank of Philadelphia finds that certain consumers who experience severe identity theft subsequently experience significant and persistent improvements in their credit profiles, often becoming more creditworthy than before the fraud occurred.The research holds particular relevance for U.S. banks and credit unions, as it illustrates that identity theft victims who leverage so-called extended fraud alerts, a specialized consumer protection product, significantly and persistently reduce their credit risk and engage in more secured borrowing.The working paper, Financial Fraud Through the Lens of Extended Fraud Alerts, uses detailed, anonymized credit bureau records, studying approximately 50,000 consumers who filed an extended fraud alert between 2008 and 2013.What is an extended fraud alert?An extended fraud alert is a notification that, at the consumer's request, appears on the consumer's credit reports for seven years after a fraud event.The alert requires lenders to take additional steps to verify the consumer's identity before they grant a request to open a new credit account, increase an existing credit line or issue an additional card.The consumer must specify a reasonable contact method, such as a telephone number, in the alert documentation, and creditors must use this method to verify the consumer's ID. Placing the alert is free, and consumers can renew it after the initial seven-year period.Only people who have experienced identity theft and have completed an identity theft report at IdentityTheft.gov, which is a website maintained by the Federal Trade Commission, or filed a police report can place an extended fraud alert.Because filers must submit evidence of identity theft, they are "almost certainly the victims of identity theft" and do not file this alert simply out of worry, according to the Philly Fed paper.Credit bureaus are legally mandated to offer this product to consumers, per the Fair Credit Reporting Act.Experian warns customers that adding an extended fraud alert "could lead to a delay when you apply for a new credit card or loan because you'll need to wait for the creditor to verify your identity or contact you," according to a company blog post.For many victims, this delay is worth it because it can help to prevent any future impacts to their credit score. And, according to the research from the Philadelphia Fed, this vigilance pays dividends.Fraud's immediate, negative effectsThe researchers documented clear signs of fraud preceding or coinciding with the alert filing. For example, filers often reversed their address to a prior address, suggesting the consumer was correcting address changes criminals made.These and other signs serve both as evidence that alert filers are true victims of identity theft (rather than merely cautious) and that, even in cases where the consumer is not directly liable for fraud losses after identity theft, they still experience negative consequences.Among the biggest negative consequences, the victim's Equifax credit score declined by 2.5 points on average just before filing an alert.This credit score decrease was often the result of a large, temporary increase in credit inquiries against their identity, peaking in the quarter the alert was filed. Fraudsters also often opened new credit card accounts opened in the victim's name.Persistent post-fraud improvementsAfter consumers file an extended fraud alert, negative consequences from the fraud quickly disappear from their credit records, the study found.More significantly, the victims experienced substantial, persistent improvements in their credit standing and financial habits.Extended alert filers saw their credit scores increase by an average of 11 points after the immediate negative effects of fraud faded, and this improvement lasted up to five years.The researchers found that this stemmed from more than just removing fraudulent accounts. For example:Filers maintained a lower incidence of major derogatory events (like charge-offs or foreclosure) by about 4 to 7 percentage points.They maintained a lower incidence of third-party collections by about 5 percentage points.They kept a higher proportion of their credit card balances in good standing.These persistent improvements suggest filers, after experiencing identity theft, actively changed their repayment habits and corrected pre-existing errors in their reports they had previously missed.The paper said these findings suggest that extended alert filers become more wary and careful after the shock of a fraud event.Filers borrow more at lower riskNotably for U.S. financial institutions, the research documented that many extended alert filers actively leveraged their improved creditworthiness to apply for additional credit.The paper found clear evidence of increased secured credit usage in the years following the alert filing.For example, filers became new auto loan holders at higher rates, increasing their average auto loan balances by up to $500, which was a 7% increase.A significant number of filers also became new mortgage holders. Average mortgage loan balances increased by up to $12,000 — a 5% increase relative to the mean — as a result of new mortgage activity.The paper found that these consumers, despite obtaining additional loans and increased balances, manage their credit "as well as or better than they did before financial fraud" for at least five years.

