Uncategorized

United Wholesale Mortgage is refuting claims by former account executives that the company mismanaged its large retirement savings plan. Plaintiffs accuse UWM of directing unvested employer contributions in the company's 401(k) plan toward future employee contributions, rather than administrative expenses. The class action complaint suggests the money-saving moves by UWM cost workers, whose contributions then covered plan expenses, upward of $1.8 million from their retirement savings. UWM matches 50% of the first 3% of its workers' contributions, up to $2,500 per year, according to its latest year-end report. The lawsuit said UWM's 401(k) plan then had 7,231 participants and $149 million in assets under management, placing it within the top 1% of retirement plans nationwide by both number of participants and assets. The lender and servicer last week asked a judge to dismiss the Employee Retirement Income Security Act complaint, arguing it isn't obligated to prioritize covering the unspecified plan expenses before future employee contributions. The dispute over United Wholesale Mortgage's 401(k) benefitsThe unvested employer contributions, or forfeitures, are funds the 401(k) plan picks up when a worker departs before reaching vesting requirements. According to case filings, UWM contributions vest at 20% per year, fully vesting in five years of employment. The three named plaintiffs are former senior account executives, staff who work with UWM's broker partners. Two of the employees rolled out of the plans, but the suit doesn't provide further details about their retirement savings. The complaint lays out UWM's 401(k) plan management, stating it diverted hundreds of thousands of dollars at the end of each year toward future employer contributions instead of annual plan expenses, which the lawsuit also doesn't describe in detail. There's a lone mention of the firm in 2022 using forfeitures to pay just $4,950 in plan expenses.The lawsuit also includes a chart purportedly showing workers' potential cumulative compounded losses in the 401(k) plan, including compounding percentages of annual plan returns. The lack of departing employee forfeitures used to pay plan expenses resulted in $1,857,731 in losses for existing 401(k) plan participants between 2019 and 2024, the suit alleges."Having never managed a very large 401(k) plan, plaintiffs, and all participants in the plan, lacked actual knowledge of the misuse and misallocation of plan forfeitures," the suit reads.In its motion to dismiss, UWM emphasized that its plan language says forfeitures "may be used" to pay administrative expenses, but it isn't required to do so. Counsel for the firm say plaintiffs' position conflicts with decades of case law and the U.S. Treasury's own guidance, as recent as 2023, that no forfeiture diversion take precedence over another. A spokesperson for UWM declined to comment, while attorneys for both UWM and plaintiffs didn't respond to requests for comment. A federal judge has also not set any hearings in the U.S. District Court for the Eastern District of Michigan UWM matched $6.4 million in employee contributions in 2024, according to its 2024 annual report. The company lumps its 401(k) benefits with salaries and commissions in its earnings reports.

As anticipation builds around potential changes to the LO comp rule, some industry stakeholders have started to chime in with their visions of what form the regulation should take.The Community Home Lenders of America, specifically, is the first to publish a blueprint of what changes should be implemented to the Loan Originator Compensation Requirements.In a 13-page white paper, the trade group representing small-to-mid-sized independent mortgage bankers, argues that the rule in its current form does not create a competitive playing field for originators, nor does it benefit consumers because it does not allow for varying LO pay.It is proposing future legislation that would "dial back the LO comp statutory remedy to the practices it was designed to address — yield spread premiums between firms," a practice in which mortgage loan aggregators paid brokers higher fees for originating higher-rate loans.But in the interim, the CHLA wants the Consumer Financial Protection Bureau to create  as much "flexibility" within the rule as possible. The group, in calling for revisions, pointed out that current restrictions around lowering compensation for originators makes it harder for LOs to stay competitive. When borrowers compare offers from different lenders, loan officers often lose customers because lenders are unwilling to match a competitor's offer if it means taking a financial loss."Because of LO Comp, the loan originator cannot reduce their compensation to compete on the deal and maintain the client relationship. And, understandably, their employing lender is unwilling to originate the loan at a loss," the CHLA said in its white paper. Therefore, the trade group said it is pertinent for a new iteration of the rule to allow for reduced LO compensation to match competitive offers for a borrower the LO is working with. The CHLA is also calling for other changes such as allowing different LO comp for state housing finance agency bond financed mortgage loans and for a reduction in compensation on a loan where the loan originator makes an underwriting error.Though the LO comp rule has always been a contentious topic, discussions have recently sparked following the Consumer Financial Protection Bureau sending the rule to the Office of Management and Budget for review. For now, it is unclear what changes the bureau is seeking, but it has made mortgage stakeholders ponder how the industry could change with the rewriting of the rule.The rule, originally implemented to prevent steering, has been criticized for disenfranchising lower-to-moderate income buyers by making certain products financially unprofitable for mortgage lenders to offer. Additionally, the industry, specifically mortgage lenders, have wanted to be able to reduce LO comp when an originator makes costly mistakes.Stakeholders have expressed a range of thoughts regarding outcomes to the rule being revised. Bill Dallas, industry veteran, in a previous interview noted if changes to LO comp were done properly, it could make mortgage lending "much more profitable [for IMBs]." "It is a mess today and it doesn't make sense to have salespeople selling varying products at the same comp," he said. Meanwhile, others think it is best to completely dismantle the rule and start over."These rules don't apply anymore," said Paul Hindman, industry consultant. "Rules just like laws become outdated, a situation they were designed to restrict changes with circumstances."Whatever the case may be, the LO comp rule, as of June 27, remains pending for review on the Office of Information and Regulatory Affairs website.

