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LOs pivoting to non-QM, equity products: survey

2025-05-12T11:22:30+00:00

A lack of housing inventory, fluctuating mortgage interest rates and home prices are the subjects that worry loan originators this year, those participating in the annual National Mortgage News Top Producers survey said.The annual survey had 327 originators participate, a number slightly smaller from last year, but the outcomes were notable.Surprisingly, LOs seem rather unfazed by the uncertain future of Fannie Mae and Freddie Mac, consolidation within the mortgage industry and even their job security.Of course splashy headlines, such as one lender acquiring another, get LOs talking, but it is not what keeps them up at night.READ MORE: The Top Producers of 2025: The complete listLOs have more concerns about boots on the ground topics, and as the mortgage market has yet to show any signs of relief for independent mortgage banks, originators increasing aim to amp up loan production across the board.The desire to use any available tool or product to survive the tough market is reflected in NMN's survey results of the originators who produced the highest dollar volume of loans last year.  Those striving loan officers are increasingly prioritizing non-QM and home equity-related products.Loan product prioritizationFor 2025, LOs are doubling down on originating all loan products under the sun. Prioritizing the origination of non-QM loans and home equity-related products is a notable shift from the year prior. Loan officer concerns for 2025The majority of respondents (59%) say they are not concerned about their job security in 2025. Meanwhile, housing inventory shortages (31%), rising home prices (24%), rising mortgage rates (24%) were ranked as the main topics of worry.

LOs pivoting to non-QM, equity products: survey2025-05-12T11:22:30+00:00

Can 1Q's positive MI results carry into rest 2025?

2025-05-09T20:22:34+00:00

A similar share of consumers used private mortgage insurance as credit enhancement in the first quarter compared with the prior year, but only one underwriter exceeded $10 billion in new insurance written.This narrowed the market share spread among the six active underwriters, according to data compiled by Keefe, Bruyette & Woods.As a group, NIW totaled $57.9 billion, down from the fourth quarter's $78.3 billion and relatively flat with $58.2 billion produced in the first quarter of 2024.During the first quarter, lenders originated $384 billion, slightly more than $377 billion done one-year prior, according to the Mortgage Bankers Association. By units, 1.068 million were produced in the period ended March 31, compared with 1.076 million for the same three months in 2024. "MI management teams across the industry continue to stress that pricing remains balanced and constructive, and that recent increase in macro uncertainty has not significantly shifted pricing dynamics to date," Bose George, an analyst at KBW, wrote in the earnings wrap report for NMI Holdings.The following is a roundup of the first quarter results at the six active underwriters, as well as some recent industry news.

