Continuing a trend that stretches back through most of this year, mortgage originations were up at some of the nation’s biggest banks in the third quarter due to this year’s consistently low mortgage rates.

As seen in the most recent data from Freddie Mac, mortgage interest rates have been sitting at approximately one full percentage lower throughout this year than they were last year.

The lower rates have led to an increase in overall originations, as the latest projections show that 2019 will likely best year for mortgage originations since 2016.

Evidence of that began to emerge earlier this year when mortgage originations rose at Wells FargoJPMorgan Chase, and Citigroup in the second quarter.

And that trend
continued in the third quarter.

Each of those banks
reported their third quarter earnings on Thursday, and examinations of each
bank’s earnings materials show that originations were up at each bank due to
low mortgage rates.

Wells Fargo, for
example, originated $58 billion in mortgages in the third quarter. That’s up
from the $53 billion originated in the second quarter, and from the $46 billion
originated during last year’s third quarter.

In fact, the third
quarter of 2019 saw Wells Fargo’s highest dollar amount in originations of any
quarter in the last year.

Unsurprisingly given
the interest rate environment, the increase in originations came as the share
of refinances went up as well.

According to Wells
Fargo, 40% of its mortgage originations in the third quarter were refinances,
the highest that share has been in at least a year.

In the second
quarter, for example, Wells Fargo saw 68% purchase originations, compared to
32% refinances, but in the third quarter, it was a 60/40 split between
purchases and refinances.

The share of
refinances has climbed steadily over the last year. During the third quarter of
2018, only 19% of Wells Fargo’s originations were refinances. That figured
climbed to 22% in the fourth quarter of 2018, 30% in the first quarter of this
year, 32% in the second quarter, and finally, to 40% in the third quarter.

As one might expect,
that increase was mirrored by the mortgage applications Wells Fargo received.
According to the bank, it received $85 billion in mortgage applications in the
third quarter, which was actually down slightly from the second quarter when
the bank got $90 billion in applications.

But, of those $85
billion in mortgage applications in the third quarter, a full 50% were for
refinances. That’s nearly double what it was in the same time period last year.

Wells Fargo is also
showing strong continuing demand for mortgages, as the bank reported that it
has $44 billion in its application pipeline (applications that are in process).

That’s the same
amount that it was in the second quarter, but up from $32 billion in the first
quarter and $22 billion in the third quarter of last year.

Mortgage
originations were also up at JPMorgan Chase.

According to the bank,
it originated $32.4 billion in mortgages in the third quarter, up from $24.5
billion in the second quarter, $15 billion in the first quarter, $17.2 billion
in the fourth quarter of 2018, and $22.5 billion in the third quarter of last
year.

Citi has the
smallest mortgage business of the three, but its originations are on the rise
as well.

That continues a recent trend at the bank, which scaled back its lending operations a few years ago, but began to ramp those back up last year.

According to the
bank, it originated $5 billion in mortgages in the third quarter, up 28% over
the second quarter total of $3.9 billion and up 85% over the third quarter of
last year, when the bank originated $2.7 billion in mortgages.



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For the second time this year, Redwood Trust, a real estate investment trust that specializes in buying and securitizing jumbo mortgages, is growing its real estate investor loan business through an acquisition.

Earlier this year, Redwood Trust paid $50 million to acquire 5 Arches, an originator and asset manager of investor-focused loans and the parent company of 5 Arch Funding.

But that was just the appetizer. Now comes the main course.

Redwood Trust announced Monday that it is acquiring CoreVest American Finance Lender, the real estate investment lender formerly known as Colony American Finance for $490 million.

CoreVest was founded in 2014 and specializes in lending to real
estate investors who want to purchase single-family rental homes, townhomes,
condos, and small multifamily properties.

The company was known as Colony American Finance until 2017, when Colony American was acquired by Fortress Investment Group. At the time, the company rebranded to CoreVest American Finance Lender.

Since its founding in 2014, CoreVest has funded more than $4
billion in loans, including more than $1.1 billion in 2019 so far. The
company is also an experienced securitization issuer, having recently completed
its ninth single-family rental securitization.

In a release, Redwood states that it views the acquisition as
a significant boost to its real estate investor lending business.