Concerns over channel conflict in mortgage lending — particularly between wholesale and retail operations — are resurfacing as brokers reclaim a growing share of originations.Tension can arise when wholesale lenders also operate retail arms, potentially putting them in direct competition with the very brokers bringing them business. This strain has led companies like United Wholesale Mortgage (UWM), Equity Prime Mortgage, and Plaza Home Mortgage to avoid retail channels entirely."Channel conflict, whether internal or external, starts at the top of the company," said Paul Akinmade, chief strategy officer at CMG Financial.Leadership's role in mortgage channel tensions"I've been in organizations where channel conflict was kind of bred, if that makes sense," Akinmade said. "They [those in the C-suite] saw it as a line of competition."But with leadership focused on collaboration, as CMG President and CEO Christopher George has done, channel harmony is possible. "I always look at its difference between collaborative and distributive negotiations," Akinmade said. "Can you make a pie greater than its whole by partnering and working together and finding the synergies?"The spark that reignited the channel conflict debateThough conflict over customer ownership has simmered for decades, it resurfaced prominently in 2018 with the creation of BRAWL — Brokers Against Wholetail Lending — by New Jersey mortgage broker Anthony Casa. The movement, which criticized lenders that maintained both retail and wholesale arms, laid the foundation for the Association of Independent Mortgage Experts.At the time, BRAWL ranked 30 lenders, putting them into three tiers based on channel conflict, service and support.The biggest beneficiary of this movement was UWM, which because of the alleged channel conflict, announced its "All-in" initiative, aimed at its larger rival Rocket Mortgage, as well as the much-smaller entity that was soon-to-exit the wholesale channel, Fairway Independent Mortgage.How brokers view the tensionSome brokers see the issue as manageable. Carlos Scarpero, of Edge Home Finance in Ohio, said it's not a priority concern. "If I avoided every lender that had retail and every lender that sold their loans off, it would leave me with very few options for my borrower," he said. Most of the lenders he works with have anti-poaching policies in place, which typically last for one year after the loan closes but it can vary."[My clients] rarely get poached because I have solid follow-up systems in place," Scarpero added. "At the end of the day, it's all about who is going to close my deal on time and at the best rate."Another broker has what might be the consensus view: that wholesalers that do retail have a conflict of interest. Nevada broker Tammar Hernandez said she's seen lenders directly contact her clients. "I as an LO feel like you're stealing from me…because you're going to try to market to my client, the client I brought to you that you don't even know."Hernandez, who attended UWM Live, pointed out that UWM is known for avoiding such conflicts.Why some third-party lenders steer clear of retailPlaza Home Mortgage has largely eschewed retail for 25 years. "The brokers definitely don't want to compete with the wholesaler that they're doing business with," said CEO Kevin Parra. "It's very hard to play in both without affecting one or the other."Instead of defending its servicing portfolio with retail LOs, Plaza encourages brokers to bring refinance business back. "We even refer them when we get people interested in refinancing in our portfolio," Parra said.Still, correspondent lenders raise similar concerns, despite whole loan sales being more about secondary market strategies and servicing rights than borrower relationships.How mortgage lenders balance retail and TPOsClick n' Close Mortgage embraces a multichannel model, with operations spanning retail, wholesale, and correspondent. CEO Jeff Bode emphasized the importance of loyalty. "If we get a certain percentage of business back from them that's refinance, they're a loyal broker," he said.Given that legislation banning trigger leads is more than likely to become law, the value of leads at the organization that currently has the loan will increase. In