title companies

Apache is functioning normally

“As Montanans face more economic challenges due to inflation, it can weigh heavily on our most vulnerable populations, including senior citizens,” Cheryl Cohen, division administrator for the housing division at the Montana Department of Commerce and executive director of the Montana Board of Housing, wrote in a recent op-ed.

“Housing costs are soaring across the nation, thanks in part due to a lack of supply keeping up with demand. While many Montana seniors own their own homes and have little or no remaining mortgage debt, they struggle to make ends meet on fixed incomes.”

This is where the RAM program can come into play. Cohen describes the program as overseeing “low-interest rate loans [which] allow senior homeowners to benefit from an additional income source from their home equity while offering the financial flexibility they need to continue living at home.”

Differences with HECM

HousingWire’s Reverse Mortgage Daily (RMD) submitted questions to Montana’s Department of Commerce about the RAM program and received responses from a spokesperson.

In terms of how the RAM program aims to solve issues that a Home Equity Conversion Mortgage (HECM) might not address, the department said that many of the goals are the same but that the RAM program may come with more flexibility on qualifications.

“The Montana Board of Housing’s RAM program provides interest rates that are competitive or lower with requirements that are simple and easy to understand,” the spokesperson said. “Board staff and participating counselors work closely with the borrowers helping to set up the reverse mortgage with closing costs often several hundreds to thousands of dollars less than similar programs.”

These closing costs are limited to the “actual charges from the appraisals and title companies with no administrative costs added by the Board,” and the administration of the reverse mortgage itself is handled by state housing staff “who can easily be personally contacted for any questions or assistance. The Montana Board of Housing is administratively attached to the Montana Department of Commerce,” the spokesperson said.

Additionally, Cohen explained in her op-ed the different types of proceeds available for RAM borrowers.

“The RAM program helps senior Montana homeowners with monthly payments back to them to manage everyday expenses while living in their homes,” she said. “Eligible homeowners can borrow a minimum of $15,000 up to a maximum of $150,000. The maximum loan amount is determined based on 80 percent of the FHA-determined value of the home.

“Additionally, lump sum advances are available at loan closing, and up to $10,000 is available for payment of prior mortgages, liens and pledges or for accessibility improvements and other home repairs.”

Longer retirements

The loan values for the HECM program are generally larger depending on the age of the borrower and the value of the home, with the HECM limit in 2024 topping $1.1 million. The minimum qualifying age for a HECM is 62 years, while the minimum for the RAM program is 68. There’s a reason for this, the spokesperson said.

“With Montana’s elderly population growing and living longer, we find that even with an age limit of 68, many of our borrowers outlive the 10 years of payments allocated,” the spokesperson explained. “Providing loans to a younger population may add to financial issues as more participants outlive those payments.”

The program’s availability is also subject to the financial disbursements the state Legislature gives to the department itself. The origination process also has similarities to the HECM program, with some state-specific requirements.

“Applicants must go through trained RAM counselors from the non-profit sector before qualifying for our financing,” the spokesperson stated. “Once they’ve completed the session, housing staff work with the participant to determine needs and financing availability. Staff assist in obtaining an appraisal and in closing the loan and setting up payments. The Montana Board of Housing is the only entity to provide this service.”

Renewed communication efforts

As for why the state is interested in spreading more awareness about the RAM program now, the spokesperson cited the economic circumstances faced by the state’s seniors as a key reason.

“The board hopes to increase knowledge of this program for the elderly in Montana and offer this option to help with costs that surpass what can be paid by social security or other pension receipts,” they said. “Since the RAM proceeds don’t need to be paid back until the home is vacated, additional funds become available without incurring further debt. We hope those monthly payments provide peace of mind and assist in our RAM participants’ quality of life.”

That being said, the reputational issues faced by the wider reverse mortgage industry have also been faced by the RAM program, which may have depressed consumer demand, according to both Cohen and the department’s spokesperson.

“Reverse Annuity Mortgages scare some seniors because of scams that have taken place by some providers of such financing,” the spokesperson said. “For this reason, we require counseling and have staff available to speak directly with participants and their families about any issues they may have. Payments we can provide often cover costs of medications or shortfalls concerning income to help pay monthly expenses for food or utilities.”

The spokesperson also mentioned a borrower’s success story granted by the program.

“One borrower mentioned to staff that she was having to sell her furniture a piece at a time to help pay for her medication but was able to stop when she started receiving the RAM monthly payments,” they said.

Source: housingwire.com

Apache is functioning normally

The Federal Housing Administration is tightening its data breach reporting requirements for mortgage lenders.