Key insight: Community banks may be able to benefit from the enormous buildup of AI capacity, as the cost of AI-based fraud detection falls.What's at stake: Criminals' use of AI-generated deepfakes to commit fraud has been growing rapidly.Expert quote: "What was once the stuff of movies is now a reality," said Federal Reserve Gov. Michael Barr.ST. LOUIS — Federal Reserve Gov. Michael Barr argued Wednesday that artificial intelligence has the potential to help community banks fight fraud more effectively, but he also issued a warning to the same banks about the rapidly expanding use of AI by cyber criminals.Speaking at the Community Banking Research Conference, Barr said that automated fraud detection seemingly hasn't been cost-effective for some community banks in the past."But the huge buildout in AI capacity now underway, along with the explosion in the number of firms seeking to get into AI-based services, may have the potential for driving down costs enough to make AI-based fraud detection more feasible for community banks," he added.Barr also flagged the growing risk to banks from criminals' use of generative-AI deepfakes to commit fraud. "Using only a brief sample of audio and access to information about individuals on the Internet, criminals employ gen AI to impersonate a close relative in a crisis, or a high-value bank client seeking to complete a transaction at their bank," he said."What was once the stuff of movies is now a reality, and a lot is at stake," Barr said, noting that the use of deepfakes in cybercrime is growing very rapidly.Barr also touched on the potential of AI to reshape employment across the U.S. economy. Such an outcome could help banks in certain rural communities where data centers get built, but it could hurt lenders in places where there are concentrated job losses."I tend to be an optimist about the potential for AI to make workers more productive, raise living standards and create more jobs in new industries, but I am realistic in my expectation that it could cause considerable dislocation of workers and businesses, at least in the short run," Barr said. "Communities dependent on a small number of employers or a single industry that is significantly affected by AI could experience these dislocations."Barr, who was the Fed's vice chair for supervision during much of the Biden administration, has spoken multiple times this year about the potential impacts of AI on the financial system. In an April speech, he argued that banks and regulators should be taking steps to make successful deepfake attacks less likely, and also to make such attacks more resource-intensive for the criminals."Another way to disrupt the economics of cybercrime is by increasing penalties for attempting to use gen AI to commit fraud and increasing investment in cybercrime enforcement," Barr said in the April speech. "This includes targeting the upstream organizations that benefit from illegal action and strengthening anti-money-laundering laws to disrupt illicit fund flows and freeze assets related to cybercrime."Barr's latest remarks came at a conference where community bankers have been discussing the implications of AI for their institutions, which historically have often been slower to adopt new technologies than their larger peers.On Tuesday, Alexander Price, the president and CEO of Ouray, Colorado-based First Citizens Bank, spoke about community banks' need to make smart use of AI while also preserving their chief asset —  the relationships they have with customers."Community banks excel in crisis, whether that's a really big crisis like the pandemic, or a … crisis like a death, a divorce, fraud, identity theft," Price said. "Because that's where you want to come in and say, 'Hey, I have this problem.' And it is so unique to that person that no AI system could possibly say, 'Here's exactly what the solution is.'"

What's at Stake: A three-judge panel already ruled in August that the Trump administration can fire up to 1,500 employees of the CFPB.Forward Look: Allowing the Trump administration to dismantle the agency would represent "a blatant disregard for Congress's constitutional role," Democrats claim.Expert Quote: "Only Congress has the power to shutter the CFPB," Democratic lawmakers state.Democratic lawmakers are asking a federal appeals court to hear a case about the Trump administration's efforts to fire most of the employees at the Consumer Financial Protection Bureau, arguing his attempt to shutter the agency is unconstitutional."A President, of course, may disagree with Congress's choice," the lawmakers said in an amicus brief filed Monday with the U.S. Court of Appeals for the D.C. Circuit. "When that happens, the remedy is to participate in the political process and make a proposal to Congress, not to usurp legislative power and unilaterally dismantle an agency Congress created." The brief was signed by 36 Democratic lawmakers led by House Financial Services Committee ranking member Rep. Maxine Waters, D-Calif., Senate Minority leader Chuck Schumer, D-N.Y., and Senate Banking Committee ranking member Elizabeth Warren, D-Mass. The lawmakers asked the full D.C. Circuit to rehear the case filed by the National Treasury Employees Union against acting CFPB Director Russell Vought. The brief was jointly written by Hannah M. Kieschnick, a senior attorney at Public