that situation, if Click n' Close gets a trigger lead on a file, "what we're going to do is distribute those leads opportunities out to the brokers that originated them, if we get a certain percentage of their business," although it will not be 100%, Bode said.He also noted that leads from their proprietary down payment assistance program may not be redistributed, but others would be. Roughly 65% of Click n' Close's volume is wholesale, with the remainder in retail and correspondent — all correspondent loans use the DPA program.When it comes to loans purchased through the correspondent channel, Bode agrees with those who view them as a different type of transaction: one that is more focused on servicing and doesn't carry the same considerations as loans originated through the wholesale channel.At OCMBC in California, retail makes up only a sliver of its business. President John Hamel said 99.99% of volume comes through third-party channels, 80% of which is wholesale. "We really don't have channel conflicts that we deal with day in and day out," he said.Even when files are resubmitted to other relationships due to rate improvements, the broker or borrower ultimately decides where the loan goes, Hamel noted."We always allow the broker or borrower to make the determination of where they want to submit the file," Hamel said. "We have a lot of duplicate checks in place to ensure that that doesn't occur across every channel." The system would work the same way if OCMBC decides to grow its retail operation, he added.How a lender handles internal channel conflictCMG's consumer-direct channel, launched a year ago, was intentionally built to work in tandem with distributed retail. The firewall between purchase and refinance doesn't mean the consumer-direct and distributed retail units don't work hand-in-hand. (Both fall under the broader definition of retail mortgage originations.)"We try to support distributed retail," Akinmade said, describing how leads are handed off from consumer-direct to high-performing retail LOs. "The way that I wanted to solve this for CMG, with the direction of [Christopher] George, was to be in a position where consumer-direct from its very birth, in its infancy, was in a position where it tries to support distributed retail, meaning that as transactions fall through our funnel that we advertise, let's give them back to our distributed retail folks," Akinmade explained. "In my head, it's a win-win."This collaboration reduces the chances of losing a deal to another lender.The consumer-direct loan officers are good at working leads, while the distributed retail salesforce have their own strong networks on the ground.If a purchase lead comes into the consumer-direct, the person handling the call is able to develop, "hand off and white glove a customer to a distributed retail individual who's a high performer," Akinmade noted. As a result, the local loan officer might get introduced to a new real estate salesperson, or have the chance to reconnect with one they have already worked with.Consumer-direct and distributed retail offer the same pricing regionally to maintain consistency and reduce conflict. "We meet the distributed retail group where they are," Akinmade said."What I was looking for is trying to identify where we would have synergies between those two groups, and I'm trying to eliminate friction and maximize the synergies as much as humanly possible," he added.Consumers look at rate tables on places like Bankrate, so consistency in pricing is important to avoid any channel conflict."You're in this position where a consumer is seeing a rate that was intended for a different channel, and in which case there's animosity around that and or there's exceptions that occur," Akinmade explained. "We meet the distributed retail group where they are, and keep the ability for alignment [with consumer direct] as much as possible."Besides the three main production channels, CMG also has several joint ventures with Realtors and homebuilders.Making certain those JV loan officer needs are also taken care of — they get the same benefits of scale, efficiency and technology as the people in distrusted retail, Akinmade noted — is another channel conflict which lenders need to be aware of.

