All articles tagged with #mortgage lending
Fair Isaac (FICO) announced a new pricing model allowing mortgage lenders to bypass credit bureaus and license scores directly to borrowers, leading to a 20% stock surge and potentially reducing credit bureau influence, while also offering more pricing options to improve economics and competition.
Fair Isaac introduces new pricing models allowing lenders to directly access FICO scores, bypassing credit bureaus, leading to a 24% surge in its stock price while credit bureau shares decline, aiming to increase transparency and reduce costs in mortgage lending.
The stock of FICO, the company behind the widely used credit score, plummeted over 17% after the Federal Housing Finance Agency announced that lenders can now use VantageScore, a competitor, to assess creditworthiness for government-backed mortgages, potentially increasing competition and reducing costs in the mortgage industry.
The average cost of a home in the US surged from $371,000 in Q2 2020 to $525,000 in Q2 2022, largely due to a significant shortfall in housing construction following the 2007-2009 financial crisis. This shortage, estimated at 4.5 million units, coupled with cautious mortgage lending practices, has made homeownership increasingly unattainable for many, especially younger generations. Addressing this crisis will require substantial time and effort.
Pontiac-based United Wholesale Mortgage reported a net loss of nearly $70 million for 2023, attributing the loss to a fourth-quarter deficit of about $461 million driven by a markdown in the value of its mortgage servicing rights. Despite this, the company retained its position as the nation's top mortgage lender by volume. UWM's CEO, Mat Ishbia, emphasized the company's operational profitability and highlighted its achievements in mortgage origination, while its Detroit-based rival, Rocket Mortgage, also reported its first full-year loss. UWM, a nonbank lender, saw a 15% decrease in total mortgage originations in 2023, but set a company record with $93.9 billion in for-purchase mortgages.
Financiers, including Texas tycoon Andy Beal, are tapping into the US Federal Home Loan Banks (FHLBs) for billions of dollars, despite being disconnected from housing. Many banks and insurance companies are using their FHLB memberships to manage their balance sheets, while some have operated more like hedge funds or made loans to celebrities. Critics argue that this highlights the unaddressed problems with the $1.4 trillion FHLB system, which has failed to adapt to changes in the mortgage market. Lawmakers and regulators are now calling for tighter rules and greater scrutiny of FHLB membership to ensure it aligns with the goal of promoting economical housing finance.