Uncategorized

Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development have announced mortgage relief measures to assist homeowners across three Southeastern states in the wake of Hurricane Helene. For borrowers with properties within designated disaster areas in Florida, North Carolina and South Carolina, HUD is imposing a 90-day foreclosure moratorium on mortgages backed by the Federal Housing Administration, effective immediately.The moratorium also covers loans taken out through the federal government's Section 184 Indian Home Loan Guarantee program. A 90-day extension period was also automatically granted for Home Equity Conversion Mortgage borrowers in the designated disaster zones.  On Sunday, President Biden declared a total of 56 counties or tribal areas that bore the brunt of the storm in Florida, North Carolina and South Carolina disaster areas, immediately making the moratorium and other federal assistance available to local residents and jurisdictions. Homeowners in 26 areas in North Carolina are eligible for moratorium relief under the HUD directive. There are 17 designated disaster counties in Florida and in South Carolina, 13 counties fall under the president's disaster declaration. HUD is advising eligible borrowers in affected counties to contact their lender or servicer directly to receive foreclosure assistance. Fannie Mae and Freddie Mac also issued reminders to homeowners and servicers of forbearance options that can be made available to victims of the storm. Mortgage borrowers impacted by natural disasters can often enter forbearance plans, suspending payments for up to one year. Borrower assistance may also be available to homeowners residing outside designated zones, but whose place of employment lies within them, the government-sponsored enterprises said. Fannie Mae also reminded servicers in instances where no contact can be established with a borrower likely affected by a natural disaster, they are authorized to offer forbearance for up to 90 days.Hurricane Helene first made landfall in Florida on Thursday before heading north, carving a 600-mile wide swath of destruction across several states. The deadliest hurricane to hit the U.S. in at least two years, Helene has so far resulted in 133 deaths as of Tuesday morning, with the number expected to rise. Initial estimates of the hurricane's destruction published late last week found the cost of property damage in coastal areas of Florida and Georgia alone to be between $3 and $5 billion, according to Corelogic. Data provided at that time did not include many of the inland areas covered by the Biden administration's disaster declaration. 

Recently, philanthropist and entrepreneur John Hope Bryant penned an article making a case for having the 40-year mortgage become the standard in order to boost homeownership affordability, especially for first-time buyers.He would use the Federal Home Loan Bank system as the vehicle for implementing this product, as well as use federal subsidies to reduce the rate.Nominally the 40-year mortgage would have a higher rate than the 30-year and it's not just because any iteration of the product that exists today falls under the non-qualified mortgage category. As with any mortgage, when the term increases, so does the rate.The trade-off is that the extra 10 years of amortization spreads out the payments.If anything, the market should even be considering a 50-year mortgage to account for affordability factors, especially if the country wants to maintain its middle class, said consumer finance expert and author Bill Westrom.Bryant writes that the 30-year mortgage term is not any magic number. It is a legacy of the Great Depression and that event's impact on homeownership in America. He looks to make the argument that with today's longer life expectancy (80 years versus 60 years), a 40-year term aligns more with modern realities.Getting a later startHowever, what is happening is that people are purchasing their first homes later in their lifecycle."[Having] 40-year mortgage loans as the standard is impractical from an age perspective," said Seamus Nally, the CEO of TurboTenant. "While a few decades ago, when people were more easily buying their first homes in their mid or even early 20s, that is not the case anymore."He said the average age of a first-time home buyer is about 36 years old."Starting a 40-year mortgage at age 36 is impractical for the vast majority," Nally said.The goal of owning a home is the ability to build equity, and the 40-year product, while albeit at a slower pace, does so in a way that improves affordability, said Melissa Cohn, regional vice president at William Raveis Mortgage.It provides the opportunity for Americans to build wealth, added Micah Jindal, managing director and senior partner at Boston Consulting Group."We know so much of your wealth comes from home ownership," Jindal said. The 40-year mortgage "brings more people into the market that can actually use that as a vehicle to build wealth."In fact, the 30-year mortgage is not seen in many other countries, most of which have terms of much shorter duration.Canada recently extended the amortization term of mortgages insured by the government for first-time home buyers and newly built homes to 30 years, expanding on an April announcement that allowed terms that long for purchasers that met both of the above criteria.Like the aim of Bryant's expanded term here, the Canadian government's goal is to improve affordability.Since the financial crisis in 2008, Canadians that needed government-provided mortgage insurance were limited to 25-year terms.In the U.S., the average tenure as of June in a home is over 11 years, according to First American Data & Analytics.Easier to qualify, no prepayment penalty"The good news is that many loans don't have prepayment penalties, so you do have the ability to accelerate the payments," Cohn said. "But most people don't do that."Indeed, many people who seek out the 40-year term would be those that were having a hard time qualifying for the amount they want to borrow, she said."One important thing to remember is that most homeowners don't stick with the same home or mortgage for the full term," said Matt Dunbar, the senior vice president for the southeast region at Churchill Mortgage, pointing to figures that show most people go 7-to-12 years before selling or refinancing."So, while a 40-year mortgage technically means paying more in the long run, most borrowers won't be making payments for all 40 years," Dunbar said. "Instead, they can take advantage of lower payments early on and refinance as their financial situation improves or interest rates change, giving them the flexibility to grow from there."The fact that most people do not intend to keep their house or mortgage for 30 years, let alone 40 years, is actually a positive for that longer duration, said Matt Schwartz, the co-founder at VA Loan Network. "By rolling out a 40 year option it would allow access to homeownership to more individuals