The Federal Home Loan Bank of San Francisco has invested nearly $53 million in a Fannie Mae bond issuance to support housing for very low-income residents near Fisherman's Wharf.The $52.6 million financing will cover 230 units in the Wharf Plaza I and II buildings, which are located at 1855 Kearny St., and have 116 and 114 units respectively.This deal follows a March $10 million investment in Nevada Housing Division Mortgage Revenue Bonds."With the authority FHLBanks have to make prudent investments in mission-consistent securities, we are proud to be able to support the affordability of these local and much-needed housing units," said Joe Amato, interim president and CEO of FHLBank San Francisco, said in a press release. "This investment aligns with our mission to be a reliable supplier of low-cost liquidity to our member financial institutions and deliver resources that supports affordable housing and community investment in our region," he added.A deficit of nearly 170,000 affordable rental homes for households earning 50% or below the area median income exists in the San Francisco metro area, according to National Low Income Housing Coalition data cited by the bank."Consistent with our obligation to our mission, we will continue to seek opportunities to invest in the creation, development, and purchase of affordable housing in the communities our members serve," Amato said.What is the FHLBanks role in affordable housingEarlier this week, the Council of Federal Home Loan Banks released its 2024 impact report. Each bank has a mandate under federal law to contribute 10% of income to their respective Affordable Housing Programs.The report said the 11 banks in the system made a total of $752 million in AHP funding. This supported the creation or preservation of over 26,000 housing units, 83% of which were multifamily developments."We are proud to be a dependable partner for America's housing finance system and a critical component of our nation's economic vitality," said Ryan Donovan, president and CEO of the Council of Federal Home Loan Banks, in a press release. "When local financial institutions thrive, so do the communities they serve, and we provide the stability and strategic support our members depend on to stimulate economic opportunity." How expensive is the San Francisco housing market?San Francisco is a particularly impacted market not just for homebuyers but renters. The city recorded the second-highest annual rent growth rate in the country, increasing 12.5%, the June Zumper National Rent Index found.The median rent for a one-bedroom apartment in San Francisco is $3,330, No. 2 behind New York's $4,570."Preserving existing affordable housing has to be a critical component of any strategy to address the Bay Area's current housing crisis," said Ben Metcalf, managing director at UC Berkeley's Terner Center for Housing Innovation, in the FHLBank San Francisco press release. "However, the scale of the problem is such that we simply can't get there unless institutional capital providers step up to the plate in a big way," he added.

Bloomberg News Most of the country's largest banks are poised to see flat or lower capital requirements next year after performing well in this year's Federal Reserve stress test, but ongoing efforts to reform its annual exam practices could complicate how much lower those requirements will ultimately be. Overall, banks registered their best performance since new stress testing protocols were rolled out in 2018, with a maximum aggregate decline in common equity Tier 1 capital of 1.8% under the test's severe scenario, down significantly from an average of 2.8% last year. It was also the lowest total loss rate on record since 2020, when banks were projected to lose 2.1% of their CET1 capital.Fed Vice Chair for Supervision Michelle Bowman said the results demonstrate both the resilience of the nation's largest banks and just how volatile the annual stress test can be. In a statement released alongside the findings, she said it provides further evidence that changes are needed to the year test."Large banks remain well capitalized and resilient to a range of severe outcomes," Bowman said. "One way to address the excessive volatility in the stress test results and corresponding capital requirements is for the Board to finalize the proposal that would average two consecutive years of stress test results, which was released in April."Should that proposed change be implemented largely as-is, the Fed would incorporate the two-year averaged findings — which would reflect a 2.3% decline in aggregate CET1 capital — into next year's stress capital buffer, or SCB, assessments.Because the rule likely could not be finalized until late this year, tested banks will be assigned capital buffers based on this year's findings alone for the fourth quarter of 2025, but then a new charge, based on the averaged results, would go into effect in 2026. The Fed said it was too far along in the development of its 2025 scenario to change it when the proposed changes were published in December.The results are inThe SCB, which comes with a minimum capital requirement of 2.5%, is determined by a bank's total decline in CET1 capital during the severe scenario relative to the previous year. Under this year's scenario, only one bank — TD Group — saw greater losses in 2025 than in 2024, meaning SCB charges would likely be flat or potentially lower in 2026 for the other 21 banks. However, including the 2024 results — which had some of the most significant losses in recent years — could result in some banks facing higher capital requirements, though that will not become official until the Fed announces next year's SCB requirements in August. Individual banks are free to announce how they will factor this change into their capital plans for next year as