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Freddie Mac opens 2022 with two large CRT offerings


Freddie Mac recently announced that its credit-risk transfer (CRT) program is projecting note-issuance volume of at least $25 billion in 2022. The government-sponsored enterprise (GSE) has made its first down-payment on that projection by issuing two single-family CRT note offerings totaling $3.3 billion so far this year that are secured by reference loan pools valued at $78.6 billion. 

Both CRT offerings were issued through Freddie’s Structured Agency Credit Risk (STACR) program. The initial deal closed on January 29 and the second offering is slated to close on February 11, according to Kroll Bond Rating Agency’s presale reviews of the STACR securitizations.

STACR 2022-DNA1 involves a $1.4 billion note issued against a reference loan pool of 190,774 residential mortgages with an outstanding principal balance of $33.6 billion. In the second offering, STACR 2022-DNA2, Freddie is issuing a $1.9 billion note against a reference pool of 143,889 single-family mortgages valued at about $45 billion. 

Through Freddie Mac’s STACR CRT transactions, private investors participate with the agency in sharing a portion of the mortgage credit risk in the reference loan pools retained by the GSE. Investors receive principal and interest payments on the STACR notes they purchase, but if credit losses exceed a predefined threshold per the security issued, then investors are responsible for absorbing the losses exceeding that mark. 

The leading originators for the loan pool in the first STACR offering of 2022, according to KBRA’s report, were United Wholesale Mortgage (UWM), 7%; Newrez LLC, 7%; Rocket Mortgage, 6.6%; Pennymac, 6.3%; J.P. Morgan Chase, 5.9%; and “other,” 67.2%

UWM also was the leading originator in the second STACR deal of 2022, at 9.1% of the loan pool. Rocket Mortgage also made a showing, at 8.3%, followed by Wells Fargo, 6.1%; JPMorgan Chase, 5.9%; Newrez, 5%; and other, 65.7%

Freddie Mac’s CRT program was founded with its issuance of the first STACR notes in July 2013. Freddie’s other single-family CRT program, the Agency Credit Insurance Structure (ACIS) program, shares risk with re-insurance companies. It was introduced in November 2013. 

“Freddie Mac’s Single-Family credit-risk transfer programs transfer credit risk away from U.S. taxpayers to global private capital via securities and re-insurance policies, providing stability, liquidity and affordability to the U.S. housing market,” Freddie Mac states in a press release.

Freddie Mac issued more than $18 billion in CRT notes across 10 STACR and 11 ACIS deals in 2021, according to the agency. 

Freddie’s counterpart, Fannie Mae, expects to issue about $15 billion in notes through Connecticut Avenue Securities real estate mortgage investment conduit in 2022, according to Devang Doshi, Fannie’s senior vice president of single-family capital markets.

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Rising interest rates trigger an exuberant MSR market 


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Incenter Mortgage Advisors was flooded with a surge of mortgage-servicing rights business in January — with bulk MSR sales approaching in one month what the firm normally tallies in an entire year.

Denver-based Incenter’s managing director, Tom Piercy, said he expects the rising tide of business to continue for the foreseeable future, so long as the housing market is swept up in a rising-rate environment — prompting holders of MSRs to sell the assets. MSRs gain value as interest rates rise, in part because upward-bound rates cause mortgage refinancing to ebb, which slows prepayment speeds on mortgages — increasing the effective long-term yield of the servicing rights tied to those loans.

Incenter completed a dozen bulk sales transactions in January involving MSRs for agency-backed loan pools that together had a total unpaid principal balance of $113.2 billion 

“On average, historically, we’d be selling $100 billion to $125 billion [in MSRs] annually,” Piercy said. “And now we just did over $110 billion for the month of January.”

Piercy explained that companies, primarily bank and nonbank mortgage originators, have been “stockpiling” MSR assets over the past two years, holding them on their balance sheets and waiting for the right moment to sell them. That “trigger” moment finally arrived in January, he added.

“The big trigger was we had a half-point increase in the 30-year par rate [for a mortgage] in January,” he said in a recent interview. “The generally accepted benchmark par rate in the marketplace was hovering around 3 1/8 [3.125%] at the beginning of the month, and that rose to 3 5/8 [3.625%].”

San Diego-based Mortgage Capital Trading (MCT) described market conditions as being “ripe for MSR bulks sales” in an analysis posted on its website in late October of last year.  At that time, with mortgage interest rates still hovering around 3% or less, the uptick in MSR transactions was likely being driven by lenders’ year-end balance sheet adjustments and concerns over a potential capital-gains and other corporate tax increases coming out of Washington as opposed to rising interest rates, according to Piercy.

