DUBLIN, Oct. 4, 2023 /PRNewswire/ — The “United States Home Loan Market Competition Forecast & Opportunities, 2028” report has been added to ResearchAndMarkets.com’s offering.
The United States home loan market is expected to experience significant growth to 2028
The United States home loan market is undergoing a transformation, driven by several key factors that are reshaping the lending landscape. These factors include a growing pool of potential homebuyers, the automation of loan processes, and the pervasive trend of digitalization.
Home loans, typically extended by financial institutions, serve as the financial backbone for individuals aspiring to acquire residential properties. These properties can range from completed, move-in-ready homes to those still in construction phases. Banks and non-banking financial companies (NBFCs) both offer home loans, often determining interest rates based on the borrower’s creditworthiness. These loans commonly come with lengthy repayment periods of up to 30 years, structured through equated monthly installments (EMIs).
In recent years, the demand for mortgages in the United States has experienced a notable upswing, primarily catalyzed by heightened home purchasing activities during the COVID-19 pandemic. Consequently, this surge has generated substantial demand within the purchase market, attracting banks, nonbank lenders, and investors operating in the mortgage sector.
Furthermore, despite the economic repercussions of the pandemic, the desire for homeownership in the United States remains unwavering. The broader economic expansion and the growth in the number of households have contributed to the increasing rate of homeownership.
Notably, 2020 witnessed a 2.6% annual uptick in homeownership, welcoming over 2.1 million new homeowners into the fold. Geographically, the Midwest and South regions of the United States exhibit higher homeownership rates compared to the Northeast and West. With this surge in homeownership, a concurrent rise in the demand for home loans is anticipated.
Automation has emerged as a pivotal force in streamlining the home loan process, substantially elevating the overall customer experience. The mortgage industry has eagerly embraced technology to expedite and simplify mortgage applications, thereby widening access to home financing and home-buying services.
A cornerstone of this technological revolution is digitalization, with the U.S. digital payments sector expanding at a commendable rate of 23%. These technological strides are designed to expedite mortgage applications, curtail expenses, and enhance the overall client journey. Consequently, the escalating wave of digitalization is poised to further propel the United States home loan market.
The ascendancy of nonbank lenders has introduced a seismic shift in the market landscape. Nonbank lenders have emerged as a credible alternative, especially for borrowers seeking refinancing options. Over the past decade, nonbank mortgage lenders have not only gained market share but have also eclipsed traditional banks in prominence.
In 2020, seven out of the top ten mortgage lenders in the United States hailed from the nonbank sector. These lenders have strategically invested in diverse technologies to fortify their operations, spanning from platform modernization to automated compliance solutions. Consequently, the continued ascent of nonbank lenders is set to stoke the growth engine of the home loan market.
In summation, the United States home loan market stands at the cusp of substantial growth, underpinned by a confluence of factors, including surging demand, automation enhancements, and the burgeoning influence of nonbank lenders.
Market Dynamics
Market Trends & Developments
Increasing number of fintech companies
Rising focus towards loan sector by Bank and NBFCs
Increasing construction activities
Rapid urbanization
Attractive marketing strategies
Drivers
Increasing home ownership
Automation in loan process
Growth of nonbank lenders
Challenges
Security concerns
Surging competition
Competitive Landscape
Bank of America Corporation
JPMorgan Chase & Co.
Citigroup, Inc.
Wells Fargo & Co.
U.S. Bancorp
PNC Financial Services Group, Inc.
American Express Company
Ally Financial Inc.
Truist Financial Corporation
Goldman Sachs & Co. LLC.
Voice of Customer Analysis
Sample Size Determination
Respondent Demographics
By Gender
By Age
By Occupation
Brand Awareness
Factors Influencing Loan Availing Decision
Sources of Information
Challenges Faced
Impact of COVID-19 on United States Home Loan Market
Impact Assessment Model
Key Segments Impacted
Key Regions Impacted
Report Scope
United States Home Loan Market, by Type:
Home Purchase
Refinance
Home Improvement
Construction
Others
United States Home Loan Market, by End User:
Employed Individuals
Professionals
Students
Entrepreneurs
Others
United States Home Loan Market, by Tenure Period:
Less than 5 years
6-10 years
11-24 years
25-30 years
United States Home Loan Market, by Region:
South
Midwest
Northeast
West
For more information about this report visit https://www.researchandmarkets.com/r/efxqax
About ResearchAndMarkets.com ResearchAndMarkets.com is the world’s leading source for international market research reports and market data. We provide you with the latest data on international and regional markets, key industries, the top companies, new products and the latest trends.
Media Contact:
Research and Markets Laura Wood, Senior Manager [email protected]
For E.S.T Office Hours Call +1-917-300-0470 For U.S./CAN Toll Free Call +1-800-526-8630 For GMT Office Hours Call +353-1-416-8900
U.S. Fax: 646-607-1907 Fax (outside U.S.): +353-1-481-1716
Mortgage rate cut quantum will vary depending on clients, cities
Bank exec: rate cut conducive for easing prepayment pressure
Chinese banks will also cut some deposit rates by 10-25 bps
$5.3 trillion mortgage book accounts for 17% of banks’ loan
BEIJING, Aug 29 (Reuters) – Some Chinese state-owned banks will soon lower interest rates on existing mortgages, three sources familiar with the matter said on Tuesday, as Beijing ramps up efforts to revive the debt crisis-hit property sector and bolster a sputtering economy.
The quantum of the cut on existing mortgages, which, if implemented, will be the first such move in China since the global financial crisis, would be different for different types of clients and in different cities, said the sources.
The reduction could be as much as 20 basis points in some cases, said the sources, who declined to be named as they were not authorized to speak to the media.
The country’s central bank, the People’s Bank of China (PBOC), did not immediately respond to Reuters’ request for comment after business hours.
The reduction in existing mortgage rates will come amid several other property, economic and market support measures Beijing has announced over the past few weeks, as concerns mount about the health of the world’s second-largest economy.
The property sector, which accounts for roughly a quarter of the economy, has lurched from one crisis to another since 2021, and contagion fears deepened this month after liquidity stress in leading developer Country Garden (2007.HK) became public.
Chinese lenders were widely expected to cut interest rates on existing mortgages after the PBOC earlier this month said that it would guide commercial banks to do so.
The central bank’s proposal to cut rates, which came after a wave of early repayments of mortgage debt, aims to reduce the interest rate costs for homebuyers and to boost consumption in a slowing economy.
China has been cutting new mortgage rates since last year to boost sales in its moribund property market, but the main result so far has simply been a rush by households paying off existing mortgages early, squeezing banks’ profits.
Lowering existing mortgage rates is expected to further weigh on the banking sector’s net interest margin (NIM) – a key gauge of profitability – which fell to a record low at the end of the second quarter, official data showed.
DEPOSIT RATES
Chinese banks have been battling headwinds such as lower lending rates and pressure from the government to prop up the economy, as well as bad debt related to property developers and local government financing vehicles (LGFV).
China’s mortgage loans totalled 38.6 trillion yuan ($5.29 trillion) at the end of June, representing 17% of banks’ total loan books.
Zhu Qibing, chief macro analyst at BOC International China, estimates the weighted average rate of new mortgages is 4.11%, while the average rate on all existing mortgages is at least 100 basis points higher.
Citigroup in a note this month said that the repricing of existing high-yielding mortgages would further add to Chinese banks’ NIM pressure and dampen their profitability and lending capability.
Adjusting existing mortgage rates is conducive to easing pressure on banks from mortgage prepayment, Lin Li, vice president of Agricultural Bank of China Ltd (601288.SS), the country’s No.3 lender by assets, said earlier on Tuesday.
