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The share of newly constructed single-family homes started in community associations rose for the first time in three years in 2023, staying near historically high levels.For mortgage lenders, properties in these organizations, which can include homeowners associations for single-family homes as well as condos, come with their own issues.Delinquent HOA dues in a number of states are considered a superior lien to a mortgage when it comes to a foreclosure. At the same time, when it comes to condos, secondary market rules on lending on those properties have tightened since the Surfside disaster.Research from the National Association of Home Builders found 64.8% of all single family properties constructed last year were in a community or homeowners association, up from 62.6% in 2022.This is the third highest level ever; the record level of 67.1% was set in 2020, while No. 2 was the following year at 65.5%.As measured in units, 601,558 homes were started in community associations during 2023.This data is similar to information from the Foundation for Community Association Research disclosed to National Mortgage News earlier this year. The demand for living in a community association exists among a percentage of consumers.Just over one-third of the respondents, 35%, to a February 2023 LendingTree study said they live in an HOA.At the time they purchased that property, 53% of that group said they sought out living in an HOA, 31% didn't think about that factor and 16% did not want to be a part of one, but bought a home in one anyhow.But HOA fees can be considered one of the hidden costs of homeownership, which can be worrisome for servicers because of the super lien.Yet, a majority of these property owners, 63%, consider HOAs priced fairly for the benefits received."HOAs can provide you with the peace of mind that comes with knowing that your neighbors probably aren't going to do anything crazy, like regularly throwing all-night parties or painting their home bright pink," Jacob Channel, LendingTree senior economist, said at that time. "But HOAs aren't for everyone, and people who aren't particularly concerned with regularly mowing their lawn or who want to maximize their freedom to do with their home what they please should probably avoid them."Last year, the NAHB analysis found the Mountain region had the highest percentage of homes built in community associations at 81.9%, followed by the South Atlantic states at 70.5%. But the Middle Atlantic states had the lowest share at 28.6%.

Housing is on the ballot this November. Presidential hopefuls Kamala Harris and Donald Trump have offered to voters their unique visions on how to relieve the strains on the nation's housing market. While analysts have questioned the viability of both candidate's proposals, industry veterans are pleased with their focus this election cycle."The unfortunate reality is we've got a crisis, so that's why it's being discussed," said Bill Killmer, senior vice president for legislative and political affairs at the Mortgage Bankers Association. "But we're pretty happy that policymakers in Congress and both of the major party candidates running for president are talking about housing."Vice President Harris, who replaced President Joe Biden on the Democratic ticket this summer, is proposing an ambitious construction goal and more assistance for first-time homebuyers. Former President Trump has called for greater influence on interest rates and freeing up federal lands for home construction, while conservatives mull larger goals for his second term. A consequential tax debate next year also weighs on the battle for Congress.Contributions from mortgage professionals and industry political action committees this cycle lean Republican, aligning with historical norms. Mortgage players however are spending far less on politics this cycle compared to their activity during the 2020 presidential race and 2022 midterm elections.The stakes are high, and lenders are refraining from public comment amid a particularly tight and tense presidential race. Despite widespread policy implications, industry analysts still have mixed feelings on the impact November's results will have on housing finance. "I think the punchline is, when it comes to housing finance, we don't really feel like that will be a top priority for either candidate," said Eric Hagen, managing director and mortgage and specialty finance analyst at BTIG.National Mortgage News broke down the playing field, analyzing each candidate's housing history and policy proposals, where mortgage dollars are flowing, and the lingering concerns experts have around the election. The state of housing Mortgage rates are declining from their recent peaks but remain more than double the sub-3% rates available during the last presidential race in November 2020. Affordability improved this summer, but inventory remains very tight. The National Association of Home Builders in August estimated total housing inventory at a low 4.7 months worth of supply, and housing starts lagged this summer on weak demand.Prospective home buyers want to ride out the storm. Over a third of consumers in a lender poll this summer said they'll wait to buy a home after the election concludes. The Harris housing pitchThe vice president is no stranger to the mortgage business, policing the fallout of the Great Financial Crisis in California as the state's attorney general from 2011 to 2017. She secured a major, multi-billion dollar settlement from bank servicers in 2012, among other enforcement actions.She also faced