by lowering their debt-to-income ratio."But even on a 30-year mortgage, consumers are paying at least twice the purchase price on a home when accounting for the interest, Schwartz said.William Raveis Mortgage does not offer 40-year mortgages as a banking product but can through brokering with a non-QM lender. Cohn most often uses the product as a loan with a 10-year interest only payment period and then amortizing over the remaining 30 years. She did not disclose the outlet but in September 2022, NewRez introduced a 40-year product that starts with a 10-year IO period.Overall, "the fact is prices have increased so dramatically that there's much greater demand for anything that helps keep payments down," Cohn said.In typical amortization of principal and interest, the latter is the larger component in the early stages of a mortgage and as time goes on, the balance shifts.Spreading out the payments "can be advantageous in today's market, where higher than average prices make it difficult for new buyers to gain access to housing," Dunbar said. "While it can take longer to build equity and possibly result in paying more interest over time, the immediate relief of lower payments allows buyers to enter the market sooner and start building equity."Do the rewards outweigh the risks?Jindal notes that slower equity build can make it harder in the future for the borrower to prepay, either for a refinance or new purchase. This is because the reduction in the loan-to-value ratio is also at a slower pace if the home's value does not significantly increase.While it is easier to qualify, it also might encourage "someone who was in the market for a $300,000 home [to be] thinking about $400,000," Jindal said.Because it is nominally a longer term, it could also lead to additional default risk, he said, as the leading drivers of nonpayments are life events such as job loss and medical emergencies."The other thing that you would just need to be conscious of is, what would this do to home prices?" Jindal said, noting it would likely increase demand in the low-end segment of the housing market, which has been hardest hit by the inventory shortage."You're only bringing more people into the market for the same set of homes," he said. "That will actually increase home prices even more."Today's 40-year mortgageA 40-year mortgage term is not a new product. Both Home Savings of America and Great Western Bank were among those in the late 1980s who introduced 40-year adjustable rate mortgages in an effort to address the affordability challenges of that period.Both banks were eventually acquired by Washington Mutual, whose September 2008 failure was a result of the excesses and missteps in mortgage underwriting of exotic products in years prior.At one point, the 40-year was available as a conforming product offered by Fannie Mae. In June 2005, it added fixed rate and hybrid adjustable rate mortgages of that length into Desktop Underwriter, expanding on a pilot it conducted with 22 credit unions.However, when the qualified mortgage standards came out, Fannie Mae issued a Seller's Guide in August 2013 that announced the 40-year loan's removal from its automated underwriting system.Freddie Mac, on the other hand, did not purchase these loans then or now and currently only allows for terms that long for modifications.The California Housing Finance Agency also provided 40-year financing starting in March 2006. But the financial market turmoil of September 2008 caused the agency to drop a number of products outside of the 30-year fixed, not just the 40-year fixed.Today, however, besides the non-QM offering, 40-year mortgages are offered as a government-guaranteed loan modification program that lender/issuers can securitize through Ginnie Mae.Loan modifications are what the 40-year term is highly suited for and has been working well at, Jindal said.Right now, even with several programs available, consumer interest in a 40-year loan is at best "de minimis," said Brennan O'Connell, director of data solutions at Optimal Blue.Out of 1.35 million locks Optimal Blue has in its system this year through mid-September, just 864 are for 40-year terms, or less than one-in-1,500, O'Connell said.Optimal Blue's PPE has approximately 850 "locking lenders," that represent about one-third of U.S. residential mortgage activity, O'Connell said.Speaking with a loan officer he was working with recently for his own loan, the originator commented that if affordability issues were to keep going in perpetuity, it could trigger a desire for a lender to offer products to alleviate those issues.But right now, the lender O'Connell's loan officer works for does not have a 40-year product on its menu.Because so little activity in the 40-year is happening, Optimal Blue does not have data for it on its website.But using the difference between the conforming 30-year and 15-year FRM as a proxy, the spread on Sept. 24 was 91 basis points. That makes it likely an unsubsidized rate on the 40-year loan would be almost a full percentage point higher than for the 30-year FRM.Bryant's rate subsidy is key to his program; the consumer would still benefit from lower payments, but higher interest would eat into that.Demand will drive FHLBanks interestIf the Federal Home Loan Banks don't make the secondary market for these loans as Bryant envisions, rates could even be higher as investors would price in a risk premium.Right now, several of the FHLBanks do accept 40-year mortgages from its members as collateral on advances, Ryan Donovan, president and CEO of the Council of Federal Home Loan Banks, said. The system's membership is only open to regulated financial institutions, including savings banks, savings and loan associations, commercial banks, credit unions, insurance companies and community development financial institutions. That excludes the independent mortgage bankers who hold a majority share of the market.It will be the demand from homebuyers that will drive whether lenders will end up offering this product, and ultimately any home loan bank's interest in being a part of the program, Donovan said.The Council's "initial legal analysis suggests that we don't see any regulatory prohibition for it," Donovan said. "If a bank goes into that, they probably would have to update their risk models and evaluate the risk appetite for such collateral."So it is likely statutorily possible, but additional guidance might be needed.While providing advances secured by collateral is the primary book of business for the FHLBanks, several also participate in asset acquisition programs such as the Mortgage Partnership Finance program and the Mortgage Purchase Program.Those programs have different risk parameters for the banks that have to be evaluated when it comes to the 40-year mortgage that would have to be figured out first."It's an interesting idea," Donovan said. "Right now, we haven't seen a lot of uptake on it, and so it's hard to know, with a lot of specificity, how the Home Loan Banks would respond."