“Collectively, the platform and assets will significantly
expand Redwood’s presence in the BPL market, furthering its position as a
leading private-sector source of housing-market liquidity,” Redwood Trust said
in a release. “Importantly, the transaction also advances several of Redwood’s
key corporate strategic initiatives, including broadening and diversifying its
revenue streams, significantly expanding its capacity to create proprietary
credit investments, and profitably scaling its infrastructure and operations.”

According to Redwood Trust, the acquisition includes the
CoreVest operating platform and more than $900 million of related financial
assets.

Under the terms of the agreement, Redwood will acquire
CoreVest’s operating platform and assets, including its business-purpose loan
portfolio and subordinate bonds from CoreVest-sponsored securitizations, from Fortress
for approximately $490 million.

Redwood plans to fund this deal with a mix of cash on hand
and shares of Redwood stock, which are payable to the CoreVest executive
management team and vest over a two-year period.

“Today we are pleased to announce the acquisition of the
CoreVest operating platform,” Redwood CEO Christopher Abate.

“CoreVest is a best-in-class operator in the
business-purpose lending sector, an area of residential lending that increases
liquidity in the housing market by enabling investors to efficiently finance
purchases of both single-family and multifamily investment properties,” Abate
continued.

“Additionally, CoreVest is the standard-bearer for BPL
securitizations, having completed more such transactions than any other issuer,”
Abate added. “Integrating the CoreVest operations and suite of products with
our own market-leading consumer mortgage banking and securitization platform
will create the preeminent specialty finance operator in our industry.”

Dashiell Robinson, Redwood’s president, said the acquisition
builds on the 5 Arches deal from earlier in the year and will allow the company
to capitalize on the “rapidly growing segment” of lending to real estate
investors.

As for CoreVest, CEO Beth O’Brien said the company is excited to be joining Redwood Trust.

“Our team has built an amazing platform and brand, and we’re poised to enter a new phase of growth by leveraging Redwood’s significant, permanent capital base and deep residential credit expertise,” O’Brien said. “Our clients will continue to experience our high level of service, but with an even greater commitment to delivering customized funding solutions at highly competitive rates.”

The companies expect the deal to close within the next two
to three business days.



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Fannie Mae
announced Wednesday that it will invest $14 million for a Low-Income Housing
Tax Credit as it facilitates the development of a 110-unit multifamily
residence.

Back in 2017, mortgage giants Fannie Mae and Freddie Mac announced they were re-entering the LIHTC market, the federal program which encourages investment of equity into affordable rental housing.

Freddie Mac explained at the time that under the program,
qualified properties are allocated federal tax credits and investors are able
to invest in those properties to take advantage of those tax credits.

The new residence, Mino-bimaadiziwin Apartments, will be located
in Minneapolis, will house Native Americans and other low-income residents in
the community and is being developed by the Red Lake Band of Chippewa Indians.

Fannie Mae will invest in the project through Raymond James Tax Credit Funds, a
Fannie Mae LIHTC fund partner.

“Our LIHTC financing of Mino-bimaadiziwin Apartments helps support much-needed housing and ancillary services for Native Americans and other members of the Minneapolis community near public transit options that enable them to commute to their places of employment,” said Dana Brown, Fannie Mae vice president of LIHTC investments.

“LIHTC enables affordable rental housing, and we are excited
to work with our partners to address our country’s pressing housing challenges,”
Brown said. “Projects like Mino-bimaadiziwin foster a healthier and more stable
living environment for individuals and families while also creating a more
sustainable neighborhood for all members of the community.”

The apartments will offer studios, one-, two- and
three-bedroom units for residents that earn 30%, 50% and 60% of the area median
income. And 24 of the units will serve as permanent housing for the metro’s
chronically homeless.

The new development will include a playground, daycare facility, wellness center, and the Red Lake Nation Urban Embassy community center. Residents will also have access to on-site healthcare and educational services.

The Red Lake Band of Chippewa Indians will provide a Housing
Support/GRH rental subsidy in partnership with Minnesota Department of Human Services. The project will cost $38.6
million. Developers have broken ground on the building project and expect to
open it to residents by fall 2020.



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The housing market is signaling there will be an economic recession by the 2020 election, according to Benn Steil, director of international economics at the Council on Foreign Relations.

“Looking back at the years preceding the 2008 financial crisis, a critical warning sign was the surging gap between the growth in home prices and household income,” Steil wrote in a blog post with former CFR analyst Benjamin Della Rocca on the think tank’s website. “Today, a parallel dynamic is playing out.”

