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In a bid to make iBuying more lucrative for buyers and sellers, Opendoor has partnered with assumable mortgage platform Roam.The move should make it easier for buyers looking for an Opendoor property to also identify the ones with an assumable mortgage attached.Many mortgages are assumable, and because existing homeowners have such low fixed-rate mortgages these days, the practice has finally become attractive.The partnership should help surface more of these loans and allow Opendoor buyers to lean on Roam’s expedited assumption process.It could also make more home purchases pencil if the buyer is able to take advantage of a lower blended interest rate.Opendoor and Roam Join Forces in Assumable Mortgage PushThere were rumblings of a partnership between these two companies on social media platform X for a while.And now they’ve finally announced a collaboration that will insert Roam’s assumable mortgage tools into the Opendoor ecosystem.Moving forward, prospective home buyers shopping for properties on Opendoor will be able to see which sellers have assumable mortgages.All types of home loans are assumable, including FHA loans, VA loans, and USDA loans.However, mortgages backed by Fannie Mae and Freddie Mac, known as conforming loans are not.Roam makes it easy to see which properties have assumable mortgages, and they also help facilitate what can be a tricky and time-consuming process.Opendoor is an iBuyer platform that allows home sellers to part with their properties without using a real estate agent, or making any improvements, staging, etc.Now that mortgage rates are markedly higher than they were just three years ago, loan assumptions are beginning to make a lot of sense.For example, if a home buyer can assume a fixed-rate mortgage set at 2.75% instead of having to take out a new one at 6.25%, it can be a major money-saver.And many of these loans still have a good chunk of the loan term remaining because mortgage rates hit record lows in 2021.That means the 30-year fixed mortgages taken out at the time still have a good 25 years remaining.Opendoor Home Buyers Can Now Use Roam’s Assumable Mortgage Tools and Transaction SupportHowever, there is the matter of the assumption gap, which is the difference between the sales price of the property and the remaining loan balance.To bridge the gap, home buyers need a down payment, but often it can be quite wide as these properties have increased in value significantly as well.Roam addresses this issue by allowing borrowers to take out a piggyback second mortgage.For example, say a home is selling for $500,000 and has an outstanding loan balance of $375,000.The home buyer can assume the loan, but that still leaves a $125,000 shortfall. Perhaps they don’t have a down payment of $125,000, but they can put down $50,000.They can get a second mortgage from Roam’s partner for the remaining $75,000 and then they’re all square.Together, these two loans will have a blended interest rate, which will be higher than the first mortgage rate.Say a 2.75% first mortgage and a 7% second mortgage. But even then, it’ll be a lot lower than a 6% mortgage.Ideally, this partnership will expand the reach of assumable mortgages and ensure more of them don’t go to waste from property owners sell.Initially, Opendoor will identify eligible properties with assumable mortgages and bring in Roam to assist qualified sellers looking to pursue a higher sales price and a faster closing.That includes eligibility coordination between the two platforms, along with home buyer/seller education, and real estate agent tools.Over time, the pair may deepen the integration to provide more value to home buyers and sellers, and make both iBuying and loan assumptions more attractive. 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)

A loan program allowing homeowners to pay for clean energy upgrades through property tax bills will still be subject to tighter lending rules next year, a federal judge ordered. The Property Assessed Clean Energy (PACE) program allows borrowers to pay for home improvements, from storm hardening to solar panels, via future property tax assessments. The Consumer Financial Protection Bureau last December finalized a longstanding effort to apply Truth in Lending Act requirements to PACE next March. A trade group for PACE participants, Building Resilient Infrastructure and Developing Greater Equity [BRIDGE], sued the bureau in May, arguing the upcoming regulation will be too burdensome and costly for participants. A federal judge in Florida this week denied BRIDGE's motion for a preliminary injunction, allowing the upcoming rules to proceed. In a footnote in his order, U.S. District Judge Tom Barber wrote that the group's accusation that the CFPB violated the Tenth Amendment, in interfering with the tax aspect of PACE loans, was unlikely to succeed. "Simply put, it does not appear from the briefing to date that PACE financing transactions are a tax," wrote Barber, suggesting the trade group focus on other arguments. Neither attorneys for BRIDGE nor the CFPB responded to requests for comment this week. How PACE worksA PACE administrator pays a contractor for home improvement work, and the property owner repays via a tax assessment against the property over a 5-to-30 year term. The program uses