Justice, a nonprofit advocacy group and Leah M. Nicholls, director of Public Justice's Access to Justice project. Separately, the Constitutional Accountability Center, a think tank and public interest law firm, also filed an amicus brief in support of the CFPB's union, calling it an "archetypal separation-of-powers case."Brianne J. Gorod, the Accountability Center's chief counsel, argued that abolishing a federal agency violates the Constitution's separation of powers because Congress has exclusive authority to eliminate a federal agency."Because federal agencies are 'creatures of statute,' … it takes an act of law to create, restructure, or abolish an agency. In that lawmaking process, Congress is supreme," Gorod wrote.In August, a three-judge panel of the D.C. Circuit ruled that the Trump administration can fire 90% of the agency staff through a reduction-in-force without impacting the agency's legally mandated work. By a 2-1 vote, the panel held that Vought's effort to conduct RIFs did not constitute a final agency action — or even a policy — and, therefore, was not reviewable by the courts under the Administrative Procedure Act. The panel of two Trump-appointed judges sided with the Trump administration while one Obama-appointed judge dissented. "Absent a preliminary injunction, Defendants will implement their decision to eliminate the CFPB. Allowing Defendants to do so would represent a blatant disregard for Congress's constitutional role and threaten the consumers the CFPB was created to protect — and has protected since its creation a decade and a half ago," the lawmakers' brief said. The lawmakers argue that the full D.C. Circuit needs to hear the case "en banc," because of the separation of powers issues."If the majority's opinion is left to stand, courts in this Circuit will thus be "powerless" to stop a President from acting with impunity and dismantling any statutorily-created agency — or ignoring any statute he so chooses," the brief states. "That result simply "cannot be reconciled with either the constitutional separation of powers or our nation's commitment to a government of laws. En banc review is urgently needed to avoid such an outcome."Congress created the CFPB in response to the 2008 financial crisis that required massive government intervention given that nearly 500 banks failed at a cost of roughly $73 billion to the Federal Deposit Insurance Corp.'s insurance fund, the brief states.Before the Dodd-Frank Act of 2010 led to the creation of the CFPB, 18 consumer financial protection laws were scattered across several agencies. Title X of Dodd-Frank transferred the oversight authority of those laws to the CFPB and gave the agency broad rule-making authority and the ability to issue regulations identifying as unlawful "unfair, deceptive, or abusive acts or practices" related to consumer financial products or services. The CFPB also has exclusive authority to supervise large banks.The lawmakers claim that reducing the workforce at an agency to such an extreme degree is effectively the same as eliminating the agency, which the president does not have the power to do."Only Congress has the power to shutter the CFPB," the brief states, adding that when "Congress has enacted a statute, as it did with Dodd-Frank, 'no provision in the Constitution authorizes the President to enact, to amend, or to repeal' it."There is no general authorization to restructure the executive branch, including by dissolving a statutorily-created agency," the brief continued. "Nor does Dodd-Frank delegate to the President the authority to dismantle the CFPB. Rather, the Act vests in Congress substantial oversight over the Bureau."The lawmakers' brief cites the 1952 case of Youngstown Sheet & Tube Co. v. Sawyer, a landmark Supreme Court decision that limited the power of the president and has served as a check on far-reaching claims of executive power. "The President must participate in the political process and adhere to the Constitution's structure, not ignore it," the brief states. "The country's history includes numerous examples of the branches working together to eliminate statutorily-created agencies.""And, even while amending the CFPB's governing statutes, Congress has rejected efforts to eliminate the Bureau wholesale," the brief states. Gorod at the Constitutional Accountability Center argues that the D.C. Circuit panel's majority erred through a "fundamental misunderstanding" of the Supreme Court's decision in Dalton v. Specter about the separation of powers."Indeed, Dalton makes clear that some executive actions taken without statutory authority do give rise to actionable constitutional claims," the brief states. "Plaintiffs may bring constitutional claims whenever the President 'act[s] in violation of the Constitution,' ... such as when he exercises a power not delegated to him, ... including those expressly delegated to other branches.""At no point has Congress authorized the President to abolish the CFPB, and Defendants do not even purport to claim otherwise," she wrote. "Past Presidents seeking to eliminate executive departments or agencies have recognized that Congress retains that ultimate authority," she wrote. "In fact, whenever past Presidents have reorganized the executive branch, they have always done so pursuant to express congressional delegations of that power."