A destroyed building near Mill Creek in the aftermath of Hurricane Helene on Monday in Old Fort, North Carolina.Melissa Sue Gerrits/Getty Images After Hurricane Helene rocked the Southeast with power outages and massive levels of destruction, banks have been assessing the damage, accounting for employees, working to restart operations and trying to communicate with clients.Financial institutions that operate in Western North Carolina, Upstate South Carolina and parts of Florida, Georgia and Tennessee said Monday that they have been focused on ensuring their workers are safe, and on trying to help the communities that were devastated by floods and mudslides. In areas around Asheville, North Carolina, where there have been at least 40 storm-related deaths, Helene was especially ruinous, knocking out power, water, gas and communications, and destroying scores of roads, including major highways."The devastation is worse than it appears on television," Peter Gwaltney, president and CEO of the North Carolina Bankers Association, told American Banker in an email Monday. "Videos and photos don't adequately capture it."Banks with a large presence in the area, including First Citizens BancShares, Truist Financial, Bank of America, HomeTrust Bancshares and First Bancorp, faced similar challenges over the weekend and on Monday, with employees who didn't have power or water and branch locations covered in debris.Mempis, Tennessee-based First Horizon, which operates a handful of branches across Western North Carolina, spent Monday getting supplies and relief to its employees, according to Mid Atlantic Regional President Sam Erwin. He said that in his native Greenville, South Carolina and the neighboring county, many businesses and homes have been without power since Friday.It's a more severe story in Western North Carolina, Erwin said. He wasn't able to get in touch with the bank's Asheville manager for two days due to poor cell coverage and power issues. On Monday, an Asheville banker walked 45 minutes to get enough reception to talk on the phone, Erwin said.First Horizon's location in Boone, North Carolina — a mountain town about 100 miles north of Asheville — was flooded with about a foot of water, and it will probably be three or four months until the branch is back in operation, Erwin said. In the meantime, First Horizon plans to get one or two full-service mobile branches up and running, he said. He expects three branches in Asheville to be open in some capacity later this week.The isolation and inability to travel into the region made it difficult for banks to contact employees and assess damages to offices and other facilities. As of Monday afternoon, all roads in Western North Carolina were still considered closed, according to the state's Department of Transportation website.Rusty Edwards, the Asheville regional executive for the $12.1 billion-asset First Bank, said in an email on Monday that he spent the day driving around the county to meet with employees and city and county officials. He said there was little to no cell service, very little electricity and no water services available, adding that gas prices are at a premium, with people waiting two to three hours to fill their tanks. First Bank, which is based in Southern Pines, North Carolina, has about 14 branches around Asheville, and is working to get local branches up and operating."The safety of our employees is paramount," Edwards said. "Many have been impacted personally or have had family members impacted by the devastation throughout the area. Homes and cars were flooded, there's spotty power and very little internet connectivity. We've accounted for everyone, which was a huge relief."Edwards said the bank is now working on how to support its workers, customers and communities.In recent days, Truist Financial has reached out to more than 13,000 employees who reside in the storm's path, and it continues to try to get in touch with those employees who have not yet responded, the company said Monday. The North Carolina company, which operates across the Southeast, said it will keep trying to make contact "until all teammates are confirmed safe."While Truist is already delivering bottled water, meals and other sanitary supplies in places such as Greenville, South Carolina; Augusta, Georgia; and St. Petersburg, Florida, it hasn't yet been able to get to Asheville, due to the continued road closures."We expect to deliver humanitarian aid into Western North Carolina once the area is deemed safe and opened to recovery efforts," the company said.Truist has about 600 employees in the multicounty North Carolina region that's been defined by the Federal Emergency Management Agency as a disaster area, the company said. About half of its 34 branches in that area are currently closed due to power outages.Erwin said First Horizon's experience with disasters in Louisiana, Florida and Texas has helped the bank prepare for events like Helene."I don't know that I fully understood that until I was right in the middle of a disaster," Erwin said. "So we have a team that's always ready, and it starts with really supporting our associates, making sure that our associates have food and water and access to fuel."Erwin said on Monday that a fuel and supply truck was stationed in Greenville, Tennessee, to provide gas, water, batteries, tarps and other relief items to First Horizon employees, and on a limited level, to the community as well.Erwin was planning to drive to Asheville on Tuesday to assess the situation in person, provide fuel and supplies to First Horizon employees and assess where further assistance is most needed.The North Carolina Bankers Association, which has 84 members, hosted a Zoom call on Sunday afternoon with bankers to get updates on current conditions. "Communication in an event like this is critical," Gwaltney told the bankers on the call. The group was scheduled to hold another call Monday evening.During Sunday's call, Bob Washburn, president and CEO of LifeStore Bank in West Jefferson, North Carolina, said that a major focus was on trying to take care of the bank's staffers."Probably half of our employees still don't have power, don't have water," Washburn said during the Zoom call. "So we're renting some space where they are going to take