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Andrew Harrer/Bloomberg NEW YORK — Treasury Secretary Janet Yellen on Tuesday said banks have a pivotal role to play in a new agency initiative focused on improving financial inclusion and narrowing the wealth gap. Speaking at the American Bankers Association Annual Convention in New York, Yellen unveiled the Treasury's National Strategy for Financial Inclusion. The plan — which was shaped by a yearlong collaborative process involving ABA staff, government agencies and consumer advocates — aims to expand access to the financial system for low-income households, people of color and rural populations as well as improve consumer outcomes."Access to financial products and services is essential to creating opportunity for all Americans," she noted in an accompanying release. "For the first time, Treasury's strategy provides a national roadmap to expand access to foundational financial tools like credit and investments that are key to building wealth. Implementing these recommendations will help more families build financial security and get ahead."Yellen said the agency would seek the industry's "active partnership in moving this strategy forward." The national strategy focuses on five core objectives aimed at providing access to products that foster well-being and financial security. The objectives are:Promote access to transaction accounts that meet consumer needs.Increase access to safe and affordable credit.Expand equitable access to savings and investments.Improve the inclusivity of financial products and services provided or backed by the government.Foster trust in the financial system by protecting consumers from illegal and predatory practices.Yellen said cooperation by financial institutions is needed to provide transaction accounts tailored to underserved communities, which would reduce the number of unbanked households in the United States. According to a 2021 survey conducted by the Federal Deposit Insurance Corp., nearly 5.9 million —  about 4.5% — of U.S. households didn't have checking or savings accounts.  While this represents the lowest rate recorded since 2009, the study found unbanked rates were disproportionately higher among lower-income, less-educated, Black, Hispanic, disabled, and single-mother households."It's clear that banks of all sizes have been crucial partners in moving forward many of our top economic priorities," she said. "So let me thank all of you for this strong and important collaboration and emphasize that it must continue."Regulatory lessonsReflecting on what regulators learned in 2023, Yellen said Treasury and federal officials would work closely with banks to address lingering vulnerabilities in the system. She underscored Treasury's ongoing focus on issues that played into the banking crisis — including some firms' reliance uninsured deposits and the effects of interest rate risk on banks' securities portfolios."This means ensuring that banks are prepared for liquidity stress," she said. "Including making sure banks have diverse sources of contingency funding and the capacity to borrow at the discount window and periodically test this capacity."Yellen also acknowledged the expanding role of nonbanks in finance and the unique challenges they pose to traditional banks. She said the agency will continue to monitor and address risks posed by the nonbank sector, including private credit and fintech, and its interconnections with the banking sector.

GoodLeap Home Improvement Solutions Trust is coming to the capital markets to raise $378 million in asset-backed securities, a deal that will be collateralized by home loans funding sustainability upgrades.The deal will be GoodLeap's 21st securitization from GoodLeap, a San Francisco, Calif.-based provider of software and financing for sustainability solutions, and issue notes through three tranches of class A, B and C notes. Asset Securitization Report's deal database expects the A, B and C to see yields of 5.4%, 6.4% and 9.1%, respectively.All of the notes are priced against the three-month, interpolated curve, according to the database.BofA Merrill Lynch, CIBC World Markets, Citigroup Global Markets and Goldman Sachs are managers on the deal. Also, previous GoodLeap deals priced under the 'Sustainable Home Solutions Trust', which financed equipment loans.The notes receive credit enhancement from overcollateralization—initially, it comes in at 7.13%, and the deal has a target of 8.13%, according to ratings analysts from Kroll Bond Rating Agency. There is also an initial reserve representing 0.46% of the pool balance, KBRA said.The 33,727 loan assets fund sustainability home upgrades, and have an average current loan balance of $12,714, with a weighted average (WA) interest rate of 12.36%, the rating agency said. Also on a WA basis, the loans have a FICO score of 751.Sustainability home upgrades represents a $450 billion annual market opportunity in the United States, according to a statement from GoodLeap about a previous deal.As with most securitization deals involving property sustainability improvements, the GoodLeap loan assets are most highly concentrated among three states. This time California, Texas and Florida account for 18.2%, 13.1% and 8.8% of the pool balance respectively.KBRA assigns A-, BBB and BB- to the A, B and C notes, respectively.