Key Insight: McKernan's confirmation comes as the Trump administration's deregulatory financial agenda begins in earnest, positioning a seasoned industry ally in a key Treasury post.Supporting data: McKernan was confirmed in a 51–47 vote. McKernan was nominated to lead the Consumer Financial Protection Bureau earlier this year but his nomination was withdrawn in May.Forward look: McKernan will advise Treasury Secretary Scott Bessent on domestic finance as the administration pushes ahead with its deregulatory efforts.The Senate Tuesday confirmed former Federal Deposit Insurance Corp. board Director Jonathan McKernan to serve as the Treasury Department's under secretary for domestic finance."It is an honor to continue my career in public service to the American People as Under Secretary of Domestic Finance," said Jonathan McKernan, following the 51-47 vote. "I want to thank President Trump and Secretary Bessent for their confidence in me to further the economic agenda of this Administration as we look to accelerate this nation's sustainable economic growth."McKernan left the FDIC in February because no more than three Republicans may sit on the board, though Trump has yet to nominate any Democratic members to the body. President Trump nominated McKernan to take over as Consumer Financial Protection Bureau Director shortly thereafter, and McKernan pledged to refocus the agency's mission in confirmation hearings later that month. But his nomination was withdrawn in May, and President Trump instead nominated him to serve as under secretary.In his new role advising Secretary Scott Bessent on domestic financial regulatory issues, McKernan will likely serve in a critical role as the administration sets about undoing what it views as the regulatory excesses of the Biden administration. In his previous role on the FDIC board, McKernan — who had previously served as a banking lawyer, senior counsel for policy at the Federal Housing Finance Agency and as Republican staff counsel on the Senate Banking Committee — offered measured critiques of the Biden administration's proposed regulations, including those aimed at raising capital requirements for large banks and those governing agency consideration of bank mergers. McKernan succeeds economist Nellie Liang, who served as domestic finance under secretary in the previous administration.During his time in office, beginning in January 2023, McKernan was one of two Republican appointees on a majority Democratic bank regulatory board. In his time he opposed a number of initiatives, most notably the Basel III endgame capital rules.McKernan has also advocated for regulators developing more detailed guidance governing banks' relationships with financial technology firms. In July 2024, he suggested regulators consider making their third-party risk guidance more specific in order to foster innovation and competition in the financial services sector."Jonathan's credentials make him an ideal leader for Treasury's domestic finance portfolio," said Secretary of the Treasury Scott Bessent. "He will play an instrumental role in strengthening our economy by clawing back the government overreach and excess that defined previous administrations. I look forward to working with him as we lay the economic foundation for America's Golden Age."Consumer Bankers Association President and CEO Lindsey Johnson celebrated the move, and said McKernan's bank regulatory experience will be an asset as the administration works to pare back regulation on banks."On behalf of America's leading Main Street banks, we congratulate Jonathan McKernan on his confirmation as Under Secretary for Domestic Finance. His experience at the FDIC and throughout his career makes him uniquely qualified to help guide Treasury's domestic finance portfolio at this pivotal moment," Johnson said in a statement. "We look forward to working with Under Secretary McKernan and Secretary Bessent to advance policies that foster innovation, promote competitiveness, and strengthen the resilience of our nation's economy."