property-based underwriting rather than credit scores, and is categorized as a super-priority lien, ahead of pre-existing mortgage liens. Homeowners don't have to pay an upfront, out-of-pocket cost, and are expected to recoup savings on their energy bills. PACE administrators today provide written financial estimates and disclosures, ensuring a property owner is current on all property-related debts and taxes. California, Florida and Missouri all have PACE programs. Why trade groups oppose the new lawsRepublicans have sought to add protections to the loans since 2017, and a 2018 law directed the CFPB to prescribe regulations. The bureau next year will treat PACE loans as mortgages under federal lending laws. BRIDGE says the CFPB exceeded its instructions from Congress to place regulations on the loans. The defanged bureau under Acting Director Russell Vought defended the PACE rules this summer, stating that PACE loans are plainly consumer credit. "The CFPB's unlawful power grab over PACE financing with the final PACE rule will end PACE financing as a legally and commercially viable enterprise," their lawsuit read. The trade group described the expected financial impact to two Florida-based administrators. Renew Financial Group, which enrolls over 5,000 contractors, claims the new regulations will result in a 72% reduction in their funding volume. The administrator said it recorded over $215 million of PACE financing in fiscal year 2024, and has a delinquency rate of around 1.4%.It serves primarily lower-income customers, and largely undertakes roofing and storm-hardening projects. Renew says it prohibits certain lending scenarios, such as balloon payments or homes with reverse mortgages. The company anticipates over $2.5 million in new compliance costs before the March implementation date. Ygrene Energy Fund, another Florida administrator with over 1,500 contractors, is similarly situated in serving lower-income property owners, and claims a delinquency rate of 4%. It also expects to spend at least $600,000 in the next year on compliance efforts, in addition to hiring more staff and buying TILA-tolerant technology.What's next in the court caseBRIDGE also accuses the CFPB for violating the Administrative Procedures Act for its arbitrary and capricious rulemaking. The law's fate still faces further legal hurdles. "The court believes that the issues presented are highly complex and are better resolved at the summary judgment stage of the proceedings, with a more developed factual record," Judge Barber wrote this week. The CFPB's final rule last year was supported by groups including the Mortgage Bankers Association. A contested 2023 bureau study found PACE borrowers were more likely to fall behind on their mortgages versus those who finance improvements with other products. 

Key insight: Consumers' use of home equity lines of credit is rapidly growing, as homeowners look to tap into the value of their houses, but banks are losing market share.Supporting data: Banks hold just under two-thirds of total HELOC debt, compared with the more than 80% they held some 15 years ago.Forward look: The demand for home equity debt is likely to stay elevated for some time, as borrowers avoid refinancing their mortgages at less favorable rates.As consumers continue to take on more and more debt, banks are losing business in one of the fastest-growing household loan products.The volume of home equity lines of credit has been rising since 2022, as Americans have sought ways to access affordable debt without refinancing their mortgages at unfavorable rates. The acceleration in the usage of home equity lines follows a period of contraction that started about 15 years ago, when banks cut back on the business, or pulled out entirely.At the peak of the Great Recession, banks held more than 80% of HELOC debt. Now, they hold just under two-thirds, as fintechs and other nonbanks have jumped into the rapidly expanding business.Meredith Whitney, a Wall Street veteran who now runs an investment research firm, said that after banks were scarred by the mortgage crisis of the late aughts, they may be missing out on the resurgence of HELOC opportunities.While banks do still hold the majority of HELOC volume, at roughly $276 billion, per data from the Federal Reserve Bank of St. Louis, nonbanks' market share is quickly increasing.Several banks exited the HELOC business in 2020, due to economic uncertainty from the pandemic. Wells Fargo stopped offering the product at the time, and hasn't picked it up again. Capital One Financial, which completed its blockbuster acquisition of Discover Financial Services this spring, announced in July that it would wind down Discover's home equity loan business.Whitney said she thinks banks have time to get in the HELOC action. At this point, though, they'll have to build digital products that are fast and easy to use, she said, in order to compete with the fintechs."That sounds really simple, but people want to go online and get their home equity approved and funded," Whitney said, explaining that banks will need to make investments in the HELOC business. "It's not as easy as just turning on the switch. They've been out of the market for long enough that they have to re enter the market in a competitive, modern way."Figure Technology Solutions, which both originates HELOCs