Freddie Mac introduces new documents that help lenders increase clarity on DPA programs

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1. Freddie Mac introduces new documents that help lenders increase clarity on DPA programs

Freddie Mac has introduced new standardized mortgage documents that increase clarity, consistency, and accessibility of down payment assistance (DPA) programs nationwide.

• Historically, subordinate-lien documents for various DPA programs have been housing finance agency (HFA)-specific and worded differently, leaving room for confusion when interpreting terms and payment plans.

The new standardized documents can be used by lenders working with housing finance agencies at the state, city, county, and local levels to eliminate confusion and misinterpretation of DPA programs.

2. Homebuyers are coming to terms with today’s housing market: BofA

People looking to buy homes are getting less patient about waiting for better prices or lower interest rates than they were six months ago.

• A study by Bank of America shows that fewer people are now waiting for costs to go down before they buy a house. In October, only 62% of potential buyers were waiting for a better deal, compared to 85% in April.

Even though a survey by Fannie Mae in October found that more people than ever think it's a bad time to buy a house, there were also signs that people are more hopeful about the housing market.

• The Fannie Mae sentiment index pointed to a more optimistic market, rising to 64.9 from the record low of 56.7 one year earlier.

Adding to the proof of waning patience, was the finding that newly constructed home sales rose in September to 759,000 units, from 679,000 in April.

3. Catch up quick

🏦 Fed is ‘disconnected’ from reality, must cut rates 5 times next year. (CNBC)

🏡 Realtor.com predicts top housing markets for 2024. (Realtor.com)

😎 Oxford’s 2023 word of the year is … ‘Rizz’. Do you have it? (NPR)

⚖️ Pennymac to pay Black Knight $155M over trade secrets theft. (Seeking Alpha)

4. Appeals court weighs DOJ push to reopen NAR commission rule probe

NAR is in a legal fight with the Department of Justice (DOJ) again.

On Friday, a three-judge appellate court panel in Washington, D.C. heard oral arguments from both NAR and the DOJ, over whether the federal agency will be able to restart its investigation into NAR’s policies, which are linked to ongoing lawsuits about commission fees.

• In 2020, the DOJ and NAR had agreed on a deal after the DOJ looked into how NAR lists properties and pays agents. This deal included making commission fees more transparent and clarifying that services for buying a house aren't always free.

• But in 2021, under new leadership, the DOJ canceled this deal, saying it stopped them from investigating rules that might hurt buyers and sellers. NAR disagreed and asked a court to stop the DOJ’s new investigations.

• In January 2023, a judge supported NAR, saying the original deal should still count. But the DOJ didn’t agree and is now trying to appeal this decision in court.

This legal fight comes at a challenging time for NAR, which is currently facing several commission lawsuits, which accuse NAR and many of the nation’s largest corporate brokerages of colluding to artificially inflate real estate agent commissions.

5. Homeowners reluctant to tap their tappable equity

Homeowners continued to amass home equity in Q3 – as home prices continued to rise – but they were reluctant to make equity withdrawals due to higher rates, according to the Mortgage Monitor report from Black Knight (ICE).

Only 0.41% of tappable equity available at the start of the quarter was withdrawn, and while this is basically flat compared with the previous three quarters, it’s down 55% from the average seen during the 2010-2022 period.

• “Despite the resurgence in tappable equity among U.S. mortgage holders, elevated interest rates are making homeowners reluctant to extract that wealth,” says Andy Walden, VP of research at ICE.

However, rising equity levels also are contributing to low default and foreclosure activity – which means there won’t be a major wave of foreclosures hitting the market anytime soon.

Andy Walden highlights that 70% of significantly overdue loans are protected by loss mitigation efforts, and 58% of these borrowers have substantial equity. This strong equity position offers alternatives to foreclosure.

👋 See you on Friday!

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