Homebuilder stocks are tumbling Tuesday after industry bellwether D.R. Horton Inc. delivered a 2025 revenue forecast that failed to meet Wall Street's expectations.The S&P Homebuilding Index plunged as much as 7.8% on Tuesday in the biggest intraday drop in more than two years. The rout came as investors grew concerned about homebuilding companies' continued use of financing incentives that put a near-term drag on gross margins and still elevated interest rates that discourage homebuyers."While the large, public homebuilders are still among the best positioned to navigate a challenging operating environment, they're not immune to the impact of higher rates and weakening consumer confidence," Bloomberg Intelligence analyst Drew Reading said.Incentives still remain a key part of homebuilder strategies, with D.R. Horton reporting that 80% of mortgage buyers took advantage of rate buydowns in the prior quarter, suggesting that buyers were not willing to take the leap on a new property without additional support. Shares of key competitors Lennar Corp., NVR Inc., PulteGroup Inc. and Toll Brothers Inc. are slumping in sympathy.As investors look for ways to play the expected decline in rates, homebuilder stocks have been a consensus long. As such, D.R. Horton's results will be sure to "inflict pain," Vital Knowledge founder and analyst Adam Crisafulli wrote in a note to clients Tuesday.While the Federal Reserve's first rate cut in four years offered a sign of relief for the broader market, sentiment for builders has soured in recent weeks amid renewed concern about consumers ability to handle mortgage rates that are pushing back toward 7%. The S&P 500 Index has gained 3.5% since the Fed's September meeting, compared with a 11% drop in homebuilders.Homebuilding stocks capitalized on the July rally sparked by a strong inflation print, so it's not surprising the group could be giving back some of those gains now, Oppenheimer analyst Tyler Batory said. To him, both seasonal and psychological factors are likely behind slowing homebuyer activity. Spring selling season is the usually most optimal time for builders. And uncertainty over the interest-rate environment and the US Presidential election are giving homebuyers a pause."In the near term, I wouldn't be surprised if homebuilding stocks moved lower. All of the bad that was happening under the surface in August through October, we're all seeing it right now."

RoundPoint Mortgage Servicing is attempting to quash a suit filed in Wyoming that accuses it of mishandling borrower payments.On Oct. 25, the servicer filed a motion to dismiss the case, arguing the plaintiff, Gary Ventling, did not attempt to resolve his dispute prior to the lawsuit "which he was required to do under both contractual and statutory pre-suit notice-and-cure-requirements."RoundPoint also does not want the suit to be certified as a class action, even if Ventling's individual claims are permitted to proceed, it said.Ventling sued the mortgage servicer, a subsidiary of Two Harbors Investment Corp., three months prior claiming it failed to record payments when received, improperly charged fees and mishandled corrections.He also alleged RoundPoint "does not have proper procedures" to handle Qualified Written Requests, a formal process for submitting servicing inquiries under the Real Estate Settlement Procedures Act. RoundPoint disagrees with the claim in its motion to throw out the complaint.The South Carolina-based servicer points out that Ventling's wife is absent from the suit, which could "prejudice her interests, and RoundPoint could be subject to multiple or inconsistent liabilities for the same conduct if [the] wife were to later bring the same claims against RoundPoint."Regarding class certification, RoundPoint said that should be stricken because there are "a significant number of uninjured members, rendering certification wholly improper." A Better Business Bureau listing notes other recent payment-related complaints at RoundPoint.RoundPoint did not immediately respond to a request for comment. Attorneys representing Ventling could not be reached.The case centers on a mortgage Ventling and his spouse obtained from Pinnacle Bank in 2016. RoundPoint began managing the loan in 2023, according to court documents. Ventling said he typically overpays his $2,805.12 monthly obligation by $4.88 and obtains receipts for it.Those receipts show mailed delivery of payments within the grace period, but RoundPoint recorded them with a lag time of several days in crediting payments such that they ended up being recorded as late, generating a $140.26 fee, the lawsuit alleges.  While the company made efforts to correct the issue, credits in that effort were misapplied, with such errors made repeatedly over a span of multiple months, Ventling claimed.The Consumer Financial Protection Bureau, which has actively criticized 'pay to pay' fees, has also expressed concern over mortgage contracts that require borrowers to notify the company of any violations before pursuing legal action."While these contract terms may sound innocent, they allow companies to silence or buy-off anyone who complains and sidestep broader accountability or the need to fix problems company-wide," the watchdog wrote in a blog earlier this year.