Can 1Q's positive MI results carry into rest 2025?2025-05-09T20:22:34+00:00

Blend announces plans to offload Title365

2025-05-09T20:22:39+00:00

As it adopts a new software-first approach, mortgage technology firm Blend Labs announced it is selling its title insurance unit. After acquiring the Title365 business from Mr. Cooper in a $500 million deal during the mortgage boom of 2021, a new strategic pivot led Blend leaders to the decision to part with its "capital-intensive" title-agency operation, according to company leaders.  "We began our journey to become a software focused company, enhancing customer value and improving our unit economics by transitioning to strategic platform partnerships rather than building noncore services ourselves," said Blend CEO Nima Ghamsari in the company's first-quarter earnings call.  "As a significant step in this evolution, we are pleased to announce that we are in an exclusive process with a leading title and mortgage services provider for the potential sale of our title insurance business," he continued. The company faced a significant housing market slowdown in the ensuing four years limiting gains from the title acquisition, and a new competitive environment has the San Francisco-based fintech focused on partnerships, which would better provide benefits as the mortgage outlook improves.         How Rocket's acquisitions impact BlendThe news comes in the wake of the recent merger announcement between Rocket Cos. and Mr. Cooper, a deal that stands to negatively impact Blend's bottom line as they consolidate, analysts predicted. Since the deal was announced in March, Blend introduced a new technology partnership with Crosscountry Mortgage and launched a unit dedicated exclusively to working with nonbanks. The pivot toward partnerships gives it the chance to focus on its software offerings, which provide the fintech with better opportunities for growth than the ownership of an outlier business."Being the best in the world of the two or three things you do really well is materially better than being just really good at those things," Ghamsari said. While the merger has already set off disruption in the mortgage market among lenders, servicers and tech providers, Amir Jafari, Blend's head of finance and administration, said it had the potential to be a "catalytic moment" transforming the way the industry works.Ghamsari likened it to how Rocket led the push into digital and mobile lending, "things that we all take for granted," he noted."The recently announced Mr. Cooper and Rocket alliance has a similar tone to it for the market, and it impacts our own trajectory as well as a result," Blend's CEO said. "Their creation of an end-to-end platform underscores the increasing expectation of borrowers to be treated as valued customers, demanding personalized experiences, acknowledging their ongoing relationship with financial institutions."Blend remarked that Mr. Cooper still continues to be a customer, with its contract not expiring until 2028. Mr. Cooper also retained a small stake in Title365 after the 2021 acquisition.  Blend by the numbersThe company finished in the red in the first quarter, with net loss attributable to shareholders or $14.7 million compared to $6.5 million in the prior three months. The first-quarter number improved from a $22.1 million loss one year ago. Numbers were adjusted according to Generally Accepted Accounting Principles.Title365, which is now classified as "discontinued operations" in the company's financial statements, dragged numbers downward in the first quarter with a $2.8 net loss for the unit.Ghamsari touted new customer additions, some of which signed off in the weeks following the Rocket announcement. "We signed a top five mortgage servicer, a top 10 mortgage originator across our mortgage, home equity and closed solutions. These customers will typically deploy in two quarters or so," he said.Total revenue from still-existing mortgage and consumer banking platforms and services totaled $26.8 million, down from $30.1 million three months earlier, but inching upward from $23.8 million in the first quarter of 2024.

Blend announces plans to offload Title3652025-05-09T20:22:39+00:00

McKernan tapped for Treasury post, CFPB future unclear

2025-05-09T21:22:40+00:00

Former Federal Deposit Insurance Corp. Board Member Jonathan McKernan, who has been tapped to lead the Consumer Financial Protection Bureau, will be nominated as Treasury undersecretary for domestic finance. Bloomberg News WASHINGTON — Jonathan McKernan, who is awaiting final confirmation as head of the Consumer Financial Protection Bureau, will also be nominated in a key Treasury bank regulation post, the Treasury Department said. McKernan has already been serving as an advisor to the Treasury Department, the agency said, and would be nominated by the president as Treasury's undersecretary for domestic finance. "During that time, McKernan has become an integral part of the Secretary's senior team. His continued service at Treasury will ensure that his experience and expertise are best put to advancing the President's America First agenda," the Treasury Department said. The Treasury did not immediately respond to a request for comment about whether McKernan still plans to lead the CFPB, which is undergoing a dramatic change under the Trump administration. Treasury said in a statement simply that McKernan has been advising the department "while awaiting Senate confirmation to lead the Bureau of Consumer Financial Protection."President Donald Trump plans to nominate McKernan as Treasury's undersecretary of domestic finance, a position previously held by Nellie Liang during the Biden administration. McKernan's nomination to lead the CFPB has been especially closely watched as the Trump administration attempts to dismantle the bureau. His nomination was initially met with relief from the banking industry, which has had an antagonistic relationship with the bureau since its inception at the end of the 2008 financial crisis, but which nonetheless wanted to see an intact agency so that it could roll back regulation that remains in place and could be enforced again under a new administration. His nomination for the CFPB advanced out of the Senate Banking Committee in a 13-11 party line vote. The future of the CFPB, currently being led by Project 2025 architect and Office of Management and Budget head Russell Vought, is unclear even under McKernan. McKernan promised repeatedly during his confirmation hearing that he would "fully execute the law" but consistently declined to say whether he would stand in the way of President Donald Trump and billionaire White House advisor Elon Musk's attempts to dismantle the agency entirely. "If confirmed, I will fully execute the law … and perform each of its other statutorily assigned functions," McKernan said in his opening statement. "The CFPB will do this by centering its regulation on real risk to consumers and by focusing its enforcement on bad actors."The CFPB and the Trump administration's planned reduction-in-force, which would decimate the bureau's staffing, has been the subject of a contentious lawsuit, and is currently on pause due to an injunction issued by a federal judge.As Treasury undersecretary, McKernan would have a more senior position to Luke Pettit, currently a staffer for Sen. Bill Hagerty, R-Tenn., who is awaiting confirmation as assistant secretary of the Treasury for financial institutions. All confirmations are currently battling for floor time. Earlier this week, Sen. Tim Scott, R-S.C., the chairman of the Senate Banking Committee, tried to pass Pettit's nomination on the Senate floor via unanimous consent, which would have bypassed the need for floor time or a broader vote. Sen. Elizabeth Warren, D-Mass., objected to passing the nomination with unanimous consent, delaying the final vote which would require only a simple majority to pass. "My litmus test for any executive branch nominee is, will they enforce the law and uphold our Constitution, or will they simply bend the knee to the orders of President Trump," Warren said on Wednesday. "I'm worried that Mr. Pettit will simply go along with the Trump administration's deregulatory agenda instead of fighting to protect consumers and to ensure financial stability." McKernan previously served on the board of directors of the Federal Deposit Insurance Corp. and has had senior roles at the Federal Housing Finance Agency, the Treasury Department and the U.S. Senate.