The bank would draft detailed implementation rules on rate cuts after policies on this become clear, he said. The lender reported a drop in its NIM to 1.66% at the end of June from 1.7% at the end of March.
Chinese banks’ net interest margin would face downward risks in the second half of this year, Fu Wanjun, Agricultural Bank of China’s president, said.
To soften the hit on the margins, the three sources said that major state banks would also lower interest rates on some fixed-term deposits, and the quantum of cuts would range from 10 basis points to 25 basis points.
Cutting deposit rates could help banks to maintain a proper level of NIM, one of the sources said.
Analysts have said China last week did not opt for a broad rate cut that would further depress banks’ narrow net interest margins, instead deferring to banks to cut their deposit rates and give themselves room to cheapen mortgages.
($1 = 7.2916 Chinese yuan renminbi)
Reporting by Xiangming Hou, Rong Ma, Ziyi Tang and Ryan Woo in Beijing, Selena Li in Hong Kong; Editing by Sumeet Chatterjee, Alex Richardson and Sharon Singleton
Our Standards: The Thomson Reuters Trust Principles.
Citi today reached an agreement with the Treasury, Federal Reverse, and FDIC, aimed at strengthening capital ratios, reducing risk, and boosting liquidity at the ailing bank.
The Treasury will invest $20 billion in the bank via preferred stock under the Troubled Asset Relief Program (TARP), on top of the $25 billion initially invested.
Citi will also issue an incremental $7 billion in preferred stock warrants to the Treasury and FDIC in exchange for a government guarantee on up to $306 billion in bad mortgage-related securities, loans, and other assets.
The bank and mortgage lender will assume losses on the troubled portfolio up to $29 billion, with the government responsible for 90 percent of losses beyond that level, and Citi assuming the balance.
The Treasury will be responsible for up to $5 billion in losses beyond what Citi covers, and the FDIC will take on up to an additional $10 billion in losses if the Treasury’s are exhausted.
The U.S. government will provide Citi with a template to manage the guaranteed assets, which includes adhering to mortgage modification procedures adopted by the FDIC.
Citi has also been provided “expanded access” to the Fed discount window and primary credit facility to further ease liquidity concerns.
As a result of the agreement, Citi will not pay out a common stock dividend exceeding one penny for the next three years, effective the next quarter.
Shares of Citi (C) climbed $2.17, or 57.56%, to $5.94 in early morning trading on Wall Street.
The company’s shares had fallen as low as $3.05 in the past week as concerns about its viability dragged down the broader market.
Swiss bank UBS AG announced Monday it has agreed to pay $1.43 billion in penalties to settle a civil action alleging misconduct related to the underwriting, issuance and sale of residential mortgage-backed securities (RMBS) before the 2008 financial crisis.
The settlement with the U.S. Department of Justice (DOJ), which refers to a civil action filed in November 2018, does not bring the determination of liabilities, the DOJ said.
“The settlement has been fully provisioned in prior periods,” UBS said in a statement.
According to the DOJ, the United States filed a complaint alleging that UBS “defrauded investors” by making false and misleading statements to buyers of 40 RMBS issued in 2006 and 2007 relating to the characteristics of the loans.
Per the civil action, UBS knew that a significant number of the mortgages did not comply with underwriting guidelines designed to assess borrowers’ ability to repay and with consumer protection laws. In addition, UBS knew that property values associated with the loans were unsupported, the DOJ claimed.
“UBS was allegedly aware of these significant problems because it had conducted extensive due diligence on the underlying loans prior to the RMBS being issued to determine whether the loans were consistent with representations that would be made to investors. Ultimately, the 40 RMBS sustained substantial losses,” the DOJ said in a statement.
“The substantial civil penalty in this case serves as a warning to other players in the financial markets who seek to unlawfully profit through fraud that we will hold them accountable no matter how long it takes,” U.S. Attorney Breon Peace for the Eastern District of New York said in a statement.
The UBS settlement is the last case brought by the DOJ working group dedicated to investigating the banks’ conduct during the financial crisis, which resulted in $36 billion in penalties to banks, originations and rating agencies. It includes Ally Financial; Aurora Loan Services; Bank of America; Barclays; Citigroup; Credit Suisse; Deutsche Bank; General Electric; Goldman Sachs; HSBC; JPMorgan; Moody’s; Morgan Stanley; Nomura; Royal Bank of Scotland; S&P; Société Générale; and Wells Fargo.
The agreement comes as UBS is working to integrate the operations of Credit Suisse Group AG. It acquired the rival this year for $3.4 billion in stock after Credit Suisse faced a deposit run in March. A recent filing from UBS showed the Swiss bank took a hit of about $17 billion due to the takeover.
In the mortgage space, UBS has plans to wind down a business in its U.S. mortgage unit that focuses on “to-be-announced” (TBA) trading. The decision is part of UBS’s strategy to focus more on financing mortgage originators, per a Bloomberg report from May.
Another four banks failed and fell into the hands of the FDIC last Friday, bringing the 2009 tally to 13 in just one and a half months.
The cost of the four failures carried a tab of nearly $350 million, further depleting the FDIC’s Deposit Insurance Fund (DIF), which fell to $34.6 billion as of the end of the third quarter, down from $45.6 billion a quarter earlier.
The latest failures included Pinnacle Bank of Oregon, Corn Belt Bank and Trust Co., Riverside Bank of the Gulf Coast, and Sherman County Bank.
While not notable names, the volume of bank failures alone may put the FDIC in a precarious position, despite doubling premiums in mid-December to bolster its reserves.
The FDIC recently raised estimates for the cost of bank failures to more than $40 billion through 2013.
Last week, RBC analyst Gerard Cassidy told Bloomberg he expected 1,000 bank failures over the next 3-5 years (just 40 were seized between 2003-2008).
He previously estimated a number closer to 300, highlighting the severity of the ongoing mortgage crisis, which seems to be constantly deteriorating.
RBC uses the so-called Texas ratio to determine the health of banking institutions.
In the past, banks have failed when their ratio climbs above 100 percent, that is, when dividing the value of their non-performing loans by the sum of their tangible capital and loan loss reverses reaches 1:1.
Two of the nation’s largest 50 banks, Sterling Financial Corp. and Colonial BancGroup., have ratios in excess of 50 percent.
Bank of America has a Texas ratio of 21.6 percent, and Citigroup is close behind at 18.4 percent, while Chase is sitting pretty at just 5.6 percent.
As of September 30, the FDIC identified 171 problem thrifts, up from 117 at the end of the second quarter. And it’s sure to keep rising.
Yesterday, the U.S. Justice Department came down hard on Citigroup, slapping the bank with a $7 billion fine over allegations it sold faulty mortgage-backed securities to unknowing investors between 2003 and 2008.
In short, the company knew the mortgages behind the securities were destined to fail, but hid the quality of the mortgages, packaged them up, and shipped them out as quickly as possible. This was a trend at the time…
It probably didn’t take long before the dubious credit quality was apparent, and an e-mail sent by a Citi trader certainly didn’t help the bank’s case.
The trader said quite clearly that “we should start praying,” and that he “would not be surprised if half of these loans went down.”
The loan defects were not unique at the time, inflated incomes and appraised values that would push the loan-to-value ratios beyond 100%.
In other words, oversized loans that couldn’t be supported by real income that would eventually default because the borrower wasn’t actually able to pay the loan for more than a few months, if that.
Anyway, as a result of these actions, Citi has to dole out $7 billion, including $4.5 billion to settle federal and state civil claims.
The other $2.5 billion will be in the form of consumer relief, with some of it going toward financing to provide affordable multifamily rental housing. The rest will be in the form of direct consumer assistance via various relief programs.
