Not a Boom Year for Seconds; Fairway Has Its Say on UWM - IMFnews

Share Register Advertise March 25, 2021 The Skunk at the 2020 Origination Party: Seconds jbancroft@imfpubs.com Home-equity lending struggled in 2020 as homeowners took advantage of historic conditions to refinance their mortgages. An estimated $182.1 billion of home-equity lines of credit and closed-end seconds were funded in 2020, down 6.1% from the prior year. The HEL sector has been in the doldrums since the housing bubble began to fizzle in 2007. New home-equity lending hit a low spot in 2012 and rallied slightly over the next few years to top $200 billion back in 2017. It’s been downhill sledding since then. The slope also remained slippery for home-equity debt outstanding. The Federal Reserve reported $441.6 billion of home-equity loans outstanding at the end of 2020, an 11.9% drop from the previous year. For full details and exclusive tables on the second-lien market, see the new edition of Inside Mortgage Finance, available online Thursday afternoon. Fairway CEO Critical of UWM Broker Contract mvolkova@imfpubs.com Fairway Independent Mortgage has stayed relatively quiet since United Wholesale Mortgage put forth an addendum earlier in the month, stipulating that if brokers want to work with Fairway or Rocket Mortgage, they can no longer do business with UWM.  Now, however, Steve Jacobson, CEO of Fairway, is speaking out — a decision made after he read through the 19-page broker contract from UWM. “If you sign the agreement, a clause says that you can’t take a loan somewhere else or you’ll see penalties, fines or both (even if the market changes). [The UWM] clause is restrictive,” said Jacobson. The clause Fairway is referring to stipulates that “the transfer or sale by broker of a mortgage loan locked in by UWM during the lock-in-period to another entity shall constitute a violation of the agreement, and the broker shall be liable.”  For more on the story and UWM’s rebuttal, see the new edition of Inside Mortgage Finance, available online Thursday afternoon. UWM Shares Under Pressure Early After Stock Notice pmuolo@imfpubs.com United Wholesale Mortgage, the nation’s largest originator through loan brokers, saw its stock price sink 5% in early trading after the company filed a POS AM document with the Securities and Exchange Commission, indicating that more shares of common could hit the open market. The lender/servicer, which went public earlier this year via a special purpose acquisition company maneuver, said it will offer 10,624,987 shares “of our Class A common … that may be issued upon exercise of the warrants included in the publicly sold units” at an exercise price of $11.50 per unit and 5,250,000 shares of common tied to warrants given to SPAC partner Gores Sponsor IV. But there’s more. The Pontiac, MI-based firm reminds the market that from time to time UWM investors holding nonpublic shares have the right to offer and sell “up to” 115,875,000 units of Class A common. When the lender went public it made clear that initially very few shares would be available to outside investors. UWM is the second largest refi lender in the nation, according to figures compiled by Inside Mortgage Finance. The company’s 52-week high is $14.38, its low $7.24. Chimera to Issue its Largest Jumbo MBS in Years bivey@imfpubs.com Chimera Investment Corp. is preparing to issue a $479.7 million jumbo MBS, the largest such offering by the REIT since it resumed issuing such securities in 2018. Like other jumbo MBS from Chimera, loans in the deal were aggregated by Bank of America. The top contributor to the deal: Guaranteed Rate with a 31.4% share, followed by Fairway Independent Mortgage at 14.1%. The loans have seasoned for an average of four months, according to a presale report from Fitch Ratings. None of the mortgages are in forbearance. Refinances account for 83.1% of the collateral. The average interest rate is 3.00%, the average credit score 780. The combined loan-to-value ratio is 62.9% while the average debt-to-income ratio is measured at 30.6%. Short Takes: Quicken and UWM, Something in Common? / Inhouse vs. Outsourcing / 34 Overseers / Acra Hires ServiceMac pmuolo@imfpubs.com It’s no secret that when it comes to lending, Quicken Loans/Rocket TPO and United Wholesale Mortgage have been at each other’s throats, especially the past few weeks. But how do they stack up as mortgage servicers? Both periodically lop off a chunk of bulk MSRs, disposing of product in the secondary market… According to figures compiled by Inside Mortgage Finance, Quicken ranks sixth overall, UWM 18th. Besides size, there is one huge difference: Quicken services inhouse while UWM relies on two subservicers, at least that’s what we read in a recent SEC filing. One of those subservicers is a bank, the other a nondepository… It stands to reason that maybe somewhere down the line, UWM might want to bring its servicing inhouse, at least that’s what competitor loanDepot is doing… Overseeing those two subservicers for UWM is a dedicated team of 34 full-timers… In other subservicing-related news, non-QM originator Acra Lending has hired vendor ServiceMac as its subservicer. Previously, the chores were handled inhouse. Executive Chairman Keith Lind explained to IMFnews this week that Acra/Citadel Servicing Corp. will handle the high-touch loans while ServiceMac focuses on the basic chores. For more details, see the Grapevine column in the new edition of Inside Mortgage Finance. Also, you might be surprised how many servicers (and originators) use overseas vendors to handle some of the processing tasks. See our new special report on the topic. Make Sure You're Counted in IMF's 2021 Salary Survey Inside Mortgage Finance’s 2021 Salary Survey is about to close! Don’t miss your chance to be counted in this important effort to benchmark mortgage industry compensation … and to receive a free report on compensation levels in the industry. Please make time today — just a few minutes — to share some details about your job function, salary, benefits and career satisfaction. It’s quick, easy and completely confidential. To ensure delivery to your inbox, add news@imfpubs.com to your address book or safe sender list. Home | Update Your Account | Mortgage Data | User Agreement | Unsubscribe © Copyright 2020 Inside Mortgage Finance Publications 7910 Woodmont Ave., Suite 1000, Bethesda, MD 20814 Tel: (301) 951-1240; Fax: (301) 656-1709

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