on its own and partners with other lenders to offer them, facilitated $5 billion in HELOCs in 2024. That volume accounted for about 13% of total HELOC growth last year. The company's HELOC customers have an average FICO score of 755, Figure said in a public filing."There is a lot of demand that the banks aren't meeting," Anthony Stratis, vice president of lending partnerships at Figure, told American Banker. "I do think there is an opportunity for depositories to rethink their home equity strategy and partner with companies, like Figure, in order to meet that demand without having the consumers go entirely outside their ecosystem."To be sure, the largest originators of HELOCs are still banks, including Citizens Financial Group, Bank of America and PNC Financial Services Group.And there are signs that banks are responding to the rise in HELOC demand. Earlier this year, JPMorganChase relaunched its home equity line of credit offering, after a five-year break from the product. Fifth Third Bancorp said this summer that it would expand parts of its home equity business, which has helped drive consumer growth, to make up for lost solar panel financing activity following new tax legislation.The jump in demand is in line with an increase in consumer debt overall, according to the Federal Reserve Bank of New York's quarterly report on household debt and credit. Total household debt grew by $197 billion, or 1%, in the third quarter, to $18.59 trillion, continuing an upward march that began in 2014.But rising indebtedness isn't necessarily a sign that there's more strain on Americans to scrape together funds, said a New York Fed researcher on a background call with reporters Wednesday. The increasing popularity of HELOCs is likely a reflection of low-risk borrowers moving away from more expensive types of debt, like credit cards or student loans, according to the researcher."I really see it as just a product switch where a borrower might opt for a different product than they would have a few years ago," the researcher said. "One note, I think, is that they are more available now. There were many years after the global financial crisis where the home equity product just wasn't quite as available."U.S consumers are still showing resilience this year, with delinquency rates among Americans stabilizing in the third quarter, per Fed data. The New York Fed researcher said that the median credit score on a newly opened HELOC is "much higher" than the median score of a newly originated 30-year mortgage, though Wednesday's report didn't include that data.At Bank of America, fewer than 4% of its revolving home equity loans were held by borrowers with FICO scores under 660 on Sept. 30. As of the same date, the average FICO score among HELOC borrowers at PNC was 777.Figure's Stratis said that he thinks the demand for home equity borrowing is still on the rise, due to the pressure interest rates are continuing to put on mortgage refinancing activity. "There's going to be a need for cash on the consumer side," Stratis said. "And as far as rates go, which asks the question of what products are a good option for consumers, I think home equity still has a place." Whitney said that consumers are still far less leveraged than they have been historically, because equity in U.S. homes has nearly tripled since 2009, to $36 trillion."I think we're still at the very beginning," Whitney said of HELOC growth.

Loandepot leadership said the company has set the course for profitability but still ended up in the red at the end of the third quarter, posting a loss for the fourth straight earnings period. The national lender reported a net loss totaling $8.7 million based on generally accepted accounting principles, with the total including fair-value changes in mortgage servicing rights. The company narrowed the loss by 65.4% from the second quarter's $25.3 million. Over the same three-month period of one year ago, Loandepot recorded a profit of $2.7 million, which was its first positive result in nearly three years. Despite recent challenges in getting over the hump back to profitability, the lender pointed to its diversification and changes implemented across the company after founder Anthony Hsieh returned as CEO earlier this year as investments that would pay dividends."The market is still highly fragmented. There is a ton of room chasing the leader in the space, so we're very enthusiastic, and we are laser focused to stay on plan, get back into a standard of operations that allows us to be an industry leading mortgage bank," Hsieh said on Loandepot's earnings call. "Having a fully diversified origination muscle — both builder and joint-venture market retail and direct-to-consumer model — really gives us an edge to scale up, particularly as we all hope there'll be some growth and volume to a more favorable interest rate cycle next year," Hsieh continued. Third-quarter numbers came off of $6.53 billion in originations production, dropping from levels of both three months and one year earlier. The total decreased 3% from $6.73 billion three months earlier and 1.9% from $6.66 billion a year ago. Gain on sale margins saw a bump up 361 basis points compared to 311 in the second quarter. On a year-over-year basis, gain on sale also increased from 333 basis points. "Our higher gain on sale margin primarily