CrossCountry in talks to acquire Fairway

Good morning! This is Mortgage Nuggets, the newsletter that keeps you up-to-date on the latest mortgage news—every Monday, Wednesday, and Friday morning.

1. CrossCountry in talks to acquire Fairway

CrossCountry Mortgage is currently in discussions to acquire Fairway Independent Mortgage, a merger that could form the fourth-largest mortgage originator, according to Housing Wire.

A spokesperson for CrossCountry said the company does not “comment on rumors, speculation or acquisitions.” Representatives from Fairway did not respond to requests for comment.

The deal is still in its early stages. If they were to merge, their combined origination from January to July 2023 would exceed $23 billion. Both companies have witnessed a decline in their origination volumes compared to the previous year.

2. Foreclosures near pre-pandemic levels

In Q3, foreclosures rose by 28% from Q2 and 34% from last year, totaling 124,539 U.S. properties. Foreclosure process initiations also increased by 3% from a year ago, nearing pre-pandemic levels, as per ATTOM's latest Foreclosure Market Report.

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3. More nuggets

🏦 PNC could cut more than 2,400 employees. (Banking Dive)

🤔 Dimon warns of ‘Most Dangerous Time in Decades’ as banks report big profits. (NY Times)

💸 LendingClub to cut 172 jobs in an effort to cut costs. (Bloomberg)

4. Surge in mortgage rates makes renting cheaper

According to Zillow, the cost of buying a home in the US, particularly in high-priced markets like Los Angeles, Honolulu, Seattle, San Jose, and San Francisco, has surged compared to renting.

For example, in San Jose, where an average home is priced at $1.4 million, a monthly mortgage with 10% down is $8,771—over $5,000 more than renting. As of August, nationally, a monthly mortgage payment was $81 more than renting, marking the largest gap since data began in 2015.

This shift, which began in September 2022, highlights the growing unaffordability of real estate due to rising mortgage rates (exceeding 7.5% for the first time since 2000). These rates have made existing homeowners hesitant to sell, while potential buyers find it hard to afford properties.

5. Fannie Mae boosts workforce lending programs

Fannie Mae's latest multifamily workforce housing program allows borrowers to decide to restrict the rental income they will receive in order to increase affordability.

The Sponsor-Dedicated Workforce product will be originated by Fannie Mae Delegated Underwriting and Servicing lenders.

A sponsor is the principal equity owner of the property and/or the primary decision maker for the borrower.

With this program, the borrower is required to keep at least 20% of the units affordable for consumers earning up to 80% of the area median income. But in certain "cost-burdened" locations, the eligible AMI can be between 100% and 120%.

☀️ See you on Wednesday!

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