Freddie Mac: Mortgage rates fall after three consecutive weeks of climbing

Freddie Mac: Mortgage rates fall after three consecutive weeks of climbing

This week, the average U.S.
fixed rate for a 30-year mortgage rose to 3.69%. That’s 9 basis points below last week’s 3.78%
and still more than a percentage point below the 4.94% of the
year-earlier week, according to the Freddie Mac Primary
Mortgage Market Survey.

“After a year-long slide, mortgage rates hit a cycle low in September 2019 and have risen in six out of the last nine weeks due to modestly better economic data and trade related optimism,” said Sam Khater, Freddie Mac’s chief economist. “The improvement in sentiment has been one of the main drivers behind the surge in equity prices and will provide a halo effect to consumer spending heading into the important holiday shopping season.”

The 15-year FRM averaged
3.13% this week, sliding from last week’s 3.19%. This time last year, the
15-year FRM came in at 4.33%.

The five-year Treasury-indexed hybrid adjustable-rate
mortgage averaged 3.39%, retreating from last week’s rate of 3.44%. The percentage
remains significantly lower than its 2018 rate of 4.14%.

The image below highlights this week’s changes:

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Democratic candidates take a stand on homelessness

Democratic candidates take a stand on homelessness

This week presidential candidate Pete Buttigieg came out against a homeless ordinance in Las Vegas.

The ordinance would criminalize homelessness in the city,
but Buttigieg, mayor of South Bend, Indiana, announced his opposition to it.

“Homelessness is a moral crisis that defies easy solutions, and the best way to address it is with smart investments in housing, supportive services and health,” Buttigieg said in a statement. “I stand with members of the homeless community and advocates in opposing this ordinance.”

Shortly after that, former Secretary of the Department of Housing and Urban Development and presidential candidate Julián Castro voiced his opinion on the bill, sarcastically saying the homeless should be treated like people.

“Former big city mayor, housing secretary and presidential
candidate here,” Castro said in a tweet. He then proceeded to list three things
he could do to help end homelessness, concluding with, “But first you have to
see people without homes as…people. Shocking.”

Castro’s three suggestions are:

1. Increase the stock of affordable housing

2. Make housing vouchers an entitlement

3. End housing discrimination

This isn’t the first time Castro has stood up for housing
matters in this election.

At the October debate, Castro criticized the moderators for closing with a question about comedian Ellen DeGeneres’ controversial friendship with former President George W. Bush without asking any questions about housing and other critical issues.

A week earlier, Castro had challenged the debate moderators via
Twitter to ask a housing question.

And a few days before the debate, at the CNN town hall on LGBT equality, Castro called on HUD Secretary Ben Carson to resign due to his comments on transgender people.

But if you like the stand the former HUD secretary is taking on housing in his campaign, just be careful about getting too attached just yet – his campaign has struggled to keep up on recent weeks. In October, Castro announced he needed $800,000 before the end of the month in order to carry on with his campaign.

While he did meet that goal and was able to stay in the
race, it does leave his campaign on shaky grounds.

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Snapdocs raises $25 million in Series B funding round

Real estate technology company Snapdocs announced Thursday morning that it raised $25 million in its Series B funding.

This funding was led by F-Prime Capital, as well as previous investor Sequoia Capital, who led its Series A funding, and Founders Fund.

Snapdocs, which was founded in 2013, will use the money to continue development on its digital real estate closing platform as well as its artificial intelligence offerings.

According to the company, Snapdocs’ platform currently powers over 10% of all U.S. residential mortgage transactions, equalling about $150 billion in real estate transactions annually.

As part of the funding round, David Jegen of F-Prime Capital will join Snapdocs’ board of directors.

“Residential mortgage is a $2 trillion industry and one of the largest sectors yet to be digitized,” said Jegen, managing partner of F-Prime Capital’s tech fund.

“The entire closing process is cumbersome and in need of a better workflow for collaboration, coordination and transparency,” Jegen added. “Snapdocs has built the leading vertical SaaS solution to this problem and is well-positioned to become the industry’s platform for digital mortgage closings.”

Snpadocs said its different approach to technology adaptation is what led to its growth and success.

“This is a huge milestone for the Snapdocs team and towards delivering on our promise of a seamless digital real estate closing. It’s also a big milestone for our lender and title partners who are now trusting us with over 750,000 real estate closings a year,” said Aaron King, CEO of Snapdocs.

Beyond the fundraising, the San Francisco-based company says it will be expanding offices and opening a branch in Denver.