criticism in that arena, when her office opted not to pursue penalties for the Steve Mnuchin-led OneWest Bank for illegal foreclosure practices in 2013. She was later the lone Democratic senate recipient in 2016 to receive a contribution from Mnuchin, according to Keefe, Bruyette and Woods. Harris this summer tapped Minnesota Governor Tim Walz as her vice presidential running mate. The former U.S. representative has a history of backing legislation around affordable housing investment and consumer protections.The Dem presidential hopeful has pushed two major housing proposals, including building 3 million homes in a 4-year period. Development would be spurred by, among other means, a tax incentive for home builders who sell their units to first-time homebuyers. The Harris-Walz ticket also pledges a $40 billion "innovation fund" for local governments to cut red tape in affordable housing development.The other major Harris pitch is $25,000 in down payment assistance for first-time homebuyers. The campaign said the assistance would aid over 4 million first-time home buyers over a 4-year period. Harris also supports Dem-backed legislation to curb tax benefits for investors who acquire 50 or more single-family rental homes. Some industry experts are pleased with Harris' focus but view the plans with skepticism. Moody's Analytics Chief Economist Mark Zandi estimated a $125 billion price tag for new Harris homes. "It could be realized, but there needs to be a lot of coordination and alignment incentives," said Jung Choi, a principal research associate with the Urban Institute's Housing Finance Policy Center.Killmer said the MBA has received outreach from Capitol Hill voices who want to beef up Harris' proposals."This is a marathon, not a sprint, so I don't think anybody should be counting on immediate relief," he said. "It took us years to get into this supply deficit for all the reasons that's happened, and it'll take long-time, consistent, incremental efforts to get us out of it."Experts also caution that the downpayment assistance plan could exacerbate inflation of home prices. The American Enterprise Institute also suggested 3 million of the 4 million down payment recipients wouldn't need the assistance. Zandi said the downpayment focus should come after supply is alleviated."It could end up putting upward pressure on home prices that are targeted as a part of the program," said Bose George, managing director at KBW. The Trump approachThe Trump administration rolled back Obama-era regulation including changes to fair housing rules. His Consumer Financial Protection Bureau reigned in enforcement action, but also revamped a qualified mortgage rule in 2020 with the support of lenders. The Department of Housing and Urban Development under secretary Ben Carson was also accused of failing to enforce HUD's fair housing laws. And despite many pleas inside and outside of his administration to do so, Trump did not pull Fannie Mae and Freddie Mac out of conservatorship.The former president in July tapped Ohio Senator J.D. Vance as his VP running mate. Vance has accused undocumented immigrants of worsening housing affordability and has supported budget cuts for HUD to curb broader inflation. Trump hasn't commented on GSE reform, but his former associates said exiting conservatorship would be a priority. Former Federal Housing Finance Agency director under Trump, Mark Calabria says privatization could be achieved in 2026 or 2027 under GOP rule.Experts agree that an exit would be a difficult process. Privatization would also dampen the administration's control over the GSEs via the FHFA, Hagen noted. Killmer said the mortgage industry in any scenario wants to understand the rules around GSEs and minimize disruption to the housing ecosystem."The capital markets implications of doing this are profound, and the cost that could be passed along, either due to volatility with that transition, or safeguards that are put in place, could increase costs," he said. The GOP ticket has called for more executive influence with the Federal Reserve regarding interest rates. Analysts explained it would be difficult for Trump to force his way into such decisions, and pointed out the president already holds some sway via Board of Governors appointments. Executive influence on interest rates could also have spillover effects on the broader economy, experts said.Trump in September also echoed Vance's stance on immigration, calling on barring undocumented immigrants from obtaining home loans. The boisterous candidate has also threatened mass deportation of immigrants.A meaningful immigration reduction could hit the nation's home builders, George said. A Trump administration also probably couldn't ban non-federally funded programs such as Individual Taxpayer Identification Loans. The Urban Institute found only between 5,000 and 6,000 such loans issued in 2023."We don't know how many properties can be freed up if (immigrants are) evicted," said Choi. "Many are likely to live in lower-income, lower-priced rental units. What kind of housing would that open up?"Fewer industry contributionsMortgage bankers and brokers, individually and via PACs, have contributed $8,304,964 during the 2023-24 election cycle, according to Federal Election Commission data analyzed by Opensecrets. Although that sum is only current as of the end of August, and only counts contributions of $200 or more, that spending is a little more than half of what the industry gave in the prior two cycles."It may be less about the industry support of politics and more about, they just can't afford to make as healthy