showers."Adam Currie, president of First Bank, said during the same Zoom call that at one branch in South Asheville, a front loader that was being used to clear the site picked up so much debris that it broke.At HomeTrust Bank, Chief Operations and People Officer Megan Pelletier said the bank had reserved blocks of hotel rooms in Charlotte and Greenville for employees who were willing and able to travel, after the bank's operations center in Asheville lost access to running water."We're putting them up, and they'll work from those locations, at least for the next week or so," Pelletier said.Another problem at branches in the most devastated areas, as of Sunday: cash shortages. Gwaltney, of the North Carolina Bankers Association, told bankers on the call that his group would work with them to arrange for escorts to allow for deliveries of cash.First Horizon's Erwin said Monday that the bank has worked with some clients to make payroll and perform similar tasks, but clients' key need is cash. Many stores that are open are only accepting cash, so Erwin said First Horizon is trying to ensure that customers, and community members more broadly, can access cash through its locations and mobile branches. Another complication is that much of the cash was soaked during the hurricane, though "the Federal Reserve will take back wet cash, we've found," Erwin said.But, he said, "the most important thing is, we're all in this together as a banking community."Amid the immense damage, a number of banks have committed donations to help disaster relief organizations. Truist's charitable arm, Truist Foundation, said it will donate $1 million to relief and recovery in communities most affected by Helene."Many of the communities we serve are experiencing historic and catastrophic flooding and millions are still without power and access to everyday essentials," Lynette Bell, president of Truist Foundation, said in the release. "We are committed to putting our purpose into action with additional funds to help those in impacted communities get connected — digitally and physically — as soon as possible."Bank of America is also committing $1 million to support those impacted by the hurricane. The first $500,000 will be deployed now to the American Red Cross, and the remaining $500,000 will be allocated as needs continue to be identified.San Antonio, Texas-based USAA announced Saturday that it was donating $1 million to American Red Cross, Team Rubicon and Feeding America in efforts to help communities impacted by Helene.

Synergy One Lending is moving forward on expansion goals with its latest acquisition of a Montana-based mortgage company that's been highly ranked as an employer. Following the addition of several branches to its network at the start of 2024, Synergy One will purchase fellow retail lender Mann Mortgage, which is currently licensed in 28 states and employs over 500 people nationwide, according to the company's website. Daily Inter Lake, a Kalispell, Montana-based publication, reported the news previously. "There are a lot of really talented people at Mann, and some of our leadership has worked with a fair amount of Mann people as well in previous companies," said Synergy One CEO Steve Majerus in an interview with NMN. "Given that they're 100% retail like we are — similar technology platform — it was a pretty easy way for us to get aligned and put this together quickly."Founded in 1989, Mann Mortgage will continue operations with its own branding under Synergy One's leadership, CEO Jason Mann said to Daily Inter Lake. Mann Mortgage took the top ranking in National Mortgage News' list of 2024 Best Companies to Work For. Its CEO cited market pressures contributing to his firm's decision to merge. While some staff will move over to Synergy One, layoffs at Mann Mortgage are expected to occur, he told Daily Inter Lake.Financial terms of the deal were not disclosed.The networks of both lenders are concentrated in the Western U.S., but within that context, the merger will bring new opportunities for Synergy One to Montana and Washington State in particular, according to Majerus.  Mann's operations extend throughout the country and the acquisition also gives Synergy One new branches elsewhere "that are really complementary to markets that we're already in," Majerus noted.  Licensed in 49 states with approximately 75 branches, San Diego-based Synergy One made expansion a key target in 2024, citing both favorable conditions within the company and expected industry trends. Earlier this year, the lender increased its branch network by absorbing 11 former Draper & Kramer Mortgage offices that opted out of a deal in which their parent company sold its single-family lending assets to New American Funding. "We haven't hidden the fact that for all of 2024, our intention was to grow aggressively into potential market opportunities," Majerus said.The latest move suggests more potential activity in the offing, through both organic growth and potential future mergers, at Synergy One. "We're continually assessing opportunities as they present themselves," Majerus said. "We do expect to continue to grow through organic efforts, as well as being open to additional acquisitions. And I think it'll be that way for quite some time."While lending volume has seen a resurgence this summer, the dramatic contraction in origination volume dating back to 2021 should make many smaller lenders amenable to selling this year, according to mortgage consultancy Stratmor Group. After record-setting origination volume of $4.44 trillion in 2021, lending retreated in the following two years and came in at $1.46 trillion for 2023, according to the Mortgage Bankers Association. The MBA expects volume to improve to $1.82 trillion this year. Other merger-and-acquisition deals announced in recent months include two asset sales. Axia Home Loans sold retail operations to Planet Home Lending, while OCMBC acquired certain Homestar Financial assets. Mortgage banking assets also played a prominent role in other deals involving banks and companies outside the home lending community. M&A activity hasn't been exclusively restricted to lenders, either. Earlier this year, Stratmor, itself, announced it had agreed to join forces with mortgage technology advisory firm Teraverde.  