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HomeStreet Bank fined for kickbacks to real estate agents, homebuilders

Over the course of this year, HomeStreet Bank moved away from the mortgage business, selling off much of its retail mortgage origination business, along with nearly all of the mortgage servicing rights associated with the loans originated in those retail outlets.

At the time, the bank said that it still planned to originate mortgages, albeit a smaller operation with loans sourced through its bank branches, online banking services, and other relationships.

But, some of those relationships have gotten the bank in
trouble with the Federal Deposit
Insurance Corp
.

The FDIC announced Wednesday that it reached a settlement
with HomeStreet Bank after an investigation found that HomeStreet had paid
kickbacks to real estate agents and homebuilders in exchange for their mortgage
business.

According to the FDIC, HomeStreet will pay a fine of $1.35
million for violations of the Real Estate Settlement Procedures Act.

As the FDIF states, RESPA “prohibits giving or accepting a
thing of value for the referral of settlement service involving a federally
related mortgage loan.”

And in the case of HomeStreet, the company was providing
payment to real estate brokers and homebuilders for referrals of their mortgage
business.

According to the FDIC, the issue stemmed from HomeStreet’s standalone home loan centers, many of which were sold off this year to Homebridge Financial Services.

The FDIC said Wednesday that an investigation found that
HomeStreet’s home loan centers entered into certain co-marketing arrangements with
real estate brokers in which the bank and brokers marketed their services
together using online platforms.

The FDIC’s investigation also determined that the bank entered
into desk rental agreements where the bank rented space in the offices of real
estate brokers and homebuilders.

According to the FDIC, these arrangements led to the bank
paying fees to the real estate brokers and homebuilders for their referrals of
mortgage business, a violation of RESPA.

“While co-marketing arrangements and desk rental agreements
are permissible where the fees paid bear a reasonable relationship to the fair
market value of marketing or rental costs, such arrangements and agreements
violate RESPA when the amounts paid exceed fair market value and the excess is
for referrals of mortgage business,” the FDIC said in a statement.

As part of the settlement, HomeStreet will pay a fine of
$1.35 million and has terminated all of its co-marketing and desk rental
agreements.

According to the FDIC, HomeStreet agreed to the settlement without
admitting or denying the violations.

HousingWire attempted to contact HomeStreet for comment on
the FDIC settlement, but as of publication time, the bank had not responded.
This article will be updated should the bank respond.

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Are homes under $250,000 nearing extinction?

A recent report by economic research consultancy Capital Economics shared a stunning statistic: The number of vacant single-family homes for sale priced under $250,000 has halved since 2012.

According to the report, at the start of the third quarter of 2019, there were only 550,000 vacant homes on the market priced under $250,000. That’s half as many as there were just seven years ago.

Capital Economics attributes part of this to lower housing inventory, in general, stating that the overall number of vacant single-family homes for sale has dropped 25% in the last seven years. 

“The homeowner vacancy rate, that is the number of vacant homes for sale (which account for just over half of all homes for sale) as a share of all owner-occupied homes did see a marginal rise to 1.45% in the third quarter,” the report stated, citing the latest U.S. Census Housing Vacancies and Homeownership survey.

“But that was up from a 40-year low in the second quarter,” the report continued. “Sales are therefore being held back by a lack of homes on the market, and in particular a shortage of cheaper homes.”

As Millennials increasingly enter the housing market and Gen Z begins to join, the lack of affordable homes could hamper their homebuying prospects. With both generations taking on historical amounts of student loan debt, increasing home prices are not a welcome reality. 

“That suggests the tick-up in the homeownership rate for under-35s in the third quarter, to 37%, is not the start of an upward trend,” the report states.

“Rather, we expect young homeownership will hold its ground over the next couple of the years. But new households have to live somewhere and, if they are not buying a home, they will rent one,” the report continued. “That suggests rental vacancy rates will stay relatively low, preventing a sharp fall in rental growth as the economy slows.”

The report does point to one bright side: “the strong labor market over the past couple of years has supported household formation.”

Capital Economics cites that in the past two years since this year’s Q3, 2.9 million new households were formed. For comparison, only about 1.9 million households were formed in the two years to the third quarter of 2017.

Household formation could lead to more people being ready to buy a home, but the report issues a warning there as well. 

“New households will have found it increasingly hard to find an affordable home to buy,” the report states. “The share of vacant single-family homes for sale priced under $250,000 has been on a steady downward trend since 2014, and averaged just 57% in the year to Q3 2019.”

“Moreover, with credit conditions relatively tight, and getting tighter, potential homebuyers will not be able to stretch their budgets to buy a more expensive home,” the report continued. “…until homebuilders ramp up production of cheaper properties, home sales, and in particular sales to first-time buyers, will see only minimal growth.”