I often try to find silver linings in bad situations.The latest issue facing prospective home buyers is a return to 7% mortgage rates, up from around 6% just one month ago.While there’s not a clear, negative correlation between mortgage rates and home prices, in that one goes up and the other down, you can still make that argument to a home seller.If you’re currently in the market to buy a home, you can use this big move higher in mortgage rates to your advantage.Simply put, home buyers can make the argument that it got more expensive to buy a home and therefore ask for a discount.Buying a Home? Ask for a Discount in Light of Higher Mortgage RatesA month ago, you could get a 30-year fixed mortgage for around 6%.Today, prospective home buyers are looking at a rate closer to 7%. Or higher!And it’s possible it could get even worse before it gets better given all the uncertainty flowing at the moment.Instead of fretting about the higher monthly payment, you can use this to your advantage and make a lowball offer.Home sellers will be well aware that mortgage rates have risen, and that housing affordability has worsened.As such, you can lower your offer price and hope the seller goes with it.When making an offer, be sure to have your agent communicate this to their agent so your lower offer price has a better chance of being accepted.While it’s not guaranteed to work, you at least have a fairly strong argument to make.Especially with fewer other bidders as a result. If there’s less competition, a lower offer has a better chance of winning.How Much Lower Can You Go?While this is certainly a smart strategy to employ at the moment, there’s no guarantee it will work.Ultimately, you need to look at the list price and determine what a reasonable offer price is taking into account rates that are about one percent higher than they used to be.Chances are you’re not going to get a one-for-one deal where your monthly payments stay exactly the same.So if the monthly principal and interest payment was $2,500 at 6%, you likely won’t be able to negotiate a lower price where the P&I remains at $2,500 at 7%.However, you might be able to meet somewhere in the middle with the seller depending on how desperate they are.Remember, if they have fewer bidders, your offer is going to be a lot more attractive, even if it’s lower.You can do some math with your agent, or fire up a mortgage calculator, to determine that number. Maybe start at something where your monthly payment looks like it did a month earlier.Then hope they meet you somewhere close to that.Tinker with the numbers and see what makes sense without getting into a situation where your offer is seen as “insulting”.You might be able to save some bucks and offset the big increase in rates.Alternatively, you could ask for seller concessions for a temporary rate buydown to secure a lower rate for now.A Lower Purchase Price Is Permanent, Unlike RatesThe beauty of getting a lower purchase price is that it’s permanent, unlike mortgage rates that can change daily.This comes with the advantage of a lower down payment, and potentially lower property taxes and homeowners insurance.The added bonus is that if and when mortgage rates do fall, you can ideally refinance to that lower rate.In the end, you might wind up with a lower purchase price AND lower mortgage rate to boot.For example, perhaps you’ll be able to score a home sales price that’s $25,000 or $50,000 less.And over time, still snag that mortgage rate that starts in the 5s if all goes according to plan.In other words, you could get the best of both worlds.Enjoy Less Home Buyer Competition While Rates Climb HigherBut wait, there’s more. As noted, you might face less competition while mortgage rates are high.Every time rates go up 1%, millions of prospective buyers no longer qualify for a mortgage.If you still do, this can make it easier to find a home while enjoying a better array of options.This is why I also recently argued to use a higher mortgage rate when home shopping so you stay in the running, even if rates are volatile.That being said, I don’t buy into trying to time the market. So this isn’t a strategy to buy now and refinance later.It’s just a potential money-saving move if you were buying a home anyway. You might as well try to get a discount if financial conditions have worsened.And logically, home sellers should understand and be more willing to extend that discount.While you’re at it, you could even ask for a credit from your real estate agent to offset closing costs.Also be strategic about the type of mortgage you get. If you think you’ll probably refinance sooner rather than later, try not to pay too much out-of-pocket at closing.Instead, consider a lender credit that covers most or all of your closing costs.That way you don’t leave anything on the table if you only keep your loan for six months or a year.A major downside to paying discount points is they often take a couple years to break even on.Meaning if you don’t keep the loan for say 24 months or more, you’ll never actually see the benefit. Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.Latest posts by Colin Robertson (see all)

Two Harbors Investment, which is now leaning heavily into the mortgage servicing business, missed analyst consensus estimates for comprehensive net income by 26 cents per share in the third quarter.Starting immediately, the company has undertaken a rebranding and will now simply be known as Two, "reflective of our evolution as a company into a MSR focused REIT," Bill Greenberg, president and CEO, said on the earnings call.The company is a real estate investment trust and reported comprehensive net income of $19.3 million for the period, versus $479,000 three months prior and a loss of $56.9 million in the previous year. This equated to 18 cents per share for the third quarter. Keefe, Bruyette & Woods expected Two Harbors to earn 47 cents per share while the consensus was for 44 cents.However, because of a $269.6 unrealized loss on available for sale securities, the GAAP net loss was $260.3 million, compared with net income of $44.6 million in the second quarter and $194.1 million for the third quarter of 2023.Going forward, Two Harbors and its peer group's future earnings will be dependent on how the yield curve moves, in one analyst's opinion."We think a bull steepener remains the ideal rate curve scenario for Two Harbors and the mortgage REITs broadly to strengthen earnings, although we're also holding out for some outperformance in a bear steepener where long rates continue moving sharply wider," Eric Hagen, an analyst for BTIG wrote. "It's conditioned on the movement in spreads, though, and in most cases we've seen current coupon spreads leak wider when extension risk is the focus."However, BTIG views the more material exposure at Two Harbors is that its net asset value along with its valuation "still remains geared around a plunge in long-term rates, which sparks a prepayment wave and potentially costly rebalancing of hedges," Hagen said.During the quarter, Two Harbors, which completed the acquisition of Roundpoint Servicing from Freedom Mortgage one year ago, settled $3.3 billion in unpaid principal balance of MSRs through bulk and flow-sale acquisitions as well as portfolio recapture.It also sold $6.2 billion of higher coupon MSRs during the period.After the third quarter ended, it agreed to buy $2.1 billion of MSRs in a bulk transaction."MSR valuations remain well supported with strong demand as the supply of bulk sales continues to normalize from the record levels of the past few years, said Nick Letica, chief investment officer in the earnings release. "Nevertheless, we believe there will continue to be opportunities to add MSR at attractive levels, enhanced by our deep expertise coupled with the benefits of our in-house servicing and recapture operations."Two Harbors is "on-track to achieve the cost savings that we initially set up and improving the economics for the investors in our MSR assets," Greenberg said.The third quarter was also the first full period where its de novo direct-to-consumer origination business was in operation, doing $22.4 billion of first-lien mortgages as well as brokering $7.5 million of second lien loans.Greenberg noted that just 1% of its MSR portfolio was in the money at current interest rates to refinance."Once at scale, we imagine this effort to provide significant hedge benefits to our MSR portfolio and to protect our assets from significantly faster than expected prepayment speeds," Greenberg said.Although the volume numbers were small, they showed "proof of concept" for the origination business, he continued. The production was achieved by a team of three-to-five loan officers. By the end of this year, Two Harbors expects to have 30 loan officers on staff.