reflected a channel mix shift with a higher contribution from our direct channel and a lower contribution from our joint-venture channel compared to the prior quarter," said Chief Financial Officer Dave Hayes. Unpaid principal balance in Loandepot's servicing portfolio grew to $118.23 billion, rising from $117.5 billion in this year's second quarter and $114.9 billion 12 months earlier. Revenue between July and September clocked in at $323.3 million, reflecting an increase of 14.4% and 2.8% from $282.6 million and $314.6 million three months and one year earlier. Loandepot's new look since Hsieh's returnSince his return to the helm of the Irvine, California-based company he originally founded in 2010 this past spring, Hsieh has largely reshaped the company in much of the image he helped create during his earlier leadership tenure. Notably, several recent appointments, including the return of some prior executives, bear the mark of Hsieh's influence as the company tries to rise up among the ranks of industry business leaders.  "In the third quarter, we initiated a business transformation, including naming new leadership across all of our origination channels: consumer, direct, retail and partnership lending, as well as our in-house servicing platform. We also transformed our technology and innovation functions under new leadership," Hsieh said. While much of the personnel may now look familiar, the mortgage industry finds itself in a significantly different business environment compared to the last decade, leaving questions whether strategies employed in the past might work in today's market. "In order to really move forward, they need to be a more skilled player, drive their costs down to be able to generate more profits," said director and senior equity research analyst at investment bank UBS Group."But if the market doesn't come back, then they're taking on extra costs at this point of trying to position themselves for growth. That's the delicate balance," Harter continued. Shares of Loandepot's stock saw a brief surge last month, where its value more than doubled from the beginning of the month to a closing high of $4.56 on Sept. 17. Social media chatter among retail investors helped drive up the value, briefly turning it into another meme stock. Since its high, the equity has floated back down to a share price of $2.79 at the closing bell on Thursday, a number still well above where it sat throughout 2025 until the September surge.

Home prices continue to rise across the country, despite the market tilting in favor buyers.The national median single-family existing-home price increased 1.7% year over year to $426,800 in the third quarter, the same annual growth rate as the second quarter, an analysis by the National Association of Realtors found. "Home sales have struggled to gain traction, but prices continue to rise, contributing to record-high housing wealth," NAR Chief Economist Lawrence Yun said. "Markets in the supply-constrained Northeast and the more affordable Midwest have generally seen stronger price appreciation."While almost every region in the United States saw price hikes last quarter, the Northeast and Midwest were far above the rest, experiencing increases of 6% and 4.2%, respectively, to averages of $540,100 and $331,100, respectively. The South saw a slight bump of 0.5% to $372,800, while the West had the largest average of $633,900 but prices fell 0.1%."Price declines are occurring mainly in southern states, where there has been robust new home construction in recent years," Yun said. "Given the region's faster job growth, these price drops should be viewed as temporary and as a second-chance opportunity for those previously priced out of the market."Home prices rose in 77% of metro markets in the third quarter, up from 75% in the prior quarter. But metro areas with double-digit price gains decreased to 4% from 5%, the report found.Most of the markets with the largest increases were located in the Northeast, such as Trenton, New Jersey (9.9%), Nassau County-Suffolk County, New York (9.4%) and New Haven-Milford, Connecticut (9%). Lansing-East Lansing, Michigan also saw a significant jump of 9.8%.Eight of the 10 most expensive markets were in California, led by San Jose-Sunnyvale-Santa Clara, which saw a 0.8% rise, Anaheim-Santa Ana-Irvine (0.1%) and San Francisco-Oakland-Hayward (0.5%). Urban Honolulu, Hawaii (-0.9%) and Bridgeport-Stamford-Norwalk (7.8%) were the other two markets to crack the top 10.The high prices contributed toward 60,000 home-purchase agreements being canceled in August, according to Redfin.Homeowners saw smaller profits in the third quarter. Sellers gained an average of 49.9% in profit after transactions closed, down from the 55.4% a year prior.The report found some home price improvements on a quarterly basis, as the monthly mortgage payment on a typical existing single-family home with a 20% down payment decreased 2.8% from the second quarter to $2,187, but still increased 2.1% year over year. The average share of income families spent on mortgage payments dropped to 24.8% in the third quarter from 25.6% in the second quarter as well.First-time homebuyers also saw some quarterly relief, as the monthly mortgage payment for a typical starter home valued at $362,800 with a 10% down payment fell $61 quarter over quarter to $2,146.