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Mortgage Tech Rundown: Tavant, LBA Ware, and Resonai

Tavant, a provider of AI-powered digital lending technologies, announced that Consumer Direct Mortgage, a division of FirstBank, leveraged FinXperience to launch a new consumer-direct digital lending platform.

FinXperience
is a point-of-sale solution
that provides a digital experience across all lending channels. By leveraging the
solution, FirstBank can now provide borrowers with a “differentiated” lending
experience through a seamless integration of data-driven processes, a suite of
portals and companion mobile applications, according to the company.

“FinXperience, empowers the Bank with a design-centric approach and enables a seamless, device-agnostic experience to meet evolving customer expectations,” said Hassan Rashid, Tavant’s chief revenue officer. “This initiative will accelerate FirstBank’s digital transformation journey and further improve the overall home buying experience for their customers while optimizing existing business processes and functions.”

Automated compensation software and systems
integration solutions provider, LBA Ware announced that Guaranteed
Rate
has enhanced the loan originator experience with the implementation
of CompenSafe.

LBA
Ware’s flagship solution, CompenSafe, gives lenders the flexibility to
implement incentive compensation plans for recruiting and retaining top talent
while eliminating the complexity of managing multiple compensation plans
manually on spreadsheets. 

“Lenders of all sizes — from community banks and independent mortgage lenders to companies like Guaranteed Rate that are leading the industry in loan production — need technologies that allow employees to focus on the tasks that add the most value,” said Lori Brewer, LBA’s founder, and CEO. “CompenSafe delivers immediate gains in operational efficiency while simultaneously improving the compensation experience for any lender’s most important asset: its loan teams.”

Resonai, an artificial intelligence, and augmented reality company, launched a new computer vision platform that creates intelligent digital twins of any building or physical space.

The
platform, Vera, embeds intelligence into the physical environment to enable
communication between any device or agent. Using the Vera platform, real estate
developers can now create scalable AR applications with functionality that was
not previously available, according to the company.

“Resonai is introducing a paradigm shift in spatial computing. By solving some of the most critical challenges in computer vision and spatial embedded AI, we can now transform any physical environment into an Intelligent digital space, that communicates and synchronizes data across devices,” said Emil Alon, Resonai’s CEO, and founder. “For the commercial real estate industry, this means a new way to interact with physical spaces to solve real business issues and will unlock a whole new asset class: Digital Real Estate.”

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DOJ approves BB&T, SunTrust merger, orders banks to divest 28 branches

The $66 billion merger between BB&T and SunTrust Banks is now nearing the final stages, as the Department of Justice announced Friday that it has approved the banks’ merger, but ordered the banks to divest 28 branches as a condition of that approval.

In order to resolve antitrust concerns raised by the “merger of equals,” the DOJ is ordering BB&T and SunTrust, which will soon be known collectively as Truist Bank, to sell off 28 branches in North Carolina, Virginia, and Georgia with approximately $2.3 billion in deposits.

According to the DOJ, this divestiture represents the
largest such maneuver in a bank merger in more than a decade.

Under the agreement with the DOJ, the banks agreed to divest
SunTrust branches in the Eastern Shore, Virginia; Patrick County, Virginia;
Franklin County, Virginia; Henry County/City of Martinsville, Virginia; Lumpkin
County, Georgia; Winston-Salem, North Carolina; and Durham-Chapel Hill, North
Carolina.

According to the DOJ, the divested assets will include all
deposits and loans associated with the divested branches.

“Banks and the financial sector are at the heart of our economy,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “Today’s settlement ensures that banking customers across Virginia, North Carolina, and Georgia will continue to have access to competitively priced banking products, including loans to small businesses while preserving the investments in innovation and technology this merger is expected to generate.”

As for what will happen to the branches in question, BB&T and SunTrust announced Friday that they are selling those 28 branches, along with two others, to First Horizon Bank.

According to the banks, First Horizon Bank will acquire 30
branches from SunTrust. As part of the agreement, First Horizon will assume
approximately $2.4 billion in deposits for a deposit premium of 3.4%, and will
purchase approximately $410 million in loans.

The banks expect the deal to go through in early 2020, and
First Horizon expects to retain all current SunTrust employees in the acquired
branches.

“First Horizon is excited to welcome new employees and
customers to our family,” said Bryan Jordan, First Horizon’s chairman and CEO.
“We are proud of the tradition of trust we have earned for more than 155 years
and look forward to working with BB&T and SunTrust to design a seamless
onboarding experience.”

While the DOJ has conditionally approved the merger, pending
the successful completion of the divestiture, the merger still needs to be
approved by the Board of Governors of
the Federal Reserve System
and the Federal
Deposit Insurance
Corp.