McKernan tapped for Treasury post, CFPB future unclear2025-05-09T21:22:40+00:00

Mortgage bonds, seen as haven, get hit as rates took wild ride

2025-05-09T19:22:28+00:00

Asset managers and strategists have for years touted mortgage bonds as a haven when the economy stumbles, but the debt has underwhelmed since President Donald Trump announced his tariff blitz. Agency mortgage backed securities have slipped about 1.1% since the start of April, trailing Treasuries and the broader US bond market. MBS tend to suffer when there's more uncertainty about the direction of interest rates. The most liquid part of the market, known as current coupon bonds, has also lagged Treasuries. READ MORE: What do the recent FHFA shifts mean for mortgage lenders?Usually the bonds perform well during recessions, as the Federal Reserve cuts rates, and the direction of monetary policy and bond yields becomes a little more predictable. Mortgage bonds are supported by government-backed companies like Fannie Mae and Freddie Mac, giving them little credit risk. Often the biggest factor for their valuations is how quickly or slowly principal will come back to investors, which is tied to the probable direction of interest rates.But their recent underperformance underscores a real risk with mortgage bonds: they can get hit when rates markets fluctuate wildly. In this market, there's still ample ambiguity about where rates are headed and if a recession is coming. This week, Fed Chair Jerome Powell said he "couldn't confidently predict" future policy. A measure of interest-rate uncertainty, the ICE BofA MOVE Index, is up since mid-February. "MBS performance was worse last month than some investors anticipated," said Zachary Aronson, a portfolio manager at MacKay Shields, a money manager owned by New York Life. "While agency bonds are protected against defaults, they remain vulnerable to uncertainty — especially around interest rates and Fed policy." READ MORE: What the latest Fed meeting means for mortgage lendersPrices on Treasuries have been in turmoil since at least the start of April, when Trump announced widespread tariffs aimed at a series of nations. Since then he's delayed the implementation of those levies, and talked more about negotiating bilateral trade agreements with multiple countries, which has helped soothe markets. Mortgage bond spreads have tightened modestly this week, and some investors see the potential for more of that to come. "During the volatility of last month's tariff news MBS underperformed pretty significantly, including against corporate bonds," said Brian Quigley, a portfolio manager at Vanguard. "But it's in the second leg of risk off that MBS has the real advantage. If economic growth slows, the credit guarantee of MBS helps it outperform compared with corporates, which could see higher defaults."Stubbornly HighMoney managers' bulging ownership of MBS may have helped push risk premiums wider during April's tumult, according to Citigroup Inc. strategist Ankur Mehta. As investors yanked money from bond funds, money managers, heftily weighted toward the bonds over Treasuries, were forced to offload some of those holdings."There was a dash for cash as funds rushed to meet redemptions, and the selling was skewed towards MBS given their overweights in the sector," Mehta said.A month after Trump's tariff announcement first rocked markets, MBS risk premiums remain "stubbornly elevated," said strategists at Bank of America Corp earlier this week. Analysts at Goldman Sachs also this week noted the relatively high levels for MBS spreads even as spreads on corporate bonds have retreated even as spreads on corporate bonds have retreated. Performance over a few weeks isn't how most investors look at returns. MBS aren't doing terribly so far this year, having gained 2.3%, outperforming credit and the broader market, not to mention US equities, which are down 3.3% through Thursday's close on a total return basis.The outlook for the rest of the year is much harder to forecast. Corporate bonds can sell off during economic downturns as investors worry about companies paying the bills and revenue shrinking, while bonds with less credit risk can perform better. "We think these assets are incredibly attractive," said Bryan Whalen, fixed income chief investment officer of TCW, referring to mortgage bonds. "We're comfortable where we are, acknowledging that the short-term has the potential to be a little bit rocky." 

