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A bill reintroduced in the House of Representatives could offer relief for millions of Americans struggling to afford their first home.The Downpayment Towards Equity Act, introduced by a group of Democrat lawmakers led by Rep. Maxine Walters D-Calif, would offer $100 billion in grants to help new homebuyers purchase their first home. The bill's sponsors described it as a key step in helping younger and minority buyers get their foot in the door in what has become an increasingly unaffordable housing market, as well as help address what they see as systemic racial inequalities in home ownership."Homeownership is a cornerstone of the American Dream and the most powerful tool for building generational wealth," Rep. Walters said in a statement. "For too long, families of color and first-generation buyers have faced insurmountable barriers to owning a home due to predatory lending, high downpayment requirements, and increasing home prices."If enacted, the bill would give eligible first-time homebuyers up to $20,000 to cover things like downpayments and closing costs. Homebuyers deemed "socially and economically disadvantaged" could qualify for up to $25,000 in grants. Applicants would have to make no more than 120% of the area median income. The grants could only be used for qualified mortgages, such as those covered by Fannie Mae, Freddie Mac, or other government-backed loans.Supporters also say the bill is an important step in addressing long-standing problems with housing inequality, including racial discrimination and redlining."With Black and brown families historically denied the opportunity to own homes and build wealth, our bill will empower first-generation homebuyers to access robust homeowner assistance and build wealth," said Rep. Ayanna Pressley, D-Mass., who co-sponsored the legislation.Multiple housing groups have come out in support of the bill, including the National Fair Housing Alliance, the National Council of State Housing Agencies, and National Association of Realtors."This bill has the potential to be a meaningful step toward addressing long-standing disparities in wealth and homeownership, while expanding access for first-generation buyers," said Shannon McGahn, the executive vice president and chief advocacy officer at NAR, in a statement. The bill comes as home ownership continues to move further out of reach for many Americans. The average home sales price hit a record $400,266 last week, according to Redfin, and a report from real estate analyst ATTOM found that home affordability had fallen in nearly every county it tracked. Since 2022, the median home price has jumped 55.7% while wages have only increased 26.6%, according to their report. And as older folks plan to stay in their current homes into the foreseeable future, many millennials and Gen Z are pessimistic about ever owning a home, with more than a third saying the idea is "just a dream," according to one survey.While laws like the Fair Housing Act and Equal Credit Opportunity Act explicitly prohibit lenders from discriminating based on race, religion, sex, and other protected characteristics, housing advocates point to complaints of racial bias from appraisers and lenders. The National Fair Housing Alliance collected more than 34,000 complaints of housing discrimination across the country in 2023, up 3.5% from the year before. At the same time, the funding bill currently being debated in Congress slashes funding to many fair housing programs at the Department of Housing and Urban Development, including cutting the department's Office of Fair Housing and Equal Opportunity by nearly a third and eliminating a range of other grants to local agencies.

Bloomberg News The Financial Technology Association filed a motion for summary judgment in federal court late Sunday, defending a final rule on consumer financial data rights that the Consumer Financial Protection Bureau under the Trump administration refused to uphold.The FTA said in a court filing that consumers cannot share their data without easy access from banks. Fintechs and banks, through their respective trade groups, are litigating over the rule on consumer financial data rights, also known as 1033 for its section in the Dodd-Frank Act or the open banking rule. The rule was first initiated in 2016 and was finalized in October under former CFPB Director Rohit Chopra. In May, U.S. District Court Judge Danny Reeves, of the U.S. District Court for the Eastern District of Kentucky, allowed the FTA to intervene in the case and defend the rule after the Trump administration said it planned to amend or rescind and reissue the open banking rule.The Bank Policy Institute, Kentucky Bankers Association and a community bank in Lexington, Kentucky, filed a lawsuit against the CFPB in May seeking to vacate the rule. The plaintiffs