Fannie Mae and Freddie Mac are taking a new approach to some guarantee-fee changes in coordination with their regulator.Under the change announced at the Mortgage Bankers Association's annual meeting in Denver, lenders selling loans into the mortgage-backed securities swap channel will get advance notice of certain pricing changes.The new policy aims to account for the time it takes to originate a loan for sale into the secondary market, so that a pricing update by either of the two government-sponsored enterprises doesn't hurt the economics of loans in process at the time it comes out.Executives at both GSEs weighed in on the change during a panel and in conversations followed the Federal Housing Finance Agency's announcement about it on Monday."What we've heard for a long time is it takes 60-plus days to originate a mortgage and you wanted pipeline protection," Freddie Mac President Mike Hutchins told attendees at the event. "We've had an internal policy for quite a while to give you 60 days notice before we had significant price increases. So we were very supportive."The change specifically requires that amount of notice be provided for base g-fees greater than a basis point, said Malloy Evans, Fannie Mae's executive vice president and head of single-family, in an interview."This new practice will provide lenders more certainty when pricing loans, while still allowing the enterprises to respond rapidly to evolving market conditions," said Nwa Awaa Tagoe, deputy director of the Federal Housing Finance Agency, during the earlier panel.In addition to the new g-fee directive, both GSEs will be moving forward with broader appraisal waiver criteria that their regulator has greenlighted.Initiatives GSE leaders said they're currently working on include a further build-out of technologies aimed at digitally verifying information loan applicants submit, said Priscilla Almodovar, Fannie Mae's president and CEO.Use of this automation has contributed to a reduction in the repurchase risk at Fannie, according to Almodovar."If you use one or more tools, we're seeing your potential defect risk go down 33%. If you use multiple tools, we're seeing your defect rate go down by 75%," she said.Automated tools Fannie has added recently include single-source validation in which 12 months of borrowers' asset data can simultaneously be used to verify income and employment, and a free self-employed income calculator. "We've had this steady drum beat of leveraging data and technology to give us better risk management capabilities, the ability to improve access to credit and the ability to deliver certainty to lenders from a rep and warrant perspective," Evans said.Fannie also has been advancing its rental payment reporting and underwriting, which can help so-called credit invisible borrowers who lack traditional measures of payment histories."I think both of us have seen great promise of people who have no score now have a score," said Almodovar, while speaking with Hutchins on a GSE leaders panel.Freddie Mac also has been developing a set of tools for data validation and nontraditional underwriting, and additionally has a fee-based repurchase alternative pilot that FHFA has allowed the enterprise to  extend to the full market.Freddie's second-lien pilot also is moving forward."It's a very important product. It's a pilot. It's a very small pilot in the scheme of things but nonetheless, we're still disturbed by all those individuals that think it's in their best interest to take a cash-out refinance on 3% mortgage," Hutchins said.Also at the conference, Freddie Mac's head of client engagement, Kevin Kauffman, was spreading the word about a recently added messaging capability for Loan Product Advisor.Known as LPA Choice, the new function provides more information than previous decisioning on loans submitted to Freddie, so that lenders get feedback if there are shortcomings in any of three areas: income, assets and loan amount."Those are the three areas that we focused on to get a product to market quickly," he said, noting that there are more on track."There were a lot of different data factors that we could look at that we can talk about eligibility, but we wanted to start by getting something that was tangible in the hands of lenders, that could make a difference for consumers," he said.Freddie develops technology based on feedback from a representative cross-section of mortgage professionals, and welcomes inquiries about participation. It requires those chosen for the group to commit to it and provide active participation in discussions about concepts.

After a bank merger derailed his opportunity as a management trainee, Neil Bader moved over to the mortgage side at Bowery Savings Bank. He quickly figured he could be more successful in the growing mortgage brokerage industry.He and a partner founded Skyscraper Capital, which in 1999 merged with IPI and its affiliate MortgageIT to become IPISkyscraper, creating at the time one of the top four mortgage brokers in the nation, according to MortgageStats.After exiting the broker business, Bader went over to the banking side, first at Wells Fargo, and now as the executive vice president and national director of retail lending at The Federal Savings Bank.That provides him with insight on the trends in how originations are done during that period, from the heyday of the mortgage brokers through the resurgence and then pull-back of the banks.National Mortgage News spoke with Bader about his career. Responses have been edited for length and clarity.