“The economy continues to heal from the pandemic and MSR pricing has seen improvement as a result,” MCT’s analysis stated. “Many servicers are still sitting on large portfolios as a result of MSR multiples/prices going to zero in early 2020, and the market is [now] becoming ripe for MSR bulk sales and there is ample capital/liquidity from buyers ready to purchase.”

Piercy said many servicers had been holding onto the lion’s share of their MSR assets since the pandemic-induced liquidity crisis hit the market in March and April of 2020. 

“Ultimately the market came back pretty quickly, by the end of Q2 [2020] really, but everybody felt the servicing was worth much more than what was being paid in the market at the time,” he explained. Consequently, Piercy said, many of the servicers chose to retain and stockpile MSRs, “with the anticipation that ultimately rates were going to rise.”

“They were willing to manage that [MSR] risk on their balance sheets because rates were historically low,” Piercy added. “So, you had two massive mortgage origination years [2020 and 2021], and you had your top mortgage originators retaining servicing, and so this asset just expanded.”

Now, with the Federal Reserve recently signaling clearly that it is taking a “hawkish position” on rates, and a rate-hike expected in March, the stage is set for a massive sell-off of MSR assets.

“Without question, with the Fed and everything it has stated and the expectation of rates rising, [MSR] buyers are much more confident with what they perceive as the [mortgage] prepayment performance going forward,” Piercy said. “And they are implementing that into their institutional valuation of the MSR assets. And so, we immediately started seeing a steepness in the pricing curves for MSRs in January, and week over week it has increased.”

As a result of the hot market for MSR sales, Incenter notched a dozen bulk MSR sales in January involving agency-backed loan pools ranging in size from $851.5 million to $23.7 billion. In fact, five of the deals involved MSRs pegged to loan pools that exceeded $10 billion in unpaid principal balance. In addition, Piercy said Incenter is already preparing bids on two new deals expected to hit the market in early February “worth about $25 billion combined.”

A look at the pricing data supplied to HousingWire by Incenter tells the story of why the MSR market is so exuberant right now. The net servicing fee — which is the MSR income stream — across the dozen MSR sales transactions brokered by Incenter last month ranged from 25 basis points to 39 basis points — with a basis point representing a fraction of 1 percent. 

The price paid for the servicing rights on the agency loan portfolios — composed of Freddie Mac, Fannie Mae and/or Ginnie Mae loans — is expressed as a multiple of the net servicing fee, and it continued to increase steadily over the month of January. Across the 12 deals handled by Incenter, the multiple paid by the MSR buyers ranged from a low of 3 to a high of 5.02. 

In fact, the largest MSR deal of the month for Incenter, involving a loan portfolio valued at $23.7 billion, commanded a price multiple of 5 — or a sales price of 125 basis points (which equates to 1.25% of the total $23.7 billion value of the loan portfolio).

MSR buyers include banks, nonbanks, real estate investment trust as well as private equity firms, according to Piercy and public records. Piercy added that private equity firms have been particularly active in the MSR market recently.

“The influence of private-equity in the space [is through] either an MSR direct investor who has their agency approvals [and] are in partnership with a servicer, or they have an equity stake in an originator,” he said. “They’ve been in this space since after the financial crisis [more than a decade ago] but their numbers have expanded.”

One of the leading purchasers of agency MSRs in 2021, according to mortgage-data analytics firm Recursion, was PHH Mortgage Corp., which is a subsidiary of Ocwen Financial Corp. PHH Mortgage ranked second among the leading purchasers of agency MSRs in 2021, with nearly $68 billion in servicing rights acquired, Recursion’s data shows. 

In May of last year, Ocwen announced it had finalized an MSR joint venture with private equity firm Oaktree Capital Management.

“Ocwen and Oaktree will invest up to $250 million of equity capital … to acquire Fannie Mae and Freddie Mac mortgage servicing rights (“MSRs”),” states the press release announcing the joint venture.. “… PHH Mortgage Corporation (“PHH”), a wholly-owned subsidiary of Ocwen, will be the sole provider of subservicing, portfolio recapture services and certain other administrative services.”

Another private-equity player in the MSR space is St. Petersburg, Florida-based Marlin Mortgage Capital, which has raised some $600 million for MSR purchases, according to industry publication Inside Mortgage Finance.

“We’ve had new groups come in that have acquired MSR platforms,” Piercy said. “We call them shells, where they are able to gain access to having Fannie and Freddie [agency] MSRs, and Marlin Mortgage is one of those.”

Marlin’s website states that it was created to act as a platform for “buying and selling residential mortgage servicing rights.”

“Marlin will enter into various subservicing agreements with best-in-class bank and nonbank operators,” the company’s website states. “… Marlin [also] has initiated the process of securing certain federal and national servicing licensing approvals necessary to own MSR assets.”

