Homebuilder sentiment declines for the first time this year

😎 TGIF everyone! Today’s newsletter is 650 words, a 2.5-minute read.

1. CFPB fines Freedom Mortgage $1.75 million for illegal kickbacks

The CFPB has taken enforcement action against Freedom Mortgage Corporation and Realty Connect for violating the 1974 Real Estate Settlement Procedures Act through illegal kickbacks.

Freedom allegedly incentivized real estate agents and brokers with cash, free subscription services, and other perks in exchange for mortgage referrals. As a result, Freedom is penalized $1.75 million, and Realty Connect faces a $200,000 fine, with both firms ordered to halt these practices immediately.

The CFPB disclosed that Freedom's "marketing services agreements" with over 40 brokerages, which totaled around $90,000 monthly, were veiled payments for referrals. This marks the CFPB's first such enforcement since 2017, spotlighting a continued focus on curbing anti-competitive behavior in the industry.

2. The average IMB lost $534 per loan in Q2; an improvement from $1,972 in Q1

IMBs and mortgage subsidiaries of chartered banks reported a pre-tax net loss of $534 on each loan they originated in the second quarter of 2023, an improvement from the reported loss of $1,972 per loan in the first quarter of 2023, according to an MBA report.

Including both the production and servicing business lines, 58% of companies were profitable last quarter, an improvement from 32% in the first quarter of 2023 and 25% in the fourth quarter of 2022.

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3. More Nuggets

🏛️ Benchmark treasury yield hits 15-year high. (Axios)

📈 Housing starts show growth in July. (NMP)

🇺🇸 Economists lift forecasts for U.S. growth. (Bloomberg)

4. Freddie Mac: 30-year fixed-rate mortgage hits 20-year high

Mortgage rates accelerated past 7% for the first time since November, landing at its highest level since 2002, according to Freddie Mac's weekly Primary Mortgage Market Survey.

The average 30-year mortgage rate came in at 7.09% for the seven-day period ending Aug. 16, up 13 basis points from 6.96% a week earlier. The current level now stands close to two percentage points higher from the 5.13% average reported a year ago. The latest rise also marks the fourth straight week of increases in the 30-year rate.

The last time the 30-year average was as high in Freddie Mac's survey was April 2002 when it stood at 7.13% Since finishing 2021 at 3.11%, the 30-year rate has shot up almost 4% in 20 months.

5. Homebuilder sentiment declines for the first time this year

US homebuilder sentiment unexpectedly declined in August for the first time this year as high mortgage rates deterred prospective buyers.

The National Association of Home Builders/Wells Fargo gauge decreased six points to a three-month low of 50. Sentiment fell across all four major US regions.

“Rising mortgage rates and high construction costs stemming from a dearth of construction workers, a lack of buildable lots, and ongoing shortages of distribution transformers put a chill on builder sentiment in August,” NAHB Chairman Alicia Huey said in a statement.

☀️ See you on Monday!

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