Uncategorized

A Bay Area credit union the suffered a ransomware incident earlier this year has revealed over one million consumers were affected.Patelco Credit Union last week updated its initial assessment of 726,000 consumers impacted by the hack to 1,009,472 people, according to a notice with the Office of the Maine Attorney General. The lender detected the intrusion on June 29, and a subsequent investigation revealed an unauthorized party accessed its database for 37 days between May and June.The initial, smaller estimate of people affected was revealed in August. Following that disclosure the Dublin, California-based Patelco conducted an additional analysis to identify as many affected individuals as possible, it said."In order to meet our legal obligations under applicable state data privacy laws following this additional due diligence, we filed amended disclosures with certain regulatory officials," a Patelco spokesperson said in a statement Wednesday.The cybersecurity event disrupted Patelco's banking systems for almost two weeks following the incident. It's waiving or reimbursing most late fees for July and August, it's told customers. The lender has not revealed which, or if, personally identifiable information was compromised. Patelco originated $667 million in loan volume last year, and reported over $2.2 billion in home loan originations in 2021 at the height of the recent refinance boom, according to Home Mortgage Disclosure Act data. Nationwide Multistate Licensing System records show 218 registered mortgage loan originators at the credit union. Affected individuals sued Patelco for failing to protect their data in seven separate lawsuits in a California federal court. SIx of those complaints were voluntarily dismissed this summer, while a newer suit was filed Tuesday. It's unclear if Patelco reached settlements with those plaintiffs, and the lender didn't immediately respond to that question Wednesday. The credit union is continuing its offer of complimentary credit monitoring for affected current or former customers for a two-year period, through Nov. 19. Companies affected by cyber security incidents usually extend such services to impacted individuals for a 12-to-24 month period. After a spate of hacks of the industry's largest players last winter, few lenders have revealed data breaches in recent months. Lawsuits against financial institutions over those incidents remain pending.Those complaints, and costs to clean up data breaches, easily reach into millions of dollars. Loandepot in August revealed its accrued $27 million, primarily as part of reaching a settlement, in a proposed class action complaint over a hack in January that affected over 16 million consumers.

A shareholder lawsuit against Rocket Cos., a complaint already facing scrutiny because of a meme stock frenzy, has more issues. A federal judge Monday rejected class certification for the investor lawsuit, because of concerns about the reliability of its lead plaintiffs. The suit claims Rocket leadership made misleading statements about origination volume in 2021, and accuses founder and chairman Dan Gilbert of insider trading. U.S. District Judge Thomas L. Ludington was skeptical of lead plaintiff Carl Shupe, who omitted a profitable trade of Rocket stock from earlier case filings. Shupe sued Rocket in 2021 after he lost $434,000 that spring by trading the company's stock. The investor however netted close to $250,000 in a trade of Rocket stock a day prior to purchasing the eventual losing shares in March. Ludington said Shupe's testimony in a January deposition explaining his earlier omission was "contradictory, self-serving and borderline nonsensical."A Rocket spokesperson Tuesday said the company was pleased with the ruling in the "baseless" lawsuit."The judge correctly denied class certification," a statement from Rocket read. "He even casts doubt onto the plaintiff's credibility, honesty and trustworthiness and the evidence showed the plaintiff's lack of basic knowledge of the groundless claims they were bringing." The judge also rejected the second lead plaintiff, the Construction Laborers Pension Trust for Southern California, because a representative for the organization had trouble understanding the lawsuit during testimony. Attorneys for plaintiffs didn't return requests for comment Tuesday. The suit hinges on executive comments about interest rate impacts on Rocket's production volume during the refinance boom. Rocket's stock during the contested period was $19.90 per share in February, before rising to $39.47 on March 3 and fading to $22.80 by May 5.Gilbert also made a $500 million private trade of his firm's stock in late March 2021 ahead of an earnings report. Although Gilbert at the time announced a $500 million philanthropic effort, he later said in a deposition the move was an effort to cover a shortfall in proceeds from Rocket's 2020 Wall Street debut. Companies in the Rocket family include title insurer Amrock and personal finance app Rocket Money. Attorneys for Rocket argue the volatile stock price was the result of a Reddit-fueled "meme stock" event, which dramatically lifted Gamestop shares months earlier. Shupe testified he considered purchasing Rocket stock in November 2020, but admitted browsing the notorious "r/wallstreetbets" forum which sparked the "short sale" activity. In his defense, Shupe claimed he also spoke about investing in Rocket with his brother and a friend. Rocket subpoenaed the men, and Ludington Monday overrode their objections to a deposition. "While Shupe can provide his recollection of conversations with Branson and Orlyn, only Branson and Orlyn can testify about their recollections of these conversations," wrote Lundginton, referring to the non-party witnesses. "Indeed, it takes two to talk."In another filing, Ludington also denied requests by both parties to exclude testimony from expert witnesses. Legal questions to certify the class hinge on "thousands of pages of pleadings" which rely on the proposed testimony of the experts, the judge wrote. A jury trial in the case is tentatively scheduled for next February. Rocket has recovered from the depths of the recent mortgage market, posting $178 million in net income in the second quarter alongside nearly $25 billion in origination volume. Its stock has more than doubled in the past 12 months, trading around $19.51 per share as of Tuesday afternoon.