Another private equity player in the MSR space is Minneapolis-based Rice Park Capital. It announced in January of this year that it “had closed on a $300 million capital commitment from M&G Investments for its inaugural mortgage servicing rights (MSR) fund.”

“The initial $300 million of equity gives us the capacity to purchase approximately $70 billion of MSRs,” said Nick Smith, Rice Park founder and CEO, in announcing the deal. “As a result of our management team’s industry relationships, we’ve already begun cultivating MSR investment opportunities within our network of origination and sub-servicing partners.”

Yet another private equity player looking to capitalize in the MSR market is Austin, Texas-based Prophet Capital Asset Management, which purchases MSRs “in tandem with our premier mortgage-servicing partners,” the company’s website states.

Prophet in mid-January of this year filed a Form D notice of exempt offering of securities with the Securities and Exchange Commission in which it reveals that more than $65 million has been raised from investors for the “Prophet MSR Opportunities limited partnership.”

“We had a pandemic during which the government had to get involved, causing rates to drop historic levels for two years,” Piercy said. “And now you’ve got natural market influences coming out of this that are generating a significant influence in the MSR space.

“We anticipate, so long as we continue to see this perception of interest rates rising — barring something happening on the other side of world that absolutely could throw interest rates into a state of flux — that you’re going to see this type of [hot] market continuing well into the second quarter.”

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Old Republic produces third consecutive record-setting year


A year of low mortgage rates and high demand for housing was certainly good for Old Republic International Corporation.

During the firm’s fourth quarter earnings call on Thursday, Craig Smiddy, Old Republic’s president and CEO, announced that the firm’s pre-tax income, excluding investment gains, was $335.1 million for the fourth quarter and $1.16 billion for all of 2021, representing 20.7% and 40.2% year-over-year increases, respectively. This was the first time yearly pre-tax income exceeded $1 billion.

“We feel very good about where Old Republic International sits with our two key businesses, General Insurance and Title Insurance, and we look forward to another productive good year in 2022,” Smiddy said during the earnings call.

Old Republic’s title insurance sector experienced significant growth in premiums and fees, as demand for homes and the number of refinances soared due to record low mortgage rates.

Income generated from title insurance premiums and fees totaled $1.1856 billion in the fourth quarter up from $1.0317 billion in Q3. Overall, in 2021, title insurance generated $4.4043 billion in revenue up 34% from a year prior. However, a larger volume of title insurance premiums written means an increase in the claims rate. In the fourth quarter, Old Republic’s title insurance claim ratio increased 0.1 percentage point from the third quarter to 1.5%. The claim ratio for all of 2021 came in at 2.6%, up from 2.3% in 2020. As a result of the rising claim ratio, claim costs from 49.9% in 2021 to $112.9 million.

“The title group posted an all-time high for quarterly underwriting revenue, while quarterly operating profits only trailed the record set of results reported in the second quarter of 2021,” Carolyn Monroe, the president of Old Republic’s title insurance group, said during the earnings call. “While we have seen a decline in order counts over the second half of the year as a result of the slowdown in the refinance sector, purchase transactions, which generate a higher fee per file, remained healthy to close out the year.”

During 2021, purchase transactions represented roughly 72% of the title group’s revenue, with refinance transactions making up the remaining 28% of revenue.

Old Republic’s total operating expenses also rose during the fourth quarter of 2021, increasing 9% from Q3 to $1.931 billion, and closing out the year at $7419.5 billion, a 14.5% increase from 2020.

Chicago-based Old Republic is the third largest of the “Big Four” title insurers. During the third quarter of 2021, Old Republic’s market share was 14.8%, making it the third largest underwriter by market share, according to the American Land Title Association. 

Last month, Old Republic announced that that its subsidiary, Old Republic National Title Insurance Company, had acquired the operating assets of Mountain View Title & Escrow, Inc. This acquisition added nine office locations and 86 employees to Old Republic’s existing network that includes more than 270 branch and subsidiary office locations nationwide.

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Class Valuation continues its acquisition spree


Class Valuation, one of the largest appraisal management companies in America, just made another acquisition. The AMC announced late last week that it has acquired fellow Detroit-based AMC Metro-West and its subsidiary Valuation Link.

In a press statement, Class Valuation said Metro-West, founded in 1987, is the largest independent residential appraisal firm in the country, with staff appraisers in over 80 U.S. metros.

“With this new partnership, we will not only be able to offer our clients more, but we can offer our appraisers more as well,” Brandon Boudreau, COO of Metro-West & co-founder of Valuation Link, said in a prepared statement. “I am incredibly proud of Valuation Link and Metro-West and all we’ve accomplished. Joining forces with Class Valuation is the perfect fit to take these accomplishments to the next level as we will continue to grow and strengthen our offerings together.”

Terms of the deal were not disclosed.