The data void created by the US government shutdown is pushing bond traders to hedge against the risk that the Federal Reserve pauses at one of its two remaining meetings this year, or potentially delivers more policy easing than the market anticipates.Interest-rate swaps have been steadily pricing in roughly a quarter-point rate cut in both October and December in recent weeks amid signs the job market is cooling. The catch, though, is that the government closure that began on Oct. 1 has delayed the release of official data that traders rely on to assess growth and inflation and gauge the Fed's next steps, after it eased last month for the first time this year.READ MORE: Even as shutdown halts BLS data, hiring appears to be slowingThe figures will come out on a staggered basis after the standoff ends. But in the meantime, traders are bracing for a range of Fed outcomes. Some hedging flows have favored outlier dovish scenarios, such as one quarter-point and one half-point easing by year-end. On the flipside, other trades have focused on the possibility that the Fed forgoes a move at one meeting. The specter of stubbornly hot inflation elevates that risk.Strategists at RBC Capital Markets fall into the skip camp, but lean toward that happening in December. "We still think the Fed is going to skip a cut" by the end of this year, Blake Gwinn, head of US rates strategy at RBC, said in a note this week. "But an October skip now looks a lot less likely." The lack of official data, the weak ADP Research employment report released last week, and the fact that the market sees a cut on Oct. 29 as virtually a lock, makes this the "path of least resistance for the Fed," Gwinn said.READ MORE: Fed's Jefferson: Uncertainty around economy 'especially high'As the impasse in Washington drags on, Fed officials have been offering differing views on the policy outlook. Governor Stephen Miran, who dissented last month in favor of a half-point cut, reiterated his case on Tuesday for why the central bank can keep easing. The day before, Kansas City Fed President Jeff Schmid said inflation was "still too high."Investment manager Carlyle Group has released its own analysis of the job market that potentially adds to evidence of softening. The firm estimates that 17,000 jobs were created in September, which would be among the weakest results since the US emerged from the 2020 recession. The official figures were scheduled to be announced on Oct. 3 and have been postponed.Of course, there have also been plenty of options trades targeting the consensus view that two quarter-point cuts are likely ahead this year.Yields on US 10-year notes were two basis points lower at 4.1% at 7:00 a.m. in New York, matching the average rate over the past month.

Applications for mortgages to buy a home or refinance both fell for a second week, marking a swift reversal of what had been a hopeful sign of a revival in the US housing market.The Mortgage Bankers Association's index of home-purchase applications declined 1.2% in the week ended Oct. 3, while a gauge of refinancing fell 7.7%. Both dropped back to levels seen in early September, when mortgage rates were on their way to a one-year low.READ MORE: More home sales fall through as buyers gain leverageA metric that combines the two applications measures fell 4.7% after plummeting 12.7% in the prior week, marking the biggest back-to-back declines since April.While the 30-year fixed contract rate fell slightly to 6.43%, the prior week's jump was enough to spook prospective buyers and homeowners looking to lock in lower borrowing costs. That's stopped an early recovery in housing activity and threatens to prolong the market's years-long slumber.READ MORE: Trump calls on Fannie Mae, Freddie Mac to boost homebuildersThe MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.

Borrowers suing Loandepot are sharing alleged evidence of the lender's scheme to steer borrowers to higher rates and deprive its loan officers of their full compensation. The latest filing in a Truth in Lending Act lawsuit cites emails, screenshots and the testimony of three LOs discussing the company's actions to circumvent the loan officer compensation rule. Four Loandepot borrowers filed an amended complaint last week, after the lender said their initial filing was full of threadbare allegations.  The class action lawsuit claims Loandepot since 2019 has offered customers inflated rates, and punished LOs who couldn't close on those terms with reduced, or no commission. The company hid its supposed LO Comp violations via "sham transfers" to internal loan consultants, as the original LO performed all the work and the ILC may have not even existed. LOs who made false excuses for the ILC transfers saw their commission reduced from an average of 100 basis points to 30 basis points, while those who did not comply received no compensation. Borrowers want to certify a class of consumers who didn't have their loans transferred to an ILC, who therefore allegedly paid higher rates. The class spans at least thousands of customers, and plaintiffs are seeking potentially massive damages including the sum of finance charges and fees paid by affected borrowers. Loandepot declined to comment Tuesday on the latest filing, while an attorney for the borrowers didn't reply to a further request for comment. Borrowers respond to Loandepot with more evidenceThe amended complaint paints Loandepot's behavior as a "front-load and discount strategy" as outlined in a 2013 regulatory filing. The illicit process features a lender offering a higher commission tied to inflated interest rates, and decreasing compensation based on the terms of the loan. Attorneys cited testimony from a different case involving Loandepot, in which its LOs said they weren't sure if the ILC was a real person. "It was three-card monte," said one LO. "It was literally just smoke and mirrors."The testimony came from Loandepot's 2023 poaching lawsuit against Movement Mortgage, which the sides agreed to dismiss last summer. In the months preceding the dismissal, an attorney for Movement, in a letter to the court, suggested employees departed Loandepot for Movement in part because of the unlawful commissions scheme. A press contact for Movement didn't return a request for comment regarding the accusation or whether the sides had reached a settlement last July. Last week's filing included alleged screenshots from Loandepot's Mello software showing managers explaining ILC transfers, and emails between managers discussing transactions. One of those purportedly shows John Bianchi, the company's former executive vice president and national production manager of distributed retail, telling other managers to make an ILC transfer prior to a pricing exception request, stating it "becomes problematic" to do the transfer after the fact. The complaint also claims "high level executives," including Bianchi and current Human Resource Director Michelle Alexander, told LOs the practice of eliminating compensation on loans transferred based on pricing was approved by the Consumer Financial Protection Bureau. Bianchi and some other employees mentioned in the lawsuit are no longer with Loandepot. Plaintiffs have not named any individuals as defendants alongside the larger company.The sides are also disputing a TILA statute of limitations. While plaintiffs originated their loans between 2019 and 2021, they say they only became aware of the alleged scheme last December. Neither further deadlines nor hearings have yet been scheduled in the federal court docket. Loandepot, one of the nation's largest originators and servicers, is seeking to turn its fortunes under founder and CEO Anthony Hsieh's return to the helm. The company in August rehired leaders who developed the mello platform, and tasked them to help steer the lender's tech future.