Effective immediately, lenders must report any cybersecurity attacks within 12 hours of detection to the Department of Housing and Urban Development, FHA wrote May 23 in a mortgagee letter.

Cybersecurity incidents include those that actually or potentially jeopardize “the confidentiality, integrity, or availability of information,” the FHA wrote. Making all events – big or small – fall into that purview. 

Lenders must report the date and cause of a cyber incident and its impact on personally identifiable information.

Once notified of an incident, HUD will contact the impacted institution “to determine the appropriate mitigation steps based on the nature of the incident.”

These requirements are part of the Department of Housing and Urban Development’s commitment to security and integrity of its systems and technology supporting FHA operations, the housing agency said.

“HUD issued this mortgagee letter to reinforce with program participants the importance of quickly reporting to HUD, addressing, and tracking cyber-security incidents in light of the nationwide increase in incidents in recent years,” a HUD spokesperson wrote in an email Thursday.

The announcement comes during a time of increased data breach activity.

In recent months, numerous megalenders have had their systems hit. In some cases, the attacks have been carried out by way of third-party vendors.

Loandepot, Mr. Cooper, Academy Mortgage and Planet Home Lending are among mortgage shops impacted by such incidents. Title companies have also been hit, including First American and Fidelity National Financial. 

All in all, millions of customers have had their personal identifiable information stolen and some litigation has sprouted because of it. 

Most recently, Planet Home Lending moved to settle a consolidated class action pegged against it for allegedly failing to protect the PII of customers during a hack in late 2023.

On May 13, a Connecticut federal judge issued a preliminary order approving a $2.42 million settlement between the plaintiffs and PHL. Over 200,000 Planet Home Lending customers had their data and PII leaked to the web.

Fannie Mae and Freddie Mac also have breach reporting requirements, though they are far less stringent for now. Fannie requires lenders to report within 72 hours if a potential hack has taken place, while Freddie requires lenders to report within 48 hours of detection.

Source: nationalmortgagenews.com

Apache is functioning normally

The standard narrative of buying a house involves a real estate agent. The Realtor acts as your tour guide, guiding you not only through available homes, but also through the complicated process of becoming a homeowner.

However, some independent sellers prefer to sell their home without a real estate agent’s services. As a prospective buyer, you would interact with the homeowner instead of a Realtor.

This process, known as a sale by owner or FSBO sale, offers potential buyers the opportunity to bypass some traditional real estate transactions, which may save money on agent’s commission fees. FSBO sellers handle every aspect of the sale, including setting the listing price, marketing the house for sale, and negotiating the purchase price.

FSBO sales differ from a typical sale, as they require the home buyer to assume tasks that a real estate agent would usually handle. This includes finding FSBO listings, validating property details, and negotiating the sales price with the FSBO seller directly.

Key Takeaways

  • A For Sale By Owner (FSBO) transaction allows buyers to negotiate directly with sellers, potentially bypassing real estate agent commissions but requiring extra due diligence.
  • Buyers should secure mortgage preapproval, verify property details through CLUE reports and title checks, and consider hiring a real estate attorney or title company to manage legalities.
  • Closing a FSBO sale involves setting up an escrow account, preparing extensive paperwork, and understanding post-closing steps like utility setup and managing property taxes and insurance.

An Overview of the FSBO Process

A FSBO sale, where an owner sells their house without a real estate agent or a listing agent, differs from a typical sale. Understanding the intricacies of these real estate transactions can be vital to a smooth closing. FSBO sellers handle everything from setting the listing price, marketing, negotiating, and closing, offering more room for direct communication and price negotiation.

However, an FSBO transaction requires the buyer to take on tasks typically handled by a real estate agent. Unless you are working with a buyer’s agent, closing can be complex. You may be on your own for a home inspection. Getting an appraisal and negotiating a selling price will be up to you. Completing the title search and other tasks usually falls to the seller’s agent.

Prepare for the Purchase

Buying a home is exciting, but it’s also a venture that requires substantial financial planning and understanding. Preparing for the financial aspect of your purchase can increase your chances of a successful transaction and make the overall home buying experience less stressful.

Determining how much house you can afford is the first step. Getting pre-approved for a mortgage is essential. You’ll also need funds for a down payment and closing costs. Buying a FSBO home is similar to purchasing through a real estate agency.

Assess Your Credit Score

Your credit score is a key player in this process. It has a significant impact on your ability to secure a home loan, dictating your interest rates and loan terms. Before you start shopping for an FSBO house, check your credit score and, if necessary, take steps to improve it. This may involve paying down debts or correcting any errors on your credit report.