A former Sprout Mortgage executive who told hundreds of employees in a video call they were fired is asking aggrieved workers not to shoot the messenger. Shea Pallante, the firm's ex-president and chief production officer, is asking a federal judge to dismiss him from a wage lawsuit from laid-off employees. The non-qualified mortgage lender abruptly shuttered in July 2022, and class action plaintiffs say Sprout stiffed hundreds of workers out of their final paychecks and health insurance coverage. According to case filings, Pallante revealed the shutdown to over 300 workers in a teleconference on July 6, 2022. Plaintiffs allege the executive during the call didn't inform them they wouldn't receive their ensuing paychecks for two pay periods.Counsel for Pallante in a motion to dismiss last month argued he didn't have any power over employment, payment nor any say in the shutdown. They point out he was only mentioned sparingly in an amended complaint by former staff. "Plaintiffs' allegations, even taken as true, do not show that Pallante was anything more than the 'bearer of bad news,' which does not impute liability to him," his attorneys wrote. Former chief financial officer Christopher Wright filed a similar motion to dismiss last month, with attorneys absolving him of responsibility and placing blame on other company leaders, including embattled former CEO Michael Strauss. An attorney for Pallante declined to comment. Counsel for the other parties didn't return requests for comment Wednesday. Sprout was one of two high-profile industry closures in mid-2022 as mortgage rates began their rapid ascent from pandemic lows. Texas-based First Guaranty Mortgage Corp. filed for bankruptcy a month earlier, in a case that closed earlier this year. The Long Island-based Sprout has endured a rougher post-shutdown experience, with creditors seeking a combined $66 million from the non-QM lender. The Internal Revenue Service is also seeking $15.5 million in payroll taxes from the company Strauss allegedly failed to pay since June 2017.The trustee for Sprout in its pending bankruptcy case has likened the actions of the former CEO to money laundering, as he purportedly used funds funneled from the lender to cover personal expenses such as homes and horse racing.The company's bankruptcy case has interfered with the employee lawsuit, axing a $3.5 million settlement agreed to in 2023. At least 120 ex-Sprout employees have signed opt-in consent forms for the Fair Labor Standards Act complaint, and attorneys claim over 540 workers are included in the proposed shutdown class.

(Bloomberg) -- T-Mobile US Inc. is selling $500 million in asset backed securities supported by installment plans the company offers to customers to buy cell phones, after the deal was postponed in August.The bonds began early marketing on Friday, and are set to be sold on Oct. 2, according to people familiar with the deal, who asked not to be named as the details are private. T-Mobile is broadly syndicating $500 million of securities, and the total size of the securitization is $561.34 million.The transaction was originally slated to be sold in August, but was postponed after a weaker-than-expected US jobs report and rate hikes from the Bank of Japan, among other factors, brought turmoil to markets, raising questions about the strength of consumers that helped push stocks down and lift prices on short-term bonds.But markets have since stabilized, helped by the Federal Reserve cutting rates earlier this month for the first time in more than four years. Sales of asset backed bonds are broadly running hot this year, with issuance in the US up by more than 20% from last year, according to data compiled by Bloomberg News.Spokespeople for Royal Bank of Canada and Barclays, banks working with T-Mobile on the offering, declined to comment. Representatives for T-Mobile and SMBC, another lead manager on the deal, didn't respond to requests for comment.More stories like this are available on bloomberg.com