Bess Adler/Bloomberg Key insight: Federal Reserve Gov. Christopher Waller's comments suggest the barriers to nonbank firms acquiring a "skinny" Fed master account — a concept Waller himself introduced late last month — may be higher than were previously assumed.Expert Quote: "There's a misunderstanding out there that somehow just a fintech can show up and say, 'Hey, I'd like a skinny master account.' You have to have a bank charter to do this." — Fed Gov. Christopher WallerWhat's at stake: The concept of allowing nontraditional firms to acquire a limited Federal Reserve master account is in the early stages of development, and Waller said in earlier appearances that the Fed is still exploring the idea and asking for stakeholder feedback.Federal Reserve Gov. Christopher Waller said Thursday there has been a "misunderstanding" about who could qualify for a so-called "skinny" master account, an idea he proposed in late October.Speaking at an annual economic conference hosted by the Bank of Canada, Waller said entities applying for the limited payment account must have a bank charter."There's a misunderstanding out there that somehow just a fintech can show up and say, 'Hey, I'd like a skinny master account,'" Waller said. "You have to have a bank charter to do this, so if you're not a bank and you don't have a bank charter, you don't have the right to ask for one at all."Waller, chair of the Fed's Committee on Payments, Clearing, and Settlement, said he expects the skinny master account to add to the Fed's balance sheet but emphasized that the account is designed to give all bank entities access to its payment rails."Why do we just have one master account?" he asked Thursday. "Why not just tailor this thing to the risk of the banks that are asking for it? Maybe we'll give you a master account, but it doesn't have all the bells and whistles."Really, the idea is to try to get away from one luxury payment account for everybody that can get it, or you just tailor and give access to people," Waller added.Waller's comments could add to confusion among banking stakeholders, as his previous remarks were widely interpreted to mean that nonbanks and/or state-chartered special purpose depository institutions could be eligible for access to the Fed's payment settlement rails."There are many eligible firms engaged in substantial payments activities that may not want or need all the bells and whistles of a master account, or access to the full suite of Federal Reserve financial services, to successfully innovate and provide services to their customers," Waller said in late October. "The idea is to tailor the services of these new accounts to the needs of these firms and the risks they present to the Federal Reserve Banks and the payment system."In his previous speech, Waller emphasized that the concept remains in its early stages and said the Fed is interested in hearing perspectives from stakeholders regarding the benefits and drawbacks of the idea."I want to be clear that this is just a prototype idea to provide some clarity on how things could change," he said in his previous speech.Waller's remarks come as the question of nonbank integration into the regulatory perimeter is percolating at other banking agencies as well. Over the course of the year, a number of nonbank fintech firms — including Paxos, Coinbase, Circle, Ripple and Stripe — have applied for National Trust Charters with the Office of the Comptroller of the Currency, spurring banks to call for a pause on application approvals until the agency can consider whether the new entrants meet the statutory requirements for approval.Comptroller of the Currency Jonathan Gould said the trend of nonbanks seeking national trust charters is a positive one, because it gives regulators their best chance of bringing the kinds of activities that have migrated out of the banking system back into the regulatory perimeter. "If there are new entrants that meet the statutory factors as they currently exist, and can meet our supervisory expectations … and they want to voluntarily come into the system where they can actually be held to the same standard, and where we can, through our regulation and supervision, make them better over time, I think that's a positive thing that people should welcome," Gould said during a fireside chat at The Clearing House's annual conference on Tuesday.

Fannie Mae announced updates to underwriting guidelines, including a change that removes mention of a long-standing minimum credit score benchmark. Instead of a minimum score used to address risk, Fannie Mae updated language behind the previous requirement with a minimum credit risk standard based on evaluations made in its Desktop Underwriter system itself."The minimum representative credit score requirement of 620 for loan case files for one borrower and minimum average median credit score requirement of 620 for more than one borrower will be removed for new loan case files created on or after Nov. 16, 2025," the government-sponsored enterprise said in its latest update. The new guidelines will not change existing policy requiring lenders to purchase borrower credit scores for their own records and assessments. "Though DU will no longer apply a minimum credit score requirement, lenders are still responsible for ensuring that credit scores for all borrowers are requested," Fannie Mae noted, referring originators to its selling guide. The Federal Housing Finance Agency emphasized the change did not relax existing underwriting standards at the two GSEs it oversees. "As we move toward competition and beyond accepting only one type of credit score model, language in the guide needs to be tweaked," a spokesperson said in a statement.  