Class Valuation, which itself is owned by private equity firm Gridiron Capital, said the acquisition of Metro-West would fit into its larger strategy of fusing tech tools such as automation and 3D measurements to help clear the well-documented capacity issues in appraisal.

“One area of focus for us has been the growth of a staff appraiser network and building out a nation-wide trainee program,” John Fraas, CEO of Class Valuation, said in a statement. “This program can improve the current capacity challenges facing the industry while also strengthening the appraiser workforce for the future. This new partnership with Metro-West and their vast network of staff appraisers will fit perfectly with this initiative.”

This is the fifth acquisition Class Valuation has made in the last 12 months, and the seventh in recent years. In September, Class Valuation acquired Kansas City, Missouri-based Pendo Management for an undisclosed sum. 

There’s been a surge in private equity investment in the U.S. appraisal space over the last two years.

Arcapita Group Holdings, a Bahraini investment firm, announced this week that it had acquired a controlling stake in appraisal management company Nationwide Property and Appraisal Services for an undisclosed price.

The deal gives Arcapita an AMC that serves mortgage lenders in all 50 states, has a network of over 15,000 licensed appraisers, and grossed $144 million in revenue in 2021.

In Arcapita’s release about the acquisition, Neil Carter, managing director and head of U.S. private equity, described the appeal: “Residential real estate is the U.S.’s largest asset class, with sound fundamentals driven by population growth in the primary homebuying demographics, and increasing levels of new home construction. With appraisals being a regulatory requirement for mortgages for new home purchases, refinancing, and foreclosures, the $7.5 billion real estate appraisal services market has cumulatively grown by 32% since 2008.”

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CoreLogic: home price appreciation will cool in 2022


Home prices across the nation climbed 18.5% year-over-year in December, according to a monthly report published by CoreLogic. On a month-over-month basis, home price gains rose by 1.3% in December 2021 compared to November.

Consumer desire for homeownership paired with a low supply of for-sale homes were the main contributors to a red-hot housing market in 2021.

However, the data vendor said that the market is beginning shift. Mainly, that home price gains, which are predicted to start 2022 above 10%, will slow to 3.5% by December 2022.

In other words, the market and home price appreciation will start to normalize.

“As we move further into 2022, economic factors – such as new home building and a rise in mortgage rates – are in motion to help relieve some of this pressure and steadily temper the rapid home price acceleration seen in 2021,” said Frank Nothaft, chief economist at CoreLogic.

Mortgage rates have already started to climb upwards, with Freddie Mac‘s PPMS Mortgage Survey clocking the average 30-year fixed rate mortgage at 3.55% during the week ending Jan. 27.

The perfect storm of supply and demand pressures in 2021 pushed price appreciation to an average of 15% for the full year, up from the 2020 full year average of 6%.

The reason for supply pressures in 2021 in part stemmed from supply-chain delays and the skyrocketing of lumber costs, delaying the building of new houses.

A report published by Redfin this week found that overall inventory dropped to a record low in December, with just 1.8 months of supply.

Meanwhile, last month, Naples, Florida, logged the highest year-over-year home price increases at 37.6%, while in Punta Gorda, Florida, home prices grew by 35.7%, CoreLogic’s report found.

On a state-by-state basis, the Southern, Southwest and Mountain West regions dominated the top three spots for national home price growth last year, with Arizona ranking first place at 28.4%.

Florida ranked second with 27.1% home price growth and Utah came in third at 25.2%, the report said.

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Fannie Mae launches another CRT offering


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Fannie Mae has unveiled its second credit-risk transfer (CRT) deal of 2002, a $1.2 billion note offering through its Connecticut Avenue Securities real estate mortgage investment conduit, or REMIC. 

The recent offering, CAS Series 2022-R02, involves transferring loan-portfolio risk to private investors via a $1.2 billion note offering backed by a reference pool of 149,393 residential mortgage loans valued at $44.3 billion.

With the completion of this credit-risk transfer (CRT) transaction, Fannie Mae will have brought 46 CAS deals to market, issued over $52 billion in notes since its initial offering in 2013, and transferred a portion of the credit risk to private investors on about $1.7 trillion in single-family mortgage loans, measured at the time of the transaction.

The agency expects to issue about $15 billion in notes through CAS transactions in 2022, according to Devang Doshi, Fannie’s senior vice president of single-family capital markets.

Through a CRT transaction, private investors participate with government-sponsored enterprise (GSE) Fannie Mae in sharing a portion of the mortgage credit risk in the reference loan pools retained by the GSE. Investors receive principal and interest payments on the CRT notes they purchase, but if credit losses exceed a predefined threshold per the security issued, then investors are responsible for absorbing the losses exceeding that mark. 

