The surprising thing about mortgage JVs

A little over a month ago, HousingWire reporters Matthew Blake and Maria Volkova began reporting on the profitable and fast-paced world of mortgage JVs. 

Good afternoon! Was this newsletter forwarded to you? Sign up here. Hello, LOs!   A little over a month ago, HousingWire reporters Matthew Blake and Maria Volkova began reporting on the profitable and fast-paced world of mortgage JVs.    It seems like almost everyone has one these days. And why wouldn't they? Lenders already have the know-how, the operational capacity and the small army of compliance personnel to – theoretically – navigate the many regulations within the Real Estate Settlement Procedures Act or RESPA. It makes sense to split the profits 50-50 with a margin-hungry real estate brokerage that is generating direct purchase leads. It all points to very high attach rates.   Let's zoom in on Guaranteed Rate Affinity, arguably the granddaddy of the mortgage JV. Blake and Volkova looked through the earnings reports to gain a better understanding of the finances of the company, which is 49.9% owned by Realogy and 50.1% owned by Guaranteed Rate. Realogy jumped from $15 million in JV equity earnings in 2019 to $126 million in earnings in 2020 thanks to $13.4 billion in mortgage loan volume. Could it have been mostly through purchase referrals?   Actually, no. A Realogy spokesperson confirmed that just 30% of Guaranteed Rate Affinity loans last year were to homeowners who worked with a Realogy agent.    "Interestingly, I had previously assumed the Guaranteed Rate Affinity joint venture was 100% purchase transactions," said Thomas McJoynt-Griffith, an equity finance analyst at the investment bank KBW. "But it actually had a similar refi-to-purchase mix as the rest of the industry – 70% refi, 30% purchase – in 2020."   Instead of being uniquely situated to benefit from Realogy's real estate deals, Guaranteed Rate Affinity was positioned as another mortgage company riding the refinance wave. By 2020, Guaranteed Rate Affinity had over 500 loan officers and a 24-hour call center.   Part I of our two-part series on mortgage JVs dropped today on HW+. Part II, which looks at the RESPA tests yet to come and whether real estate agents will ever embrace the JVs, will follow tomorrow morning. Hope you give it a read! And please feel free to share feedback with me at jkleimann@housingwire.com.   James Kleimann Managing Editor, HousingWire Why brokerages and mortgage lenders are rushing into JVs Agent, Brokerage, Mortgage, Real Estate, HW+ Exclusive Content Joint ventures are suddenly stitched into the fabric of a handful of national brokerages. But the idea of the joint venture collides with the loose, informal networks that color the American housing economy. Permanent RON legislation is being enacted across the US With permanent RON legislation being enacted across the US, lenders and title companies are leveraging eClosing to process purchases and refinances in record times. See how you can deliver that digital experience your borrowers are asking for. Watch demo. Sponsored by Stavvy Implementing social media policies for LOs that balance risk and maximize returns Presented by Black Knight Black Knight's social media platform manages all compliance obligations, so loan officers can maximize their returns and cut costs. New York poised to expand CRA rule to nonbank lenders Mortgage New York State is close to approving a controversial bill that expands the requirements of the CRA to non-depository lenders, following the lead of Massachusetts and Illinois. UpEquity raises $50M, hopes to originate $1B in next year Real Estate, Mortgage Co-founded by Tim Herman and Louis Wilson, "power buyer" startup UpEquity enables homebuyers to make all-cash offers to compete with institutional investors HousingWire, 433 East Las Colinas Blvd., Suite 830, Irving, TX 75039 Manage preferences

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