Mortgage bonds, seen as haven, get hit as rates took wild ride2025-05-09T19:22:28+00:00

Dave Ramsey Thinks Lower Mortgage Rates Could Ignite a Home Buying Frenzy

2025-05-09T18:22:22+00:00

While folks debate whether mortgage rates are going higher or lower, most expect a boom if they eventually do come down.Even Dave Ramsey, who is known for being a very shrewd financial guru, thinks so.In a new interview with TheStreet, he said if rates sink a point or two, prospective buyers will likely return in droves.And that could create a “fire” in the housing market, which has suffered lately from a severe lack of affordability.But Ramsey also some very strict rules for home buying, which still might not pencil even if rates come back down to record lows.Ramsey Expects Lower Mortgage Rates, Housing Market ComebackWhile he wasn’t too specific, Dave Ramsey told TheStreet that mortgage rates will “probably fall,” and with that he expects “this market to come back.”He didn’t specify why mortgage rates might come down, just that they’d improve, perhaps because he’s an optimist.Maybe because like everyone else, he knows the housing market isn’t sustainable at rates and prices like these.To that end, he doesn’t believe homes prices are going to fall, even though inventory is beginning to rise and put pressure on sellers.In a nutshell, he said they aren’t going to come down because there’s more demand than supply.I suppose that varies based on the city in question, and there’s certainly been a shift to a buyer’s market in 2025 relative to prior years.But he believes there’s still a lot of pent-up demand from prospective home buyers, who continue to play the waiting game.And if mortgage rates somehow see a sizable drop, that could be the catalyst necessary to get things going again.For the record, 2024 saw the lowest existing home sales going back to 1995, and was similar to the depressed levels seen in 2023 as well.So far, 2025 doesn’t appear to be markedly better, though it depends on the direction of the economy, mortgage rates, and the trade war and tariffs.Does a Home Purchase Pencil Today Using Ramsey’s Math?One issue with Dave’s optimism is he’s pretty strict when it comes to home buying math.He’s got all sorts of rules you should abide by if you’re wanting to purchase a home, including a 25% rule, where only 25% of your take-home pay can be used toward the housing payment.This is much lower than the maximum DTI ratios allowed by Fannie Mae, Freddie Mac, the FHA, and so on, which accept ratios in the 40s and beyond.And those use gross income, not net, after-tax pay. That can be tough these days with home prices and mortgage rates where they are.On top of that, he has said in the past that “the only kind of mortgage I recommend is a 15-year, fixed-rate loan.”So let’s just pretend you make $100,000 annually and homes are going for $360,000, which is around the national average.Using ADP’s gross-to-net calculator, gross pay is $8,333 and take-home pay is $6,561 per month (using their default settings).If you can muster a 20% down payment, which Ramsey strongly advises, you’re looking at a loan amount of $288,000.So we’ll use a 6% 15-year fixed mortgage rate, which gives you a monthly principal and interest payment of $2,430.Next, we add in property taxes of roughly $375 per month and another $100 monthly for hazard insurance.All in you’re at $2,905, which would be about 44% of take-home pay using that ADP calculator.Ultimately, you can only allocate $1,640 toward PITI using Dave’s rules. And I was being pretty lenient here with a $100k salary and $360,000 purchase price.By His Rules, We Need Much Lower Mortgage RatesIf we abide by Dave’s many rules, we need significantly lower mortgage rates to make it all work.How low exactly? Well, using my example above we can only allocate $1,640 toward the housing payment.The property taxes and hazard insurance are fixed at about $475 per month and part of the housing payment.That leaves $1,165 for the principal and interest portion of the payment. Not a lot of money, especially when we have to take out a 15-year mortgage instead of a 30-year mortgage.Not even a 1% mortgage rate would get us there. But I suppose he knows the vast majority of home buyers out there don’t abide by all his rules.If they did, we wouldn’t have many homes sales (if any). Or we’d need salaries to be a whole lot higher. Or home prices a whole lot lower.But he said he doesn’t see home prices falling, so it appears the pent-up demand either makes a lot more money, or will break some of these stringent rules to get in the door and buy a home.One also has to wonder if mortgage rates actually do fall one or two percentage points, what will the economy look like?We all want mortgage rates to ease to boost housing affordability, but a big drop like that might only come from a major economic downturn. Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.Latest posts by Colin Robertson (see all)