Kroll Bond Rating Agency (KBRA) notes that the reference pool for this latest CRT transaction “exhibits significantly more geographic diversification” than most prime jumbo loan pools it rates, which “helps mitigate the risk that a regional economic recession or natural disaster will have an outsized impact on default rates.” 

The bond-rating agency’s report notes that the average California concentration of loans in KBRA-rated prime jumbo pools is typically 45% to 50%, but the concentration of loans from the Golden State in the CAS Series 2022-R02 transaction is “relatively low at 14.7%.” The other states among the top five in terms of loan concentration are Texas and Florida, each at 7.8%; Washington, 3.8%; and Virginia, 3.7%, the KBRA report shows.

Fitch Ratings also notes that the reference loan-pool borrowers “have a strong credit profile,” with an average FICO credit rating of 748 and a debt-to-income ratio of 36%. The major loan originators for the loans in the CAS Series 2022-R02 reference pool are United Wholesale Mortgage, 8.04% of loans originated; Rocket Mortgage, 7.43%; and Wells Fargo Bank, 5.54%, according to Fitch.

The initial CRT deal of 2022, CAS 2022-R01, involved a $1.5 billion note issued against a reference loan pool of 180,002 residential mortgages with an outstanding principle balance of $53.7 billion. In the final CRT deal of 2021, CAS 2021-R03, Fannie Mae issued a $909 million note against a reference pool of 117,000 single-family mortgages valued at about $35 billion. 

The prior two deals in 2021 involved CRT notes with a combined value of nearly $2.2 billion. Prior to restarting CRT offerings last year, Fannie Mae had backed away from the CRT market for a time — with its prior transaction closing in March 2020.

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Private-label market wraps up January with a roar


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J.P. Morgan Mortgage Trust, the securitization conduit for financial giant JPMorgan, recently issued a $2 billion offering backed by a pool of jumbo loans — capping off a vibrant first month of 2022 for the overall private-label market.

At least 25 transactions collateralized by more than 27,000 mortgages valued at $14.3 billion hit the market in January, based on an analysis of the flurry of bond-rating reports published over the month. The offerings were evenly divided among the major private-label buckets.

  • Jumbo-loan offerings — seven deals at $5.67 billion.
  • Investment property/second home offerings —eight deals valued at $4.17 billion
  • Non-QM (or non-prime) issuances — nine deals at $4.03 billion. ‘
  • Plus, there was one private-label transaction involving reperforming loans (BRAVO Residential Funding Trust 2022-RPL1), which was backed by mortgages valued at about $414 million.

For the month, JPMorgan sponsored the largest deals in both the jumbo and investment-property categories — with its $2 billion jumbo offering and a separate nearly $740 million deal backed by investment properties. 

On the non-QM side — a market that serves borrowers who don’t qualify for traditional agency-backed mortgages — lender Verus Mortgage Capital and real estate investment trust Starwood Property Trust led the way. They sponsored offerings through their private-label conduits valued at more than $562 million each.

“The non-QM market is beginning to mature much more and at a much faster pace than what people were anticipating, and much of that is tied to interest rates [rising],” said Tom Piercy, managing director of Incenter Mortgage Advisors. “So, as you begin to see refinances move away, and we go into this purchase market, the non-QM space obviously has a much broader capability in the credit box, and that will allow it to capture greater market share through the purchase-money side.”

Last year, Verus Mortgage sponsored 11 private label transaction valued at about $5.4 billion, according to data from Kroll Bond Rating Agency (KBRA), while Starwood sponsored half a dozen offerings valued at nearly $2.3 billion. 

JPMorgan ended 2021 with 17 completed jumbo-loan securitization deals valued at $17.1 billion and eight offerings backed primarily by investment properties/second homes valued in total at $3.9 billion, KBRA data show. The combined value of JPMorgan’s private-label transactions, about $21 billion in 2021, represents 18% of KBRA’s estimated $115 billion in deal volume for the entire private-label market last year.

“The 2021 resurgence of the private label mortgage-backed securities market was led by J.P. Morgan … with a robust 17 [jumbo] deals pricing for more than $17 billion,” states a January report published by digital mortgage platform MAXEX — in which JP Morgan is in an investor. “J.P’s volume alone nearly eclipsed 2020’s [jumbo-securitization] volume across all issuers.

“Other notable deals include Citigroup’s first foray into the prime residential mortgage-backed securities (RMBS) market since 2014.”

MAXEX notes that Citigroup, which originated close to $31.2 billion in residential mortgages last year, finished 2021 with three jumbo-loan offerings valued at slightly more than $1 billion. The lender also sponsored three private label offerings backed by investment properties last year valued at $800 million, KBRA data show. 

Citigroup added to its securitization portfolio in January of this year with another offering, Citigroup Mortgage Loan Trust 2022-J1, which is backed by high-balance mortgages valued at $351 million.