In 2018, as in 2005, housing-price growth began slowing, with significant price drops occurring in several major markets, the post said, linking to a story on New York home prices in “near free-fall” from earlier this month.

Household income has been growing, but it hasn’t come close to keeping up with the increase in home prices. For example, the median annual household income in August rose 1.3% from a year earlier, Sentier Research said earlier this month. That compares with the 4.7% gain in the U.S. median home price in August from a year earlier, using data from the National Association of Realtors.

“The trend-line in existing-home sales growth has also been down since 2015, tipping into negative territory at the start of last year,” the post said. “Similar drops have preceded nearly every recession since 1970,” it said.

“When income fails to keep pace with home prices, the latter must fall back,” the post said. “Falling home prices, in turn, drive down household spending by way of the so-called wealth effect – that is, consumers cut spending when their assets fall in value.”

A slowdown in consumer spending, which accounts for about 70% of GDP, points to an economic contraction. Economists define a recession as two subsequent quarters of negative GDP.

“If these trends continue, we should expect broad falls in home prices beginning by mid-2020, which will, in turn, drag down household spending against a darkening economic backdrop,” the post said. “Growth has been slowing, with Trump’s tariff war hitting exports. Manufacturing is contracting. Retail sales, excluding autos, have stalled. Consumer confidence is falling.”

The Federal Reserve probably doesn’t have enough power to stop a recession, the authors said. When the economy slows, the Fed cuts its benchmark rate to make it cheaper to borrow and encourage economic growth. But, the rate already is so low it probably won’t be enough to help, the blog post said.

“If we are really on the cusp of a recession it will likely take more than 175 basis points of easing to prevent it – and that is all the central bank has to play with before we’re back to the zero lower bound,” they wrote. “At that point, applying monetary stimulus becomes considerably more challenging.”



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What a time to be an independent mortgage broker!

As we kick off the second annual AIME Fuse national conference this
weekend, it’s a good time to not only reflect on the successes that the
mortgage broker community has achieved over the last 18 months, but also to
fully assess our current status and focus on the responsibilities that still
lie ahead if we want to reach and surpass our biggest goals.

The victories we’ve achieved, both individually and collectively,
should absolutely be celebrated. Not only have thousands of loan officers left
the retail side of the business to join mortgage brokers – or open their own
businesses as entrepreneurs – but a countless number of existing loan officers
and brokerages have seen business grow at an incredible speed.

Consumer awareness of the value that independent mortgage brokers
provide continues to increase, and the proof is in the numbers. The third
quarter of 2019 was the best quarter for brokers in funded volume and market
share percentage in over 12 years. Mortgage brokers have been the
fastest-growing channel in the mortgage business over the last seven quarters,
notably producing greater than 100% year-over-year growth in loan volume
compared to the third quarter of 2018.

With mortgage broker market share at nearly 16%, brokers have doubled
market share in the 18 months since AIME launched in March 2018 – a monumental
shift that I’m incredibly proud to be a part of.

But, in light of all the success that the mortgage broker community has
worked so hard to accomplish thus far, our status is a very real reminder that
there’s still a great amount of work left to do. Our growth is indicative of the
progress we’ve made so far on our journey; our destination is still far ahead
of us.

In a business environment where e-commerce giants like Amazon have used
their distinct financial clout to consistently and methodically suffocate small
businesses from the playing field, the revitalization of independent mortgage
brokers bucks that trend. Entrepreneurs in the mortgage business are thriving,
growing their businesses, growing their teams, and bringing investment back to
their respective communities – all while best serving local consumers on their
journey to affordable homeownership. Not only are we holding our own against
the giants of the mortgage business, we’re beating them in many ways.

Mortgage brokers are more focused than ever on providing consumers the
best and most trustworthy service by delivering the lowest interest rates
available, the lowest cost to borrow, the widest selection of products and
programs, and personalized service from true advisors. Our priority is
protecting, educating and supporting our customers throughout their
homeownership journey.

As the mortgage broker community continues to increasingly outshine our
mega bank and retail lender competition by making best-in-class customer
service – not profit margins – our primary objective, we’ll continue our rapid
upward trend.

Mortgage brokers should take time to revel in what we’ve been able to
accomplish thus far but, remember, we’re really just getting started. Several
years back, the idea of the mortgage broker channel reaching 20% market share
seemed out of reach, but here we are, knocking on the door.