Secure Loan Preapproval

Once your credit is in check, securing preapproval for a home loan can give you a head start. This process involves a lender checking your financial history and assessing whether you’re a viable candidate for a loan.

Upon preapproval, you’ll know the maximum amount you can borrow, which helps you set a realistic budget for your house hunting. A mortgage broker, with their extensive knowledge and resources, can guide you through this process and help you choose the best loan for your needs.

Set Aside Savings

Additionally, it’s essential to have savings set aside for a down payment and closing costs. Down payments typically range from 3.5% to 20% of the home’s purchase price. Closing costs, on the other hand, usually amount to 2% to 5% of the loan amount. These costs can add up, so preparing for them can prevent financial surprises down the road.

Ensure a Mortgage Contingency

Lastly, when setting the terms of the purchase contract, ensure it includes a mortgage contingency. This clause protects you if your final home loan approval falls through, allowing you to back out of the deal without financial repercussions.

Research the Property

Buying an FSBO home requires thorough due diligence and understanding your local market’s dynamics.

Familiarize Yourself with the Market

Familiarize yourself with FSBO listings in your desired area. Assess the features of various properties, their listing prices, and how long they’ve been on the market. This exercise can help you gauge a fair price for the property you’re interested in.

Verify Property Details

In FSBO sales, buyers need to take extra care when verifying property details. These include, but are not limited to, ownership history, physical condition, and any past insurance claims related to the house for sale.

  • CLUE Report: A good starting point for property research is the Comprehensive Loss Underwriting Exchange, also known as CLUE. This database contains up to seven years of insurance claims history for properties. Requesting a CLUE report can provide insight into any past damages or issues that have led to insurance claims. This information helps when assessing the overall condition of the home and can play a role in price negotiations.
  • Check the Title: Another important element in property research is checking the home’s title. The title outlines the history of property ownership, and any issues, like liens or disputes, could complicate the transaction. You might want to consider hiring a title company or a real estate attorney to ensure a clear title, further securing your investment.

Conducting extensive research on the property not only aids in making an informed decision but can also arm you with valuable information during price negotiations.

Understand the Legalities

Buying a house is not just a financial commitment, it’s a legal one too. Understanding the legal aspects of real estate transactions can protect you from potential complications, particularly in a FSBO sale, where you might not have a real estate agent guiding you through the process.

Hire a Real Estate Attorney or a Title Company

In a traditional real estate transaction, a buyer’s agent handles the legal paperwork. However, in a FSBO sale, buyers often need to manage these tasks themselves. This is where a real estate attorney or a title company can help. These professionals can assist with the legal aspects of the transaction, including:

  • Ensuring the house is a separate legal entity operated correctly, free from liens, and without any outstanding claims.
  • Conducting title searches to confirm the legitimacy of the property’s ownership.
  • Assisting with the closing process, ensuring all necessary documents are correctly filled out and filed.

Review the Purchase Agreement

The purchase agreement is a binding legal contract between the buyer and the seller. It outlines the final purchase price, terms of the home sale, and any conditions that must be met before the sale can be finalized.

Given its importance, it’s recommended to have a lawyer review the purchase agreement before the buyer and seller sign it. This review can ensure that all the stipulations are in your best interest and that there are no potential loopholes that could cause problems later.

Pricing and Negotiations

FSBO sales often provide room for more negotiation when it comes to the home’s asking price. This flexibility can result in a lower purchase price, potentially saving you money.

Home Appraisal

A home appraisal can be an essential tool during these negotiations. An appraiser evaluates the property and provides an estimated market value. This estimate is based on various factors, including the home’s condition, location, and comparable homes in the area.

With an appraisal in hand, you have a foundation for negotiating the home’s price with the seller directly. It gives you a benchmark, helping to ensure you don’t pay more than the property is worth.

Handling a Low Appraisal

A FSBO transaction can become complicated if the appraisal is lower than the agreed-upon purchase price. In this scenario, you have a few options:

  • Request a price reduction: If the appraisal comes in lower than the agreed-upon price, you can ask the seller to reduce the price. They may be willing to do this to keep the sale on track.
  • Challenge the appraisal: If you believe the appraisal was inaccurate, you can challenge it. You’ll need to provide compelling evidence, such as recent sales of comparable homes that were not included in the original appraisal.

Handling these situations tactfully can keep your home purchase on track while ensuring you get a fair deal. Remember, every real estate transaction is unique, and dealing with these challenges may require professional guidance from a real estate attorney or a buyer’s agent.

Home Inspections

Investing in a home inspection is a prudent step in the homebuying process. A comprehensive inspection can reveal potential problems or necessary repairs that may not be immediately apparent. This is especially critical when buying a FSBO property, as there might not be a real estate agent involved to facilitate this step.