U.S. Treasuries are sliding after U.S. companies added more jobs than expected last month, sending a mixed signal to traders who are watching the labor market for signs the Federal Reserve needs to aggressively cut interest rates.Bonds were already lower ahead of the ADP private payroll data, reversing the rally Tuesday when Iran's missile attack on Israel fueled haven demand. Longer-term bonds led the decline, with 10-year yields jumping 5 basis points to 3.78%. The U.S. Treasury selloff followed a broad decline in European bonds with yields for UK 10-year gilts rising 8 basis points as crude oil jumped about 2%.The ADP data followed a stronger-than-expected job opening report Tuesday that signals the labor market remains resilient. Earlier this week, Fed Chair Jerome Powell said that policymakers are not "in a hurry" to lower rates, discouraging those expecting the central bank to cut the borrowing costs by half percentage point for a second straight meeting.   "The ADP jobs numbers continue to show strength in labor markets," said Michael Contopoulos, director of fixed income at Richard Bernstein Advisors. "The idea that labor is falling off a cliff is mistaken and the market is realizing that."Bearish sentiment was present during the U.S. morning trading session in the Treasury options market with a large buyer of protection targeting a 5-year yield increase to approximately 3.75% by the end of next week, from the current level about 3.56%.Traders are pricing in about 33 basis points worth of easing when the Fed announces its next rate policy on Nov. 7, implying a 33% chance for a half-point cut. They see some 69 basis points of reductions before the end of the year, from the current level at 3.56%.Treasuries rallied in the five months through September, posting their longest winning streak in 14 years as the Fed finally kicked off its rate-lowering cycle. But the 10-year yields have rebounded 8 basis points since the Sept. 18 Fed meeting. The question remains the pace and size of cuts ahead as policymakers attempt to keep inflation at bay without creating trouble in the labor market. Traders are betting that the Fed will bring down interest rates from about 5% to a level closer to neutral, which is estimated at about 2.9%, over the next 12 months. Such aggressive easing is rarely seen outside recessions.The risk for bond traders is that a resilient economy limits the amount of easing. The Atlanta Fed's GDPNow model, for instance, suggests the economy is expanding at a solid 2.5% annual pace.  "Financial markets are wide open, equities are at all time highs, financing is available, real estate prices are going up in every market, and yet we're stimulating," Apollo Global Management Inc. Chief Executive Officer Marc Rowan said during an interview on Bloomberg TV. "It is not clear that we need more rate cuts at this point in time."ADP Research Institute's report, which hasn't been as a reliable indicator of the labor market as US Department of Labor data, showed private payrolls increased 143,000 last month, more than the median estimate of 125,000 among economists surveyed by Bloomberg. Economists expect government data due to be released Friday to show a rebound in job growth and a steady unemployment rate in September.Subadra Rajappa, head of U.S. rates strategy at Societe Generale, said investors are likely to "lay low" until the presidential election, two days before Fed officials meet."I expect yields to remain somewhat range-bound over the upcoming month," she said.

SitusAMC has announced a transaction in which it will share ownership of a division managing mortgage repurchase risks.The large industry vendor has sold a majority stake in its Securent Risk Retention Group to VineLight Ventures.The move reunites Securent's president, Justin Vedder, with Bryan Binder and Jason Garmise. All three previously worked at CastleLine, a provider of mortgage data and insurance products later sold to Altisource."We are focused on improving our customers' efficiency and profitability and look forward to introducing Securent's newest solutions that we believe will help transform the securitization market," Binder said in a press release. "We are also thrilled to be back in business with Justin Vedder." The transaction will support SitusAMC's growth in its other business lines, particularly those supporting residential mortgage-backed securities, while preserving access to Securent's risk management. SitusAMC will retain a minority stake and have a seat on the board of directors for Securent's holding company."We look forward to continuing to work with Securent," Michael Franco, CEO of SitusAMC, said in the press release.Terms of the deal were not disclosed. Michael Franco Securent provides analytics in addition to insurance and other types of risk management for lenders, investors, RMBS issuers, warehouse lenders and mortgage servicing rights. Risks addressed include underwriting defects, compliance violations, appraisal errors, fraud and misrepresentation"Repurchase demands continue to be a material impediment and concern for mortgage company leaders, and fraud related-risk will continue to be a challenge throughout the mortgage manufacturing process, especially in RMBS structures," Vedder said in the press release. "The combination of Securent's proven offering, VineLight's expertise in building businesses, and the additional capital infusion will allow us to grow."