of contributions as they made in the past," said Matthew VanFossen, CEO of Absolute Home Mortgage.Since January 2023, mortgage professionals and PACs contributed $3,345,717 to Democrats and $4,564,262 to Republicans, for a 42% to 57% split, according to the data. The industry has leaned Republican since 1998, outside of the 2008 election, according to historical figures. Individuals from the combined affiliates of Rock Holdings lead mortgage lenders through August 31 with $1,648,078 in contributions, according to Opensecrets. Rock Holdings PAC meanwhile has raised over $1.2 million this cycle and spent $1.3 million, with contributions again slightly in favor of GOP candidates. Money from both the PAC and Rock Holdings employees this season trails totals from the 2022 ($4.1 million combined) and 2020 ($3.3 million combined) election cycles. The MBA's MORPAC spent $1,799,896 through the end of August. MORPAC has contributed $352,500 to Democrats this cycle and $425,000 to Republicans, according to Opensecrets. It also has $879,447 cash on hand as of August 31. Its spending so far is a little over half of the amount MORPAC contributed in 2022. "I can assure you our level of political intensity through our direct lobbying and our grassroots outreach is as strong as ever," said Killmer, who's also treasurer of MORPAC. "The receipts and disbursements are down a bit, but that's to be expected."Following the moneyMortgage bankers and brokers this cycle have given more money to Harris, with $473,143 in contributions through August, than to Trump, with $316,803. The remaining mortgage contributions flow to a familiar roster of senators and U.S. representatives on their respective financial committees. Sherrod Brown, a Democratic senator from Ohio and chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs, has received $127,906 so far from the industry. Jon Tester, a Democratic senator from Montana also on the committee, has received the next most contributions at $94,999 – both lawmakers are in close races this fall. Republican French Hill of Arkansas, the vice-chairman of the House Financial Services Committee, is the top GOP mortgage contribution recipient on Capitol Hill with $69,200 through August. Fellow committee member Andy Barr, a GOP representative from Kentucky, is the next-highest GOP mortgage recipient with $64,000 in contributions this cycle. Individuals from Fannie Mae and Freddie Mac have overwhelmingly given to Democrats, with contributions totalling so far $250,108 and $113,793, respectively. Veterans United Home Loans employees are among the industry's most politically active, giving 62% of their total $188,030 in funds to Republicans. CrossCountry Mortgage individuals have contributed $149,480 through August, $83,808 of those dollars to the GOP.The Association of Independent Mortgage Experts PAC is boosting its profile, contributing $108,000 this cycle, 54% of that to Republicans. It retained $195,167 cash on hand as of August 31. The National Association of Mortgage Brokers PAC has revived its longtime political activities, spending $95,800 this election season. That's the most that PAC has spent since 2018.The Title Insurance PAC has spent about $1 million this cycle, and its contributions lean slightly Republican, according to Opensecrets. That spending approaches TIPAC's activities in 2020, but trails its 2022 efforts when it spent over $1.3 million on the midterms.Mortgage players are also spending far less on lobbying this year, with just $6.7 million in 2024. Through August, that appears on pace to come well below the sums the industry spent in every year since 1998, according to Opensecrets. In the wake of major financial legislation passed last decade, housing finance stakeholders still surpassed $10 million in lobbying spend annually.Only the MBA ($1.8 million) and the Council of Federal Home Loan Banks ($1.2 million) have spent over a million dollars on lobbying this election cycle. Pennymac is the top lender among industry lobbying leaders, spending $290,000 by the end of August. Lasting implicationsFew names have been floated as potential housing leaders under either administration. Calabria has said he'd serve in his FHFA role again, if asked. Speculation has revolved around a Trump Treasury secretary; hedge fund billionaire John Paulson has been rumored."If (Paulson) were to happen, we feel like the odds for exiting conservatorship get much higher," said Hagen of BTIG. "And we would expect to see activity in the stocks."There's also the Project 2025 variable, the Heritage Foundation's lengthy playbook for an incoming Republican administration that would dramatically reshape federal housing agencies. Despite Dems' arguments, Trump has repeatedly disavowed the plan. Congressional races will also determine a critical battle over the Tax Cuts and Jobs Act, a Trump-era achievement set to expire in 2025. Aside from a bevy of provisions at stake that could impact housing finance, presidential candidates are also weighing corporate tax changes. Trump has pitched lowering the corporate tax rate from 21% to 15%, while Harris wants to raise the rate, which isn't an expiring TCJA provision, to 28%.Analysts concluded a pro-business Trump presidency would be slightly more favorable to the mortgage industry, but each candidate presents pros and cons. "As lenders, we tend to be as bipartisan as possible," said VanFossen. "We respect our employees' individual views, and we respect the system as a whole. Elections have consequences, and no matter which way it'll go, there will be benefits and there could be potential downfalls."