Choosing a Home Inspector

Finding a qualified and experienced home inspector is paramount. Look for inspectors who are certified by a national association and who have a good reputation in your local market. Your home inspector should evaluate the following:

  • Structural elements: walls, ceilings, floors, roof, and foundation.
  • Systems: plumbing, electrical, and HVAC.
  • Other components: insulation, ventilation, windows, and doors.
  • Outside: drainage, driveways, fences, sidewalks, and any potential safety hazards.

After the Home Inspection

Once the home inspection is complete, you will receive an inspection report outlining any identified issues. Depending on the findings, you may:

  • Request repairs: If the inspector identifies any issues, you can ask the seller to make necessary repairs before closing.
  • Renegotiate the asking price: If there are significant issues that the seller is not willing to fix, you might renegotiate the price to account for the repair costs.
  • Walk away: In the case of severe problems, such as foundational issues or extensive water damage, it might be in your best interest to walk away from the sale.

Securing Financing

Once you’ve agreed on a sales price and completed the home inspection, the next step is to finalize your home loan. This stage requires careful consideration as it can significantly impact your personal finance situation.

Compare Mortgage Options

Start by comparing different mortgage options. Each loan type has its advantages and drawbacks, and the best one for you depends on your individual circumstances. A mortgage broker can be a valuable resource during this process, helping you understand the nuances of each option and finding the best fit for your financial situation.

Review the Loan Estimate

Mortgage lenders are required to provide a loan estimate within three days of receiving your application. This document outlines the specifics of your loan, including:

  • Loan amount: The total amount that you’ll borrow.
  • Interest rate: The cost you’ll pay each year to borrow the money, expressed as a percentage.
  • Closing costs: The expenses you’ll need to pay to finalize your mortgage, which can include origination fees, appraisal fees, and title insurance.

It’s essential to review the loan estimate thoroughly and make sure you understand all the costs involved. If something seems off, don’t hesitate to ask your lender for clarification. After all, this is a significant financial commitment, and you want to be sure you’re making an informed decision.

Closing the Sale

Closing a FSBO sale involves several key steps that vary slightly from a typical sale involving real estate agents. However, the primary goal remains the same: to legally transfer ownership of the property from the seller to you, the buyer.

Setting Up an Escrow Account

In real estate transactions, an escrow account is used to safeguard the earnest money — the deposit you make to show the seller you’re serious about buying the house. This account is managed by a separate legal entity, such as a title company or escrow company, ensuring the funds are protected until the sale is finalized.

Preparing the Paperwork

The closing paperwork can be quite extensive and typically includes:

  • The deed: This transfers ownership from the seller to the buyer.
  • The bill of sale: This outlines the terms and conditions of the sale.
  • The affidavit of title (or seller’s affidavit): This document states the seller owns the property and there are no liens against it.

It’s best to have a real estate attorney or a title company prepare these documents to avoid any mistakes.

Title Insurance and Closing

Your lender may require you to purchase title insurance. This protects both you and the lender in case any undisclosed liens or ownership disputes arise after the sale.

On the closing day, you and the seller will sign all closing documents. The funds held in the escrow account, including your down payment and closing costs, will be appropriately distributed, and the property’s ownership is legally transferred to you.

Post-Closing Steps: What Comes Next?

After the exhilarating process of buying a house, there are a few additional steps to take post-closing.

Utility Setup and Address Change

Ensure utilities are set up in your name, including water, electricity, gas, and internet. You should also update your address for any subscriptions, credit cards, bank accounts, and identification documents.

Understand Property Taxes and Home Insurance

As a new homeowner, it’s important to understand your obligations regarding property taxes and home insurance. Familiarize yourself with due dates and payment procedures to avoid late fees or potential complications.

Dealing with Potential Problems

If any problems arise with the home past closing, consult your home inspection report before paying for repairs out of pocket. If you’ve received a home warranty as part of the sale (which is different from home insurance), it may cover some of these post-closing issues.

Remember, buying a FSBO home might be more complicated than a typical sale, but the potential benefits, such as saving on the agent’s commission, make it an attractive option for many home buyers. With careful planning, research, and professional guidance, you can manage the FSBO homebuying process with confidence.

Conclusion

Though a FSBO transaction can be intimidating, with research and preparation, potential buyers can make the process go smoothly. Buying a house for sale by owner can offer significant savings and more room for price negotiation, as you bypass the real estate agent’s commission.

However, you need to remain diligent and informed throughout the process. Understand the local market, conduct a thorough home inspection, and engage professionals like a real estate attorney or title companies for a smooth real estate transaction. The homebuying process may be a marathon rather than a sprint, but with patience and perseverance, you’ll cross the finish line to your new home.

