Pennsylvania lender to pay more than $3M in DOJ redlining settlement

Good morning! This is Mortgage Nuggets, welcome aboard as we take you on a safari through the mortgage world today. Today’s newsletter is 719 words, a 3-minute read.

1. Resilient labor market complicates things for the Fed

In May, total nonfarm payroll employment rose by 339,000 jobs, maintaining an average monthly gain of 341,000 jobs over the past 12 months. Despite this growth, the unemployment rate increased to 3.7% from 3.4% in April as more people entered the workforce.

• Nonbank mortgage jobs also rose for the first time in a year; mortgage bankers and brokers collectively employed an estimated 341,000 people, up slightly from 340,100 in March. The data suggests that some retention and hiring for the spring homebuying season has stemmed the tide of industry layoffs.

There was speculation the Fed might pause rate hikes at its June meeting, but that was before the jobs report came out. The job gains, combined with steady wage growth (+4.3%), present a complex scenario for the Fed.

• A top Fed official had signaled the central bank might skip a rate hike at its meeting later this month, but if the economy is perceived as overheating, then more rate hikes are on the way as the Fed focuses on reducing inflation.

2. PA lender will pay more than $3M to settle redlining claims

Pennsylvania-based ESSA Bank & Trust will pay more than $3 million to settle redlining allegations, the Justice Department announced.

The bank, between 2017 and 2021, “failed to provide mortgage lending services and did not serve the credit needs of majority-Black and Hispanic neighborhoods” in and around Philadelphia, the DOJ said in a complaint filed Wednesday in federal court.

As part of the settlement, ESSA agreed to invest at least $2.92 million in a loan subsidy fund meant to increase access to credit for home mortgages, improvement, and refinancing in majority-Black and Hispanic neighborhoods in the bank’s lending area.

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3. Purchase locks fall and credit standards tighten, Black Knight

According to Black Knight, purchase locks fell 11% between late March and mid-May, a period typically considered prime spring buying season, at the same time interest rates resumed their climb. The fall marks a turnaround from earlier in the year when momentum from falling rates pushed locks higher.

The average credit scores for purchase locks jumped by an average of seven points since late December, hitting the highest mark since 2000, indicating stricter lending standards that may leave hopeful buyers on the outside looking in — a situation that has plagued the housing industry for months.

A rise in scores was reported among conforming mortgages, as well as loans guaranteed by the Federal Housing Administration and Department of Veterans Affairs. Full report.

4. More Nuggets

Pretium Partners is acquiring thousands of homes from construction company D.R. Horton Inc. in a $1.5 billion deal. The deal includes a combination of completed homes and homes that are not yet finished. (Bloomberg)

LoanDepot shakes up its leadership. The changes bring in a chief financial officer from CEO Frank Martell's former company, CoreLogic, while removing four execs with ties to founder Anthony Hsieh. (BizWire)

UWM sued by two former underwriters for retaliation, sexual harassment, and other violations related to the firm's return-to-work during the coronavirus pandemic. (NMN)

Longread: A deep dive into how US efforts to help homebuyers get affordable loans mainly benefits banks instead. (Bloomberg)

Ginnie Mae issuers must start using the Single Family Pool Delivery Module (SFPDM) in the MyGinnieMae portal when creating single-family and manufactured housing securitization pools on July 31, ending an 18-month transition period. (Ginnie Mae)

☀️ See you on Wednesday!

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