🏠 68% cancellation rate

GM, this is Mortgage Nuggets, where we take you on a safari through the mortgage world every single day.

Here's what we got for you today:

• UWM big step to reduce prices

• KB Home reports a 68% cancellation rate

• Defy Mortgage launches Non-QM lending

1 big thing: KB Home reports a 68% cancellation rate

KB Home reported that its cancellation rate in Q4 2022 rose to 68%, a significant increase from 35% in Q3 2022 and 13% in Q4 2021.

The company cited challenging market conditions, including high mortgage rates, persistent inflation, and an uncertain economy as reasons for the spike in buyer cancellations.

Additionally, KB Home stated that it prioritized delivering on its large backlog and protecting high margins, rather than taking steps to stimulate additional sales during the typically slower Q4.

Why it matters: A 68% cancellation rate is pretty high even compared to the 2008 recession when the average builder cancellation rate was 47%.

Buyers are cancelling their contracts because they're afraid that home prices will fall further in 2023; others have simply lost their mortgage eligibility in the face of 6% mortgage rates.

This puts homebuilders in a difficult spot as they now have a lot of unsold inventory on hand.

They'll likely try to entice buyers with incentives like mortgage rate buydowns, but if that doesn't work they may have to lower home prices to move the unsold inventory.

2. UWM offers brokers 125 basis points in new program to increase market share

UWM) announced a new program called "Control Your Price" that offers up to 125 basis points to brokers for any loans they lock with the lender, with a maximum of 40 basis points per loan.

The big picture: The program aims to help UWM gain market share in a shrinking mortgage market. The program is effective immediately and brokers can use the points for conventional, government, and non-agency loans up to $1 million.

UWM has been implementing an aggressive pricing strategy to gain market share and attract loan officers, with the "Game On" initiative cutting prices by 50 to 100 basis points.

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3. Defy Mortgage launches Non-QM lending

Defy Mortgage announced its launch as a national mortgage lender that focuses on non-qualified (Non-QM) loans.

It was founded in May 2022 and is currently licensed in six states: Colorado, Florida, Montana, Oregon, Tennessee, and Texas.

The company aims to increase homeownership by targeting consumers with alternative forms of income, such as the gig economy.

Defy claims to take a "holistic approach" in evaluating a homebuyer's entire asset portfolio, including cryptocurrency and bitcoin.

4. Catch up quick

✂️ Blend cuts 340 workers amid executive shakeup (NMN)

📈 Mortgage demand picks up as seller concessions rise (HousingWire)

🕗 For Wells Fargo, 'The Writing Was On The Wall' (NMP)

5. Meme Corner

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