Source: crediful.com

Apache is functioning normally

With its four largest firms all at least 100 years old, the title insurance industry has a bit of a reputation for being antiquated and technology averse.

“I always joke that we work in an industry that literally researches the past, and because of that, sometimes, I feel like our marketing, sales, and technology live there too,” Sam Trimble, vice president of strategic growth and development at Fidelity National Financial, said.

The title industry has worked hard over the last few years to shed that reputation. It has begun to adopt and integrate more and more technology into the title search and production process. While progress has been made, many in the industry see artificial intelligence (AI) as a way to really catapult the 19th century business into the 21st century and beyond.

“There are tons of operational opportunities using artificial intelligence and large language models and generative AI in title,” Trimble said.

While many in the industry have already explored using generative AI to create marketing collateral and campaigns, Trimble said he and others in the industry are excited about how AI can help with the day-to-day operations of a title company.

According to the State of the Title Industry Report from solutions firm Proplogix, 26% of respondents are looking into or already using AI in their closing workflows.  

“When I was a title agent in Texas, there was a team of people opening new orders, verifying information, and sending out documentation that was needed for buyers and sellers,” Trimble said. “Not only did it take a lot of time, but it cost a lot of money. Now a process that could have taken a couple of hours, takes a couple of minutes and it is significantly more accurate without room for human error. It really is limitless.”

Charlotte Brown, the vice president of product at Qualia, shares Trimble’s outlook.

“We’ve seen that generative AI is most effective for tasks that are time consuming to start but easy to double check,” Brown said. “Data extraction from documents is a great application of generative AI. For example, when a title company receives a Purchase & Sale contract via email, AI can help grab key information and queue up a transaction with pre-populated data for review.”

However, Brown said that generative AI tools are still in the early stages of development and their outputs should be double checked for errors, stressing that “accuracy matters in underwriting.”

Additionally, the title industry has long struggled with a talent crunch and an aging workforce (over 40% of State of the Title Industry report respondents were over the age of 55), and some industry professionals believe that AI could help alleviate some of the pain this has created.

“The unsung heroes of title are examiners, processors and receptionists,” Trimble said. “Their jobs are hard and tedious, and AI could help free up some of the time they spend on things like data entry to do tasks better suited for humans.”

Hoyt Mann, the president and co-founder of Alanna.ai, likes to think of AI as an “army of interns.”

“Something we say a lot is let robots do what robots do and let humans do what humans do. If you had this army of interns, you would have them do things like order entry that doesn’t take a lot of industry knowledge to do, so why not allow AI to do it,” Mann said. “It frees up humans to create and continue to establish relationships and deal with the human part of the business, which is so important to smaller title companies. A small company that is able to leverage AI can have a similar type of capabilities as a bigger company.”

While many in title are optimistic about the advances AI could help the industry make, there are certainly some concerns.

“There is a lot of excitement about what you can do with data. I can take my title plant that has 10,000 or 100,000 documents and put it in ChatGPT and create a narrative or summary — there are great potential use cases in our industry,” Genady Vishnevetsky, the chief information security officer at Stewart Title, said. “But one must understand what the implications are — are you doing this in a controlled environment or using a service? Be aware of the data fed to the AI platform and input becomes a property of the service.”

For Vishnevetsky, the biggest concern is data safety.

“Since ChatGPT came out in November of 2022, we saw an evolution and an explosion of anything from the browser plugins that have ChatGPT or AI in them, but the majority of these are third-party services. There are literally dozens of these .Ai domains registered every single day and you really don’t know anything behind them,” Vishnevetsky said. “You might be able to feed information to these services and get results that seem plausible to you, but you really don’t know or understand what is does with your data — is it safe or not safe?”

Vishnevetsky also noted that the constant evolution of large language models means that it may give different answers to the same query depending on the information it has available, creating potential inconsistencies.

While this is of concern to CertifID CEO Tyler Adams, his main source of unease is how fraudsters may utilize AI to make fraud attempts harder to catch.

“A couple of years ago we were able to warn people to look for misspellings or bad grammar in emails and with AI that has just disappeared,” Adams said. “The precision with which emails are getting crafted by criminals is really scary and it is not allowing for business owners to look for what had been standard red flags.”  

For Vishnevetsky the application of voice cloning by fraudsters is an even greater source of concern.