With the market favoring buyers, more home sales are falling through as minor disagreements can lead to deals being called off.Nearly 60,000 home-purchase agreements were canceled in August, according to a new report from Redfin, a subsidiary of Rocket Cos. That's 15.1% of homes that went under contract, up from 14.3% a year earlier and the highest August rate in records dating back to 2017.There were roughly 500,000 more sellers than buyers in the market in August, and paired with high prices, high mortgage rates and economic uncertainty, buyers became selective. They asked sellers for repairs, price reductions and other concessions, but some buyers backed out of deals for other reasons."One of my buyers almost canceled a contract because she accidentally flushed her engagement ring down the toilet during the home inspection," said Manny Bermudez, a Redfin real estate agent in Phoenix, in a press release Tuesday. "The seller came home and both parties searched for the ring for two hours. The buyers never found it and took their bad luck as a sign to back out of the deal."Many sellers did not give in to buyers' requests and failed to accept that it is no longer a lucrative market like in 2021, when homes received dozens of offers above the asking price, the report said. Some sellers who bought their homes during the pandemic were also unwilling to negotiate below a certain price to avoid taking a loss.Deals can often fall apart during the inspection period, during which buyers may cancel the deal if the seller didn't agree to repair requests, a better home was listed or if they experienced buyer's remorse. This was a stark difference from a few years ago, when buyers waived every contingency for a chance at winning the bidding war, the report said."I had a listing where the buyers requested nearly $15,000 in pool repairs," said Kevin Alford, a Redfin real estate agent in Oklahoma City. "My sellers went above and beyond, completing the work, paying out of pocket to make sure everything was perfect. But even after the pool was repaired, the buyers failed to close on the scheduled date without notice. The deal ultimately fell through, and it was heartbreaking for the sellers."Redfin surveyed 443 real estate agents last month, 70.4% of which said home inspection or repair issues caused deals to fall through. Buyer financing (27.8%), a buyer's inability to sell their current home (21%), a change in the buyer's financial situation (14.9%), a buyer finding a different home they liked (12.9%) and concerns about the economic climate (12.2%) were the next most common responses.Many agents also reported issues with condos, as high HOA dues and special assessments can scare off buyers. Deals can also fall through if a condo buyer isn't aware that not all condo buildings are approved for Federal Housing Administration loans.While it is typically more challenging for sellers to back out of deals, 11.5% of Redfin agents who dealt with a contract cancellation in the past three months said a seller caused it.Regionally, Florida has been building more homes than any other state besides Texas. As a result, Jacksonville (20.5%), Orlando (20.2%) and Tampa (19.4%) all experienced a high share of cancellations, with Atlanta (21%) being the only city in the top 50 most populated with a higher percentage, according to the report."I worked with one seller who received 78 repair requests from a buyer following the inspection, and that was after the seller had already agreed to lower their $375,000 asking price by $25,000 because the house needed some improvements," said Dawn Liedtke, a Redfin real estate agent in Tampa. "The buyer came back and said they would handle the cost of the repairs, but only if the seller was willing to lower the price by another $100,000. The deal didn't work out."