soon as next Tuesday. Banks are afforded a window in which they can contest their stress test results and provide more accurate data ahead of the August SCB announcement.No banks failed this year's test, holding consistent with a yearslong trend of universal passage.BMO Financial Group was the only bank to see its CET1 capital dip below 8% under the severe scenario. The Canadian bank's capital fell as low as 7.8%, which is still well above the 4.5% minimum. Deutsche Bank registered the biggest capital decline in the exam, dropping 11 percentage points, from 23.7% to 12.7%. The performance was still an improvement from 2024, when its capital level dropped by 13 percentage points.The four largest banks all improved their performance year to year, with Wells Fargo posting the biggest improvement, going from a 3.3 percentage point decline in 2024 to a 1 percentage point decline this year. JPMorganChase registered a decline of just 1.5%, down from 2.5%, Bank of America a decline of 1.7%, down from 2.7%, and Citi fell 3.2%, down from 3.7%.Great expectationsMarket analysts broadly expected banks to perform stronger in this year's test than in last year's. The Fed aimed to make the stress scenarios it used in this year's test less severe than those used in 2024. The investment bank Piper Sandler projected an overall reduction in capital requirements of a quarter percentage point.This year's scenarios included a smaller jump in unemployment, less reduction in interest rates and smaller declines in asset values than the 2024 version. The Fed said it made these adjustments because of real-world changes in unemployment, interest rates and commercial property values. It also aims to avoid the results being procyclical.This year's stress test marks the end of an era for Fed regulatory oversight. The central bank is in the process of reforming its stress testing practices to provide greater transparency around the models and scenarios it uses to examine bank resilience and set capital expectations. It will also average findings over the past two years to avoid drastic changes in capital requirements from year to year.Changing the formulaThe Fed undertook this reform effort both as the result of leadership changes — namely the rise of stress testing critic Michelle Bowman from Fed governor to vice chair for supervision — and in response to growing pushback from the banking industry. When it announced its intention to rework its stress testing regime in December, the Fed pointed to evolving legal precedents around administrative law that have made it harder to successfully defend its practices in court."The framework of administrative law has changed significantly in recent years," the Fed stated. "The board analyzed the current stress test in view of the evolving legal landscape and determined to modify the test in important respects to improve its resiliency."Indeed, several banking groups filed a lawsuit against the Fed over its stress testing regime just one day after it announced its reform plans. The parties have since agreed to pause the proceedings while the Fed amends its practices, an indication that the changes are likely to be in line with industry aspirations.

The clock is ticking for the 90-day pause on President Trump's tariffs. As the July 8 deadline draws near, banks face the possibility of a new round of disruptions to their business — and yet some CEOs aren't worried.In interviews with American Banker, two bank leaders expressed confidence that Trump will avoid ratcheting his tariffs back up to their original amounts. Even if new trade deals are not reached in time, the CEOs said, Trump will most likely "declare victory" and leave the levies at manageable levels."My belief system is that this administration, while they talk seriously about how they're going to lay down the law, I don't believe that they want to go down as the White House that burned down the nation," said Mariner Kemper, CEO of UMB Financial, a $69 billion-asset bank based in Kansas City.On April 2, Trump announced steep new tariffs on almost 90 countries, raising some as high as 50%. But just one week later, the president declared a three-month pause on most of the levies, bringing them down to a "baseline" of 10%. By the end of those 90 days, Trump said, the United States would negotiate "fair" new trade deals with the affected countries. (China was excluded from this reprieve but later received a separate pause, which expires on August 12.)Implicit in the plan was a threat: If these deals were not made by July 8, tariffs would shoot back up to their initial, dizzying heights.This uncertain new climate raised costs for U.S. companies and slowed down M&A in the banking industry. But CEOs like Kemper remained calm.UMB loans to companies with supply chains in other countries, and so has some exposure to the costs imposed by new tariffs. But Kemper said that exposure is limited, and the bank's commercial clients believe they can pass those costs onto their customers.Then there's the bigger picture: Trump's tariffs, as Kemper sees them, are more of a negotiating tool than a policy goal unto themselves. "I'm a believer in the art of the deal as the backdrop for what's happening," Kemper said. "I think they will find a way to declare victory by the middle of the summer, get stuff made again and put on ships, and we'll have Christmas." Mariner Kemper, CEO of UMB FinancialTodd Rosenberg Photography The CEO cautioned that if things go the other way, the return of soaring tariffs could cause a recession — a scenario that his bank has prepared for. But to him, that doesn't seem like the most likely outcome.And Kemper is not alone. Bruce Van Saun, CEO of the $220 billion-asset Citizens Financial Group, thinks that as Trump has paused and made exemptions to his tariffs, the risk of a recession