“AI allows us to process massive amounts of data and now with just a few seconds of audio and tuning software you can almost get it perfect and that is terrifying,” Vishnevetsky said. “Everything else can be spoofed — your email address, the caller ID of a mobile or a desk phone, but now the voice is also able to be spoofed. So now if you imagine all of this together, I can make a phone call to the CFO posing as the CEO of a company, and my caller ID appears as the CEO and I’m leaving a voicemail in their voice telling them to wire money to the account I’ll send them in an email — it seems very credible.”

Although AI may make fraud attempts harder to detect, Adams is excited about the ways AI could be utilized to help fight these AI powered fraud attempts.

“We are utilizing it to enhance our fraud models,” Adams said. “We collect all these data points to better understand if something is a risky transaction or if somebody has infiltrated a particular deal. Our ability to synthesize this information in real time and evaluate all of those signals becomes a lot better with AI.”

Adams said they are still in the early stages of this, but he is very hopeful that utilizing AI in this way will help keep even more transactions safe from fraud in the future.

Despite the potential data security risks and its usage by bad actors, industry professionals believe AI is here to stay in title.

“I think the amount we use AI might fluctuate but it is definitely here to stay,” Bill Svoboda, the president and co-founder of Close Simple, said.

Svoboda said all of the industry professionals he talks to are already using AI to help with things like proofreading emails, if not finding other ways to integrate AI into other aspects of their business, like creating marketing collateral or streamlining backend operations.

“Our lives can’t go backwards,” Svoboda said. “How much a business leans into AI for things like automations — that is going to be the difference maker. If a company can provide a better customer experience by using AI to free up people to be there for their clients, they are already thinking about how they are going to do that.”

Or as Diane Tomb, the president of the American Land Title Association put it, in a Proplogix report: “No one is going to lose their job to AI, but they are going to lose their job to the people who know how to use AI.”

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

Just weeks after New York-based digital lender Better Home & Finance Holding went public, Better issued pink slips to employees in early September in a new round of layoffs, Insider reported.

Better laid off about a quarter of its U.S. mortgage sales and origination team, according to the news outlet, citing two former employees who were affected by the latest downsizing.

The layoff news comes on the heels of Better going public via special purpose acquisition company (SPAC) Aurora Acquisition Corp. in August.

About 75 employees are left on the mortgage origination team in the U.S. as well as some employees in India, according to Insider. 

While Better didn’t respond to HousingWire‘s inquiry about the number of affected employees, spokeswoman Jessica Schaefer told Insider the firm has more than 100 people left on the team. 

Better plans to fill some vacant positions from the layoffs.

“As a publicly listed company, we’re focused on making prudent and disciplined decisions that account for market dynamics so that we can continue to serve both customers and shareholders for the long-term,” Better’s spokesperson said in an e-mailed statement to HousingWire.

“We are hiring more seasoned professionals who can sell in this tough mortgage environment and then making them 10X more productive through our continued investment [in] technologies such as Tinman and One Day Mortgage, which have created efficiencies that streamline and automate nearly every major function of homeownership,” the spokesperson said. 

As of June, Better had 950 team members, a 91% decrease over an 18-month period from 10,400 in Q4 2021, according to its previous filing with the Securities and Exchange Commission (SEC). 

While Better was an efficient refi shop during the pandemic years when rates hit record lows, the lender and other independent mortgage banks (IMBs) were hit hard by the Federal Reserve‘s monetary policy.

The digital lender reported a net loss of $45.5 million in Q2, an improvement from a net loss of $89.9 million the previous quarter.

In Q2, Better’s origination volume was $900 million across 2,421 loans, compared to production of $800 million across 2,347 loans funded in Q1.

When Better debuted on Nasdaq in late August, the SPAC deal unlocked $565 million of fresh capital for the unprofitable company.

The digital lender has pivoted its strategy from being a one-stop-shop to becoming a “mortgage-as-a-service” company or a white-label provider of mortgage tech.

“For things like homeowner’s insurance, title insurance, and Realtors, we’ve now just become a marketplace. We match the consumer with a partner capable of delivering the best product to them. So, we ended Better Real Estate for the sake of efficiency and savings for the consumer. We partner with best-in-class agents, insurance companies and title companies,” Better CEO Vishal Garg said in an interview with HousingWire in August.

Better will invest in tech-driven products like One Day Mortgage, a program that will allow customers to apply for a mortgage, get preapproved, lock their rate and receive a mortgage commitment letter within 24 hours.

“We are committed to further developing this technology during an interest rate environment where customers need it the most,” Better’s spokesperson noted.

Better was ranked as the 59th largest lender in Q1 2023, plummeting from the 19th in 2021, according to Inside Mortgage Finance.