In addition to JPMorgan, Citigroup, Verus and Starwood, other major private-label deal sponsors in January included Rocket Mortgage, Redwood Trust (through its Sequoia conduit), Goldman Sachs, Guaranteed Rate, loanDepot (through its conduit, Mello Mortgage Capital Acceptance), and Wells Fargo. 

As of October 2021, according to the most recent report from the Urban Institute’s Housing Finance Policy Center, the non-agency share of the RMBS market — compared with the agency share — stood at 4%, up from 2.44% in 2020. Still, it’s far off the nearly 60% of the market private-label issuance commanded just prior to the housing-market crash in 2008. 

The Federal Housing Finance Agency’s (FHFA’s) recently announced plan to hike upfront fees for high-balance and second-home loans effective April 1 should provide a boost for the private-label securities market in 2022, according to Dashiell Robinson, president of Redwood Trust. He added that the fee boost helps to offset the drag on the non-agency RMBS market from the FHFA’s 2022 conforming-loan limit increase as well as its suspension last fall of volume caps on agency purchases of investment-property and second-home mortgages.

“The FHFA, particularly in the Biden administration, seems to be more focused on first-time homebuyers, minority homeowners — getting back to the roots of the [government-sponsored enterprises] purpose, which is homeownership,” said John Toohig, managing director of whole-loan trading at Raymond James. “It’s not your second home, or investor property, or high-balance loan. It’s not your mansion. It’s your first home.

“I would bet 2022, you’ll see more of a move in that direction, which is going to push more deals into the private label market.”

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The growth of Stewart toward an end-to-end real estate experience


Stewart is one of the largest global title insurance companies and underwriters in the industry. It’s been around for more than 128 years and is built on values that include accountability, collaboration, trust and a fundamental commitment to providing better experiences.

But the company is not satisfied just looking back at its long history. Instead, its leaders are looking ahead and focused on how the company can grow.

“Our vision is to be the premier title services company,” said Beth Fowler, EVP of Lender Services at Stewart. “To do that, to be the best company in the industry for lenders and enterprise customers, what we deliver has to go beyond title. And it does.”

Investing in people and technology

Stewart has been in the news several times over the past two years, as the company has expanded talent and made numerous acquisitions to aid in its growth. Among the acquisitions are title and settlement offices to expand its share and gain scale in key markets, as well as technology providers to improve the customer experience and expand its data and analytics capabilities. 

In the past three quarters alone, the company has added more than 3,500 employees through acquisitions and direct hires.

Over the past 18 months, the company has invested $1 billion on more than twenty companies that span the full breadth of its business. Industry leaders it has added to its portfolio to expand service capabilities include A.S.K. Services, Cloudvirga, Pro Teck Valuation Intelligence, Signature Closers, United States Appraisals, Informative Research, PropStream, and NotaryCam.

“We’ve been very intentional as we’ve looked at potential acquisition targets and products and services that would benefit our customers,” Fowler said. “Our acquisition strategy demonstrates Stewart’s commitment to delivering a better experience, whatever it takes. That dollar investment, tied with the intentional nature of what we’ve brought into the Stewart fold – at the end of the day, we’re excited about what that brings to our customers.”

Improving services and capabilities

Stewart’s investments reflect the important role lender services plays in its overall plan to become the premier title services company. Stewart has shown a true commitment to providing centralized title services to its lender and other enterprise customers. Over the past two years, the lender division has focused on two things: growing in size and scale and adding new capabilities to serve customers needing multi-state and national solutions.

According to Fowler, “As a premier partner, we’re being really thoughtful in deploying capital to look for solutions, capabilities, and products and services that really maximize and enhance the customer experience, whether that be for lenders, servicers, investors, power buyers, or others. A big part of that, in terms of what we see, is ensuring we have a robust suite of digital data and analytics services.”

Providing an end-to-end experience

Stewart’s lender services cover the full digital mortgage and real estate experience. That’s by design, Fowler said.

“We start by leveraging our core title capabilities and expanding to other products and services in the transaction lifecycle,” she said. “We’ve added capabilities that start at the front end with the consumer, and then take it all the way through the closing and funding experience and beyond.”

The result is an impressive chain. PropStream offers data for lead generation; Informative Research provides customer acquisition, prequalification, portfolio retention, and credit and verification solutions; Cloudvirga’s POS system powers lenders, originators, consumers and brokers and automates back-office tasks; United States Appraisals and Pro Teck expand Stewart’s depth in the appraisal and valuation space from originations to capital markets to servicing; Signature Closers and NotaryCam provide enhanced signing options; and the partnership with CertifID protects funding.

Commenting on Cloudvirga, one of Stewart’s more recent acquisitions, Fowler said, “We were very attracted to the technology and mortgage expertise that it brings to the table. Certainly, that’s core to what lenders need. We also appreciate the opportunities to expand its impact.”