The Federal Home Loan Bank of Des Moines made an additional $6 million of funds available to its members for a program that subsidizes a mortgage rate buydown they can offer consumers.Since it launched the program, called Mortgage Rate Relief, this spring, FHLB Des Moines members have funded over 1,000 loans in underserved areas by permanently reducing interest rates by approximately 2 percentage points lower than the current market rate. This relief was available to both purchasers and existing borrowers who were earning up to 80% of the area median income.The additional first come, first served funding was available starting Sept. 16.When it launched the program in May, the initial commitment was for grants totaling $25 million. Those funds were exhausted by July."The Mortgage Rate Relief product is aligned with our mission and specifically designed to support our members with the goal of improving housing affordability within their local communities." said Dan Mahlum, FHLB Des Moines mortgage programs director, at the time the program was announced. Mortgage Rate Relief is a part of the bank's voluntary funding program, which is the 10% statutorily required contribution of net income to affordable housing. In 2024, all of the Banks agreed to increase that amount voluntarily to 15%.This funding is available to FHLB Des Moines members who are a part of the Mortgage Partnership Finance program, a secondary market outlet run by the Chicago bank that several of the FHLBanks participate in.Recently, community activist John Hope Bryant called for a 40-year mortgage program using the FHLBanks as a framework, coupled with a federal subsidy to buy down the rate for first-time home buyers. The 11 FHLBanks would look at the demand among consumers before considering such a product, Ryan Donovan, president of the Council of FHLBanks said in a recent interview.TopLine Federal Credit Union, headquartered in Maple Grove, Minnesota, called this a new program in a press release that publicized its participation; but the institution has been involved since inception.So far, the credit union had 17 of its members participate in the initial program for a total of $3,830,437."We believe that homeownership should be within reach for everyone," says Mick Olson, president and CEO of TopLine Financial Credit Union. "We were excited to partner with the Federal Home Loan Bank of Des Moines to offer the Mortgage Rate Relief Program to make home buying more affordable, and help our members achieve their goals of homeownership."

United Wholesale Mortgage is expanding the capabilities of its front-facing chatbot, announcing the roll out of new features Wednesday.Enhancements to UWM's chatbot, which is dubbed ChatUWM, include brokers now being able to "chat with a document," the bot being able to calculate borrower income and upload a loan right to the wholesale lenders application system.The mega lender introduced its chatbot built for brokers in May. At the time, the company predicted that its user base would migrate over to ChatUWM to get answers to all of their questions."Brokers are going to want a lot more out of it, because they're going to want to start acting as if ChatUWM is a ChatGPT for them, and that's exactly what we're going to give them," said Jason Bressler, the firm's chief technology officer.Recent updates to the lenders chatbot will provide brokers with additional assistance, the lender said.One of the new features is that the bot will allow brokers to upload any PDF and "engage in dynamic conversations with the documents."The wholesale lender says this can help brokers in situations including extracting details from an appraisal or clarifying seller credits from a purchase agreement. Clarifying seller credits can be as simple as asking ChatUWM, "What are the seller credits?" and "Is the buyer contributing anything additional?" UWM claims. Brokers will also now have the ability to import a loan to ChatUWM, afterwhich the AI system runs "the file through One-Click AUS, pulls credit and imports it directly into EASE, UWM's application system," the Pontiac-based lender said.Additionally, ChatUWM's AI technology is now able to examine a borrower's specific financial situation and recommend a product offering that is the best fit."A broker could simply upload a credit report and W2, and the platform will analyze the documents, ask a few follow-up questions and immediately provide a recommendation on product offering," the company's announcement said.Apart from enhancing its front-facing chatbot capabilities, UWM is using AI to beef up its call center operations.In a recent interview with National Mortgage News, Bressler said UWM launched an AI-powered initiative earlier this year to have an "overview of all of the calls that come in." "We could actually start to get an inflection and tone in how people were talking and it would be analyzed," said Bressler. "We could see if customers or team members were angry and if they were happy and pleasant, so that we could really start to change the overall training of our customer service platform." Consumer-facing and internal bots have been actively introduced by lenders to give prospective borrowers advice and to help loan officers find details on loan products. Apart from UWM, mortgage players such as Guild Mortgage, Figure Technology Solutions and Rocket Mortgage have rolled out similar products to streamline the loan origination process.