Dave Ramsey Thinks Lower Mortgage Rates Could Ignite a Home Buying Frenzy2025-05-09T18:22:22+00:00

Treasuries slide as Trump pushes investors toward riskier assets

2025-05-09T19:22:32+00:00

(Bloomberg) -- US Treasuries sank as investors took job market data and a US-UK trade framework as reasons to embrace riskier assets and pare back their bets on interest-rate cuts.The declines on Thursday pushed two- to 10-year yields higher by at least 10 basis points on the day after President Donald Trump urged people to buy stocks based on the latest trade developments. Yields on 30-year bonds were up about eight basis points to 4.85% after an auction was met with tepid investor demand."The hard data has not yet followed the soft data. A trade deal is done. Risk appetite is better. The Fed is in no hurry," said George Catrambone, head of fixed income at DWS Americas. Because of all that, "some of the rate-cut expectations have walked themselves out of the market."Swaps priced in a 15% chance of a quarter-point rate cut at the next Federal Reserve meeting in June, compared to about 30% on Tuesday and more than 50% a week ago. Markets see barely three reductions this year, which would bring rates to a range of 3.5% to 3.75%. At the end of April, four rate cuts were fully priced in.Short-term yields had already been rising as traders pared bets on cuts. Chair Jerome Powell said Wednesday the Fed wasn't in a rush to lower borrowing costs. Officials voted unanimously to keep the benchmark federal funds rate in a range of 4.25% to 4.5%, where it has been since December.In a statement, policymakers said they see a growing risk of both higher inflation and rising unemployment. Still, Powell said the labor market remains resilient amid the trade uncertainties — which was reinforced Thursday by a drop in the weekly tally of new jobless."The idea of preemptive cuts is not on the table, which means they may end up being a little bit late to whatever happens," said David Rogal, portfolio manager, fundamental fixed income group at BlackRock. "There's just a lot of uncertainty in both directions."On Thursday, the S&P 500 rose after Trump touted what he described as a comprehensive trade agreement with the UK, marking the first of his promised deals with countries around the world. The Bloomberg Dollar Spot Index rose by 0.7%, the biggest jump in over a month.Trump criticized the Fed's policy stance again on Thursday, saying there's virtually no inflation in the US and that Powell "doesn't have a clue." The president has been calling for the central bank to lower rates to boost the economy, and has even suggested he could remove the Fed Chair before the end of his term."Powell definitely gave a whiff of sort of stagflationary risks, but because of the political noise around it at the moment, he was very careful not to say anything inflammatory," said Neil Sutherland, portfolio manager at Schroder Investment Management. "It's really difficult for them to make a big call one way or the other."Pimco's Chief Investment Officer Dan Ivascyn said in an interview with the Financial Times that the probability of a US economic recession is the highest it's been in a few years. The firm has made small increases to its Treasury holdings over the previous two months, focusing on short maturities.--With assistance from James Hirai and Anya Andrianova.(Updates yield levels.)More stories like this are available on bloomberg.com

Treasuries slide as Trump pushes investors toward riskier assets2025-05-09T19:22:32+00:00