Jerome Powell, chairman of the US Federal ReserveAl Drago/Photographer: Al Drago/Bloomberg Inflation and unemployment are the two key data points the Federal Reserve leans on when setting monetary policy, but Fed Chair Jerome Powell flagged another potentially relevant metric: personal savings. Powell said government measures of gross domestic income, or GDI, had been coming in low relative to gross domestic product, or GDP, resulting in a low savings rate — an outcome often associated with economic weakness. But, recent revisions to GDI boosted the savings rate from 4.8% to 5.2% and, according to Powell, assuaged some concerns at the Fed."There's now no gap between [GDI and GDP]," Powell said. "In theory, there should be no gap. There's no statistical error in measurement. So that .. removes a downside risk to the economy."Powell added that the higher income projections erased another simmering concern for the Federal Open Market Committee: that consumers were spending more than they were earning. "There are more savings on people's balance sheets, and the savings rate is higher," he said. "That suggests that spending can continue at a healthy level."Powell's comments on inflation data came during an on-stage question and answer session at the National Association for Business Economics, or NABE, annual conference in Nashville. The discussion largely focused on labor market conditions and Powell's economic outlook. He discussed notable developments since the last FOMC meeting that could factor into the group's next policy move.Powell noted that the most relevant data readings — the consumer price index, the personal consumption expenditure index and the Board of Labor Statistics's labor situation report — are still to come. Earlier this month, the FOMC lowered its benchmark interest rate by half a percentage point. It was the first policy rate cut by the Fed since 2020 and marked the end of the central bank's 30-month battle to rein in inflation.In prepared remarks, Powell said the decision was made in light of the continued improvement in market prices and a softening of labor market conditions — but he noted that the cut should not be interpreted as a sign of economic weakness. "That decision reflects our growing confidence that, with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in an environment of moderate economic growth and inflation moving sustainably down to our objective," he said.Powell added that the baseline expectation is for the FOMC to continue lower interest rates at the two remaining meetings this year, but said that course of action is not set in stone."Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance. But we are not on any preset course," he said. "The risks are two-sided, and we will continue to make our decisions meeting-by-meeting. As we consider additional policy adjustments, we will carefully assess incoming data, the evolving outlook, and the balance of risks."

The nation's No. 3 reverse mortgage lender, Longbridge Financial, is accusing market leader Mutual of Omaha Mortgage of dishonest marketing practices.According to a complaint filed by Longbridge, its competitor is allegedly using a number of websites with fake reviews as a means to prop up its reverse mortgage business, equating to unfair business conduct.The New Jersey-based reverse mortgage lender wants to put a stop to Mutual's alleged tactics, a suit filed in a California federal court on Sept. 27 said.Specifically, Longbridge claims Mutual of Omaha uses misleading websites —ReviewCounsel.org, AdvisoryInstitute.org, and RFSQualify.com—to manipulate senior consumers into choosing its services or Retirement Funding Solutions.The above-mentioned websites, which present themselves as unbiased review platforms, are actually run by Mutual and "inflate Mutual's ratings and misrepresent it and Retirement Funding Solutions (RFS) as separate entities, despite their shared ownership," the complaint said. Longbridge refers to a filing with the California Secretary of State, which shows that Review Counsel is owned and operated by Mutual.Longbridge also claims the other websites mentioned are either directly or indirectly controlled by Mutual of Omaha and that the education articles on the Review Counsel website are authored by a director of marketing at Mutual of Omaha Mortgage, "further proving that Mutual is pulling the strings of the Review Counsel website.""[Review Counsel] publishes false and misleading "ratings" of reverse mortgage providers that score Mutual of Omaha far higher than its competitors based on factual misrepresentations and highly skewed rating criteria," Longbridge purports in its suit. "In addition, the Review Counsel website presents seniors with a false choice between two winning alternatives in the rankings—namely, Mutual of Omaha and RFS (Retirement Funding Solutions) — making these companies appear to be competitors in the rankings (and the marketplace more generally), as opposed to what they really are: one and the same company."Both Longbridge and Mutual of Omaha declined to comment on the pending litigation Monday. According to the Nationwide Mortgage Licensing System, RFS is a trade name for Mutual of Omaha.The filing argues that these deceptive advertising practices not only harm vulnerable seniors but also unfairly impacts