How the change could affect lendersThe updated guideline comes amid ongoing conversations in the mortgage industry about how to best evaluate methods to qualify borrowers, including longtime renters and others with limited credit histories. "You have a good number of borrowers who don't have credit, or they've got what you would call thin credit — maybe just a credit card open for six months but no other trade lines for whatever reason," said Jon Overfelt co-owner and director of sales at American Security Mortgage Corp. "I think for that segment of the population that doesn't have credit or doesn't utilize 'normal' credit, it'll have a big impact."The change ought to drive an increase in homeownership opportunities for many communities previously underserved, concurred Hector Amendola, president of Panorama Mortgage Group, the parent company of several lenders assisting first-time buyers.  "A lot of people that I've served over my years in the industry have been Hispanic, and a lot of them show up to the office, and they don't really have much credit. It's almost like we penalized them for that," he said. It could also increase the number of options lenders have when proposing products to their clients, with the update opening up conventional offerings to borrowers who may have thought government-backed loans from the Federal Housing Administration were their only choices based on their limited credit history. Such a change would offer cost savings over the life of a loan, Amendola added. "If this means that a loan that would normally have had to have been pushed over to an FHA can stay conventional, that can be a big deal. Mortgage insurance on an FHA is for the life of the loan, whereas on the conventional, it comes off once you get to 70% loan to value."The update comes amid an ongoing dispute between Fair Isaac Corp. and VantageScore over whose metrics can optimally serve the mortgage industry, with the former's FICO Classic offering long the sole score accepted for secondary market sales to Fannie Mae and Freddie Mac. FHFA Director Bill Pulte, whose department regulates both GSEs, took much of the industry by surprise in July when he announced the GSEs would start accepting Vantagescore 4.0 for mortgage eligibility. Back-and-forth debates about the benefits and flaws between both credit score providers and have ensued since. While FICO argues its system provides better mortgage predictive accuracy, Vantagescore claims its offerings will help more consumers with limited credit histories become loan eligible through its analysis that includes factors like rental payments. While it comes in the middle of the current dispute, the update is as much a reflection of much-needed modernization now that the mortgage industry has a great deal of data in its hands, Overfelt said. "The rules that were written by Fannie and Freddie years ago — they haven't been updated fast enough. Times are different," he said. "We have so much more access to information than we did even three years ago, let alone when those foundational rules were written." Other Fannie Mae DU updatesAlongside the removal of the minimum credit score language, Desktop Underwriter will also apply rural high-needs designations to new loan case files beginning in mid November. Rural high-needs areas are determined by FHFA to determine eligibility for some acceptance offers and for use in Duty to Serve messaging and its mission index information. The Fannie Mae technology will also issue a new message when a loan has obtained representation and warranty relief for non-mortgage undisclosed liabilities. The message will be issued on loan case files when certain eligibility criteria are met.

Key insight: Large banks are starting to see measurable returns on AI.Supporting data: BCG estimates AI could unlock over $370 billion annual banking profit by 2030.Forward look: ROI may need to be redefined as generative AI scales workforce and workflow leverage.Source: Bullets generated by AI with editorial reviewResearch the Boston Consulting Group published this week found that AI could unlock more than $370 billion in annual profit for the global banking industry by 2030, yet most institutions remain far from ready to capture it, the consultants said. "Actual examples of real value attained from deploying AI — in the form of cost savings, revenue gains and [earnings before interest and taxes] increases — are hard to find," the BCG consultants wrote in their report, which came out Wednesday. "Most retail banks are piloting AI in some functions or operations. A few have embarked on more ambitious end-to-end transformation of functions or workflows. But results so far have been limited."In the wild, however, some bank technology leaders say they are starting to see quantifiable returns on their AI investments.JPMorganChase is "absolutely seeing value from AI," Teresa Heitsenrether, the bank's chief data and analytics officer, said at American Banker's recent Most Powerful Women in Banking conference. "It's very quantifiable, but it's mostly from traditional machine learning right now with areas like fraud and credit card marketing."For instance, the bank has seen measurable improvements in fraud avoidance, fraud detection, and improved ability to determine which transactions truly are risky and should be denied versus those that seem unusual but are legit, she said. "These are all the things that AI does every single day that create value, not only for the country, but for our customers," Heitsenrether said. "It has been for years, and continues to evolve and get better."At Bank of America, which this week said it plans to invest $13 billion in technology next