Bloomberg News The Consumer Financial Protection Bureau's nonbank registry to address repeat corporate offenders goes live this week, raising concerns that companies will be more inclined to fight enforcement actions to avoid being publicly shamed. The Conference of State Bank Supervisors opposed the creation of the registry since its conception, claiming that the CFPB exceeded its authority and did not need to identify nonbanks that are subject to public orders because the Nationwide Multistate Licensing System already does so. CSBS is concerned about redundant reporting and costs to nonbanks associated with maintaining compliance with two registries, which could cause confusion. The CFPB's registry requires nonbanks that provide financial services to consumers and have violated local, state and federal consumer protection laws plus court orders to register all public actions with the bureau. It requires that companies provide copies of public orders and up-to-date information annually and to verify their compliance — a provision that some experts say could become a sticking point in settlement agreements. "I expect targets of state regulator enforcement investigations, especially ones where the regulator is taking an expansive or aggressive legal position, to be substantially less willing to settle just to make the regulator's concern go away," said Jeff Naimon, a partner at Orrick, Herrington & Sutcliffe LLP. Jonathan Pompan, a partner at Venable, called the registry "an online treasure trove of information that will be available for all to see," and "a move that's sure to make nonbank financial institutions even more uncomfortable." CFPB Director Rohit Chopra has said the registry is necessary to ensure the bureau can identify repeat offenders who are failing to adhere to the terms of existing orders or are engaging in additional violations of consumer protection laws.  The CFPB issued a final rule in June, after proposing in 2022 to create a database on nonbank offenders that it said would address a lack of comprehensive information about orders issued against nonbanks. Brandon Milhorn, president and CEO of CSBS, said the CFPB has not proven there was a recidivism problem with nonbanks to necessitate the creation of the registry. "We are disappointed that the CFPB is proceeding with its public orders registry and stand by the concerns expressed by state regulators during the consultation process," Milhorn said. State regulators supervise for compliance with both state and federal consumer financial laws, a purview that CSBS claims is significantly broader than the CFPB's authority. The CFPB has primary authority to supervise and examine banks with over $10 billion in assets. It also supervises nonbanks of any size in certain markets such as mortgage companies, payday lenders, and student lenders, and can also supervise larger participants in other nonbank markets, and ensure compliance with consumer protection laws. CSBS is trying to ensure there is alignment between the CFPB's registry and the NMLS to prevent industry confusion and redundant reporting, Milhorn said.The NMLS tracks more than 350,000 entities and individuals in a wide range of industries including money services providers, check cashing firms, earned wage access and payday lenders, as well as third-party debt collectors and credit repair companies. Nonbanks that primarily provide financial services directly to consumers are state licensed.  Whereas both state and federal regulators may charter banks, only state regulators have the authority to license consumer-facing nonbanks.CSBS launched the NMLS in 2008 to manage and monitor mortgage lenders, brokers, and individual loan originators after the financial crisis. Congress mandated a nationwide licensing and registration system through the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, known as the SAFE Act. In 2010, state regulators launched NMLS Consumer Access, a searchable database that allows the public to check whether a regulatory action has been taken against by a licensed company or individual. "Requiring attestations of compliance with state actions could position the Bureau to ostensibly exercise supervisory and enforcement authority over laws for which the CFPB has not been granted such authority, and it could pose serious challenges to state supervision and enforcement efforts," CSBS said in a comment letter last year.  Some critics of the registry suggest that nonbank mortgage lenders and other companies may not want to settle state actions if they are made public with annual certification requirements. As a result, the registry may have the unintended effect of pushing more enforcement matters into confidential supervisory resolutions. Moreover, consent orders typically have covenants stating that a company cannot violate the law, which includes state prohibitions on "unfair or deceptive acts and practices," known as UDAP, or must maintain compliance management programs to address compliance. Such provisions are difficult to certify and may have to be renegotiated, some lawyers said. "I expect all targets of investigations to more closely negotiate injunctive relief with an eye towards the new registry's annual certification requirements," Naimon said. Clay Coon, special counsel for supervision examinations at the CFPB, said that companies do not have to register in advance of an order."Please do not just sign up in advance because you think at some point you might need to register," Coon said in September on a call to address technical questions. The registry excludes banks and credit unions.The CFPB has tiered compliance deadlines. Larger participants subject to CFPB supervision have until January 14, 2025 to register, while other covered CFPB-supervises nonbanks have until April 14, 2025. Other nonbanks have until July 14, 2025 to register. 

