FHA new proposal to help struggling borrowers

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. FHA proposes a new partial claim option to help struggling borrowers

The FHA has proposed to create a new partial claim option, as a result of its acknowledgment that its current loss mitigation toolkit isn’t enough to support struggling borrowers as rates surge.

The new option called Payment Supplement Partial Claim, will allow servicers to use an interest-free loan to bring a borrower's home loan current, and temporarily reduce monthly payments for three to five years. The new proposal allows borrowers to keep their existing interest rate while using funds from the partial claim to decrease monthly payments.

"Many homeowners continue to experience hardships due to health or financial difficulties... these challenges have been exacerbated by current economic uncertainties," Julia Gordon, HUD’s assistant secretary for housing and federal housing, said. The FHA's proposal has been welcomed by industry groups. LINK

2. Mortgage applications fall for a third week

Mortgage volumes fell for a third straight week after interest rates surged to their highest level since November, the Mortgage Bankers Association said.

The MBA's Market Composite Index, a measure of weekly loan application activity based on surveys of the trade group's members, dropped a seasonally adjusted 3.7% for the seven-day period ending May 26. Compared to the same week last year, volumes were 36% lower, with economic pressure continuing to weigh on both consumers and lenders. LINK

3. More Nuggets

🤝 Planet Home Lending has acquired Illinois-based retail lender Platinum Home Mortgage. Planet will acquire the majority of Platinum's origination staff, and more than 20 branch offices. The financial terms of the transaction have not been disclosed. (PHL)

💼 Six federal regulatory agencies on Thursday requested public comment on a proposed rule designed to ensure the credibility and integrity of models used in automated real estate valuations. (FHFA)

💬 David Doctorow, CEO of the Realtor.com parent Move Inc., is stepping down from his role, the company announced in a statement on Thursday. Damian Eales will be taking over as CEO, effective June 12. (LINK)

4. White House unveils plan to combat racism in home appraisals

The White House has launched measures to counteract racial bias in home appraisals. The plan aims to address algorithmic bias and increase diversity in the appraisal profession. This is in response to a consistent pattern of homes in predominantly Black and Latino neighborhoods being undervalued, thereby affecting homeowners' ability to accumulate wealth.

Proposed actions include;

• A nondiscrimination standard in appraisal algorithms,

• Increased transparency through the release of more Federal Housing Administration data on appraisal disparities, and

• A push for states to reduce educational barriers for appraisers. Only 5% of appraisers are people of color, which the White House aims to change through expanded training for underrepresented groups.

5. Mortgage rates drop amid lower monetary, fiscal pressures

Mortgage rates have eased off after peaking last week due to a debt ceiling standoff and anticipated federal funds rate increase. This comes on the heels of a U.S. debt limit suspension until 2025 and signs that the Federal Reserve may delay rate hikes.

The downward trend in rates is particularly evident in the Mortgage News Daily Index, which shows a reduction in the 30-year fixed rate for conventional loans from 7.14% last Friday to 6.85% on Thursday.

☀️ See you on Monday!

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