Property taxes up 10.4% in past three years

2025-05-09T15:22:38+00:00

Property taxes for all homeowners in the U.S. rose between 2021 and 2023, but varied widely in different regions of the country.Median property taxes lurched upwards by an average of 10.4% to an annual payment of $2,969, or $247 a month, putting additional burden on property owners, according to a LendingTree analysis.Though taxes rose across the board, the increases ranged widely across the 50 largest metros ranging from $1,091 to $9,937 annually, the financial services platform said in its report.While LendingTree did not include data from 2024, a similar analysis by another vendor found that last year homeowners paid an average of $4,172 in property taxes. "There are already so many factors stacked up against homeowners today," said Matt Schulz, chief consumer finance analyst at LendingTree, commenting on the property tax increases."The fact that property taxes have risen so quickly just makes a challenging situation that much more difficult," he added in a statement. "That extra money that has to go to pay taxes is money that can't go toward dealing with high grocery prices, building an emergency fund, growing your retirement savings or other financial goals."Homeowners in Tampa, Florida (23.3%), Indianapolis (19.8%) and Dallas (19%) saw the steepest property tax increases in the nation over the three-year period. In contrast, Pittsburgh (4.4%), Philadelphia (8.2%) and Milwaukee (8.3%) recorded the smallest increases.Some Southern metro areas had the lowest overall median property taxes, according to LendingTree's analysis. Among the 50 largest metro areas, residents of Birmingham, Alabama, paid the lowest median property tax at $1,091 annually. Homeowners in Memphis, Tennessee, and Louisville, Kentucky, followed with average annual payments of $1,856 and $1,912, respectively.Unsurprisingly, residents in metro areas such as New York ($9,937), San Jose, California ($9,554), and San Francisco ($8,156) pay the highest property taxes in the nation.Among the 10 metro areas with the highest property taxes, four are in California — San Jose, San Francisco, Los Angeles and San Diego — and two are in Texas: Austin and Dallas."Those states are known for their relatively high tax rates and housing prices," Schulz said. "As a homeowner in Austin, I can tell you I'm not surprised to find my metro near the top. As Austin has boomed in recent years, many people have moved here from California and other places because of relatively low housing prices, only to be unpleasantly surprised by the size of their yearly property tax bill. It's a big deal."On a state-by-state level legislation cropped up to neutralize the spike in property taxes. Two states, Florida and Georgia, passed measures tying their property tax burden to the pace of inflation last year.Meanwhile, Florida's Governor Ron DeSantis announced a plan to wipe out the state's property levies.Critics of the idea have pointed out that the state's lawmakers would have to raise $43 billion to maintain the same level of public services, according to estimates from the Florida Policy Institute. Tax levies, though a nuisance to some, are essential for funding public schools, law enforcement and infrastructure. 

Property taxes up 10.4% in past three years2025-05-09T15:22:38+00:00

Financial risk from flawed appraisals runs into the billions

2025-05-09T14:23:10+00:00

Serious oversights or inconsistencies appear in one-third of traditional property assessments conducted by human appraisers, resulting potentially several billion dollars worth of financial penalties for lenders. Almost 34% of appraisals had a serious unwarranted condition or quality adjustment that wasn't justified after further examination by artificial intelligence tools, according to a white paper from technology firm Restb.ai. The errors subject lenders to repurchases of property-collateralized loans that could cost them between $27.1 billion and $59.7 billion.Overall, three out of four appraisals showed inconsistencies that could lead to incorrect valuations, the company also said. Among issues found by Restb.ai, which specializes in using AI-backed computer vision tools to determine valuation, were a challenging classification system, lack of transparency and human-imposed limits on how outcomes might be reviewed by appraisal management companies that allow errors to slip through. "The scale of flawed condition and quality adjustments in appraisals is bigger than most people realize," said Restb.ai chief product officer Nathan Brannen in a press release. "Most AMCs and lenders simply don't have a quick and easy way to check for these issues, so they ignore the problem and hope for the best."In the study that analyzed over 1,200 completed assessments against almost 6,500 comparable units, researchers noted limitations in the uniform appraisal dataset in grading a home's condition and quality as a contributor to inconsistency. Limited granularity in the UAD scale led the overwhelming majority of properties to fall in the middle range of values when looking at a home's condition and quality. Even when both a professionally assessed property and AI came in with similar ratings, appraisers still made adjustments on almost 12% for condition and 5% for quality, raising questions about transparency.  Restb.ai's research also pointed to a 2024 Fannie Mae study, which cited an inadequate selection and adjustments of comparables and inaccurate reporting of appraised homes contributing to inaccuracy. Using AI for property assessmentsTechnology-focused companies like ICE Mortgage Technology and Restb.ai have turned to artificial intelligence to help with valuation, with AI allowing for quick examination of a property's images or photographs.  "While some appraisers remain skeptical of AI, its value is in its ability to immediately flag potential issues for closer review rather than waiting for discrepancies to be found later in the appraisal process," the paper said. Using artificial intelligence in the valuation process  would also help remove some subconscious biases that emerge when a professional appraiser does the work, Restb.ai also said. Another advantage is its ability to consistently analyze properties repeatedly.  "AI is trained over property imagery independently of that property's price, region, owners, or any other aspect that is more difficult for a human to abstract," the firm said. 