claim the CFPB exceeded its authority by refusing to allow banks to deny third parties access to consumers' financial information. BPI also has claimed the rule would jeopardize the safety and soundness of the banking system.The FTA said the plaintiffs' challenge purports to be motivated by a concern about data security, "but in truth the CFPB addressed banks' stated concerns by incorporating extensive security measures into the rule.""Plaintiffs' true concern is that allowing consumers to unlock and leverage their banking data opens opportunities for other financial services providers to compete with banks," The FTA said.In the latest legal filings, the fintech and bank trade groups are arguing over definitions of what constitutes a consumer and whether the statutory definition of a consumer's representative includes third-party providers such as financial technology firms. Some of the legal sparring involves the definition of a "consumer," which the law defines as "an individual, or an agent, trustee, or representative acting on behalf of an individual." At issue is whether fintechs were granted a right by Congress to act on behalf of the consumer and if the financial data can only be delivered directly to the consumer, not a third party — a view that fintechs oppose. FTA said in its motion that banks have not always provided "consistent or meaningful data access to consumers' third-party providers," which has led to providers relying on "screen scraping" — or third parties using consumers' login credentials to access their accounts at other financial firms. The CFPB's final rule created a three-step authorization process for a provider to become an "authorized" third party, and therefore a consumers' "representative." Under the Consumer Financial Protection Act, a third party must provide the consumer with an authorization disclosure, provide a statement to the consumer in the disclosure certifying that the third party agrees to numerous obligations, and obtain the consumer's express informed consent by obtaining a signed authorization disclosure. The procedures were designed to ensure that third parties accessing a consumer's data are acting on behalf of the consumer under the CFPA's definition, the FTA said in its legal filing. FTA argued further that under the bank trade groups' view of 1033, "consumers would be forced to manually download their own data to their devices and then upload it to third-party apps, rather than have the banks transmit the data to the authorized third parties.""Congress could not possibly have desired this illogical, insecure, and inefficient scheme," FTA said. "Requiring manual downloads and uploads is not only cumbersome and complex for unsophisticated consumers, but also unsafe for consumers who may use unsecured channels and may be vulnerable to malicious data thieves. A rule requiring only that data providers make financial information available to individual consumers, as opposed to also requiring them to make the information available to third parties authorized by consumers, would significantly impair the uses to which consumers, through authorized third parties, are actually putting their financial data today." Paige Pidano Paridon, BPI's executive vice president and co-head of regulatory affairs, said fintechs should be working with banks to improve data security."The Financial Technology Association is attempting to defend a rule so indefensible that even the CFPB has acknowledged it exceeds the law," Paridon said in a press release. "Instead of trying to salvage a rule that undermines banks' ability to protect consumers' most sensitive data, FTA's members should continue to work with banks to further develop the secure, competitive data-sharing ecosystem that exists today because of private sector collaboration and innovation."  The financial data rights rule was the culmination of a bipartisan process that was started 2016 with a request for information under the first Trump administrations and finalized late last year under the Biden administration. Penny Lee, FTA's president and CEO, said in a press release that the rule providing financial data rights supports consumer choice."This rule is grounded in longstanding legal authority and reflects a bipartisan commitment to modernizing how Americans manage their financial lives," Lee said. The rule was expected to radically reshape consumer finance and allow fintechs to better compete with banks. Many fintechs' business models are premised on consumers being able to access and securely share their financial data. The CFPB and BPI have until July 29 to respond with their own briefs and then FTA will get another 30 days to file its response. The briefing schedule is expected to continue through the end of August. The judge is expected to hold an oral argument hearing sometime later this summer or in early fall.