Nearly $200 Million Going to the State of California
In the state of California, Attorney General Kamala D. Harris negotiated the largest settlement, with $102,700,000 in damages being reimbursed to the state’s pension funds, CalPERS and CalSTRS.
Another $90 million will go to homeowners affected by the suspect lending policies in place at Citi at the time.
Citigroup will be required to provide relief to underwater homeowners and distressed borrowers by issuing loan modifications and/or providing principal forgiveness.
It’s a little strange that homeowners who overstated their income and got loans with inflated appraisals will now get compensated, but I digress. If you think you might be eligible for relief, you might want to contact Citi sooner rather than later.
If you live in a state other than California, check out your Attorney General’s website for details about your state’s claims, if applicable.
For the record, the settlement doesn’t let the perpetrators off the hook for their wrongdoings, and they could still face criminal charges.
A similar settlement was reached last November when the state of California received $300 million from Chase (out of a total $13 billion) over misrepresentations related to residential mortgage-backed securities sold to CalPERS and CalSTRS.
loanDepot has agreed to settle a securities class action lawsuit filed by shareholders that alleged the company, its executives and investment banks made false or misleading disclosures before and after the lender’s initial public offering in 2021.
According to court filings, the parties agreed to settle and release all claims against the defendants in exchange for a cash payment of $3.5 million. However, the defendants deny any fault, liability, wrongdoing or damages.
“On July 26, plaintiffs filed a motion for preliminary approval of the settlement, which is pending approval,” loanDepot disclosed in a 10-Q filing on Thursday morning.
loanDepot declined to comment on the case, which was filed in California. A representative for the shareholders did not respond to a request for comments.
Defendants include loanDepot, its founder Anthony Hsieh, former chief financial officer Patrick Flanagan and former accounting officer Nicole Carrillo, among other executives. Bank underwriters of the IPO, such as Goldman Sachs, BofA Securities, Credit Suisse Securities, Morgan Stanley, Barclays Capital and Citigroup Global Markets, were also named.
The class action was filed on behalf of investors who purchased loanDepot’s class A common stock in connection with the company’s initial public offering on February 16, 2021. It also includes investors who acquired company stock between March 16, 2021 and September 22, 2021.
loanDepot debuted on the stock exchange in February 2021, raising $54 million. loanDepot stock was trading at $2.14 on Thursday around noon.
The shareholders allege loanDepot improperly collected double daily interest from refi borrowers, inflating its interest income. The plaintiffs claimed the matter was brought to Hsieh’s attention in late 2019, but he returned improperly collected interest only to borrowers in states with active attorneys general. Ultimately, the lender misrepresented its compliance practices and omitted to disclose its “years-long improper collection of double interest payments,” the lawsuit alleges.
In addition, the shareholders claimed that loanDepot’s registration statement for the IPO misrepresented to investors exactly when—and how quickly—the company’s “gain-on-sale margins” had begun to erode.
The plaintiffs also alleged that loanDepot’s registration statement misleadingly omitted to disclose “Project Alpha” and “Project Beta.” These projects systematically violated mandatory loan origination and underwriting requirements to allow the lender to close loans as quickly as possible and boost the lender’s performance, capturing additional market share, shareholders alleged.
The shareholders’ complaint mentions another lawsuit filed by Tammy Richards, formerly loanDepot’s chief operations officer. In September 2021 Richards alleged that loanDepot and its subsidiary Closing USA had engaged in interest overcharging between 2016 and 2019. Richards also claimed that the lender closed 8,000 loans without proper documentation, at the behest of Hsieh.
loanDepot’s 10-Q filing says that the company deposed Richards and “anticipates filing its Motion for Summary Judgment, or in the alternative, Summary Adjudication on or before November 15, 2023.” Richards is seeking damages north of $75 million.
A representative for Richards did not reply to a request for comments.
Lawsuits had an impact on loanDepot’s financials in the second quarter. In a call with analysts on Tuesday, executives said the company sustained $8 million in costs related to the “settlement of legacy litigation” during the second quarter of 2023.
“Excluding volume-related expenses, Vision 2025 related charges and the litigation settlement accrual, our adjusting operating expenses decreased by $10 million compared to the previous quarter, reflecting the ongoing benefits of our efficient improvements,” David Hayes, loanDepot’s Chief Financial Officer, told analysts.
The lender narrowed its losses in Q2 2023. It recorded a non-GAAP adjusted net loss of $34.3 million, compared to a $60.2 million loss in the previous quarter.
There are two separate shareholders lawsuits still pending against loanDepot, in California and Delaware. Beginning in June 2023, three similar shareholder derivative complaints were filed in the Delaware Court of Chancery, and actions are in their preliminary stages.
loanDepot has agreed to settle a securities class action lawsuit filed by shareholders that alleged the company, its executives and investment banks made false or misleading disclosures before and after the lender’s initial public offering in 2021.
According to court filings, the parties agreed to settle and release all claims against the defendants in exchange for a cash payment of $3.5 million. However, the defendants deny any fault, liability, wrongdoing or damages.
“On July 26, plaintiffs filed a motion for preliminary approval of the settlement, which is pending approval,” loanDepot disclosed in a 10-Q filing on Thursday morning.
loanDepot declined to comment on the case, which was filed in California. A representative for the shareholders did not respond to a request for comments.
Defendants include loanDepot, its founder Anthony Hsieh, former chief financial officer Patrick Flanagan and former accounting officer Nicole Carrillo, among other executives. Bank underwriters of the IPO, such as Goldman Sachs, BofA Securities, Credit Suisse Securities, Morgan Stanley, Barclays Capital and Citigroup Global Markets, were also named.
The class action was filed on behalf of investors who purchased loanDepot’s class A common stock in connection with the company’s initial public offering on February 16, 2021. It also includes investors who acquired company stock between March 16, 2021 and September 22, 2021.
loanDepot debuted on the stock exchange in February 2021, raising $54 million. loanDepot stock was trading at $2.14 on Thursday around noon.
The shareholders allege loanDepot improperly collected double daily interest from refi borrowers, inflating its interest income. The plaintiffs claimed the matter was brought to Hsieh’s attention in late 2019, but he returned improperly collected interest only to borrowers in states with active attorneys general. Ultimately, the lender misrepresented its compliance practices and omitted to disclose its “years-long improper collection of double interest payments,” the lawsuit alleges.
In addition, the shareholders claimed that loanDepot’s registration statement for the IPO misrepresented to investors exactly when—and how quickly—the company’s “gain-on-sale margins” had begun to erode.
The plaintiffs also alleged that loanDepot’s registration statement misleadingly omitted to disclose “Project Alpha” and “Project Beta.” These projects systematically violated mandatory loan origination and underwriting requirements to allow the lender to close loans as quickly as possible and boost the lender’s performance, capturing additional market share, shareholders alleged.
The shareholders’ complaint mentions another lawsuit filed by Tammy Richards, formerly loanDepot’s chief operations officer. In September 2021 Richards alleged that loanDepot and its subsidiary Closing USA had engaged in interest overcharging between 2016 and 2019. Richards also claimed that the lender closed 8,000 loans without proper documentation, at the behest of Hsieh.
loanDepot’s 10-Q filing says that the company deposed Richards and “anticipates filing its Motion for Summary Judgment, or in the alternative, Summary Adjudication on or before November 15, 2023.” Richards is seeking damages north of $75 million.
A representative for Richards did not reply to a request for comments.
Lawsuits had an impact on loanDepot’s financials in the second quarter. In a call with analysts on Tuesday, executives said the company sustained $8 million in costs related to the “settlement of legacy litigation” during the second quarter of 2023.
