CFPB: Borrowers could save $100 a month (or more)

Good morning! This is Mortgage Nuggets, the newsletter that delivers the freshest news and insights from the mortgage industry every day. Let’s boogie.

1. Regulators may view pre-approval and pre-qualification mix-ups as deceptive

According to the Washington State Department of Financial Institutions, the use of the terms "pre-approval" and "pre-qualification" interchangeably is deceptive. “The two terms have different meanings, and using them incorrectly could lead to a violation of the unfair, deceptive, and abusive acts and practices rule”.

"Issuing mortgage preapprovals without actually having a valid underwriting result is misleading, deceptive, and a violation of the fiduciary duty mortgage brokers have to their clients," the Washington state bulletin said. Since the start of 2023, the state has conducted at least one enforcement action in this area. LINK

2. Fannie Mae: Home prices continue to rise

Home prices continued their upward trend, with a 4.3% increase in the first quarter of 2023 compared to the same quarter last year, according to the Federal Housing Finance Agency (FHFA). This marks the 45th consecutive quarter of year-over-year growth since 2012.

The five states with the highest year-over-year increases were South Carolina at 9.5%, North Carolina at 9.4%, Maine at 8.9%, and both Vermont and Arkansas at 8.8%.

The states showing the highest annual price declines were Utah at -4.3%, Nevada at -3.6%, California at -2.9%, Washington at -2.6%, and the District of Columbia at -2.3%. LINK

3. More Nuggets

🏚️ State Farm is no longer accepting property insurance applications in California. (LA Times)

📉 UBS is set to close its U.S. mortgage trading unit. (Bloomberg)

💰 Elon Musk says home prices will tumble ‘next’—Redfin’s CEO disagrees. (Fortune)

4. CFPB: Borrowers could save $100 a month (or more)

By analyzing Home Mortgage Disclosure Act (HMDA) data, the CFPB found that borrowers seeking mortgage financing to purchase a home could save $100 a month or more by shopping around and locating cheaper lenders to do business with.

“We found that price dispersion for mortgages is often around 50 basis points of the annual percentage rate,” the CFPB notes in its blog. “To put this number in context, the median loan amount in 2021 was close to $300,000 and the median interest rate was 3%. The monthly payment for such a 30-year fixed loan is $1,265. The monthly payment for a 3.5% interest rate loan on a loan of the same amount is $1,347 – a difference of $82 a month (a 6.5% higher payment).” LINK

5. Debt-ceiling bill headed to a vote today

The debt ceiling deal brokered by President Joe Biden and House Speaker Kevin McCarthy is heading toward a vote today, having cleared a key hurdle in the House Rules Committee yesterday night. Just days remain to avoid a debt default, with Congress racing to pass the measure before June 5, when Treasury Secretary Janet Yellen has warned the US could run out of money.

Biden and McCarthy are both confident the measure will pass. However, there is some unrest within the conservative ranks, with critics suggesting that McCarthy has made too many concessions to the Democrats.

☀️ See you on Friday!

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