The nation’s largest mortgage lender, UWM, has launched a new 90% LTV cash-out refi to drum up more business.While it’s being sold to mortgage broker-partners as a way to “win more business,” it doubles as a worrisome trend of loosening underwriting guidelines.Typically, homeowners are capped at 80% LTV when it comes to a cash out refinance, but UWM is taking things a little further.This could be the symptom of low volume, which has plagued many mortgage lenders ever since mortgage rates jumped in mid-2022.And it could be a sign that some American consumers are struggling to make ends meet as they grapple with surging inflation.Conventional Cash-Out 90 Lets You Borrow More Than the Other GuysCash out refinance up to 89.99% LTVLoan amount capped at the conforming loan limitMust be a primary residenceMinimum FICO score of 680 requiredNo mortgage insurance required (might be built into rate)First let’s talk about this new loan program, known as “Conventional Cash-Out 90,” then we’ll talk about whether it’s worrisome or not.As noted, United Wholesale Mortgage (UWM) will now let you cash out up to 90% of your property value.Technically, it’s capped at 89.99% LTV, but it’s still considered a conventional loan. Note that there’s a difference between conventional and conforming loans.Both are non-government loans, but conforming loans must meet the guidelines of Fannie Mae or Freddie Mac.And Fannie Mae and Freddie Mac have a maximum 80% loan-to-value ratio (LTV) limit for cash out refinances.So it doesn’t meet their guidelines, which also means many competing lenders can’t offer such high limits.In other words, UWM is offering something the other guys can’t, assuming you want a whole lot of cash.On top of that, they aren’t charging private mortgage insurance (PMI). Though as I always say, if it’s not being charged separately, it’s usually baked into the mortgage rate.However, the maximum loan amount on the program is at the conforming loan limit, currently $766,550 for 2024.And the property must be your primary residence (the one you live in), and you need a minimum FICO score of 680 to qualify.It’s unclear just how high the mortgage rates are, but I can’t imagine them being cheap when your typical vanilla purchase or rate and term refinance at 80% LTV or less is still around 6.5%.We might be talking about rates in the mid-7% range or higher. But I’m just speculating here. You’ll need to speak to a UWM-approved mortgage broker for actual pricing.Are We Bringing Too Much Risk Into the Housing Market?Now let’s talk about risk. As noted, Fannie and Freddie have limited cash out refinances to 80% LTV. And they did this to minimize risk to both lenders and homeowners.It’s generally not a good thing to be overleveraged as a homeowner, especially if the mortgage debt is pricey as it has become today. And even more so if home prices feel a tad frothy.This means if your property is valued at $500,000, the largest loan amount you can qualify for when tapping equity is $400,000.In the early 2000s, prior to the mortgage crisis, it wasn’t uncommon to see 100% LTV cash out refinances. Or even 125% LTV loans!Of course, we all know how well that went. Homeowners had no equity left, and once home prices collapsed, they were the proud owners of underwater mortgages.That led to one of the worst housing downturns in our lifetimes. The good news is it also led to stricter underwriting guidelines, including the 80% LTV cap on cash out loans.So the fact that United Wholesale Mortgage (UWM) is pushing past this limit might feel a little troubling.But it’s likely just the result of loan volume being so dismal today, and their desire to remain the top mortgage lender in the nation.You also need homeowners to take the bait. Most have very low locked-in 30-year fixed mortgage rates in the 2-4% range with no desire to disturb them.Chances are volume won’t be high on this new loan program, despite these more accommodating guidelines.If and when a lender allows 100% cash out refis again, then I’ll really start to worry. Fortunately that seems unlikely at this juncture. 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)

Consumer Financial Protection Bureau director Rohit ChopraBloomberg News Rohit Chopra, the director of the Consumer Financial Protection Bureau, was asked at a consumer law conference last week whether his tenure at the agency could be characterized as finding creative ways to use existing laws to enforce regulations.During a "fireside chat," Chopra was asked by Christopher Peterson, the John J. Flynn endowed professor of law at the University of Utah's S.J. Quinney College of Law, about whether there is a so-called "Chopra doctrine," and if it is rooted in finding new ways to enforce the CFPB's existing legal authority."I would propose that if there is a Chopra doctrine, it's finding creative uses of existing statutory authority to do bold new product projects," Peterson said. "You seem to look for untapped statutory authorities that have been residing in the U.S. Code, waiting for creative new applications. Is that fair?"But Chopra categorically rejected that view."No," he said, to laughter from Peterson and the audience of lawyers and law students.Instead Chopra described his three years at the CFPB as merely reading the actual language of the law and trying to be faithful to the intentions of Congress. "It's so inherently uncreative to read the statute and use it. There's nothing creative about reading statutes," Chopra said Friday at the Salt Lake City conference. "You actually have to look at the words on the page, and you don't have the power to just cross it off. I consider it being faithful to when our legislative branch enacts legislation."Some consumer finance attorneys think Chopra is making up the law as he likes without regard to what any statute actually says. As an example, they point to a 2022 CFPB policy adopted that sparked an uproar when the agency updated its exam manual and announced in a press release that discrimination in any financial product is an "unfair" practice that can trigger liability under the federal prohibition against  "unfair, deceptive or abusive acts or practices," known as UDAAP.  