But the DOJ said Friday that it will advise the Fed and the
FDIC that it will not challenge the merger as long as the banks satisfy any
conditions raised by any of the regulatory bodies.

As for SunTrust and BB&T, they can now move forward
toward their future as Truist.

“First Horizon is recognized in the industry for its
outstanding customer service and commitment to a positive culture,” said
SunTrust Chairman and CEO Bill Rogers. “We are pleased to have found a buyer
that will retain the jobs of talented teammates and continue to foster the
strong client relationships we have established in these branches.”

The companies did not disclose the financial terms of the acquisitions
by First Horizon.

Here’s a full list of the branches that are being divested:

Winston-Salem, NC Fed Banking Market

  • Medical Park, 2006 S. Hawthorne Rd., Winston-Salem, NC 27103        
  • Mocksville Yadkinville Road, 880 Yadkinville Rd., Mocksville, NC. 27028
  • Yadkinville State Street, 200 S. State St., Yadkinville, NC 27055
  • Reynolda Road, 2801 Reynolda Rd., Winston-Salem, NC 27106
  • Hillsdale, 5361 US Highway 158 Advance, NC 27006
  • Walkertown Main, 2820 Old Hollow Rd., Walkertown, NC 27051
  • First Stratford, 101 South Stratford Rd., Winston-Salem, NC 27104
  • Kernersville, 1000 S. Main St., Kernersville, NC 27284
  • Ogburn Station, 4306 N. Liberty St., Winston-Salem, NC 27105                                                                      

Durham-Chapel Hill, NC Banking Market

  • South Square, 4235 University Drive, Durham, NC 27707
  • Triangle Park, 2008 East NC Highway 54, Durham, NC 27713
  • Croasdaile, 1821 Hillandale Rd., Durham, NC 27705
  • Riverview, 5112 N. Roxboro Rd., Durham, NC 27704
  • Northgate Mall, 1516 N. Gregson St., Durham, NC 27701
  • Bethesda Point, 1611 S. Miami Blvd., Durham, NC 27703
  • University Mall, 201 South Estes Dr, Chapel Hill, NC 27514
  • West Franklin, 126 West Franklin Street, Chapel Hill, NC 27516
  • Hillsborough Central, 260 S. Churton St., Hillsborough, NC 27278
  • Pittsboro, 88 Hillsboro St. Pittsboro, NC 27312
  • South Madison Boulevard, 207 S. Madison Blvd., Roxboro, NC 27573                                                                                                                                

Roanoke, VA Fed Banking Market

  • Smith Mountain Lake, 13264 Booker T Washington Hwy., Hardy, VA 24101
  • Main & Court, 260 S. Main St., Rocky Mount, VA 24151          

Martinsville, VA Banking Market

  • Collinsville, 3000 Virginia Ave, Collinsville, VA 24078
  • Village of Martinsville, 250 Commonwealth Blvd., W. Martinsville, VA 24112             
  • Patrick County, 114 W. Blue Ridge St., Stuart, VA 24171

Eastern Shore, VA-MD Banking Market

  • Onancock, 62 Market St., Onancock, VA 23417
  • Cheriton, 21263 Lankford Hwy., Cape Charles, VA 23310

South Boston, VA Fed Banking Market

  • South Boston, 410 Main St., South Boston, VA 24592

Wayne County, GA Fed Banking Market

  • Jesup, 175 S. Macon St., Jesup, GA 31545

Lumpkin County, GA Fed Banking Market

  • Dahlonega Main, 111 S Chestatee St., Dahlonega, GA 30533

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More first time homebuyers enlisting help from family, friends

Home prices are rising with no signs of slowing, and affordability
is getting worse each month, causing potential homebuyers to turn to family or
even friends to come up with a down payment.

The 2019 Profile of Home Buyers and Sellers report from the National Association of Realtors revealed
that more than 30% of first-time homebuyers used down payment help from family
and friends.

This is despite seeing lower down payments. In 2019, the
median down payment was 12% for all buyers, 6% for first-time buyers and 16%
for repeat buyers. Lower down payments among homebuyers are another result of
rising home prices as buyers find it difficult to save for a down payment. In
fact, 17% of all buyers and 25% of first-time buyers used an FHA loan to
purchase, likely taking advantage of low down payment programs.

But this hasn’t seemed to help increase the number of first
time homebuyers, with remained at 33% in 2019, significantly below the
historical norm of 40%.

“Prerecession, the number of first-time buyers was higher,
in part, because buyers had more options,” NAR President John Smaby said.
“However, over the past few years, we have unfortunately experienced a scarcity
in housing inventory, especially at the middle- and lower-end of the market.”