Financial risk from flawed appraisals runs into the billions2025-05-09T14:23:10+00:00

To get HELOC borrowers, lenders must offer education

2025-05-09T12:22:32+00:00

A larger number of homeowners are open to accessing their property's equity compared with three years ago, but an education gap remains regarding the product, an update of a 2022 survey from MeridianLink found.The interest in home equity products increased to 28% of consumers saying they are somewhat or very likely to take out a home equity loan now from 21% three years ago, noted JP Kelly, senior vice president of mortgage at MeridianLink."There is still a little bit of a barrier due to a lack of knowledge of the potential use cases," Kelly said.Why consumers are reluctantConsumers' hesitation is around high interest rates, cited by 63%; the fear of risking homeownership, 22%, and uncertainty about repayment terms, 18%.Americans have a record amount of equity tied up in their homes, about $35 trillion. But financial institutions in particular need to educate consumers about what they can use a home equity loan for, he said.The amount of tappable equity, the amount available leaving borrowers with an 80% loan-to-value cushion, is $17 trillion at the end of last year according to ICE Mortgage Technology.Among the obvious reasons to tap ones' equity is to finance home improvements, especially at a time when higher first mortgage rates are influencing any decisions on moving.Teach consumers how to use their home equityPeople might not be aware of other reasons, such as paying down higher cost debt such as credit cards or other forms of adjustable rate financing."It's important that we have to educate the home borrowers that it's a much more affordable use to use their equity to pay down that credit card debt where you're paying potentially 25%, 26% interest," said Kelly.Only 16% of the respondents said they would take a home equity loan to consolidate debt. The leading reason, cited by 45%, was to use it for renovations or home improvements.Meanwhile, 16% would use the money to invest in new properties, 11% said they plan to create an emergency fund, while 5% are looking to pay down medical debt.Fixing the product and the processBesides educating the customers, lenders can also work on simplifying the process and developing flexible loan terms and repayment options, the MerdianLink survey found.Most home equity lines of credit are adjustable-rate products, and this is what caught many borrowers in the storm of the financial crisis.The volatility generated in the markets by the headlines over the Trump Administration's tariff policies are a marketing opportunity for home equity products, a recent survey from Point suggests."Right now, most of the borrowers are of the mindset that we're going to be in an interest rate environment that will go down, so HELOCs don't scare them as much," MeridianLink's Kelly said. "But educating them to the potential pitfalls of a variable interest rate product, and making sure that they are taking amounts that are comfortable and safe for them if rates were to go back up, that is a key component too."Pitfalls in home equity for lendersLenders need to be mindful of these pitfalls as well. "I think it's important for us, as an industry in general, to make sure we keep our guard rails up and be diligent around that as well, and not overly loosen and put people into products they have no business gaining," Kelly said.When looking for a home equity lender, 72% of borrowers prioritize competitive interest rates, 43% also look at the lender's reputation and 41% value convenience and personalization.These products used to exclusively be in the purview of depositories, as they had to be put into portfolio, but a secondary market has now developed which independent mortgage bankers could now take advantage of, Kelly said. Another competitive threat is companies like Point or Unison, which market home equity investment products.Rate volatility cuts both waysAs for the recent volatility in Treasury yields and interest rates hurting or helping the home equity business, it can go both directions."I don't think it has to be one way or the other necessarily, as long as we go back to that educational point of view, and they're making sure that they're educating the borrowers on what they can use the equity for in their home, and again, making sure they're aware that that volatility can affect their rates as they're adjusting," said Kelly.

To get HELOC borrowers, lenders must offer education2025-05-09T12:22:32+00:00
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