In response, the U.S. Chamber of Commerce and six business groups including the American Bankers Association and Consumer Bankers Association sued the bureau, arguing that the policy was a significant departure from existing antidiscrimination laws. A Texas judge agreed and ruled last year that Congress did not give the CFPB broad authority to look for discrimination beyond those areas specified in the statute. Under Chopra's watch, the CFPB has prioritized several rulemakings that were required by the Dodd-Frank Act of 2010, but have not been enacted. He finalized the small-business data collection rule, known as 1071 for its section in Dodd-Frank, with compliance beginning in mid-2025. A final rule on personal financial data rights, known as 1033 or open banking, is expected to be released in a week or so. One of the innovative rules that banks and credit card issuers are fighting is the CFPB's $8 credit card late fee rule, which is currently on hold pending litigation. The CFPB last year proposed reducing the safe harbor for late fees to just $8 for large credit card issuers, down from $30 on average. Chopra has repeatedly criticized the Federal Reserve Board of Governors for creating a safe harbor to the Credit Card Accountability Responsibility and Disclosure Act, known as the CARD Act, in 2010 that allowed card issuers to charge and increase late fees even though the law states that such payments must be "reasonable and proportional" to the harm suffered by the financial institution. Chopra explained his thinking on the issue, which has prompted a major legal clash with industry.  "The way in which many firms have approached pricing has actually really undermined how we want a competitive market to work," Chopra said. "If you look at modern pricing theory and practice in boardrooms across the country, it's a lot easier to try and make more money by disguising your pricing or making it more difficult to figure out in some other ways, rather than actually creating a better product or service." The CFPB did a review of the original rules for credit card penalty fees and found they were "a massive profit engine — which is exactly what Congress didn't want," Chopra said. Last year credit card issuers charged $130 billion in fees and interest. "The credit card market has serious problems," Chopra added. "Behind closed doors, a lot of banks will admit, yeah, this gets out of hand. And the way it often works is they set certain targets for the business unit head. They try to find ways to pump up profits at slower times. And our goal is really to make that price clear up front and that people can really have a fair market."The CFPB has also taken issue with credit card rewards programs issued by big banks on behalf of large airlines. In September, the Department of Transportation launched a probe of airline rewards programs, which are extremely popular, but which Chopra and Pete Buttigieg, who heads the Transportation Department, are looking to rein in. "We were very, very nervous when we were learning that big credit card issuers were really engaged in a lot of things that were very problematic, some of the bait-and-switch tactics on rewards, some of the ways in which they appear to have been coordinating on pricing and credit reporting practices, some of the extremely sketchy collections that they were engaged in," Chopra said. Peterson, a former special advisor during the Obama administration to former CFPB Director Richard Cordray, asked Chopra to comment on the impact to the CFPB of two Supreme Court cases last term — Loper Bright Enterprises v. Raimondo, that overturned the so-called Chevron doctrine that gave deference to administrative agencies, and Corner Post v. Board of Governors of the Federal Reserve, that overturned the statute of limitations for judicial review of federal agencies' rulemakings. "I don't sweat it too much," Chopra said. "I think we have been able to navigate the current waters exceptionally well. We have been able to provide a lot of advice to other agencies who are dealing with just an avalanche of this similar type of litigation."Chopra also cited a recent victory in a contentious case, CFPB v. Townstone Financial, in which a federal appeals court ruled that the CFPB has broad authority to discourage discrimination to combat redlining."Our statutes, a large number of them, have expressed delegations of authority for rulemaking to prevent evasions and others. So I think we're always ready for what's next. I think we've been able to stay three steps ahead," Chopra said, while giving credit to the CFPB's General Counsel Seth Frotman, and the bureau's legal team.

Fix-and-flip lender Backflip raised $184 million of new capital to help fund its operations through a number of equity and debt transactions.The additional capital comes on top of the $15 million Series A round it completed in April with a group of nine investors, led by Firstmark.Including and through the Series A, Backflip raised a total of $50.4 million in four rounds, according to Crunchbase.Part of the new transaction includes a $20 million joint venture with previous investor (from the Series A) ECMC. The second equity portion involves a $10 million Backflip-managed private credit fund.On the debt side, Performance Trust arranged a $100 million warehouse line of credit, while Setpoint provided a $54 million credit facility.The fix-and-flip product is one of those included in the broader category called residential transition loans. The company refers to its clients as "members" and noted a year ago that 53% of its loans were made to people of color.For the trailing 12 months up to the time of this announcement, Backflip had a $375 million run rate, with members analyzing an average of $10 billion in properties each month through its app."Raising these private credit vehicles and the warehouse facilities allows Backflip to offer ever-improving capital products to our members doing the important work of rejuvenating obsolete homes," said Jake Rome, co-founder and chief operating officer, in a press release. "We are grateful for the trust and support of our capital partners, and are excited to be on the front lines of a rapidly institutionalizing investment asset class."Backflip pointed to Morningstar DBRS comments on Sept. 19 regarding the sector, noting that the first-ever rated transaction came in February from Toorak Capital Partners.Approximately $4 billion of RTL were included in securitizations in the first half of 2024, rated and unrated, representing a 546% increase compared with the first six months of the previous year, Backflip pointed out.The Morningstar DBRS report said 100 RTL securitization transactions have been completed since 2016. Since that first Toorak deal, Morningstar DBRS has either rated or performed presale reports on eight other RTL securitizations."Historically, the RTL industry has been somewhat fragmented with variations in operational processes, lending approaches, and target borrowers. However, some aspects of this appear to be changing with the emergence of rated RTL securitizations and an expanded investor base," said Corina Gonzalez, associate managing director, U.S. RMBS ratings at Morningstar DBRS, in the commentary for the report. "This trend toward standardization is a key turning point for a growing asset class, when word spreads and what was once a niche product gains mainstream acceptance," she added.Many Backflip originated loans are included in securitized transactions, a company spokesperson said. The company is keeping its options open regarding directly securitizing its product in the future.