“Excluding volume-related expenses, Vision 2025 related charges and the litigation settlement accrual, our adjusting operating expenses decreased by $10 million compared to the previous quarter, reflecting the ongoing benefits of our efficient improvements,” David Hayes, loanDepot’s Chief Financial Officer, told analysts.
The lender narrowed its losses in Q2 2023. It recorded a non-GAAP adjusted net loss of $34.3 million, compared to a $60.2 million loss in the previous quarter.
There are two separate shareholders lawsuits still pending against loanDepot, in California and Delaware. Beginning in June 2023, three similar shareholder derivative complaints were filed in the Delaware Court of Chancery, and actions are in their preliminary stages.
The Jefferson Avenue commercial district in Buffalo, New York, is anchored by a supermarket.
There are dozens of other businesses and services along the 12-block corridor — a couple of bank branches, a library, a coffee shop, gas stations, a small plaza with a dollar store and a primary care clinic and a business incubator for entrepreneurs of color.
But Tops Friendly Markets, the only grocery store on Buffalo’s vast East Side, is the center of activity. More than just a place to buy food, pick up medications and use an ATM, the store is a communal gathering space in a predominantly Black neighborhood that, for generations, has been segregated, isolated and disenfranchised from the wealthier — and whiter — parts of the city.
Which explains how it came to be the site of a mass shooting on a spring day in May of last year. On that Saturday, a gunman, who lived 200 miles away in another part of the state, drove to Jefferson Avenue and went into Tops, and in just a few minutes killed 10 people, injured three and inflicted mass trauma across the community.
It is a scenario that has sadly, and repeatedly, played out in other parts of the country that have experienced mass shootings. But this one came with a twist: The gunman’s intention was to kill as many Black people as possible.
To achieve that, he specifically targeted a ZIP code with one of the highest percentages of Black residents in New York state. All 10 who died that day were Black.
“The mere fact that someone can research, ‘Where will the greatest number of Black people be … on a Saturday morning,’ that’s not by chance,” said Franchelle Parker, a community organizer and executive director of Open Buffalo, a nonprofit focused on racial, economic and ecological justice. “That’s not a mistake. It’s a community that’s been deeply segregated for decades.”
The day of the shooting, Parker, who grew up in nearby Niagara Falls, was driving to Tops, where she planned to buy a donut and an unsweetened iced tea before heading into the Open Buffalo office, which is located a block away from Tops. The mother of two had intended to complete the mundane task of cleaning up her desk — “old coffee cups and stuff” — after a busy week.
She saw the news on Twitter and didn’t know if she should keep driving to Jefferson Avenue or turn around and go back home. She eventually picked the latter.
When she showed up the next day, there were thousands of people grieving in the streets. “The only way that I could explain my feeling, it was almost like watching an old war movie when a bomb had gone off and someone’s in, like, shell shock. That’s how it felt,” said Parker, vividly recounting the community’s collective trauma in a meeting room tucked inside of Open Buffalo’s second-story office on Jefferson Avenue.
Almost immediately following the May 14, 2022, massacre, which was the second-deadliest mass shooting in the United States last year, conversations locally and nationally turned to the harsh realities of the East Side and how long-standing factors that affect the daily life of residents — racism, poverty and inequity — made the community an ideal target for a white supremacist.
Now, more than a year after the tragedy, there is growing concern that not enough is being done fast enough to begin to dismantle those factors. And amid those conversations, there are mounting calls for the banking industry — whose historical policies and practices helped cement the racial segregation and disinvestment that ultimately shaped the East Side — to leverage its collective power and influence to band together in an effort to create systemic change.
The ideas about how banks should support the East Side and better embed themselves in the neighborhood vary by people and organizations. But the basic argument is the same: Banks, in their role as financiers and because of the industry’s history of lending discrimination, are obligated to bring forth economic prosperity in disinvested communities like the East Side.
I know banks are often looked upon sort of like a panacea, but I don’t particularly see it that way. I think others have a role to play in all of this.
Chiwuike Owunwanne, corporate responsibility officer at KeyBank
“Banks have been very good at providing charitable contributions to the Black community. They get an ‘A’ for that,” said The Rev. George Nicholas, an East Side pastor who is also CEO of the Buffalo Center for Health Equity, a four-year-old enterprise focused on racial, geographic and economic health disparities. “But doing the things that banks can do in terms of being a catalyst for revitalization and investment in this community, they have not done that.”
To be sure, banks’ ability to reverse the course of the community isn’t guaranteed — and there is no formula to determine how much accountability they should hold to fix deeply entrenched problems like racism. Several Buffalo-area bankers said that while the Tops shooting heightened the urgency to help the East Side, the industry itself cannot be the sole driver of change.
“There are a lot of institutions … that can certainly play a part in reversing the challenges that we see today,” said Chiwuike “Chi-Chi” Owunwanne, a corporate responsibility officer at KeyBank, the second-largest bank by deposits in Buffalo. “I know banks are often looked upon sort of like a panacea, but I don’t particularly see it that way. I think others have a role to play in all of this.”
A long history of segregation
How the East Side — and the Tops store on Jefferson Avenue — became the destination for a racially motivated mass murderer is a story about racism, segregation and disinvestment.
Even as it bears the nickname “the city of good neighbors,” Buffalo has long been one of the most racially segregated cities in the United States. Of the 114,965 residents who live on the East Side, 59% are Black, according to data from the 2021 U.S. Census American Community Survey. The percentage is even higher in the 14208 ZIP code, where the Tops store is located. In that ZIP code, among 11,029 total residents, nearly 76% are Black, the census data shows.
The city’s path toward racial segregation started in the early 20th century when a small number of job-seeking Black Americans migrated north to Buffalo, a former steel and auto manufacturing hub at the far northwestern end of New York state. Initially, they moved into the same neighborhoods as many of the city’s poorer immigrants and lived just east of what is today the city’s downtown district. As the number of Blacks arriving in Buffalo swelled in the 1940s, they were increasingly confronted with various housing challenges, including racist zoning laws and restrictive deed covenants that kept them from buying homes in more affluent white areas.
Black Buffalonians also faced housing discrimination in the form of redlining, the practice of restricting the flow of capital into minority communities. In 1933, as the Great Depression roiled the economy, a temporary federal agency known as the Home Owners’ Loan Corporation used government bonds to buy out and refinance mortgages of properties that were facing or already in foreclosure. The point was to try to stabilize the nation’s real estate market.
As part of its program, HOLC created maps of American cities, including Buffalo, that used a color coding scheme — green, blue, yellow and red — to convey the perceived riskiness of making loans in certain neighborhoods. Green was considered minimally risky; other areas that were largely populated by immigrant, Black or Latino residents were labeled red and thus determined to be “hazardous.”
“The goal was to free up mortgage capital by going to cities and giving banks a way to unload mortgages, so they could turn around and make more mortgage loans,” said Jason Richardson, senior director of research at the National Community Reinvestment Coalition, an association of more than 750 community-based organizations that advocates for fair lending. “It was kind of a radical concept and it has evolved over the decades into our modern mortgage finance system.”
The Federal Housing Administration, which was established as a permanent agency in 1934, used similar methods to map urban areas and labeled neighborhoods from “A” to “D,” with “A” considered to be the most financially stable and “D” considered the least. Neighborhoods that were largely Black, even relatively stable ones, were put in the “D” category.
The result was that banks, which wanted to be able to sell mortgage loans to the FHA, were largely dissuaded from making loans in “risky” areas. And Buffalo’s East Side, where the majority of Blacks were settling, was deemed risky. Unable to get loans, Blacks couldn’t buy homes, start businesses or build equity. At the same time, large industrial factories on the East Side were closing or moving away, limiting job opportunities and contributing to rising poverty levels.