Source: housingwire.com

Apache is functioning normally

Federal agencies urged mortgage companies and banks to be more vigilant in reporting compromised real estate transactions to their local financial crime units and to do so in specific ways that would increase the likelihood of an investigation.

According to representatives from both the Federal Bureau of Investigation and the Secret Service during a panel discussion Monday, instances of wire fraud, home equity theft, investment scams and elderly-related fraud have ticked up, while the methods used by bad actors have become more nuanced.

“[The mortgage industry is a target-rich audience for fraudsters] and they are targeting title companies and real estate brokers by compromising business email accounts. We see a lot of that,” said Stavros Nikolakakos, supervisory special agent at the Secret Service at the Compliance and Risk Management conference hosted by the Mortgage Bankers Association in Washington D.C. Monday. “If you don’t have direct contact information of your local law enforcement, [you should definitely establish that relationship].” 

A way for mortgage companies to help government agencies, such as the FBI and Secret Service, catch bad actors is by being mindful in how they fill out consumer complaints including the Internet Crime Complaint Center (IC3) form, which the bureau monitors and the Suspicious Activity Report (SAR) form.

“For those of you that enter SARS, I would strongly encourage you to not hold back in filling out this information, put your conclusion and the amount stolen at the very top,” Nikolakakos said. “When you have agents reviewing these SARS they only skim them. They cherry-pick because agents are looking for easy arrests and they’re trying to find the very best cases. “

Timothy Wu, Supervisory Special Agent, Financial Crimes Section, Money Laundering, Forfeiture, Bank Fraud Unit at the FBI, added that the volume of fraud complaints received can make someone’s “eyes start to glaze over.”

“Fraud in the mortgage space is not the same as in 2008 and our fraud portfolio is much smaller,” he added. “We are seeing HELOC fraud and application fraud — nothing new or ground breaking — but these practices have accelerated and gotten better.”

Cash attained by these criminal acts are usually transferred to Eastern Europe, West Africa or China by money mules, Nikolakakos added. 

Statistics published by the FBI show that business email compromise scams related to real estate set a record for dollar losses in 2022. The 2,284 complaints received last year amounted to losses totaling $446.1 million, compared with $430.5 million in 2021.

Those targeted by fraudsters have about 72 hours to report the event to the government before it becomes harder to investigate.

In a separate panel addressing fraud mitigation, Steve Safavi, vice president of mortgage fraud at Mr. Cooper noted that one of the best ways to prevent wire fraud is to be mindful of emails received prior to closing and the domain that is being used.

“As busy as you are at the end of the month, trying to get something funded it can get by,” he said. “Best thing to do is for title companies to call the lender and verify the wiring instructions. Have them repeat the payoff statement to you instead of vice versa.”

As fraud risk has increased, companies in the financial services sector have turned to vendors to protect their transactions and infrastructure. For example, recently Tata Consultancy Services announced a partnership with FundingShield to the fintech’s wire fraud prevention solutions available to the IT consulting company’s clients.

Source: nationalmortgagenews.com

Apache is functioning normally

I don’t think it would be much of a stretch to assume nobody likes high mortgage rates.

They make it more difficult for prospective home buyers to get to the finish line, especially with lofty asking prices.

And they’ve led to countless mortgage layoffs and job losses in a number of related industries.

Sure, investors might earn more interest on loans with higher mortgage rates, but only if the loans are held onto to.

There’s a good chance they’ll be paid off sooner rather than later, making them a little less enticing. But there is one silver lining to these stubbornly high mortgage rates.

There Will Be a Mortgage Refinance Boom in the Near Future

The longer mortgage rates remain elevated, the larger the number of high-rate home loans in existence.

It’s pretty straightforward. If lenders keep doling out new loans, they’ll undoubtedly have high interest rates.

If you look at the chart above from Black Knight, the average interest rate on outstanding mortgages is around 3.94%, but is inching higher as time goes on.

As more high-rate mortgages are originated, this average rate will climb, thereby replenishing the very dry refinance pool.

At last glance, the popular 30-year fixed mortgage is going for over 7%, up from the 2-3% range in 2021 and early 2022.

Mortgage rates are now close to their 21st century highs, with the 30-year fixed reaching 8.64% in May 2000.

Hopefully we don’t go that high, but anything is possible these days.

Even 7% mortgage rates have caused home loan volume to drop considerably, with mortgage refinances basically nonexistent and home purchases also dropping off due to sheer unaffordability.

We’ve never seen mortgage rates double in such a short span of time, and it’s clear this is taking a massive toll on the industry.

It’s hurting loan officers, mortgage brokers, real estate agents, title and escrow officers, and many others.

But despite this more than doubling in mortgage interest rates, there is still considerable business taking place.