Today, with our goal set at surpassing 50% market share, that
milestone, too, is closer than you may think. At the same time, in true
mortgage broker spirit, it’s not the destination of a 50% market share that we’ll
appreciate the most – it’ll be the process of serving our communities, helping
consumers achieve affordable homeownership, and growing our business with local
jobs that will satisfy us the most. Just the way it always has been.



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The real estate industry has been waiting to see how Realogy, the largest owner of U.S. real estate brokerages and franchise brands, would respond to the iBuying trend. Now we know.

Realogy is teaming up with Home Partners of America, a real estate investment and management company, to launch two new programs, RealSure Sell and RealSure Mortgage.

RealSure Sell gives qualifying home sellers a cash offer upon listing. It’s valid for 45 days while an affiliated agent markets the home in pursuit of “an even better price,” as Realogy described it.

“RealSure has been designed to solve the two questions consumers most often have when selling their home – what is the best price I can achieve in the market, and should I wait to look for my next home until my current residence sells?” Realogy said in a statement.

Next, RealSure Mortgage allows a seller who’s enrolled in RealSure Sell to make an offer on his or her next home by “leveraging” the cash offer, Realogy said.

“The ability to secure a mortgage on a new home eliminates the stress many Americans face when having to sell a home while simultaneously trying to buy another,” Realogy said. “A majority of consumers are selling a house while also looking to buy one at the same time.”

According to a survey from the National Association of Realtors, 39% of buyers need to use proceeds from the sale of their prior residence to fund the purchase of their next home.

RealSure is now available in Dallas and Denver for home sellers who have a qualified property and use a participating real estate agent affiliated with Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, ERA or Sotheby’s International Realty.

Over the next month, RealSure will roll out to brokerages affiliated with those brands in eight additional U.S. markets, including Chicago, Houston and Austin, Texas, Sacramento, California, as well as Tampa, Orlando, Sarasota and Fort Myers in Florida.

Realogy intends to “learn from the program in these markets and quickly scale to others,” the company said in the statement.



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Mortgage credit availability loosened in September, driven
by an increase in jumbo loans, according to the Mortgage Bankers Association’s Mortgage Credit Availability Index,
which analyzes data from Ellie Mae’s
AllRegs Market Clarity business information tool.

The MCAI rose by 0.9% to 183.4 in September. A decline in
the MCAI indicates that lending standards are tightening, while increases in
the index are indicative of loosening credit. The index was benchmarked to 100
in March 2012.

The Conventional MCAI increased by 2.4%, while the Government MCAI increased 0.6%. But the Jumbo MCAI saw the largest increase as it rose by 4.7%. The Conforming MCAI fell by 1.1%.

“Credit availability increased slightly in September, driven
by a 5% increase in the supply of jumbo loans,” said Joel Kan, MBA associate
vice president of economic and industry forecasting. “The jumbo index, which
grew from a combination of lower credit score requirements, non-QM loans, and
investor products, is now at a record high since tracking began in 2011. Meanwhile,
the trend of tightening credit availability in conforming and government
programs continued over the past few months, as both indices decreased.”

In fact, earlier this year, the appetite for jumbo loans increased as jumbo credit availability rose to an 8-year high. Back in May, reports showed investors were turning their eye on jumbo, non-QM loans in a race to remain competitive.

Non-QM is predicted to continue rising, poised for 400% growth in 2019, according to the annual Origination Solutions Survey from Altisource Portfolio Solutions, and a continued surge is expected in 2020.



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Curbio, a house-flipping startup that gives owners with homes that need renovation an alternative to selling “as is” to an iBuyer, is expanding into eight additional metro areas within the next few months.

Curbio describes itself as a “renovation partner” that uses its proprietary software to plan and complete a project. Curbio handles the renovation as the licensed and insured general contractor, using technology to ensure the process is quick and cost-effective. Clients don’t have to pay Curbio until the sale of their home closes.

“Although renovated homes sell faster and generate more profit, many sellers opt-out of renovation because of the time commitment and stress that accompany typical home renovation projects,” Curbio said in the statement announcing the expansion. “Likewise, real estate agents are often reluctant to suggest renovations that might delay time to market and require their oversight.”

The company will be in expanding into Minneapolis, Las Vegas, Boston, Portland, Seattle, San Francisco, Los Angeles, and Charlotte within the next few months, Curbio said in a statement. It already serves Philadelphia, Baltimore, Washington D.C., Northern Virginia, Atlanta, Houston, Dallas, Chicago, Phoenix and the Florida metro areas of Orlando, Tampa, Miami and Fort Lauderdale.