Real estate brokerage The Agency is adding mortgage lending with a new joint venture agreement.Alongside JV partner, Arizona-based mortgage broker Barrett Financial Group, the two companies this week announced the launch of lending business Aclara Lending, which will offer over 140 loan products geared toward high-end purchases. Among the products available to The Agency's clients are jumbo, super-jumbo and non-QM mortgages, the JV's leaders said. "Together, we're setting a new standard for luxury home buying by providing clients with not only tailored lending solutions but also a seamless, integrated experience that supports their entire journey — from the initial search to closing the deal," said Trevor Barrett, founder and president of the namesake mortgage business, in a press release. With initial mortgage operations aimed at the Southern California market, Aclara hopes for greater expansion to eventually serve buyers across the U.S. Barrett Financial is currently licensed in 49 states. The Agency's real estate brokers should also benefit through continuous education opportunities to learn about mortgage trends and new products thanks to the agreement, the company said. "This partnership marks a pivotal moment in our journey, bringing together a comprehensive suite of mortgage solutions with a strong focus on agent empowerment," added Burke Smith, executive vice president of affiliated businesses at The Agency. Company leadership touted Aclara's ability to offer paperless loan technology, including E-signing, in the borrowing and closing process. Aclara loan originators will also be able to easily compare data from both Fannie Mae's and Freddie Mac's underwriting systems side by side to determine the best options for clients. A dedicated account executive at each Barrett lending office will be available to better assist The Agency's clients.Founded in 2011 by CEO Mauricio Umansky in Beverly Hills, California, The Agency currently counts more than 120 offices in 12 countries within its broker network. The real estate company said it has closed more than $72 billion in transactions since its founding. Umansky is also known in Hollywood circles as a producer as well as the husband of Real Housewives of Beverly Hills star Kyle Richards. The latest JV is the latest in a list of moves over the years from real estate brokerages entering mortgage lending using various strategies. In September, Florida company Realpha added home lending to its offerings with the acquisition of mortgage broker Be My Neighbor. In late 2023, Loandepot also teamed up with Exit Realty, joining its network to offer home lending services to the agency's customers. In the past, real estate giants, including Zillow and Redfin, also purchased home lenders, while Remax introduced its own mortgage broker franchise network, Motto. In joint-venture moves similar to the The Agency/Barrett Financial agreement, Kind Lending and a Midwest Remax franchise partnered last year to form Results Home Mortgage, aimed at serving buyers in the region. In 2021, Compass and the company now known as Rate, both leading names within their respective industries, launched lending business Originpoint. Recent decisions between businesses in real estate and mortgage to work together come amid a prolonged stretch of sluggish home sales, arising from a challenging interest-rate environment and record-high prices. While declining mortgage rates are leading to optimism for a rebound in home sales, several researchers have cautioned the market may not return as quickly as hoped. This week Redfin reported that the share of homes sold in the first eight months this year relative to the total number of U.S. properties was the smallest in several decades at 2.5%. Researchers cited homeowner reluctance to give up favorable mortgage rates they held as a leading cause for the slow housing turnover. 

Apollo Global Management CEO Marc RowanJeenah Moon/Bloomberg Apollo Global Management CEO Marc Rowan said he doesn't see a reason for the Federal Reserve to keep cutting interest rates to stimulate the U.S. economy right now."Financing is available. Real estate prices are going up," Rowan said in an interview Wednesday on Bloomberg Television. "It is not clear we need more rate cuts."Fed officials lowered interest rates for the first time in four years last month, cutting them by a half percentage point. On Monday, Fed Chair Jay Powell indicated that officials would continue lowering rates but in smaller increments. Rowan raised concerns that the central bank could overstimulate the economy. "To the extent we accelerate the economy and have to go in the other direction," he said, "that would not a good day."Apollo revealed ambitious targets at its investor day Tuesday that aim to boost assets under management to $1.5 trillion and generate $10 billion of annual earnings in five years.Apollo is likely to form more bank partnerships similar to its deal with Citigroup to pursue private credit investments, Rowan said Wednesday. The firm could form international, investment grade and infrastructure-related partnerships, he said.The CEO said the differences between public investment-grade debt and private investment-grade debt are continuing to narrow, especially as credit-rating agencies say they're the same quality."Eighteen months from now I do not believe investors will know the difference," Rowan said. "Everything that exists in the public markets is coming to the private markets."Those developments will also extend to equity investments, he said. Investors are overly allocated to a few large stocks, and the addition of private investments to 401(k) portfolios could boost outcomes by 50%-60%, he said.Rowan also cautioned against the current pace of government spending, noting that the United States is "spending the next generation's money."