Mortgage Lenders Are Still Expected to Close Nearly $2 Trillion in Home Loans This Year

While the boom years have come and gone, the Mortgage Bankers Association still forecasts $1.7 trillion in 1-4 unit residential home loan volume for 2023.

That’s on top of the $2.3 trillion or so in home loan originations in 2022, for which the 30-year fixed was priced in the 6s and 7s for a decent chunk of the year.

Of course, these numbers are down significantly from 2021, when mortgage lenders originated a record $4.4 trillion or so in home loans.

Coming off a record year to a doubling in mortgage rates is one of the reasons it’s been so hard for those in the real estate and mortgage industry.

Because business was going gangbusters right before this unprecedented mortgage rate spike, lenders were fully staffed, as were real estate brokerage houses, escrow and title companies, and so on.

This sudden and violent shift meant staffing levels were going to need major adjustments. It wasn’t a slow trickle down in business, it was a rapid decline.

Because of depressed sales volume, many will leave the business and not come back.

But as we’ve seen time after time, there will be opportunity, especially if there are fewer players left after the dust settles.

Once mortgage rates do come down, which they invariably will, trillions in home loans will be ripe for a refinance once again.

It’s still not clear when this will happen, but it will happen, that much is true.

Homeowners Also Stand to Benefit from Lower Mortgage Rates in the Future

While the industry is going through some tough times, recent home buyers are also suffering.

The 30-year fixed was a screaming bargain a couple years ago, and is now a thorn in the side of homeowners.

Due to supply shortages, home prices have stayed near record highs, despite a major decline in affordability.

This has pushed the typical home buyer’s monthly payment up to $2,605, per Redfin, up about 20% from a year ago. It’s now hovering around an all-time high.

Meanwhile, months of supply is still lingering around the 3-month range, well below the 4-5 months that represent healthy levels.

So today’s home buyer still has to compete with many others, despite record high home prices and equally expensive mortgage rates.

However, a time will come when mortgage rates come back down, allowing those who stick it through to see some relief.

Lately, real estate agents and loan officers have been pitching the so-called date the rate, marry the house line.

Simply put, the interest rate is just temporary but the home can be yours forever. And if rates go down, you can refinance your existing loan and ideally pay a lot less for it.

This has yet to transpire, which hammers home the importance of being able to afford the housing payment in front of you, not some prospective future one if the stars align.

But as time goes on, interest rates will come down. And those stuck with rates in the 7s will be able to snag something a lot more reasonable.

So each day, as more and more 7% mortgages are funded, more opportunity is being created.

Source: thetruthaboutmortgage.com

Apache is functioning normally

FundingShield, the fintech provider of plug-and-play solutions to manage risk, compliance and fraud prevention, has partnered with Tata Consultancy Services (TCS), a technology services and consulting company. 

The partnership comes amid an increase in wire and title fraud risk. FundingShield and TCS aim to protect more lenders, homebuyers, sellers from wire and title fraud, both companies said.

“The safest way to verify information is through automated, real-time, source-data verification, which is FundingShield’s expertise. We look forward to bringing our automations to more of the top US banks, GSEs, and to numerous other sectors where TCS has deep domain knowledge and experience,” Ike Suri, CEO of FundingShield, said in a statement.

FundingShield’s API driven fitnech services allow lenders, investors, homebuyers and title companies to confirm wired funds are going to intended recipients and transactions are free of impact from cyber fraud, phishing, business email compromise, or title fraud. 

The company uses source data in real-time to confirm that documents are valid, vendors are compliant with regulations and insurance coverage protecting lenders, real-estate investors and consumers is enforceable. 

“Wire fraud prevention has become a mandatory capability as part of any mortgage solution, protecting lending institutions from multi-million dollar risks to the third-party closing, title, and settlement entities,” Santhosh Ananthakrishnan, global head of mortgage strategic initiatives at TCS, said in a statement.

Wire and title fraud risk were on the rise in Q2 compared to the same period in 2022, according to a report from FundingShield that did an analysis of a $68 billion portfolio of real estate closings. 

The fraud prevention solutions company saw a 12.6% jump in the number of loans with issues, 6.5% rise in closing protection letter-related errors and a 4.7% increase in issues with proof of insurance in Q2. 

Email phishing continued to be “one of the fastest and most effective ways that fraudsters scam parties in a real estate transaction,” the report said.

Business email compromise scams related to real estate were $446.1 million in 2022, marking a record for dollar losses, according to the Federal Bureau of Investigation (FBI).

A total of 2,284 complaints were received in 2022, the second most ever, after an all-time high of 2,593 in 2018. 

Source: housingwire.com