2022 originations make up 60% of underwater mortgages: Black Knight

One in 12 purchase mortgages originated in 2022 is now underwater, as the downturn in home prices over the past few months has opened the door to a slowly emerging but potentially problematic issue, Black Knight found. Home prices fell for the fourth consecutive month in October, according to the data and business intelligence provider's Mortgage Monitor report. The number represents the smallest monthly pullback since prices hit their peak in June, but the four-month long trend points to a growing loss in home equity that hits buyers who made purchases when costs were at their highest especially hard. Of the 450,000 mortgages where the amount owed exceeded the value of the home at the end of the third quarter, almost 60% were originated this year, with purchases accounting for 95% of those.

READ MORE: 2022 originations make up 60% of underwater mortgages: Black Knight

Mortgage fintech Tomo rolls out real-time pre-approval

The Connecticut-based fintech launched a real-time underwritten mortgage loan pre- approval, which should spit out a credit decision in "the matter of one minute." This new offering allows for a buyer's income, assets, liabilities, and credit to be quickly verified, and then the application to be pre-underwritten and pre-decisioned at any time, the company claims in its press release. In the past couple of months Tomo has rolled out numerous offerings to try to drum up originations including appraisal coverage —a product that  protects home buyers from having to bring more cash to the close when appraisals come in low– and a lock and shop product, which allows a potential buyer to lock-in a mortgage rate for up to 120 days.

Home Point Capital completes $6 billion Ginnie Mae servicing sale

The purchase price was around $87.5 million, and the sale represented 6.92% of the Homepoint mortgage subsidiary's servicing portfolio as of Sept. 30. The company did not name the buyer of the MSRs. The company has been engaged in sales of Ginnie Mae servicing for some time, and in its last earnings call, executives said it was close to completing its exit from this part of the MSR market.The amount sold represented around 62.4% of Homepoint's Ginnie Mae servicing portfolio at the third quarter's end, according to the SEC filing. The company said during its earnings call that it had a notional amount of Ginnie Mae servicing equal to around $8 billion or so remaining. In total, Homepoint's portfolio had well above $90 billion in mortgage servicing rights at the end of the third quarter. 

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CFPB seeks to limit banks' ability to collect on delinquent HELOCs

The Consumer Financial Protection Bureau is taking the position that banks cannot secure repayment on certain home equity lines of credit by pulling funds from their delinquent customers' checking accounts. The bureau's argument in a court case filed by a customer of PNC Financial Services Group has implications for how banks structure HELOCs, which are coming back into favor as interest rates rise. At issue is how HELOCs should be treated legally, given that they are open-ended credit lines, similar to a credit card, but are exempt from some card-related rules. A PNC customer is arguing that the Pittsburgh-based bank should not have pulled some $3,000 over a few months from his checking account — saying that a HELOC is an open-ended credit plan and therefore is essentially a credit card.

The controversy around Ginnie Mae's new capital requirements explained

Ginnie Mae's updated capital requirements affect both banks and nonbanks, and many believe that the new requirements are not manageable, while others say they're prepared for the new rules, which now go into effect at the end of 2024. Ginnie reduced the minimum 10% the risk-based capital ratio it had proposed to 6%, consistent with the non-risk-based standard already in place. However, it did not change aspects of its earlier proposal that imposed a risk weighting for a variety of assets, most notably retaining 250% for mortgage servicing rights similar to the ratio imposed on banks. Also, while it adjusted its overall ratio calculations in ways aimed at meeting nonbank needs, not everyone was happy with the formula. Read more about the new regulations as well as reactions within the industry in our roundup.

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