Enjoy complimentary access to top ideas and insights — selected by our editors. During testimony to the House Financial Services Committee, Federal Reserve Board Chairman Jerome Powell repeatedly evaded questions from members of both parties about the impact of monetary policy on housing.  Rep. Rashida Tlaib D-Minn. seemed perplexed or confused by Powell's assertion that Fed policy isn't "a driver of longer-run [housing] supply." Powell said in response: "In the short run, rates are high and that's going to weigh on housing activity. But the best thing we can do for the housing market, the absolute best thing is to restore price stability so that rates come down..."In fact, Chairman Powell and his predecessor, former Fed Chair and Treasury Secretary Janet Yellen, are responsible for the surge in mortgage lending activity and home prices. After nearly crashing the US Treasury bond market in December 2018, let us recall, the Powell Fed suddenly pivoted policy from tightening to ease, and began to aggressively force mortgage rates down – a year before COVID.Between January of 2019 and March of 2020, the Fed cut the duration of $10 trillion in mortgage-backed securities (MBS) in half, something that this author and many market participants thought impossible. Through open-market purchases of MBS and sales of to-be-announced (TBA) contracts in the secondary market for home mortgages, the Fed forced interest rates down and home prices surged higher."It is useful to recall that the Fed used to depend upon a chief transmission mechanism — housing — to control economic activity and deflation," this writer notes in my new book, "Inflated: Money, Debt and the American Dream." "The policy mistakes made by the Powell FOMC in 2018 and 2020 broke that connection and contributed to boosting home prices 40 percent in the past four years, a massive increase of consumer inflation."In response to a question from Rep. Nikema Williams D-Ga., Powell said: "Over the long run, [interest rates] don't really affect housing supply. You know, assuming that rates will go up and down… interest rates really affect housing demand. So, if you, with lower rates, you see more demand, and higher rates, maybe less demand."  Powell neglects to mention that the primary reason for the Fed's dramatic shift in policy after December 2018 was to bail out the US Treasury, not to help the economy or housing. Ironically, then-Chair Yellen worried about "bubbles" in housing in 2018, even as she supported massive purchases of MBS by the Fed.  These excessive purchases and, incredibly, the reinvestment of redemptions into more Treasury debt and MBS, drove home prices through the roof.   Even after March of 2020, when the Treasury market essentially collapsed, the political narrative from the Fed was focused on helping the economy navigate through COVID. The dysfunction in the Treasury market is never mentioned. The fact that the Fed's zero rate policy helped to finance mortgage forbearance for millions of Americans during COVID was a serendipity. The unspoken issue for the Fed under Powell, however, was whether elevating the cost of buying a home by raising interest rates after 2021 was having any impact on reducing home prices. The need to ride to the rescue of the Treasury in 2020 had a cost, boosting home prices dramatically. The fact of higher funding costs was inflationary and also hurt banks due to trillions in unrealized losses on loans written during COVID.Because of the Fed's primary concern, namely preserving the Treasury's access to the debt markets, the fact of rising home prices during and after COVID was entirely a secondary concern. Just as in 2000, when Fed Chairman Alan Greenspan kept interest rates too low for too long, the Fed's decision to continue purchases of Treasury debt and MBS drove up housing prices, but the motivation was not full employment or price stability. Had Chairman Greenspan and the Fed raised interest rates in the 2000s, the bubble in the housing market might not have been nearly as large, but the U.S. economy might have weakened. In 2019, after a near miss in the Treasury market, how would the U.S. economy have looked without being able to finance a $2 trillion federal deficit?  The fact of the Treasury's need to finance growing debt is the unspoken truth in the discussion of monetary policy and housing costs. By early 2023, when the Fed was raising interest rates, the damage was done.  The value of mortgage securities plummeted, causing Silicon Valley Bank to fail and imposing trillions of dollars in unrealized losses on the rest of the banking industry.  By lowering interest rates in 2019 onward, millions of tomorrow's home sales were pulled into the present. A vast wave of home sales and mortgage refinance transactions caused more than half of all residential mortgages to turn over. After 2022, mortgage rates more than doubled and lending volumes fell dramatically, causing a severe recession in the housing sector. The industry continues to consolidate today as new loan origination volumes have fallen to 1/10th of levels seen during COVID.The huge decline in interest rates engineered by Jerome Powell and the FOMC from 2019 to 2022 drove up prices for single-family homes by double digits annually, destroying a key component of the American dream of home ownership.  Yet the fact of the massive federal debt prevented the Fed from tightening enough to force home prices down, as Fed Chairman Paul Volcker did in the 1980s. In June of 2022, Chairman Powell described the mounting carnage in the house industry with considerable detachment:"Recent indicators suggest that real GDP growth has picked up this quarter, with consumption spending remaining strong. In contrast, growth in business fixed investment appears to be slowing, and activity in the housing sector looks to be softening, in part reflecting higher mortgage rates. The tightening in financial conditions that we have seen in recent months should continue to temper growth and help bring demand into better balance with supply."Sadly, none of Chairman Powell's statements regarding supply and demand turned out to be true for housing. Concerns about the Treasury market and the government's weakening ability to finance trillions in short-term debt prevent the Fed from maintaining a policy that meets the legal mandate for price stability. Not only does maintaining liquidity in the Treasury market lead to higher inflation, but the surge in home prices over the past five years may be lasting. With President Donald Trump calling almost daily for Chairman Powell to cut interest rates or resign, the next leg in the false Washington narrative about inflation may be another upward surge in home prices care of Donald Trump, followed by a significant home price correction just prior to the 2028 election.