year, Hari Gopalkrishnan said the bank is seeing cost savings through AI-based self-service tools like Erica, which over the course of its life has handled three billion customer interactions. On a recent day, it had two million customer conversations. "We know that, for example, those two million conversations that happened yesterday are dropping call center volume and helping customers serve themselves on their own time, so that's a clear drop to the bottom line type of savings," Gopalkrishnan, chief technology and information officer at the bank, said at Evident's recent AI Symposium. His bank has also seen reduced fraud losses after upgrading to AI models. Bank of America runs 270 open source and proprietary gen AI models throughout the organization, Gopalkrishnan said at the bank's investor day on Wednesday. The 3,000 employees in its Global Markets unit use large language models for search and summarization of market research. Payment staff get access to policies and procedures through a bot called askGPS. Relationship managers use gen AI to create first drafts of client meeting prep documents, which saves time, Gopalkrishnan said. "The hours of time they save can then be used to deepen prospects … freeing up time to then go after the high-value opportunities," he said. Chatbots in trading operations help simplify the trade lifecycle and diagnose issues up front, Gopalkrishnan said. AI models used in fraud detection have led to a 55% reduction in fraud losses. And 18,000 software developers use coding agents to optimize the development process, which has led to 20% productivity improvements. Some benefits are hard to measureIt's difficult to calculate ROI on gen AI, Sumeet Chabria, CEO of Thoughtlinks, said at the Most Powerful Women in Banking conference. "There's a one-time infrastructure investment needed at the enterprise level, a financial commitment that has to be made, and that overhead cannot be passed to the first few use cases," he said. "A lot of times, the first few use cases are all about experimentation anyway."Heitsenrether pointed out that though large language models are saving employees' time, it's hard to attach dollar amounts to that."We've rolled it out to a lot of people, and I know for a fact that they're gaining hours of productivity a week, but that doesn't show up anywhere in an income statement," she said. "It's very hard to measure it. It's just a ubiquitous way that everyone's going to work, and if your employees don't have it, by definition, you're that much less efficient."Rethinking returnGopalkrishnan said Bank of America is reinvesting some of the gains it's getting from AI.The 20% productivity lift in the coding life cycle, for instance, is being reinvested in new initiatives, "which means I go from $4 billion to $4.1 billion without spending $4.1 billion," he said. "And that's the virtuous cycle we want to create."ROI may have to be rethought, Heitsenrether said."What would you do if I could give you 2,000 more people in your business at zero cost tomorrow?" she said. "It's that type of thinking that I think just hasn't absolutely permeated everybody's consciousness yet of just how much scale and parallel capacity is going to be possible."

Welp, it has arrived. The sub-1% mortgage rate is here.It’s part of a new promotion from the nation’s top home builder, D.R. Horton.The company’s financing arm, DHI Mortgage, is currently offering a 0.99% mortgage rate if you buy a home in select communities in Texas.But the loan has to close on or before December 31st, so you’ve got to act quick.Also, there are some string attached, which I’ll explain.Will 0.99% Mortgage Rates Sell More Homes?There was an article in Bloomberg about home builders betting on 1% mortgage rates to “wake up” home buyers.Between lofty home prices and mortgage rates that feel really high (their historical average is actually 7.75%), housing affordability has rarely been worse.Much of that can be blamed on the lack of available for-sale inventory, and the fact that would-be sellers often have very low fixed-rate mortgages.That has created mortgage rate lock-in, where possible sellers are reluctant to sell and give up their rate.In the process, it exacerbates the inventory issue even more, keeping prices from falling as they might otherwise do if affordability is too low.While the high prices are beginning to take their toll, leading to price cuts and some more wiggle room from sellers, it’s still a highly unaffordable housing market.But the home builders aren’t would-be sellers. They are must-sell sellers because they can’t afford to wait. Nor can they sit on their unsold inventory.A strategy they’ve employed since 2022 when mortgage rates more than doubled (and eventually nearly tripled) has been mortgage rate buydowns.Simply put, the builder offers a below-market mortgage rate to bring in a buyer, without having to lower the sales price of the property.Because it generally takes a 11% drop in home price to equal a 1% drop in mortgage rate, builders can lean on these buydowns to greatly improve affordability.They also don’t want to lower prices as that can have a cascading effect on a development and hurt appraisals and recent buyers.The Lowest Mortgage Rate Buydown I’ve Ever SeenThat brings us to the new mortgage rate buydown from DHI Mortgage, which is the financing division of D.R. Horton.The company is offering an unheard of 0.99% mortgage rate to home buyers for a limited time in select communities.The ad I came across applied to some properties in Texas, but it might also extend to properties in other states, such as Florida.Basically the areas where inventory is piling up and needs to be moved quickly, you’re