“Today what we’re left with is the residue of this process where we’ve enshrined … a pattern of economic segregation that favors neighborhoods that had fewer Black people in them and generally ignores neighborhoods that had African Americans living in them,” Richardson said.
Case in point: Research by the National Community Reinvestment Coalition shows that three-quarters of neighborhoods that were once redlined are low- to moderate-income neighborhoods today, and two-thirds of them are majority minority communities.
Adding to the division between Blacks and whites in Buffalo was the construction of a highway called the Kensington Expressway. Built during the 1960s, the below-grade, limited-access highway proved to be a speedy way for suburban workers to get to their downtown jobs. But its construction cut off the already-segregated East Side even more from other parts of the city, displacing residents, devaluing houses and destroying neighborhoods and small businesses.
As a result of those factors and more, many Black residents have become “trapped” on the East Side, according to Dr. Henry Louis Taylor Jr., a professor of urban and regional planning at the University at Buffalo. In 1987, Taylor founded the UB Center for Urban Studies, a research, neighborhood planning and community development institute that works on eliminating inequality in cities and metropolitan regions. In September 2021, eight months before the Tops shooting, the Center for Urban Studies published a report that compared the state of Black Buffalo in 1990 to present-day conditions. The conclusion: Nothing had changed for Blacks over 31 years.
As of 2019, the Black unemployment rate was 11%, the average household income was $42,000 and about 35% of Blacks had incomes that fell below the poverty line, the report said. It also noted that just 32% of Blacks own their homes and that most Blacks in the area live on the East Side.
“Those figures remain virtually unchanged while the actual, physical conditions that existed inside of the community worsened,” Taylor told American Banker in an interview in his sun-filled office at the center, located on the University at Buffalo’s city campus. “When we looked upstream to see what was causing it, it was clear: It was systemic, structural racism.”
Banks’ moral obligations
As the East Side struggled over the decades with rampant poverty, dilapidated housing, vacant lots and disintegrating infrastructure, banks kept a physical presence in the community, albeit a shrinking one. In mid-2000, there were at least 20 bank branches scattered across the East Side, but by mid-2022, the number had fallen to around 14, according to the Federal Deposit Insurance Corp.’s deposit market share data. The 14 include four new branches that have opened since early 2019 — Northwest Bank, KeyBank, Evans Bank and BankOnBuffalo.
The first two branches, operated by Northwest in Columbus, Ohio, and KeyBank, the banking subsidiary of KeyCorp in Cleveland, were requirements of community benefits agreements negotiated between each bank and the National Community Reinvestment Coalition. In both cases, Northwest and KeyBank agreed to open an office in an underserved community.
Evans Bank opened its first East Side branch in the fall of 2021. The office is located in the basement of an $84 million affordable senior housing building that was financed by Evans, a $2.1 billion-asset community bank headquartered south of Buffalo in Angola, New York.
Banks have been very good at providing charitable contributions to the Black community. They get an ‘A’ for that. But doing the things that banks can do in terms of being a catalyst for revitalization and investment in this community, they have not done that.
The Rev. George Nicholas, an East Side pastor who is also CEO of the Buffalo Center for Health Equity
On the community and economic development front, banks have had varying levels of participation. Buffalo-based M&T Bank, which holds a whopping 64% of all deposits in the Buffalo market and is one of the largest private employers in the region, has made consistent investments in the East Side by supporting Westminster Community Charter School, a kindergarten through eighth-grade school, and the Buffalo Promise Neighborhood, a nonprofit organization focused on improving access to education in the city’s 14215 ZIP code.
Currently, Buffalo Promise Neighborhood operates four schools. In addition to Westminster, it runs Highgate Heights Elementary, also K-8, as well as two academies that serve children ages six weeks through pre-kindergarten. Twelve M&T employees are dedicated to the program, according to the Buffalo Promise Neighborhood website. The bank has invested $31.5 million into the program since its 2010 launch, a spokesperson said.
Other banks are making contributions in other ways. In addition to the Jefferson Avenue branch and as part of its community benefits plan, Northwest Bank, a $14.2 billion-asset bank, supports a financial education center through a partnership with Belmont Housing Resources of Western New York. Meanwhile, the $198 billion-asset KeyBank gave $30 million for bridge and construction financing for Northland Workforce Training Center, a $100 million redevelopment project at a former manufacturing complex on the East Side that was partially funded by the state.
BankOnBuffalo’s East Side branch is located inside the center, which offers KeyBank training in advanced manufacturing and clean energy technology careers. A subsidiary of $5.6 billion-asset CNB Financial in Clearfield, Pennsylvania, BankOnBuffalo’s office opened a month after the shooting. The timing was coincidental, but important, said Michael Noah, president of BankOnBuffalo.
“I think it just cemented the point that this is a place we need to be, to be able to be part of these communities and this community specifically, and be able to build this community up,” Noah said.
In terms of public-private collaboration, some banks have been involved in a deeper way. In 2019, New York state, which had already been pouring $1 billion into Buffalo to help revitalize the economy, announced a $65 million economic development fund for the East Side. The initiative is focused on stabilizing neighborhoods, increasing homeownership, redeveloping commercial corridors including Jefferson Avenue, improving historical assets, expanding workforce training and development and supporting small businesses and entrepreneurship.
In conjunction with the funding, a public-private partnership called East Side Avenues was created to provide capital and organizational support to the projects happening along four East Side commercial corridors. Six banks — Charlotte, North Carolina-based Bank of America, the second-largest bank in the nation with $2.5 trillion of assets; M&T, which has $203 billion of assets; KeyBank; Warsaw, New York-based Five Star Bank, which has about $6 billion of assets; Northwest and Evans — are among the 14 private and philanthropic organizations that pledged a combined $8.4 million to pay for five years’ worth of operational support, governance and finance, fundraising and technical assistance to support the nonprofits doing the work.
Laura Quebral, director of the University at Buffalo Regional Institute, which is managing East Side Avenues, said the banks were the first corporations to step up to the request for help, and since then have provided loans and other products and education to keep the program moving.
Their participation “is a signal to the community that banks cared and were invested and were willing to collaborate around something,” Quebral said. “Being at the table was so meaningful.”
Richard Hamister is Northwest’s New York regional president and former co-chair of East Side Avenues. Hamister, who is based in Buffalo, said banks are a “community asset” that have a responsibility to lift up all communities, including those where conditions have arisen that allow it to be a target of racism like the East Side.
“We operate under federal charters, so we have an obligation to the community to not only provide products and services they need but also support when you go through a tragedy like that,” Hamister said. “We also have a moral obligation to try to help when things are broken … and to do what we can. We can’t fix everything, but we’ve got to fix our piece and try to help where we can.”
In the wake of a tragedy
After the massacre, there was a flurry of activity within banks and other organizations, local and out-of-town, to respond to the immediate needs of East Side residents. With the community’s only supermarket closed indefinitely, much of the response centered around food collection and distribution. Three of M&T’s five East Side branches, including the Jefferson Avenue branch across the street from Tops, became food distribution sites for weeks after the shooting. On two consecutive Fridays, Northwest provided around 200 free lunches to the community, using a neighborhood caterer who is also the bank’s customer. And BankOnBuffalo collected employee donations that amounted to more than 20 boxes of toiletries and other items that were distributed to a nonprofit.
At the same time, M&T, KeyBank and other banks began financial donations to organizations that could support the immediate needs of the community. KeyBank provided a van that delivered food and took people to nearby grocery stores. Providence, Rhode Island-based Citizens Financial Group, whose ATM inside Tops was inaccessible during the store’s temporary closure, installed a fee-free ATM near a community center located about a half-mile north of Tops, and later put a permanent ATM inside the center that remains there today. And M&T rolled out a short-term loan program to provide capital to East Side small-business owners.