has diminished.The president "sought off-ramps," Van Saun told American Banker in an interview. "He doesn't want to tank the economy and tank the presidency. He's got people around him who let him do his thing for negotiation benefit, and then they kind of called time."As the pause deadline approaches, the CEO of the Providence, Rhode Island-based bank is not watching the clock with trepidation. Similar to Kemper, he does not expect Trump to deliberately send tariffs soaring again, even if the threat of doing so remains useful."It feels like we're a little bit in a new normal," Van Saun said. "People accept that Trump wants to negotiate fairer trade, and he's going to use the tariffs as a cudgel to achieve that, but the worst case scenario — of really super high tariffs sticking — is pretty much off the table."Van Saun acknowledged that in April, confusion over Trump's rapid-fire announcements put a chill on many businesses' long-term investments, which in turn took a toll on commercial banking. But more recently, he's felt the pace pick back up."I'm kind of sanguine that things got really stuck for about a month, and then they started to thaw," Van Saun said. "And this should play into a better second half of the year." Bruce Van Saun, CEO of Citizens Financial Group.Bloomberg Recent messaging from the White House has bolstered the notion that July 8 is only a soft deadline. On Friday, Treasury Secretary Scott Bessent told Fox Business that the pending trade deals could be "wrapped up by Labor Day" — meaning September 1st.That kind of flexibility, combined with the administration's renewed focus on deregulation and tax cuts, has led to a more positive business environment, Van Saun said — even as the 90-day countdown still looms."It would be nice if this would just be behind us," Van Saun said. "But even if it's not, it's not going to end up causing a recession."

The conservator of two government-sponsored enterprises that buy and securitize many mortgages originated in the United States said he's arranged some unusual talks between them to get their input on deregulation."In following President Trump's deregulation mandate, I ordered the executives of Fannie and Freddie to meet and provide me [with] regulatory changes," Bill Pulte, director of the renamed Federal Housing Finance Agency said in an X post on Thursday. "To my surprise, they hadn't been allowed to talk, despite being heavily regulated together."Pulte, who has rebranded the FHFA as U.S. Federal Housing, said there'll be "more to come" regarding information from those meetings, which he announced amid a flurry of other other activity this week.READ MORE: Pulte pushes Fannie, Freddie to count crypto assetsPulte's comments about his interest in bringing the two enterprises closer together follow an announcement about repositioning their existing joint venture, and may point to further exploration of collaborative reform.As evidenced by their existing JV, other efforts in which the FHFA has asked Fannie and Freddie to work collaboratively and frequent appearances at industry events together, Pulte's statement that Freddie and Fannie haven't "been allowed to talk" could be hyperbole. That said, there's been a distinction between projects they've collaborated on like the joint venture, and the competition between them to get the "best" loans mortgage lenders produce with some differences in criteria and process, so to that degree they have been at odds at times.Is a Fannie Mae and Freddie Mac merger likely?Some pundits say because the GSEs' existing JV was created to put their mortgage securities on equal footing, Pulte could be looking into finding ways to resolve their differences or identify the complementary strengths of each in preparation for a merger."With no real difference in the type of security issued or in price, product or service, or in business model, why should they be allowed to stay separate?" Clifford Rossi, academic director of the University of Maryland's Smith Enterprise Risk Consortium said in commentary earlier this year.Rossi, who also has been risk management executive for the GSEs and a regulator, said in his commentary that Pulte's earlier decision to name himself chairman of both enterprises' boards and the exit of Freddie's CEO without a permanent successor may point to a possible merger.Freddie's president and interim CEO, Michael Hutchins, recently "agreed to extend his tenure in the dual role." But if no permanent successor is named, his tenure as far as serving in both positions could end later this year, according to a Securities and Exchange Commission filing.Fannie Mae CEO Priscilla Almodovar has remained in place through the post-election transition period and Pulte said in late April that he didn't foresee any further executive changes.Why Pulte's statements may not signal a Fannie Mae, Freddie Mac mergerPulte's move to chair both boards has raised some Democratic eyebrows, but others say it's not cause for concern."Under the conservatorship, the boards of the enterprises are not only not independent, they are forbidden from having a fiduciary responsibility to shareholders and have their sole responsibility to the conservator," said National Housing Conference President and CEO David Dworkin."This is why Director Pulte putting himself on both boards and taking on responsibilities of board chairs is really a distinction without a difference. Every FHFA director already had that authority. He's essentially made it more transparent," said Dworkin, who also is a former Treasury official.While Rossi said ending the GSEs' "duopoly" could head off a "race to the bottom" in loan quality as they compete, something NHC has also shown concern about, Dworkin said the enterprises' regulator also will need to be mindful of antitrust laws as it reforms the GSEs.