The Federal Communication Commission has set the ball in motion to make it easier for customers to opt out of automated calls.Updates to the Telephone Consumer Protection Act aimed at simplifying customers' ability to opt out of robocalls and robotexts will take effect on April 11, 2025.New rules should make customers' decision making on what robocalls or texts they want to receive more straightforward.Specifically, customers have the right to refuse contact even if they had previously agreed to it, and they can communicate their decision in any manner they prefer.Additionally, robocallers and texters will have to honor do-not-call requests in no longer than 10 business days from receipt. Changes to the guidelines will also codify a 2012 ruling that clarified that a one-time text confirming a customer's opt out request does not violate the TCPA.TCPA, enacted in 1991, prohibits calls to cell phones using an automatic telephone dialing system or an artificial or prerecorded voice without the prior express consent of the called party. Fines for such calls range from $500 and go up to $1,500 per violation. In the world of mortgage lending, borrowers and prospective home buyers have been inundated with such calls. As a result, litigation has sprouted against originators such as Loandepot, Freedom Mortgage and Rocket Mortgage, which are accused of such practices.Mortgage lenders found guilty of violating the FCC's rule have faced hefty fines.Last year, Cardinal Financial agreed to dole out $7.2 million to settle a class-action lawsuit arising from alleged violations of the TCPA. Approximately 141,049 members were included as part of the lawsuit. Meanwhile, in 2022, real estate company Keller Williams agreed to pay $40 million to settle a case after it was accused of making unsolicited calls to consumers on the Do Not Call Registry. Americans on average received around 3.34 billion robocalls in December 2023, amounting to about 17 spam calls for every person in the country, according to spam call blocking app Robokiller. Apart from robocalls and texts, consumers in the housing industry also have been inundated with trigger lead calls. But that practice, too, may be more restricted soon.Legislation regulating the use of trigger leads, long a hot button topic in the mortgage industry, has come closer to becoming law as it has been included as an amendment to one of the federal budget bills.The Senate's version of the National Defense Authorization Act includes a rule that bars the furnishing of a credit report pulled for a mortgage loan to anyone else unless the consumer approves. The language also allows for the report to be provided to the current mortgage lender and/or servicer on an existing loan. The bill also has an exemption for banks and credit unions.Mortgage brokers in particular have long complained that leads from credit inquiries, which bureaus sell to data brokers and lenders, results in a barrage of intrusive consumer marketing.

Summer gains are making way for fall pain. Effective rates for home loan products tracked by the Mortgage Bankers Association shot up last week, sending application activity into a nosedive. The MBA's Market Composite Index for the week ending Oct. 11 fell by 17%, after a smaller slide in the prior period. The average contract interest rate for a 30-year fixed-rate loan jumped 16 basis points to 6.52% last week, weakening demand for refinances that only weeks ago was thriving. The MBA's Refi Index fell 26% weekly, against a Purchase Index falling 7% over the same timeframe.Compared to the same time last year, when a 30-year FRM was well above 7%, purchase activity is up 7%. The Refi Index also remains 111% higher than a year ago. "Demand is holding up to an extent for prospective first-time buyers," said Joel Kan, the MBA's vice president and deputy chief economist, in a press release. Kan cited inventory which has relatively improved, which limited the damage to Federal Housing Administration loan activity. FHA purchase applications saw the lowest weekly drop among loan types, falling just 0.4% week-over-week. Applications for other government-backed loans fell by double digits on a weekly basis, with only Department of Veterans Affairs purchase application activity declining by single digits at minus 4.8%.The average contract interest rate for 30-year FHA loans rose 20 basis points to 6.42% last week. Both jumbo loan and 15-year FRM rates increased by double digits to 6.76% and 5.94%, respectively.  Interest rate increases were more muted for 5/1 adjustable-rate mortgages, up to 6.14% last week. Wednesday's findings are a reversal from promising mortgage activity in mid-September, when applications hit their highest level since July 2022. Rates were also inching toward 6% flat, but the 30-year FRM this year hasn't dropped under that threshold in over two years. The average loan size, considering all mortgage types, also fell to $389,000, after hitting an MBA applications survey-record $413,100 on Sept. 20. 