One of the funds that benefited from banks’ support was the Buffalo Together Community Response Fund, which has raised $6.2 million to address the long-term needs of the East Side.
Bank of America and Evans Bank each donated $100,000 to the fund, whose list of major sponsors includes four other banks — JPMorgan Chase, Citigroup, M&T and KeyBank. Thomas Beauford Jr., a former banker who is co-chair of the response fund, said banks, by and large, directed their resources into organizations where the dollars would have an immediate impact.
“Banks said, ‘Hey, you know … it doesn’t make sense for us to try to build something right now. … We will fund you in the work you’re doing,'” said Beauford, who has been president and CEO of the Buffalo Urban League since the fall of 2020. “I would say banks showed up in a big way.”
Fourteen months later, banks say they are committed to playing a positive role on the East Side. For the second year, KeyBank is sponsoring a farmers’ market on the East Side, an attempt to help fill the food desert in the community. Last fall, BankOnBuffalo launched a mobile “bank on wheels” truck that’s stationed on the East Side every Wednesday. The 34-foot-long truck, which is staffed by two people and includes an ATM and a printer to make debit cards, was in the works before the shooting, and will eventually make four stops per week around the Buffalo area.
Evans has partnered with the city of Buffalo to construct seven market-rate single family homes on vacant lots on the East Side. The relationship with the city is an example of how banks can pair up with other entities to create something meaningful and lasting, more than they might be able to do on their own, said Evans President and CEO David Nasca.
The bank has “picked areas” where it can use its resources to make a difference, Nasca said.
“I don’t think the root causes can be ameliorated” by banks alone, he said. “We can’t just grant money. It has to be within our construct of a financial institution that invests and supports the public-private partnership. … All the oars [need to be] pulling together or this doesn’t work.”
‘Little or no engagement with minorities’
All of these efforts are, of course, welcomed by the community, but there is still criticism that banks haven’t done enough to make up for their past contributions to segregating the city. And perhaps more importantly, some of that criticism centers on banks failing to do their most basic function in society — provide credit.
In 2021, the New York State Department of Financial Services issued a report about redlining in Buffalo. The regulator looked at banks and nonbank lenders and found that loans made to minorities in the Buffalo metro area made up 9.74% of total loans in Buffalo. Overall, Black residents comprise about 33% of Buffalo’s total population of more than 276,000, census data shows.
The department said its investigation showed the lower percentage was not due to “excessive denials of loan applications based on race or ethnicity,” but rather that “these companies had little or no engagement with minorities and generally made scant effort to do so.”
“The unsurprising result of this has been that few minority customers or individuals seeking homes in majority-minority neighborhoods have made loan applications … in the first instance.”
Furthermore, accusations of redlining persist today, even though the practice of discriminating in housing based on race was outlawed by the Fair Housing Act of 1968.
In 2014, Evans was accused of redlining by the New York State Attorney General, which said the community bank was specifically avoiding making mortgage loans on the East Side. The bank, which at the time had $874 million of assets, agreed to pay $825,000 to settle the case, but Nasca maintains that the charges were unfounded. He points to the fact that the bank never had a fair lending or fair housing violation, no specific incidents were ever claimed and that the bank’s Community Reinvestment Act exam never found evidence of discriminatory or illegal credit practices.
The bank has a greater presence on the East Side today, but that’s because it has grown in size, not because it is trying to make up for previous accusations of redlining, he said.
“Ten years ago, our involvement [on the East Side] certainly wasn’t what you’re seeing today,” Nasca said. “We were looking to participate more, but we were participating within our means and our reach. As we have grown, we have built more resources to be able to do more.”
Shortly after accusations were made against Evans, Five Star Bank, the banking arm of Financial Institutions in Warsaw, New York, was also accused of redlining by the state Attorney General. Five Star, which has been growing its presence in the Buffalo market for several years, wound up settling the charges for $900,000 and agreeing to open two branches in the city of Rochester.
KeyBank is currently being accused of redlining by the National Community Reinvestment Coalition. In a 2022 report, the group said that KeyBank is engaging in systemic redlining by making very few home purchase loans in certain neighborhoods where the majority of residents are Black. Buffalo is one of several cities where the bank’s mortgage lending “effectively wall[ed] out Black neighborhoods,” especially parts of the East Side, the report said.
KeyBank denied the allegations. In March, the coalition asked regulators to investigate the bank’s mortgage lending practices.
Beyond providing more credit, some community members believe that banks should be playing a larger role in addressing other needs on the East Side. And the list of needs runs the gamut from more grocery stores to safe, affordable housing to infrastructure improvements such as street and sidewalk repairs.
Alexander Wright is founder of the African Heritage Food Co-op, an initiative launched in 2016 to address the dearth of grocery store options on the East Side, where he grew up. Wright said that while banks’ philanthropic efforts are important, banks in general “need to be in a place of remediation” to fix underlying issues that the industry, as a whole, helped create. (After publication of this story, Wright left his job as CEO of the African Heritage Food Co-Op.)
Aside from charitable donations, banks should be finding more ways to work directly with East Side business owners and entrepreneurs, helping them with capital-building support along the way, Wright said. One place to start would be technical assistance by way of bank volunteers.
“Banks are always looking to volunteer. ‘Hey, want to come out and paint a fence? Want to come out and do a garden?'” Wright said. “No. Come out here and help Keshia with bookkeeping. Come out here and do QuickBooks classes for folks. Bring out tax experts. Because these are things that befuddle a lot of small businesses. Who is your marketing person? Bring that person out here. Because those are the things that are going to build the business to self-sufficiency.
“Anything short of the capacity-building … that will allow folks to rise to the occasion and be self-sufficient I think is almost a waste,” Wright added. “We don’t need them to lead the plan. What we need them to do is be in the community and [be] hearing the plan and supporting it.”
Parker, of Open Buffalo, has similar thoughts about the role that banks should play. One day, soon after the massacre, an ATM appeared down the street from Tops, next to the library that sits across the street from Parker’s office. Soon after the ATM was installed, Parker began fielding questions from area residents who were skeptical of the machine and wanted to know if it was legitimate. But Parker didn’t have any information to share with them. “There was no outreach. There was no community engagement. So I’m like, ‘Let me investigate,'” she said. “I think that’s a symptom of how investment is done in Black communities, even though it may be well-intentioned.”
As it turns out, the temporary ATM belonged to JPMorgan Chase. The megabank has had a commercial banking presence in Buffalo for years, but it didn’t operate a retail branch in the region until last year. Today it has four branches in operation and plans to open another two by the end of the year, a spokesperson said.
After the Tops shooting, the governor’s office reached out to Chase asking if the bank could help in some way, the spokesperson said in response to the skepticism. The spokesperson said that while the Chase retail brand is new to the Buffalo region, the company has been active in the market for decades by way of commercial banking, private banking, credit card lending, home lending and other businesses.
In addition to the ATM, the bank provided funding to local organizations including FeedMore Western New York, which distributes food throughout the region.
“We are committed to continuing our support for Buffalo and helping the community increase access to opportunities that build wealth and economic empowerment,” the spokesperson said in an email.
In the year since the massacre, there has been some progress by banks in terms of their interest in listening to the East Side community and learning about its needs, said Nicholas. But he hasn’t felt an air of urgency from the banking community to tackle the issues right now.
“I do experience banks being a little more open to figuring out what their role is, but it’s slow. It’s slow,” said Nicholas. The senior pastor of the Lincoln Memorial United Methodist Church, located about a mile north from Tops, Nicholas is part of a 13-member local advisory committee for the New York arm of Local Initiatives Support Coalition, or LISC. The group is focused on mobilizing resources, including banks, to address affordable housing in Western New York, specifically in the inner city, as well as training minority developers and connecting them to potential investors, Nicholas said.