"We are looking at the opportunity to make the 2017 tax relief permanent," said Senate Leader John Thune during a floor speech on Saturday. "We're adding to the 2017 tax relief with new pro-growth provisions, like a provision to boost domestic manufacturing by implementing full expensing for new factories and factory improvements.  Thanks to the pro-growth provisions in our legislation, we can expect to see GDP as much as 4.9% higher as a result of our bill."  Bloomberg News The U.S. Senate has moved the Trump administration's first major piece of legislation forward, which includes raising the cap on state and local tax deduction and no action on limiting tax-exempt municipal bonds as it extends many of the 2017 Tax Cuts and Jobs Act's provisions."We are looking at the opportunity to make the 2017 tax relief permanent," said Senate Leader John Thune during a floor speech on Saturday. "We're adding to the 2017 tax relief with new pro-growth provisions, like a provision to boost domestic manufacturing by implementing full expensing for new factories and factory improvements.  Thanks to the pro-growth provisions in our legislation, we can expect to see GDP as much as 4.9% higher as a result of our bill."  The Tax Cuts and Jobs Act of 2017 was paid for nearly $4 trillion in tax cuts, which the new bill makes permanent. The cuts were due to expire this year. The Congressional Budget Office has priced the cost of the new legislation saying it will add at least $3.3 trillion to the national debt over the next decade. The number is higher than the estimated costs of the House's $2.4 trillion version.  The Senate's deficit also doesn't include additional borrowing costs that would push the number closer to $4 trillion. To help justify the addition spending the Senate is not counting the extra costs incurred by keeping the 2017 tax cuts in place, an accounting gimmick, known as "current policy baseline," that's legitimacy is still being argued. Counting out the dollars using the current policy baseline shows a budget reduction of roughly $500 billion. "Rather than be honest with the American people about the true costs of their billionaire giveaways, Republicans are doing something the Senate has never, never done before, deploying fake math and accounting gimmicks to hide the true cost of their bill," said Senate minority leader Chuck Schumer D - N.Y. "Republicans can use whatever budgetary gimmicks they want to try and make the math work on paper, but you can't paper over the real-life consequences of adding trillions to the debt."On Monday, the Senate is debating and voting on various possible amendments to the bill, a process known as vote-a-rama. A list of current winners and losers prepared by the CBO shows the adjustments to the SALT cap deduction, which goes from $10,000 to $40,000 until 2030 as a $946 billion savings. Expanding the low-income housing tax credit which affects the use of private activity bonds and is popular with housing advocates is scored as a $16 billion cost. There is also a provision currently in place that allows spaceports to issue tax-exempt bonds with a cost of $1 billion. There are multiple new restrictions being proposed for Medicaid payments including adding work requirements, that accounts for $317 billion in savings. Clean energy provisions are a mixed bag of extending and limiting different programs and policies. The 51-49 vote to advance the legislation to the next stage included two GOP defections. Sens. Rand Paul R- Ky., and Thom Tillis R-N.C. both voted "no." Paul is considered a budget hawk who is objecting to raising the country's debt ceiling.  Tillis has doubt about how the bill treats Medicaid funding and announced on Saturday he would not be running for reelection.  Last minute converts to putting the bill onto the floor for debate includes Sens. Ron Johnson, R-Wisc., Mike Lee, R-Utah, Rick Scott, R- Fla., Cynthia Lummis, R-Wyo., and Lisa Murkowski R-Alaska. None of the Democrats are in support, as Minority Leader Chuck Schumer, D-N.Y., used his clout to force an out-loud reading of the 940-page bill, a process that started late Saturday and ran into Sunday afternoon, lasting nearly 16 hours.President Trump began a victory lap via posts on Truth Social declaring his pride in the Republican party and announcing the movement as a "great victory." 

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."