The Federal Housing Finance Agency is updating rules governing appraisals to expand waiver access to more buyers. Citing success it had seen in current initiatives, the agency said it would change rules governing purchase loans insured by government-sponsored enterprises Fannie Mae and Freddie Mac. Maximum loan-to-value ratio eligible for full appraisal waivers will grow from 80% to 90%. For inspection-based waivers, LTV ratio increases from 80% to 97%. "This update represents a sensible step forward in the enterprises' efforts to promote efficiencies in loan cycle times and cost savings in the broader mortgage market," said FHFA deputy director Naa Awaa Tagoe at the Mortgage Bankers Association's annual conference in Denver on Monday. The FHFA underscored that the rule change also came with appropriate risk management controls."To be clear, the expanded eligibility of appraisal waivers does not constitute an expanded credit box, but rather will allow more first-time homebuyers, and particularly low- and moderate-income first-time homebuyers, to recognize the benefits associated with appraisal waivers," Tagoe continued.Also set to receive an update is the uniform appraisal dataset, which will include information collected from Federal Housing Administration-backed loans. Previously, FHFA had only used appraisal data that had been submitted to Fannie Mae and Freddie Mac."Accurate home valuations are vital to all segments of the housing market, so this is both a fair lending and a safety and soundness issue," Nagoe said. The appraisal updates came on a day when policy developments aimed at helping lenders address expenses took the spotlight at the conference. Elsewhere in her prepared remarks Nagoe announced that a pilot program introduced by Freddie Mac that offers a fee-based penalty in lieu of mandatory repurchases of defective loans would be opened up to include all approved lenders. Positive feedback from participating businesses led to the decision to expand the pilot, which Freddie Mac announced in late 2023.Under the program, lenders have the opportunity to opt into fee-based alternatives each year. Businesses choosing not to enroll in a year-round program will still be able to select a fee-only penalty charged to a defective loan when they appear, rather than incur a full repurchase. "The broader availability of this fee-based repurchase alternative will allow Freddie Mac to better incentivize high-quality underwriting and ensure appropriate remedies for performing loans with defects," she said. In other news from the conference, the surging costs of homeowners insurance will continue to  be a hot-button issue for advocacy following Hurricanes Helene and Milton. New MBA chair Laura Escobar said insurance concerns would be among her focuses during her tenure in an earlier speech on Monday, while acting director of the U.S. Department of Housing and Urban Development, Adrianne Todman also brought up the subject."I know the HUD team has already looked at ways that we can review our insurance requirements to make sure that we are doing the very best to meet what people's needs are and what they can afford," Todman said in noting the frequency she receives questions about rising costs. "We're trying to find ways to make sure that our operating costs and the operating subsidies that we provide are adapting to increased house insurance premiums."

Figure Technology Solutions rolled out a "piggyback" home equity line of credit platform for its partners in the financial services space, it announced Monday.The feature, which is embedded into lender partners' systems, gives borrowers the ability to take out a down payment on a house, if they so desire. Those who already own a house, but have yet to build up equity, can use it to apply for a cash-out refinance, the company said.The offering is geared mainly towards first-time home buyers because they often "need additional funds to make their down payment," the company said. For borrowers, the piggyback HELOC allows a 10% down payment and doesn't require mortgage insurance. After the second lien loan is originated, Figure, which is the nation's largest non-bank provider of HELOCs, handles the sale of said loan to capital markets.The product came to fruition due to requests from lenders, the company said."Our growing number of lending partners made it clear they want to embed our new piggyback to better meet their customers' needs," said Michael Tannenbuam, CEO of Figure Technology Solutions.Mortgage lenders including The Loan Store, Union Home Mortgage, Guaranteed Rate, Movement Mortgage and Fairway Independent Mortgage partner with Figure to offer HELOC products to their borrowers.Bill Cosgrove, CEO of Union Home Mortgage, noted in a statement the piggyback feature gives a wider array of options to borrowers' "full financial needs amidst current market conditions.""We are building a great partnership between UHM and Figure, ensuring speed and ease to help more Americans achieve their dream of homeownership," Cosgrove added.The rollout of the piggyback offering coincides with the company's expansion nationwide. In October, Figure expanded into New York and Delaware, bringing the availability of its products to 49 states and Washington D.C, it said.Apart from expanding its presence, Figure Technology Solutions, an umbrella company for Figure Lending LLC, is also looking to go public.In March it "confidentially submitted a draft registration statement on Form S-1 with the U.S. Securities and Exchange Commission relating to the proposed initial public offering of its equity securities." This form is required for registering companies that want to be listed on a national exchange.Figure has concentrated its efforts on growing market share in the home equity line of credit space. Last year, it launched a HELOC wholesale loan production platform. The company also entered into partnerships with independent mortgage bankers to provide a private-label HELOC product.To date, the company's products have been used to unlock over $12 billion in equity, a press release said.