Of the 13 members, seven are from banks — one each from M&T, Bank of America, BankOnBuffalo, Evans and KeyBank, and two members from Citizens Financial Group. One of the priorities of LISC NY is health equity, and the fact that banks are becoming more engaged in looking at health disparities is promising, Nicholas said. Still, they have more work to do, he said.
“I need them to think more on how to strengthen and build the economy on the East Side and provide leadership around that, not only to provide charitable things, but using sound business and banking and community development principles to say, ‘OK, if we’re going to invest in this community, these are the types of things that need to happen in this community,’ and then encourage their partners and other people they work with … to come fully in on the East Side.”
Some bankers agree with the community activists.
“Putting a branch in is great. Having a bank on wheels is great,” said Noah of BankOnBuffalo. “But if you’re not embedded in the community, listening to the community and trying to improve it, you’re not creating that wealth and creating a better lifestyle for everyone.”
What could make a substantial difference in terms of banks’ impact on the community is a combination of collaboration and leadership, said Taylor. He supports the idea of banks leading the charge on the creation of a comprehensive redevelopment and reinvestment plan for the East Side, and then investing accordingly and collaboratively through their charitable foundations.
“All of them have these foundations,” Taylor said. “You can either spend that money in a strategic and intentional way designed to develop a community for the existing population, or you can spend that money alone in piecemeal, siloed, sectorial fashion that will look good on an annual report, but won’t generate transformational and generational changes inside a community.”
Banks might be incentivized to work together because it could mean two things for them, according to Taylor: First, they’d have an opportunity to spend money in a way that would have maximum impact on the East Side, and second, if done right, the city and the banks could become a model of the way to create high levels of diversity, equity and inclusion in an urban area.
“If you prove how to do that, all that does is open up other markets of consumption all over the country because people want to figure out how to do that same thing,” Taylor said.
Some of that is already happening, at least on a bank-by-bank case, said KeyBank’s Owunwanne. Through the KeyBank Foundation, the company is able to leverage different relationships that connect nonprofits to other entities and corporations that can provide help.
“I see this as an opportunity for us to make not just incremental changes, but monumental changes … as part of a larger group,” Owunwanne said “Again, I say that not to absolve the bank of any responsibility, but just as a larger group.”
Downstairs from Parker’s office, Golden Cup Coffee, a roastery and cafe run by a husband and wife team, and some other Jefferson Avenue businesses are trying to build up a business association for existing and potential Jefferson-area businesses. Parker imagined what the group could accomplish if one of the banks could provide someone on a part-time basis to facilitate conversations, provide administrative support and coordinate marketing efforts.
“In the grand scheme of things, when we’re talking about a multimillion dollar [bank], a part-time employee specifically dedicated to relationship-building and building out coalitions, it sounds like a small thing,” Parker said. “But that’s transformational.”
Think mortgage math is complicated? Many in the nation are focused on air conditioning. Why is it measured in tons? It harkens back to the days of using ice, and a “ton” measures how much heat, removed by the system, would be needed to melt 2,000 pounds, or one ton, of ice in a 24-hour period. The result is then expressed in BTUs per hour. It takes 288,000 BTUs to melt a ton of ice in 24 hours, or 12,000 BTUs per hour. 1 BTU/hr. = 0.00029307107 kWh. And the average residential electricity rate in the U.S. is about 23 cents per kilowatt-hour (kWh). When you see your utility bill in the mail, don’t think about me. Maybe the math in a company acquisition is more straightforward. I mention this since ICE and Black Knight have agreed to sell Optimal Blue to Constellation Software in an effort to get regulatory approval for their merger. Constellation Software is already buying Empower and will purchase OB for $700 million paid for in $200 MM cash and a $500MM promissory note. Meanwhile, plenty of branch-level acquisitions are occurring that don’t make the headlines and will continue. (Today’s podcast can be found here and this week’s is sponsored by Richey May, a recognized leader in providing specialized advisory, audit, tax, technology and other services to the mortgage industry for almost four decades. To experience how Richey May can help you transform your mortgage business, visit richeymay.com. Hear an interview with Seth Sprague and James Brody on the wave of loan-repurchase requests from Fannie Mae and Freddie Mac that represents another threat to lenders’ balance sheets.)
Lender and Broker Software, Services, and Products
With first mortgage rates rising and inventory dropping to record lows, many lenders are looking to turn up the volume on their HELOC business. Many of these lenders have begun aggressively advertising these solutions, many even announcing “HELOC Promos” on billboards, marques, and in digital advertising. In other words, the HELOC market is starting to heat up, and your competitors are beginning to make a big grab for this business. Don’t let them get to your borrowers before you do! With Symmetry, you can offer your borrowers one of the best, most competitively priced HELOC options on the market. Let Symmetry help you present this solution to your borrowers before they go somewhere else. Contact your Area Manager today!
Verus Mortgage Capital recently launched a Closed End Second Lien Mortgage program to help lenders capitalize on the more than $18 trillion of tappable home equity in the U.S. Verus’ new program is the perfect solution for borrowers who don’t want to refinance their home but want to take advantage of the equity they’ve amassed. In this competitive environment, non-QM can be a new revenue channel for originators, one that enables you to meet the needs of borrowers who need more flexibility, people with nontraditional income, those who are investing in properties, foreign nationals or borrowers seeking an interest-only payment option. Interested in serving more applicants with non-QM? Meet with Verus at the Western Secondary Market Conference Aug. 21-23 to learn more. Contact Jeff Schaefer, EVP – National Sales at 202-534-1821.
The Work Number® can help streamline processes and provide greater value to income and employment verification processes. Wider data coverage can help streamline lending processes, and the standard Mortgage VOE and Mortgage VOI solutions from The Work Number are now available with the option for a receipt. The Work Number is the largest commercial repository for consolidated income and employment data with access to 618 million INSTANTLY returned records, updated each pay cycle, provided directly by employers and payroll providers. Lenders and brokers have a choice: access The Work Number directly from Equifax OR through our pre-built integrations with over 60 Point of Sale (POS) and Loan Origination Systems (LOS). Gathering all of the necessary information about potential borrowers through your LOS or POS is quick and efficient and can eliminate the need to swivel back and forth between systems, juggling multiple logins.
BSI Financial Services extends Sagent partnership for seven years! Sagent is thrilled to announce the recent expansion of its partnership with BSI Financial Services (BSI) for another 7 years. As BSI looks to grow its servicing operation to 1M loans, Sagent will continue to power BSI with its configurable, cloud-based platforms including LoanServ, TEMPO, Datascape+, and LoanBoard. BSI’s great reputation and growth is because they’ve mastered things like automating complex tasks, solving customer issues fast, and adapting in real-time to regulator and investor needs. Sagent takes this crucial role in helping BSI very seriously, and they are excited to continue building with the BSI team! Read Sagent/BSI partnership details here.
“According to ATTOM, foreclosure filings were up 7% in May and 14% from a year ago. Managing an REO portfolio requires a strategic and systematic approach to ensure effective management and maximize returns. The team at Consolidated Analytics delivers one of the most comprehensive asset management solutions to streamline your REO process and satisfy the most stringent investor and client requirements combining a seasoned team, advanced tech and management platforms, and access to a nationwide network of REO professionals. Our team delivers from post-foreclosure through marketing and final disposition with proven strategies to streamline the asset management process, meet SLAs, accelerate turn times, and maximize returns. Contact [email protected] to help make more informed decisions and achieve portfolio management goals.”
