Morgan Stanley: Commercial real estate faces a crisis

Happy Wednesday! It's Nate here in the driver's seat while Ian takes a break. Today's newsletter is 560 words, a 2.5-minute read. Let’s dive in.

1. Rocket offers help with closing costs

Rocket Mortgage is offering spring homebuyers up to $10,000 in closing cost credits through its new "BUY+" program.

Clients who find a home with a Rocket Homes partner real estate agent and obtain financing from Rocket Mortgage will receive a credit equal to 1.5% of their loan amount for closing costs.

Borrowers who opt to use their own agent can also qualify to receive a smaller closing credit if the agent refers them to Rocket Mortgage, equal to 0.25% of their loan amount. Those borrowers are eligible to receive an additional 0.5% lender-paid credit if they use Rocket Mortgage’s verified approval or RateShield letter.

Additionally, Rocket's "SELL+" offer provides home sellers listing their properties with a partner agent a rebate check for 1% of the sale price after closing.

These initiatives aim to incentivize homebuyers and sellers as Rocket Mortgage expands its product offerings in a high-rate environment.

2. Morgan Stanley: Commercial real estate faces a crisis

Investors and economists are raising concerns about the commercial real estate market, particularly with refinancing issues amid rising vacancy rates and falling property values due to the shift to remote work.

Lisa Shalett, chief investment officer for Morgan Stanley Wealth Management, sees a significant challenge ahead. She notes that over 50% of the $2.9 trillion in commercial mortgages will need renegotiation in the next 24 months when new lending rates are expected to rise by 350-450 basis points.

Shalett also highlights a potential 40% peak-to-trough price decline in the sector, worse than during the Great Financial Crisis. Stricter lending standards, a lack of liquidity, and the risk of defaults, distress, and delinquencies may impact landlords, bankers, business communities, private capital funders, and security owners.

3. More Nuggets

🏦 Cornerstone Servicing has launched a subservicing business designed to empower homebuyers and fuel sustainable growth for lenders and investors. (Press Release)

⚡️ SoFi has acquired Wyndham Capital Mortgage, a digitally-native mortgage loan originator and servicer, in a move that aligns with SoFi's mission to vertically integrate every part of their business and own every part of their home loan business. (SeekingAlpha)

🏡 Top 10 metros for buying a home on a budget. (Best Places with RH)

💰 Kind Lending, a Calif.-based lender that laid off 150 employees last year due to the downturn in the housing market, has rehired at least half of them in 2023 after seeing a turnaround in origination volume. (NMP)

4. CFPB to appeal its Townstone redlining case loss

The CFPB is appealing a judge's decision to dismiss its redlining lawsuit against Chicago-based Townstone Financial.

In February, the case was dismissed as the judge ruled that the Equal Credit Opportunity Act applies only to home loan applicants, not potential applicants. The CFPB filed a notice with the Seventh Circuit Court of Appeals to challenge the ruling.

Attorneys representing Townstone and its owner Barry Sturner argue that the CFPB exceeded its statutory authority and that no borrower has complained about Townstone's practices.

The Center for Responsible Lending supports the CFPB's decision to appeal, citing concerns that the ruling would make allegations of redlining immune from being challenged under the Equal Credit Opportunity Act.

5. Moon launches crypto-backed mortgage product

Miami-based cryptocurrency lending platform Moon Mortgage has launched a product enabling investors to use Bitcoin, Ethereum, and USDC as collateral for real estate funding.

The crypto mortgage product has a minimum loan amount of $1 million, with current collateral requirements at 100%. Moon Mortgage is not a bank, so crypto assets are stored with Anchorage Digital, the first federally chartered crypto bank in the U.S.

Moon also introduced "Trade & Borrow," a product that allows investors to take out loans against their digital assets while maintaining control. The company aims to offer more options for crypto investors, with loan origination available in six steps and closing times as short as 14 days.

6. Charted: Change in home prices

Shift in home prices in February, according to Black Knight House Price Index (HPI)

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