The potential for mortgage lending fraud accelerated over the past year, with risk related to undisclosed transaction details driving much of the surge, according to Cotality.In its latest report, the real estate data platform found fraud risk was up 7.3% year over year in the first quarter. Risk lessened over time, though, coming in mostly flat from the previous three-month period, with an 0.3% drop. Cotality's mortgage application fraud risk index score finished at 133 at the end of March, according to its quarterly published data. The reading surged from 124 a year earlier.  "While mortgage delinquencies are currently low across the U.S., the market is ripe for an increase in fraud because of the continuing high interest rates, slow housing market and other increasing costs of homeownership like insurance affordability," said Matt Seguin, Cotality senior principal, fraud solutions, in a press release.Of indicator categories tracked, Cotality found elevated risks in income, transaction, occupancy and property data. The largest growth emerged in transaction risk, which jumped 4.6% year over year. Examples of potential transaction-related fraud are hidden sales concessions, an undisclosed pre-existing relationship between buyer and seller or regular instances of home flipping not reported to the lender. "If market conditions continue to challenge sellers, risks like misrepresented down payments, inflated prices and straw buyers could increase dramatically," Seguin added.Property values not aligning to a borrower's age or market also contribute to transaction risk.In the occupancy category, the number of homes designated as a borrower's residence but later listed for rental grew 50% over the previous six months, but other factors brought down the potential for risk in the category overall, Cotality said.  Factors, such as high salaries inconsistent with length of time employed or mismatches with local geographies influenced income risk. Property risk entails higher-than-expected values for homes compared to the surrounding market or being resold in less than a year after its previous sale. Each dollar lost to mortgage-related fraud ended up costing $4.36 to fix the problem in 2023, according to a Lexisnexis Risk Solutions study from last year. Weeding out fraud has emerged as a top agenda item at the Federal Housing Finance Agency in the first few months of Director Bill Pulte's tenure. In April, the FHFA introduced a public fraud tip line for consumers to report suspected incidents but did not reveal who would investigate claims or what would be done with information received. Where fraud risk increased the mostFraud risk grew significantly in several Northeastern U.S. markets, according to Cotality's report. Of the 10 markets with the highest index scores, four were located in the region. The market surrounding Poughkeepsie, New York, landed on top with a reading of 416, with risk potential jumping 37% on an annual basis.Similarly, New Haven, Connecticut, which was in second place, saw risk potential up 30%. Lower on the list was Albany, New York, but the threat of fraud in the state's capital leaped 82%, Cotality said.

