FHFA Director addresses loan buyback concerns

Plus: Freddie Mac rolls out down payment assistance tool

October 18, 2023

Happy Wednesday to you. Today’s newsletter is 708 words, a 3-minute read. Let’s go.

Disclaimer: Average mortgage rates as of Oct 17, 2023. © MND's Daily Rate Index.

1. Freddie Mac introduces down payment assistance tool

Freddie Mac has introduced "DPA One," a complimentary tool for lenders that consolidates and simplifies access to down payment assistance programs nationwide. Recognizing the challenge first-time homebuyers face in gathering down payments, the tool acts as a central hub for lenders to identify, compare, and connect with various state, local, and municipal assistance programs.

It streamlines the process by allowing comparison of up to three programs at once, and provides real-time updates from state agencies. Currently, DPA One encompasses 48 state programs and specific local programs in Texas and Minnesota, with plans to expand further by the end of 2024.

“DPA One will make it easier for mortgage lenders of all kinds to participate in HFA down payment assistance programs so they can more easily reach the underserved borrowers these programs were designed to help,”

Stockton Williams, executive director of the National Council of State Housing Agencies

2. FHFA Director addresses loan buyback concerns

FHFA Director Sandra Thompson addressed concerns from lenders about the rise in loan buybacks from Fannie Mae and Freddie Mac. Speaking at the MBA conference, Thompson said the regulator expects originators to adhere to the loan guidelines. But, she added that the GSEs must implement a fair, consistent, and predictable process for identifying loan defects and the appropriate remedies.

“After multiple years of record-high loan volume, we have seen an increase in the absolute number of repurchase requests – which is to be expected,” Thompson said. “The good news is that there has been a large decrease in repurchase requests since their peak in early 2022, as the Enterprises have worked through loans originated during the refinance boom.”

Thompson said Fannie Mae and Freddie Mac have closely examined their existing processes and practices, including efforts to improve language in the selling guidelines and provide more consistent feedback to lenders on buybacks. The goal is to lead to less ambiguity in underwriting.

In addition, the FHFA is open to additional options that would ensure alternatives to repurchases are available and offered regularly. However, “work on this front remains ongoing,” according to Thompson.

3. More nuggets

🏛️ White House announces new actions to support homeownership. (WhiteHouse)

🤝 Zillow, Windermere stick with scandal-rocked NAR. (The Seattle Times)

⚖️ The broker commission system is facing unprecedented antitrust scrutiny from the DOJ and two private class-action lawsuits. Read all about it here.

✋ Fairway's CEO refutes rumors of plans to sell to CrossCountry. (LinkedIn)

⏸️ Philly Fed President Harker: “We are at the point where we can hold rates”. (CNBC)

4. Home builder confidence falls to lowest since January

Homebuilder confidence fell in October to the lowest levels since January, according to a report released Tuesday, signaling sky-high mortgage rates are weighing on construction firm optimism and potential buyer traffic.

The confidence index fell for the third-straight month to 40 from a revised September reading of 44, the National Association of Homebuilders (NAHB)/ Wells Fargo report said.

“Builders have reported lower levels of buyer traffic, as some buyers, particularly younger ones, are priced out of the market because of higher interest rates,” said NAHB Chairman Alicia Huey. “Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability.”

5. VantageScore claims to unlock $1 trillion in new business

A huge pool of 2.7 million potential home buyers await lenders who adopt the new scoring models as required by regulators, according to a white paper released Monday by VantageScore at the MBA annual convention in Philadelphia.

The paper, which urged lenders to “move swiftly” in incorporating the latest 4.0 version of the VantageScore model, said the untapped group of possible borrowers represents as much as $1 trillion in new business.

For comparison, MBA Deputy Chief Economist Joel Kan said that origination volumes in 2024 should reach $1.95 trillion, a jump of 19% from $1.69 trillion this year, and move still higher in 2025 to $2.25 trillion.

☀️ See you on Friday!

Charted: Which states are people moving to? Led by Idaho, mountain west states outpace the rest in newcomers per capita. (Interactive Chart)

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