U.S. Attorney General Merrick Garland.Al Drago/Bloomberg The Department of Justice and the Consumer Financial Protection Bureau on Tuesday hit Fairway Independent Mortgage Corp. with a consent order alleging the company discriminated against applicants in Black neighborhoods in Birmingham, Alabama, by discouraging people from applying for mortgage loans.The Madison, Wisconsin-based mortgage lender agreed to pay nearly $10 million under a proposed settlement for redlining Black neighborhoods in Birmingham and failing to address known signs of discrimination, according to the consent order. Fairway, the fifth-largest mortgage lender by origination volume, operates in Birmingham under the name MortgageBanc, though it is not a bank. "This case is a reminder that redlining is not a relic of the past, and the Justice Department will continue to work urgently to combat lending discrimination wherever it arises and to secure relief for the communities harmed by it," Attorney General Merrick B. Garland said in a press release.The complaint alleges that Fairway concentrated its retail loan offices in majority-white areas and spent less than 3% of its direct mail advertising in majority-Black areas. Though the company claimed to serve the entire Birmingham area of 1.1 million people, Fairway for years discouraged homeownership in majority-Black areas by generating loan applications at a rate far below its peer institutions.The Justice Department said that Fairway took "no meaningful action," to address redlining risk and failed to train or incentivize its loan officers to serve majority-Black neighborhoods. Between 2018 and 2022, only 3.7% of Fairway's mortgage applications were for properties in majority-Black areas, compared to 12.2% for the company's peers. Fairway's CEO Steve Jacobson and the company did not immediately respond to requests for comment. Under the proposed consent order, Fairway has agreed to pay $8 million for a loan subsidy program in Birmingham's majority-Black neighborhoods that will provide lower interest rates and down payment assistance, among other forms of relief. The company also agreed to pay $1.9 million to the CFPB's victims relief fund and will invest at least $1 million in redlined neighborhoods in Birmingham by opening a loan production or retail office and by spending at least $500,000 on advertising and outreach plus $250,000 on financial education. The settlement still awaits approval by the Federal District Court for the Northern District of Alabama.CFPB Director Rohit Chopra said the consent order would hold Fairway accountable for redlining Black neighborhoods."Fairway's unlawful redlining discouraged families from seeking loans for homes in Birmingham's Black neighborhoods," Chopra said in a press release. From 2015 to 2022, Fairway operated three retail loan offices and three loan production desks within real estate offices — all of which were in majority-white areas of Birmingham. The mortgage company relied on referrals from real estate agents and its loan officers' personal contacts to generate mortgage applications, of which the vast majority were located in white areas, the complaint states."By taking these actions, Fairway discriminated against, and unlawfully discouraged, mortgage loan applications for properties in majority-Black neighborhoods," the Justice Department said. Competing mortgage lenders generated applications at over three times the rates of Fairway in majority-Black neighborhoods, the Justice Department said. The disparity was even higher in areas with 80% or more Black residents, where Fairway originated loans at less than one-eighth the rate of its peers, the DOJ said.Despite the findings, Fairway failed to adopt any written plan for marketing or growth to address the issue of redlining. The settlement is the third case that the Justice Department and CFPB have brought jointly, and it brings the amount of relief for the DOJ's Combating Redlining Initiative to more than $150 million, Garland said.

The pandemic led to innovations that positioned the servicing market to survive similar crises, but the next one will be different, federal officials said at a recent meeting.For Ginnie Mae, a government guarantor for securitizations of affordable-housing loans that other agencies like the Federal Housing Administration back, one key concern is a small-scale turn in the economy affecting government mortgage borrowers, acting President Sam Valverde said at the Mortgage Market Resilience and Access to Credit Summit Tuesday."Somewhat counterintuitively, I'm less worried about a large downturn," he said, noting that a mild recession that affects service workers or other government mortgage borrowers could be a bigger challenge.Given recent mixed signals about the state of the economy, questions are percolating about whether monetary policymakers would intervene and how they might do so.While policy intervention during the pandemic did allay some servicer concerns, measures taken in a future crisis may not be as effective at reducing advancing risk, considering that a large number of outstanding loans have very low rates, Ted Tozer, a former Ginnie Mae president, noted during the conference. The pandemic was somewhat unique in that low interest rates had spurred rampant refinancing, which returned cash to mortgage firms. "The Fed has no ammunition left," Tozer said.Refinancing also can be a mixed blessing, as mortgage prepayments can be a risk for MBS investors.While mitigated in part by the outstanding loan mix, it's a risk Ginnie officials have been keeping an eye on as technological developments have allowed mortgage companies and borrowers to react quickly to small changes in rate. It's tricky to strike the right balance between managing prepayment and advancing risk while forbearance is at play. But the pandemic showed payment suspensions were an effective tool that can be used in future crises, officials indicated."There was a moment at FHA where our delinquency rate was close to 12%. That could have ended badly and it did not," Commissioner Julia Gordon said at the Mortgage Market Resilience and Access to Credit Summit.However, the next challenge the market faces will be different, said David Dworkin, president and the CEO of National Housing Conference, who moderated one of the panels at the summit."We're always great at planning for the crisis we just had, not so much for the crisis we're about to have," he said.