Fowler also noted that Stewart was particularly excited to pair NotaryCam, a leader in online notarization and original provider of eClosing solutions, with Signature Closers, a signing and technology platform that’s part of the Stewart family of companies. Stewart acquired NotaryCam in late 2020, after years of partnership in the digital and eClosing space.

“Bringing those two pieces together enables Stewart to deliver on any closing experience that our customers want,” she said. “Leveraging the NotaryCam platform, which truly is one of the best in class, [if] they want that true remote online notarization experience, we have that capability, and more importantly the depth of expertise to deliver.”

Stewart’s partnership with CertifID is part of the experience as well. CertifID is Stewart’s partner for secure funds transfer protection, as the company wants to ensure it protects its customers, itself and its shareholders among rising threats of wire and title fraud.

“All of these products and services are superior from a standalone perspective,” Fowler said. “Our vision is to take it a step further, to pull those services together in a more streamlined and digitized experience that can then yield efficiencies for our customers – cost savings, better decision-making, and ease of use. Now that we’ve brought these capabilities together, the next iteration is to transform it into a more streamlined and digitized end-to-end experience.”

The future of Stewart

“Stewart also has two main goals when it comes to how it plans to move forward,” Fowler said, one of which is to continue to build and expand upon its automated capabilities.

Part of that is a focus on Stewart Accelerate, the company’s automated title and underwriting decision engine, which benefits lenders by providing them with an upfront workflow decision to help them identify which loans can close more quickly. Stewart is looking to continue to enhance the technology and decisioning capabilities over the next year.

Its second goal goes back to the company’s desire to streamline and create a platform of solutions for its customers across the real estate spectrum – lenders, investors, servicers, and other enterprise buyers and sellers.

“We want to continue to leverage Stewart’s assets and capabilities, finding ways to connect the components for the benefit of our customers with more integrated solutions and intelligent decisioning that culminates in a premier customer experience,” Fowler said.

Over the last few years, Stewart has demonstrated its commitment to growth, evolution and movement toward its goals of streamlining the mortgage or buying and selling process for its customers. It shows no signs of stopping anytime soon.

“Momentum is something that you see and hear when you talk about Stewart,” Fowler said. “We’re investing in that momentum and that’s going to yield some more great things to come. We’re definitely excited about what we’ve accomplished and where we’re going.”

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The Housing Market Price Growth in 2021 Presents Challenges to America’s Future


The tight housing supply, the extreme demand by buyers, and the overall irregular conditions we’ve faced for the last couple of years have made the housing market prime for home sellers. And, these conditions have also made it incredibly difficult for buyers and renters who are looking for housing.

According to a new report from ATTOM, a real estate data publisher, home seller profits rose 45% year-over-year in 2021, and are now up to $94,092 in average profit. In 2020, the average profit was $64,931—and just $55,000 the year prior.

The giant leap in profits is attributed to the continued acceleration of appreciation in markets across the country. The Case-Shiller Index now tracks at 276.12 points, up about 19% since this time last year—with over 90% of markets increasing profit margins throughout 2021.

So how is this massive growth affected buyers and renters—and how will it affect the housing outlook for these two groups in the future? Here’s what you should know.

Home buyers faced extreme challenges throughout 2021

At the start of the pandemic, the Fed lowered interest rates to near-record lows. This helped flood new buyers into the market, exacerbating the housing shortage and spiking prices—and rates continued to fall throughout 2021. This created a storm of home sales that culminated into one of the greatest housing markets on record for sellers—and one of the worst for buyers.

“What a year 2021 was for home sellers and the housing market all around the U.S. Prices went through the roof, kicking profits and profit margins up at a pace not seen for at least a decade. All that happened as the virus pandemic raged on, which actually helped drive the increases instead of [stifling] them,” said Todd Teta, chief product officer at ATTOM.

“Households that escaped job losses from the pandemic dove into the market, in large part as a response to the crisis. And the rising demand led the market boom onward. No doubt, there are warning signs that the surge could slow down this year. But 2021 will go down as one of the greatest years for sellers and one of the toughest for buyers,” Teta said.

Renters didn’t have it any easier

Both buyers and renters received the short end of the stick in 2021. Rental markets across the U.S. skyrocketed in price—making it a lot more expensive to pay for housing for current and would-be renters.

According to Zumper, rent prices rose 12% for a median one-bedroom apartment in 2021. In turn, rent prices hit an all-time high.

Of course, not all markets are created equally. Some saw faster price growth than others.

New York City, for instance, saw 25% growth in one-bedroom rental prices—with San Francisco trailing right behind. On average, all markets increased enough to push the national median into double-digit growth.