competitors, such as Longbridge, who adhere to ethical advertising practices.Mutual is accused of violating a number of state and federal statutes including the Real Estate Settlement Procedures Act (RESPA), Federal Trade Commission guidance and the Lanham Act, which prohibits the use in commerce of any "false or misleading description of fact.Longbridge is seeking injunctive relief under California's Unfair Competition Law (UCL) to stop Mutual from using the misleading websites.Without such a motion, Mutual will "continue to target elderly consumers with the false, deceptive, and misleading advertising contained on these websites" and will further harm Longbridge's reputation and business," the legal filing states.Through August in fiscal year 2024, Mutual of Omaha has 4,024 Home Equity Conversion Mortgage endorsements from the Department of Housing and Urban Development, putting it ahead of Finance of America at 4,002 and Longbridge at 2,004, according to Reverse Market Insight.Mutual of Omaha entered the reverse mortgage business through the 2018 acquisition of Synergy One Lending. In 2020, Synergy One management repurchased the brand as well as the distributed retail forward production channel.Concurrently, Mutual is also being asked to cough up $145,000 in sanctions by Waterstone Mortgage in a trade secrets case. Waterstone, in a motion filed Sept. 27 in a Florida federal court, claims Mutual has caused it to incur thousands in fees "by identifying 186 alleged trade secrets and then changing course and alleging entirely new trade secrets eight months after the close of discovery."

Even though mortgage rates have fallen quite a bit from their highs seen a year ago, they remain quite elevated relative to much of the past decade.Sure, a 6% 30-year fixed is better than an 8% 30-year fixed, but it’s still a far cry from a 3 or 4% 30-year fixed.This might explain why prospective home buyers haven’t exactly rushed back into the housing market in recent months.And now we’re being told this is as good as it’s going to get for mortgage rates. That remains to be seen, but what’s interesting is I’ve seen quotes down into the high-4s for mortgage rates recently too.So how are lenders able to advertise rates that low if the Freddie Macs of the world are telling us rates are still above 6%?Well, the secret is a little thing called mortgage discount points.Mortgage Rates Are Lower When You Pay PointsAfter mortgage rates surged since beginning in early 2022, the secondary market where investors buy and sell mortgage-backed securities (MBS) got all out of whack.Basically, uncertainty and volatility surged while volume plummeted. Long story short, MBS investors wanted more assurances, which generally meant borrowers had to pay points upfront.This ensured a profit even if the mortgage was short-lived and paid off in a short period of time.It also allowed lenders to keep mortgage rates from going even higher, completely decimating lending volume in the process.Conditions have since improved, and it’s again possible to get a home loan today without paying points.But you’re still seeing lenders offer rates with points attached. And the reason why is because you can offer a lower rate!Obviously, it looks a lot better if you’re able to advertise a rate starting with a 5 instead of a 6, or a 4 instead of a 5.And that’s exactly what some lenders do, at least the ones that lead on price as opposed to service or brand name.Interestingly, I discovered over the weekend that this isn’t a new phenomenon. Back in the 1980s and 1990s this was also common.Homeowners Paid Over Two Points on Average from 1981 to 1991Remember those super high mortgage rates in the 1980s? Well if you don’t, the 30-year fixed climbed as high as 18.45% in late 1981, per Freddie Mac.Despite the rate being astronomically high, the average amount of discount points required was a whopping 2.3 at that time.In other words, on a $250,000 loan amount, you’d be talking about $5,750 in fees just to obtain that ridiculously high rate.Did that mean a borrower who only paid one point would have been subject to a 20% rate? Perhaps, I don’t know, but that’s generally how it works.If you opt to pay less or nothing upfront, your mortgage rate will be higher, all else equal.This average amount of points paid by homeowners hit its peak in 1984 and 1985, when the average amount paid was 2.5 points.So for every $100,000 borrowed, a home buyer would have to fork over $2,500. And again, to wind up with a mortgage rate around 12 or 14% (they came down a bit after peaking in 1981).Are Mortgage Rates That Require Upfront Points Legit?Now that brings me to modern day, where lenders still charge multiple points for the lowest rates.While not obligatory, as I mentioned, you do typically have the option to pay points at closing.The tradeoff being a lower interest rate if you do. This is essentially what home builders have been doing to draw in business with their permanent and temporary rate buydowns.They’re buying the rates down to lure in home buyers, which allows them to keep their asking prices steady (or even rising).Those who comparison shop mortgage rates may also find that some lenders are offering “below-market rates” versus what they see in the mortgage rate surveys.The way lenders accomplish this is by asking you