most likely to see these unprecedented mortgage rate deals.However, it should be noted that the 0.99% mortgage rate isn’t fixed. You don’t get that low rate for the full loan term.That’d be amazing if it were the case, but it’s not.Instead, it’s a temporary buydown, meaning it lasts for just the first year of then loan.In year two, the rate increases to 1.99%, and in year three, it’s 2.99%. Still very low, but not quite the 0.99% that got your attention.Finally, the rate increases to 3.99% in year four and remains there for the remainder of the loan term.This is known as a 3-2-1 buydown because you get a reduced rate for the first three years that is 3% lower in year one, 2% lower in year two, and 1% lower in year three.So for 27 out of the 30 years, the rate is a much higher 3.99%. And that’s ultimately what matters most.But, that 3.99% is still a well below-market rate because the average 30-year fixed is priced at about 6.25% right now.Temporary + Permanent Rate Buydown Solves Two ProblemsBringing it all together, this is a temporary buydown combined with a permanent buydown, a tactic home builders have implemented lately to really juice home sales.It’s not enough to simply provide a rate buydown for the first few years of the loan. Housing affordability is just that bad.In addition, complementing the temp buydown with a permanent buydown allows borrowers to qualify at that lower rate.For example, the 3.99% rate is used to calculate the borrower’s debt-to-income ratio (DTI), making it far easier to get a mortgage.If they had to qualify at say 6.25%, their DTI might be too high, and D.R. Horton would lose a sale.So the strategy is two-fold; attract buyers with low rates and also increase approval odds.The only problem is at 0.99%, you can’t go any lower on the mortgage rate front. 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)

Al Drago/Bloomberg Key insight:Federal Reserve Governor Michael Barr said the short-term impact of AI-related job cuts will likely lead to long-term economic gains, as new technology may create new jobs with higher pay. He also said the central bank is working to bring inflation back to its 2% target but noted there is "some work to do."Expert quote:"[You] may be beginning to see a little bit of that in employment data — not a lot, but a little bit of it in some sectors," Barr said. "It might be an area to watch in the future."What's at stake: Federal Reserve Governor Michael Barr's brief comment that there is "work to do" on inflation may signal a more hawkish stance on future short-term interest rate cuts. Federal Reserve Governor Michael Barr expects artificial intelligence to cause disruptions in the workforce of some industries but is hopeful the technology will benefit communities and the economy in the long run.Speaking at the Federal Reserve Bank of St. Louis Thursday, Barr said he understands concerns about how AI will affect the labor market, noting that "it's an appropriate thing to worry about."Barr said that if AI tools are implemented rapidly by employers, they could make certain roles obsolete. "You could see significant dislocations in particular sectors," he said, adding that a small degree of those changes may already be occurring."You may be beginning to see a little bit of that in employment data — not a lot, but a little bit of it in some sectors," Barr said. "It might be an area to watch in the future."Barr, the former Fed vice chair for supervision, emphasized that he remains optimistic about how AI will affect communities, saying he believes it will ultimately help the economy grow."I think even if there are some short-term dislocations, what we've seen with the introduction of technologies in the past is that over the long term, new jobs are created and jobs that exist change to be more productive for the worker," Barr said. "Workers get paid more, so it could increase real wages for people."He added that the economy will continue to expand if employers are "attentive to the concerns people have about dislocation, appropriate training, and making sure people are brought into the system and not left behind by it."Regarding the labor market, Barr said a "two-speed economy" is beginning to emerge."Wealthier households are doing quite well, but low-income households, many of them are struggling," he said. "Some people are worried about if they lost their job whether they might get a job in the future, so we have to pay careful attention in making sure that the labor market is solid."On inflation, the other part of the Fed's dual mandate, Barr said the central bank is working to bring inflation back to its 2% target but that there is "some work to do."Barr also noted that Community Development Financial Institutions, or CDFIs, have expressed concern about the future of their operations."I do think CDFIs are worried about whether they're going to continue to have the funding that they need to do the important work in their local communities," Barr said. "I hear that all around the country, and I certainly understand that concern."President Donald Trump issued an executive order in March scaling back the CDFI program — which provides technical and financial assistance to help CDFIs grow — to its minimum level under federal law. In August, internal documents obtained by American Banker showed the Office of Management and Budget had frozen nearly all discretionary CDFI funds. Military credit unions have since urged Congress to restore funding, warning that the cuts would hurt veterans and undo decades of progress on financial inclusion."CDFIs have been so essential, really, over the last 30 years, in helping local communities get the credit they need to thrive," Barr said.