Atlantic Union Bankshares in Richmond, Virginia, sold a $2 billion portfolio of commercial real estate loans, completing a task it set for itself in October, when it acquired Sandy Spring Bank.American Banker/John Reosti UPDATE: This article includes a new comment by Atlantic Union.In a deal that closes the loop on its transformative acquisition of Sandy Spring Bank, Atlantic Union Bankshares said it sold $2 billion in performing commercial real estate loans to Blackstone Real Estate Debt Strategies. The $38 billion-asset Atlantic Union announced its intent to sell a CRE portfolio in October, when it struck its $1.3 billion deal for Sandy Spring. The subsequent loan sale, announced late Thursday, reduces Atlantic Union's CRE exposure while providing the means to pay down high-cost funding and add to the securities book.  John AsburyAmerican Bankers Association The episode "is another proof point of Atlantic Union's ability to execute and deliver on transactions that create long-term value for our shareholders," President and CEO John Asbury said in a press release. "[It] reduces our CRE concentration and frees up capacity for potential future growth." The Richmond, Virginia, bank will continue servicing the CRE loans it sold to Blackstone. Retaining servicing rights is crucial because it provides an opportunity to preserve the banking relationships with borrowers and, potentially, make new loans when the existing credits mature, Hovde analyst David Bishop wrote Friday in a research note. Atlantic Union had already marked the CRE portfolio to market, so there was no loss associated with the sale, even though the loans were sold at a discount, according to Bishop. Indeed, the deal might yield a small gain, he wrote. "We view this sale as a major first-step positive," Bishop wrote.Atlantic Union Spokesman Bill Cimino said the sale terms Atlantic Union received were better than it anticipated when it discounted the loans in April. "It shows there's an appetite for these loans among investors," Cimino told American Banker Friday. Banks selling off commercial real estate loans has become a recurrent theme as financial institutions look to limit downside vulnerability to a sector marked  by concerns about retail, multifamily and office vacancy rates. In December, the $62 billion-asset Valley National Bancorp in New York sold a $1 billion CRE portfolio to Brookfield Asset Management. The same month, HomeStreet in Seattle agreed to sell a $990 million CRE portfolio to Bank of America. HomeStreet, the holding company for HomeStreet Bank, later agreed to sell itself to the $16 billion-asset Mechanics Bank in Walnut Creek, California. Blackstone Real Estate Debt Advisors, which originates loans and invests in real estate-related debt for institutional and private investors, has completed several recent transactions involving bank CRE portfolios. In May 2024, Blackstone acquired $1 billion of loans originated by a German bank backed by multifamily, office and hospitality properties in the U.S. and the United Kingdom. Five months earlier, in December 2023, Blackstone acquired a 20% stake in a joint venture holding $17 billion of CRE loans originated by the failed Signature Bank.  The Atlantic Union loan sale "demonstrates the breadth of our market-leading platform and deep expertise providing solutions to financial institutions for their commercial real estate portfolios," Tim Johnson, global head of Blackstone Real Estate Debt Strategies, said in a press release. Atlantic Union closed its acquisition of the Olney, Maryland-based Sandy Spring ahead of schedule in April. The deal established the company as the largest regional bank in Maryland and Virginia. With Sandy Spring under its belt, Asbury said the company plans to pivot south and seek growth opportunities in North and South Carolina. "We push south and make the investment in the Carolinas over time. That will be the next big thing," Asbury said in a recent interview with American Banker.

It's a buyer's market, but homeowners are still recouping all-time high sales prices. Sellers are netting an average sales price of $400,266 over the four weeks ending June 22, according to Redfin. That figure is up 1.6% from the same time last year, in a housing market currently beset by near 7% mortgage rates and sluggish activity due to economic uncertainty. Inventory continues to pile up and more sellers could be feeling like they missed their best chance to sell. There's over 1.1 million active listings nationwide, the brokerage reported, and prices are falling in some of the most coveted markets in recent years. "Some homeowners feel they missed the prime selling window; many people who don't need to sell right now are holding off, either staying put or trying to rent out their house," said Kathy Scott, a Redfin premier agent in Phoenix, in a press release. The average asking price is $22,000 higher than the ultimate sales price, the brokerage found. And although buyers have a host of options in the national market, they're still facing median monthly mortgage payments of $2,820 with an average 6.81% rate. Which metros are heating up or cooling down?Redfin recorded the greatest year-over-year sales price growth in Newark, New Jersey, of 6.1%. Other Northeast cities, and snowbird destination Miami, also saw home prices grow around 5% from last spring. Homeowners in hot pandemic-era destinations are watching their values cool off, as home prices in Atlanta, Austin and Tampa all fell 2% or more in the past year. Oakland saw the largest dip in median sales price, fading 4.9% from last June. Pending sales statistics paint an even starker picture of the market's evolution. Imminent sales were down double digits in Houston, Miami, Las Vegas and San Jose, California. Fort Lauderdale, Florida was especially slow, with pending sales dropping 18.6% annually. Conversely, some mid-sized markets across the country saw modest gains in pending sales, led by Dallas (8.6%).Overall demand however could be turning at the summer equinox. Redfin's Homebuyer Demand Index, which tracks tours and other services by the company's agents, ticked up slightly in the past two weeks, and another metric shows house tours heating up faster than last June.