to pay points upfront, which are a form of prepaid interest.So the rate offered might be 6% with no points or for a no cost refinance. But 5.25% if you’re willing to pay a point (or more than a point) at closing.These are entirely legit rates, they just cost money to obtain them. And that cost is essentially an investment in the mortgage that you’ll only realize if you hold it long enough.Paying Points at Closing Might Not Be the Best MoveWhile the promise of a lower mortgage rate, especially something that starts with a 4 is enticing, it might not be worth it.Let’s consider a quick example where you pay two points to get a rate of 4.875% versus a rate of say 5.75% with no points.On a $500,000 loan amount that would set you back $10,000 at closing.The monthly payment would be $2,646.04 versus $2,917.86, or roughly $272 per month.While that’s a decent amount of savings, it would take about three years to breakeven on the upfront cost.Now imagine then 30-year fixed falls to the mid-4s or even lower during that span. Or if you want to sell your home and move.You’ve already paid for the lower rate and might not get the full benefit. This is not to say it’s a bad decision, since you, me, and everyone else doesn’t know what the future holds.But you’re making a conscious choice when paying points and there are no refunds.If we look back at those folks who paid 2.5 points back in 1984 for a 14% rate, only to see rates fall to sub-10% by 1986, it makes you wonder. 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)

Homebuyers are finding houses more affordable than they were at this time last year, much to the relief of lenders. That should get the home purchase market moving again even if consumers are still slow to react to the drop in mortgage rates.Consumers may be playing a waiting game to see what actions the Federal Reserve takes going forward and its impact on mortgage rates, Sam Khater, Freddie Mac's chief economist, commented on last week's Primary Mortgage Market Survey results.Only 2.5% of U.S. homes changed hands in the first eight months of this year, the lowest turnover rate in at least the last 30 years, Redfin said."Mortgage rates have already fallen more than one percentage point from their 2024 peak, but we have not yet seen a significant increase in the number of homes changing hands," said Redfin Senior Economist Elijah de la Campa in a press release. "Of the homes listed this year, many have gone stale because of the lack of demand — especially homes which needed a little extra work."Besides the mortgage rate environment, Redfin attributed the lack of movement to high prices and low supply of houses for sale.Affordability improved on an annual basis in August for the first time since 2021, First American Data & Analytics said. The 4.4% improvement in its Real Home Price Index came from two factors: a 3.1% annual rise in nominal household income and a drop of 57 basis points in the 30-year, fixed mortgage rate compared with one year ago.However, nominal home prices are still expected to increase through the end of 2024 as the supply of homes for sale remains challenged.The ongoing shortage puts a floor on how low prices can go, Mark Fleming, chief economist at First American, said in a press release. Still, he expects home value growth to return to its historical average of between 3% and 4% by the holiday season in December.Mortgage rates should continue falling in line with the 10-year Treasury yield. Still spreads between the conforming 30-year fixed and 10-year Treasury remain outsized at 231 basis points on Sept. 27, based on Optimal Blue and Yahoo Finance data.That actually gives mortgage rates the opportunity to move lower at a faster pace than the 10-year Treasury if that spread narrows to norms of around 170 basis points, Fleming said."If mortgage rates fall to 6% by the end of 2024, household income grows at the pre-pandemic historical annual average of 2.9% and nominal house prices increase by 3.9% annually, affordability will improve by 7% at the end of the year compared with one year ago," Fleming's cautiously optimistic outlook declared."Industry estimates predict that 2025 will bring even lower mortgage rates — the potential for further relief in the coming year could be a game changer for those waiting to enter the housing market," he added.Meanwhile, first-time home buyers need to earn 0.4% less in annual income to be able to buy a starter property, the first decline since August 2020, a separate Redfin study said.This is because the recent drop in mortgage rates offset a 4.2% increase in starter home prices.These buyers now need to earn $76,995 per year to afford the median priced starter home, which Redfin put at $250,000. In August 2023, one year earlier, a buyer needed to earn $77,343.But before the pandemic, in August 2019, a buyer only had to make $39,997, and seven years before that, $24,905.Being able to qualify for a entry-level house at a lower income is the good news about what first-time buyers are facing. said de al Campa.The bad news is that "starter homes aren't what they used to be," de la Campa said. "A decade ago, a turnkey four-bedroom house in a nice neighborhood was often considered a starter home, but today, a small fixer-upper condo is often all a first-time home buyer can afford," he said.