And this low level of starter home inventory continues to be
the single greatest factor keeping first time homebuyers off the market. NAR
chief economist Lawrence Yun explained that buyers report the most difficult
step in the home buying process is just finding the right home to purchase, and
what buyers want most from their real estate professional is to help them find
the right home to purchase.

“Low inventory conditions hurt would-be first-time buyers
most,” Yun said. “Their homeownership dream and the opportunity to build wealth
gets delayed until more inventory choices reach the market.”

Of course, this low level of inventory has helped one group – home sellers. This year, home sellers received a median of 99% of their asking price and typically sold their home within just three weeks. The increase in home prices lowered the number of home sellers who reported delaying selling because their home was worth less than their mortgage. This particular share of sellers declined from 9% in the 2018 report to 7% in 2019. However, 20% of sellers who bought their home 11 to 15 years ago continue to report stalling their home sale.

The age of repeat buyers continues to steadily increase over the years, moving from the mid-30s in the 1980s to the mid-50s today. In fact, there is no area that has seen a more rapid and consistent increase than the median age of repeat buyers, which hit a record high of 55 years old in both 2018 and 2019.

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Reonomy raises $60 million in Series D funding

Reonomy, a commercial real estate data startup, on Thursday closed a Series D funding round at $60 million.

The new investment brings the total funding for the company to more than $128 million, New York-based Reanomy said in a statement.

The financing was led by Georgian Partners, with participation from Wells Fargo Strategic Capital and Citi Ventures. Existing investors, including Sapphire Ventures, also continued their participation in this round, Reonomy said.

“This funding will help expand the platform’s machine learning capabilities and platform-driven applications in its efforts to continue developing the most robust and comprehensive CRE data solutions available in the market,” the company statement said. “It will also fuel Reonomy’s international expansion following strong demand from its existing customers to scale products to Canada, the U.K., and other markets.”

Reonomy provides market data to investors, building owners and business owners to connect highly fragmented data points in the commercial real estate market.

In July, Reonomy announced an agreement to have Black Knight provide data through the platform, adding to partnerships with CoreLogic and Dun & Bradstreet. Reonomy also draws on a vast amount of public data, much as Zillow does for the residential market.

“We’re building a platform that connects the world of property information and empowers a new era of applications to unlock insights and opportunities for everyone,” said Rich Sarkis, Reonomy CEO. “This investment will further strengthen our ability to drive innovation around property intelligence.”

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Growing real estate giant Pretium buys Selene Finance

Pretium, an investment management firm that owns one of the nation’s largest single-family rental operators and buys loads of non-performing loans from Fannie Mae and Freddie Mac, expanded its housing business earlier this year when it bought Deephaven Mortgage.

But buying the non-Qualified Mortgage lender wasn’t Pretium’s
last big move of 2019.

Pretium announced this week that it acquired Selene Holdings from funds managed by Oaktree Capital Management and Lewis
Ranieri’s Ranieri Partners Management. Ranieri is considered by
many to be the father of mortgage securitization.

Selene Holdings is the parent company of Selene Finance, a mortgage servicer
that focuses on non-performing, re-performing, REO and performing mortgages.

And now, the company and its more than 500 employees will be
under the Pretium umbrella.

According to Pretium, the company is hiring Joe Davila, the
former president of servicer solutions of Altisource
Portfolio Solutions
, to serve as CEO and president of Selene.

“Selene is already a leader in all aspects of mortgage loan
servicing, and I am thrilled to join their dedicated team,” Davila said in a
release. “We will continue to enhance our clients’ experience by delivering
flexible and creative servicing solutions to meet their needs. We will support
a renewed growth strategy with a focus on proactivity, innovation and the
delivery of outstanding client and consumer interaction models.”

Davila will be leading Selene as it joins Pretium’s growing list
of real estate holdings, which also includes Deephaven Mortgage and the company’s
sizable portfolio of single-family rentals.

In fact, Pretium bills itself as the “largest private single-family rental owner and operator in the U.S.” and has more than 32,000 single-family rental homes in its portfolio. Pretium owns and operates Progress Residential, which manages its portfolio of single-family rentals.

“Selene’s servicing capabilities complement and continue to
expand Pretium’s residential credit ecosystem and we are excited to welcome
Selene to our expanding asset management platform,” Pretium Founder and CEO Donald
Mullen said. “Joe is a proven executive and we look forward to his leadership
and vision, as we seek to create value for Selene’s clients and Pretium’s
investors through strong communication and investment in technology and
infrastructure.”

Financial terms of the deal were not disclosed.

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