What these rising prices mean for buyers and renters in the future

These increased rent prices painted an especially bleak picture for younger renters and workers. For example, workers in the 16- to 19-year-old age bracket earn, on average, about $555 per week. For employees in the 20-24 age bracket, weekly earnings total about $633 on average.

And, considering that the national median rent for a one-bedroom apartment now costs, on average, about $1,374, it takes the average younger renter more than two weeks of work to gross enough funds to cover rent.

Considering the decreasing rate of homeownership amongst the millennial demographic compared to previous generations at their age, the prospects look no better for Gen Z. Not only is rent completely unaffordable for most young adults, but student debt also continues to soar—and most report having little to no savings.

Granted, most young adults in the 16-24 age demographic are either living with their parents or guardians or are in college—or both. But one of the age-old promises in this country is the opportunity for unparalleled upward financial mobility, which is driven primarily by the ability to own property and carve your own path in life.

But now, even with a bachelor’s degree, it’s becoming a lot harder to get started on the path towards the American Dream. And it’s due in large part to the fact that we have a severe affordability crisis in the United States.

Where does it all end?

I’ve repeated it in several articles, but it bears repeating again: The major issue is our severe shortage of housing units. The U.S. suffers from a shortage of a whopping 10 million units, and it’s been plaguing us since prior to the 2008 crash.

Without those units, we’ll continue to be in a supply deficit. And, based on the basic laws of supply and demand, if demand remains higher than supply, prices will stay elevated.

The housing market is, of course, unique. Factors like interest rates and wages play a role in demand. And, interest rates are expected to rise throughout 2022.

However, it’s worth noting that even though interest rates are set to rise, they are still on the lower end of the spectrum historically. What that suggests is that unless rates rise to the percentage points we saw throughout the 1980s—between 10-15%—the demand will likely remain elevated. And, that’s especially true for investors who recognize that anything below 8% is still low comparatively.

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Final thoughts on the housing market challenges in the U.S.

Affordability issues are finally catching up to the sales market, so we are starting to see more and more buyers getting price-locked out of various markets. That’s especially true for first-time buyers.

Theoretically, this should help cool some of the demand. However, long-term prospects suggest that home prices will stay up—barring some sort of financial crash, anyway.

So, there is really no telling as to when the affordability crisis will end. At this point, it’s all just a matter of letting the market play out and then seeing where it takes us.



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One of the largest appraisal management companies just got acquired


Arcapita Group Holdings, a Bahraini investment firm, has acquired a controlling stake in large independent appraisal management company Nationwide Property and Appraisal Services for an undisclosed price.

The deal, which was announced Monday, gives Arcapita an AMC that serves mortgage lenders in all 50 states, has a network of over 15,000 licensed appraisers, and grossed $144 million in revenue in 2021.

Nationwide has been under the umbrella of Corridor Capital, a lower middle market private equity firm, since 2016. Corridor will retain a stake in Nationwide, which claims to have more than 100 lenders and 21 of the top 25 wholesale lenders in the country as clients.

“We were attracted by Nationwide’s highly cash generative business, experienced management team, and strong base of clients across the country,” Arcapita CEO Atif Abdulmalik said in a statement. “Close to 50% of Nationwide’s customers have maintained their relationship with the company for over six years, highlighting the longevity of its customer relationships, and the company benefits from a free cash flow conversion rate of over 99%.”

Nationwide, led by Sri Velamati and purportedly the second-largest AMC in the country, itself has been acquisitive in recent years. The AMC has acquired five other companies since Corridor bought a stake in Nationwide in 2016. In June, Nationwide acquired Portland, Oregon-based First Choice Appraisal Management, expanding its reach into the Pacific Northwest.

Other large financial firms are also putting money into the appraisal management space, which is highly fractured.

In September, appraisal management company Class Valuation, a subsidiary of investment firm Gridiron Capital, acquired Kansas City, Missouri-based Pendo Management for an undisclosed sum. And in October, private holding group StoicLane acquired control of the appraisal management company Lender’s Valuation Services (LVS). 

The appraisal industry has been a focus of the Biden administration. The Department of Housing and Urban Development formed a task force to root out bias in appraisal, and the Appraisal Subcommittee issued a scathing report last week that concluded the appraisal industry was essentially self-regulated and suffers from numerous structural problems.

Further, a report issued by Fannie Mae in late January concluded that Black borrowers refinancing their home on average received a slightly lower appraisal value relative to automated valuation models (AVMs); homes owned by white borrowers were more frequently overvalued than homes owned by Black borrowers; and six states – Georgia, Louisiana, South Carolina, North Carolina, Mississippi, and Alabama – accounted for nearly 50% of the overvalued homes of white owners in majority-Black neighborhoods.

HousingWire in June published a longform examination of the appraisal industry’s unconventional – and trying – relationship between appraisers and appraisal management companies.

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