Onity on Monday announced several steps aimed at moving more quickly on efforts to strengthen its balance sheet, including selling its stake in a joint venture to its partner.The company is selling a 15% investment in a mortgage servicing rights investment vehicle to Oaktree Capital Management. Oaktree also plans to participate as an anchor investor in an Onity debt financing. Onity additionally is engaging in debt reduction, asset sales and securitization.Onity will sell its interest in MSR Asset Vehicle LLC to Oaktree for around $49 million, with the sale expected to close in the fourth quarter, contingent on approvals and the debt financing, which will refinance all outstanding PHH Mortgage Corp. 7.875% notes."We are pleased to announce the agreement with Oaktree that will enable a meaningful reduction of our highest cost corporate debt and continuation of our relationship with MAV," said Glen Messina, chairperson, president and CEO of Onity Group, in a press release.How companies with servicing exposures are handling their MSR investment vehicles and balance sheets amid a recent shift in the interest rate environment has been closely watched by stakeholders.For five years, Onity will maintain the status quo as the only subservicer for MAV's existing portfolio, which had an unpaid principal balance of $52 billion as of Aug. 31. It also will subservice most new MSRs acquired. MAV will have some sales restrictions for 36 months.Onity also will redeem a minimum of $150 million in notes during the fourth quarter. It's doing this in conjunction with requirements to redeem a principal amount equal to the proceeds from the MAV sale plus other transactions, subject to certain adjustments.Oaktree also will receive a transaction fee of as much as roughly $16 million depending on the previously mentioned financing's size, pricing and other conditions. The other transactions that the aforementioned proceeds are based on include the Mortgage Assets Management deal announced over the summer. In that transaction, Onity is buying substantially all MAM's assets, which have an aggregate value of $55 million.Also included in the transaction list is a securitization that included reverse mortgage assets recently purchased from a large, unnamed financial institution in September. Onity said that transaction has provided $46.1 million in liquidity to its PHH Mortgage Corp. unit to date.In addition, Onity reported that it was on track to complete a sale of MSRs from loans sold to Fannie Mae and Freddie Mac by the end of the business day on Monday.The company anticipated that sale would reduce its MSR debt by $73.4 million and generated roughly $26.5 million in cash proceeds that it plans to use to pay down corporate debt.Collectively, the moves "should aid the company's ongoing deleveraging efforts" as intended, Keefe, Bruyette & Woods said in a report on Onity's announcement."While likely to reduce earnings given the transactions are reducing the size of ONIT's MSR portfolio, the ultimate impact will depend on the size and cost of new debt issuance," they said."While we think the market should react positively to the continued deleveraging efforts, the impact could be neutral given the +20% move in shares on Friday."Onity's shares were trading just above $34.50 around noon Eastern on Monday, nearly flat compared to an opening price of $34.75.

Luke Tilley, chief economist at M&T Bank's Wilmington Trust, said the American Bankers Association's Economic Advisory Committee expects continued growth through 2025.Tiffany Hagler-Geard/Bloomberg The U.S. economy will slow further this year and settle into a modest growth pattern through 2025, but it will evade a recession, and that bodes well for banks' continued strong credit quality.That was the latest assessment from the American Bankers Association's Economic Advisory Committee. The panel is composed of 15 top economists from some of North America's largest banks. They collectively expect economic growth at around 2% for both the second half of 2024 and for 2025.While that would mark a notable slowdown from the 3% growth of the second quarter this year, the consensus outlook pegged near-term recession risk at just 30%, unchanged from the group's last forecast in March."Despite expectations for continued growth, the labor market has softened from historically tight levels. That is something that will need to be monitored going forward," Luke Tilley, committee chair and chief economist at M&T Bank's Wilmington Trust, told reporters Monday.Federal Reserve policymakers in mid-September lowered their benchmark rate by 50 basis points — the first cut since 2020. They had raised rates to tame inflation that topped 9% in 2022. They cited falling inflation since then and job market softening.The annual pace of inflation slowed to 2.5% last month, close to the Fed's 2% target.The Labor Department said U.S. employers added 142,000 jobs in August and the unemployment rate ticked down to 4.2% from 4.3% in July. But the pace of job gains slowed from a prior 12-month average of 202,000.While lower in August, the unemployment rate has risen from 3.4% at the beginning of 2023. Going forward, the ABA committee expects the jobless rate to peak at 4.4% in the first half of 2025."When it comes to hitting its dual mandate targets on employment and inflation, the Fed is close to 'mission accomplished,'" Tilley said.The group expects inflation to continue to glide down. The committee's forecast is that personal consumption expenditures, the Fed's preferred inflation indicator, will meet the Fed's long-term goal of 2% by the second quarter of 2025.Following the 50 basis point cut in September, the consensus view of the committee is that the Fed will reduce rates by an additional 150 basis points between now and the end of 2025."It's the longer-term path that matters more, and our expectation is for the Fed's policy rate — which is still restrictive — to reach a more neutral level by the end of next year," Tilley said.With lower rates, the committee members expect credit availability to expand and credit quality to remain stable over the next six months. The forecast anticipates bank consumer delinquency rates to remain relatively stable, at 2.7% in 2025.In a separate report, Raymond James Chief Economist Eugenio Alemán said the Fed's own outlook calls for 100 basis points of cuts by the end of 2024. "We do expect some weakening in economic activity over the next several quarters but probably not enough to warrant" and even more aggressive pace of rate reductions, he said."Recent data is still showing a very strong U.S. economy as consumer demand remains resilient," Alemán added. Lower rates "will probably give some new life to the housing market," providing additional support.