There are so many things we’d rather put off in life: stumbling to the gym at 5 a.m., eating our broccoli, preparing tax returns. But avoiding pain in the present doesn’t set us up well for the future. It’s the same for lenders looking to make a strong rebound when today’s cold originations market starts heating up again. Black Knight held discovery sessions with dozens of banks, credit unions and independent mortgage bankers who all agreed: the time to invest in your mortgage technology is now. Click here to read why competitive lenders will likely be the ones who seize this market moment and prepare themselves now to be ready for the future, even though it might be uncomfortable in the short term. Then contact Black Knight when you’re ready to see how you can be prepared for whatever the market throws at you next.
Podcast Alert! Tune into HousingWire’s Housing News podcast featuring Wolters Kluwer’s VP of Banking Compliance Solutions Simon Moir and HousingWire’s Clayton Collins. With more than 20 years of experience in the banking and financial services industry, Simon shares valuable insights on the relationship between AI and regulatory powers, and the changing dynamics in the fintech world and investor strategies. Don’t miss this key conversation exploring the future of technology, regulations, and finance. Tune in now for valuable industry perspectives.
When Premium Mortgage Corporation set out to replace its Point-of-Sale system, Premium chose LiteSpeed by LenderLogix. Amazing borrower experience. Immediate ROI. Seamless integration into Encompass® by ICE Mortgage Technology™. The best part, the results speak for themselves: Check out its experience here.
Capital Markets
The secondary markets are incredibly complicated, especially what happens “behind the scenes.”
Don’t forget that MISMO, the real estate finance industry’s standards organization, announced that the Private Label Residential Mortgage-Backed Securities (PL RMBS) Specification has reached “Candidate Recommendation” status, which means that it has been thoroughly reviewed by a wide range of organizations and industry participants and is available for use across the industry and should lead to a more efficient process for private label residential mortgage-backed securities. The MISMO PL RMBS Specification provides a standard and defined set of data that can be used by the rating agencies to help determine the ratings applied to securitizations. The tools are designed for parties that support the submission of the current ASF and supplemental mapping specifications to the rating agencies. They will provide lenders, rating agencies, third-party reviewers, and technology solution providers with the necessary information to update their systems with the revised data from the MISMO PL RMBS or flat file layout.
And while you’re not forgetting, last month Ginnie Mae announced, in All Participants Memorandum (APM 23-09), that it is extending the use of electronic signatures in conjunction with Remote Online Notarization (RON) to include power of attorney (POA) mortgage documents. All Ginnie Mae Issuers can now use RON to execute POA documents when necessary to obtain Single-Family government insured or guaranteed loans on “paper” mortgages.
By extending digital capabilities to include POA mortgage documents, Ginnie Mae is modernizing its Mortgage-Backed Securities (MBS) program with flexibility that benefits our Issuers and borrowers. Issuers must continue to follow all insuring or guarantying agency guidance regarding POA eligibility and requirements, including the circumstances under which a borrower is permitted to use an attorney-in-fact to obtain Single-Family government insured or guaranteed loans. By using RON for POA, Issuers are subject to the electronic signature and notarization requirements outlined in chapter 24 of the MBS Guide. Please refer to APM 23-09 for more information regarding the requirements.
In bond market activity, which changes every day, bets are growing that central banks are winning their battle against inflation without driving economies into deep recessions. Goldman Sachs lowered its probability of a U.S. recession over the next 12 months to 20 percent from 25 percent yesterday, and ECB Governing Council member Knot suggested that additional rate hikes after next week are uncertain. Investors also received a weaker than expected Retail Sales report for June (actual 0.2 percent, expected 0.5 percent), with gasoline a big driver of the decline. Figures are not adjusted for inflation, and on a year-over-year basis, sales rose 1.5 percent. We’ve also received better-than-expected Q2 earnings from big banks such as JP Morgan, Citigroup, and Wells Fargo. Manufacturing took a step back in June, though Treasuries and MBS prices showed no significant response to that below-consensus June Industrial Production report (actual -0.5 percent, expected flat).
“Risk-on” sentiment has taken hold over the last couple of weeks, meaning investors are favoring stocks following softer-than-anticipated consumer and producer price data in June that has optimism abounding over inflation continuing to soften and the economy avoiding a recession. CPI dropped precipitously to a 3.0 percent annualized rate in June from 4.1 percent in May. Producer price increases are also slowing with core PPI up 2.6 percent from one year ago. Core CPI remains at a still robust annualized pace of 4.8 percent, albeit down from 5.3 percent in the previous reading. Yes, inflation is still above the target of 2 percent, but bets are that the 25-basis point rate hike on July 26 that lifts interest rates to a 22-year high will be the last as the Fed reaches a terminal target rate of 5.50 percent. Then begins the waiting game, as the tight U.S. labor market is key for long-run inflation considerations.
Today’s economic calendar kicked off with mortgage applications from MBA. Including an adjustment for Independence Day, Mortgage applications increased 1.1 percent from one week earlier, which was not entirely unexpected following last week’s Treasury rally after both CPI and PPI came in softer than expected. During the reporting period, the 10-year yield fell more than 20 basis points, with the 30-year mortgage rate tumbling even more (25 basis points, to 6.89 percent, according to Mortgage News Daily).
We’ve also received housing starts (-8.0 percent at 1.434 million) and building permits for June (-3.7 percent to 1.44 million). Expectations were for 1.455 million starts and 1.525 million permits versus 1.631 million and 1.496 million previously. Later today brings a Treasury auction of $12 billion reopened 20-year bonds. We begin the day with Agency MBS prices about .125-.250 better than Tuesday evening, the 10-year yielding 3.73 after closing yesterday at 3.79 percent, and the 2-year at 4.70.
Employment
While most people are struggling in this market, there are still some lenders growing and adding to their leadership team! A national IMB located in the Dallas/Fort Worth Metroplex is looking to add a Chief Financial Officer, a Head of Capital Markets, and a Chief Compliance Officer with Ginnie Mae/Agency securitization experience to its team. Must have direct experience working in a securitization heavy environment. NonQM is a plus. If you are interested, please email Chrisman LLC’s Anjelica Nixt to forward your confidential note/resume.
“Job boards and careers pages can produce applicants, but are they quality candidates? Our team at Pezian Search Group are Talent Experts within the Mortgage, Banking, Credit Union, Title & Escrow and Financial Services spaces from the C-Suite to the Call Center, Front Office, Bank Office, Operations, Sales, Marketing, and everything in between. That means that we understand the industry and take the time to properly discuss important items with candidates such as backgrounds, skill sets, experience, growth objects and more. This ensures that there is a long-term fit and that we are providing our nationwide network of Clients quality candidates every time. We’ve set ourselves apart from our competition, career pages and the traditional job boards, all while offering a full satisfaction guarantee. To learn more, email our team, follow us on LinkedIn, and review the opportunities that we currently have available throughout the country.”
“Micah Parsons, linebacker for the Dallas Cowboys and the 2021 NFL Defensive Rookie of the Year, recently signed a two-year partnership with SWBC to join us as a spokesperson and brand ambassador. He is a natural fit for SWBC, as his commitment to excellence and drive to make a difference within the community align with our goal of inspiring hope where we live and lend. Micah is an exceptionally talented individual, and we’re excited to work with him to help hopeful buyers tackle their homeownership goals. SWBC Mortgage has big goals and is looking for those who can help us reach them. We combine innovation with personal interaction, empowering our loan officers to serve the communities where they live and lend. Contact us to learn more about how our unique setup helps maintain LO compensation and pricing. Contact James Clark, Director of Strategic Growth or visit us here.
Download our mobile app to get alerts for Rob Chrisman’s Commentary.
Share via Social Media:
All social media shares will include the image and link to this page.