“Delaying payment until closing is the easy part,” said Co-Founder and Chief Executive Officer Rick Rudman. “The difficult part – and the part that will truly deliver real value to homeowners – is transforming the renovation process to align with the needs of home sellers.”

For agents, it’s an easy way to add to a property’s value, he said.

“We’ve built a team with the pre-sale renovation expertise required to actually increase the value of the home,” Rudman said. “And agents love that Curbio takes care of everything from beginning to end, always focused on quality, speed to market and return-on-investment.”



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While this year hasn’t been so great for the luxury housing market, one city has seen a positive trend.

According to Knight Frank Wealth Report, Miami placed No. 1 for the fastest-growing luxury real estate market in the U.S. It also ranked No. 5 among the fastest-growing luxury real estate markets in the world, following Madrid, Berlin, Paris, and Cape Town. 

High-end home sales bounced back in Q2, Redfin said in September. Prices went up 1%, a significant jump from Q1’s decline of 1.7%.

In the first quarter of 2019, luxury home prices declined for the first time in three years, and sales saw their largest decline since 2010, when supply increased by double digits. 

In 2018, Coldwell Banker named Palm Beach, Florida, as one of the top five luxury buyer power markets.

The Miami luxury real estate market has seen a positive trend in new and existing construction properties, seeing record sales activity in the last few years, according to a release. 

Because of lack of an income tax imposition in Miami, investors and hedge fund managers have sought refuge from other large metros where other sizable income taxes exist.

Lower tax policies in Miami have attracted the attention of other high-end markets to the Sunshine State. According to Realtor.com and Trulia.com, overseas shoppers are also setting their sights to Miami. 

In turn, the cost of luxury residences have increased in value. The median price of luxury single-family homes in Q1 rose 61% year over year to $10.1 million. Luxury condos rose 12.7% to $3.23 million. 



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In the same city where iBuyer Opendoor first set out to disrupt the housing industry in 2014, a new online real estate marketplace is emerging. 

Kribbz launched in Phoenix last week, and its founders are hoping to streamline the home-selling process, all while offering a fee-free service for sellers. And the company isn’t shying away from comparing itself over the iBuyer model. 

“iBuyers are purely focused on the bottom line, and through a combination of offer price and fees will get to a number that works for them. It’s a take it or leave it proposition,” Kribbz co-founder and CEO Kent Clothier said. “Kribbz marketplace is fee-free for the seller and facilitates bidding from a broad cross-section of potential buyers. End of the day, the seller has market validation and therefore the confidence that they are getting the best immediate, all-cash offer available, and as importantly, that what they see now in terms of offer price, is what they get in their pocket later.”

According to Kribbz, the company’s model is to provide an online marketplace that allows homesellers to source multiple, fee-free immediate offers on their property from investment-grade buyers. The company aims to launch in other markets throughout the remainder of this year and into 2020. 

Sellers won’t have to worry about open houses or the cost and time burdens that come with showing a home, the company said. This, of course, is similar to other iBuyer models. Kribbz’s biggest selling point? The fees land on the buyer. 

“Even with the rise of iBuyers, home sellers remain subject to fees and commissions that range from 6 percent to 14 percent of the offer price, which significantly impacts their net takeaway,” the company stated in a press release. “Kribbz fee-free, no-obligation experience removes after-the-fact charges and expenses for home sellers. Furthermore, by bringing together multiple buyers in a 24-hour bidding process, home sellers can receive several, competing offers on their property, giving them added confidence that their instant offer is the best available.”

According to the company, buyers on Kribbz are typically real estate investors. They have access to properties on the site by going through a paid subscription of almost $300 per month. There is a daily bidding cycle, and buyers are notified about available properties at the start of each one. Should their offer be accepted by the seller, the buyer then pays a $3,500 transaction fee to Kribbz. According to the company, all escrow-related activities are tracked in its app in real-time to all parties, and they can expect closing in no more than two weeks’ time.

“Technology is fundamentally reshaping real estate, making it a different industry today than it was even two years ago. Despite this, long-standing issues remain as homeowners continue to get punished with fees and remain subject to agendas that don’t align with their goals,” Clothier concluded. “By bringing together buyers and sellers in a marketplace environment, Kribbz streamlines and democratizes the entire experience, allowing both sellers and buyers to achieve their goals.”



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