Wells Fargo pulls out of correspondent lending

Wells Fargo's strategic plans for "a more focused home lending business" include an exit from corresponding lending and a reduction to its servicing portfolio. The depository noted in a communication published Tuesday that both measures will help to "reduce risk in the mortgage business by reducing its size and narrowing its focus." The announcement confirms plans for a mortgage pullback that was first discussed in a Bloomberg report in August. Some industry stakeholders noted that Wells Fargo's exit would further decrease competition in the correspondent channel.

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Purchase applications fall to 9-year low

New loan activity picked up at the start of 2023 after a steep decline at the end of December , even as purchase numbers fell to their lowest level since 2014, according to the Mortgage Bankers Association. The MBA's Market Composite Index, a weekly measure of loan volumes based on surveys of association members, increased a seasonally adjusted 1.2% for the period ending Jan. 6. The uptick came one week after the index had registered a 26-year low. Compared to the same time period of 2022, the new year's first week of applications came in 68% lower. A rise in refinances brought on by lower interest rates helped lift the index, but its effect was countered by further slowing of purchases.?

Mortgage credit, underwriting fluctuating but not excessively

Credit availability contracted slightly in the latest index published by the Mortgage Bankers Association, following an increase in November that was the first seen in nine months. The index, which incorporates data from ICE Mortgage Technology, inched down from 103.4 to 103.3 In December. That leaves it slightly above 100, a value that reflects the historically tight credit conditions after the Great Recession's housing crash. Many industry stakeholders have been watching certain credit measures closely for signs that underwriting is loosening out of concern it could do so excessively like it did during the crash, but indicators still show it's historically tight.?

Fix-and-flip buyers see more opportunities in 2023

Although a challenging real estate market looks set to persist for much of 2023, a majority of noninstitutional investors view the current market offering opportunity and plan to grow their businesses in the coming year, a new study found. Approximately 70% of single-family home investors said they expect to make additional purchases this year, based on surveys of close to 900 current and potential clients conducted by New Western, the real estate marketplace platform connecting independent fix-and-flip investors to sellers. The number represents a small decrease from the 73% who said business grew from 2021 to 2022 . Among likely buyers, 59% intended to use cash or private money for their purchases.

CFPB proposes rule to rein in nonbank arbitration contracts

The Consumer Financial Protection Bureau proposed a rule Wednesday to rein in arbitration clauses in a second attempt to block companies from limiting consumers' legal rights or their ability to sue or remedy alleged violations of consumer protection laws. The proposed rule would create a nonbank public registry of non-negotiable form contracts that the bureau says "mislead consumers into believing the terms or conditions are legally enforceable." For years companies have used the fine print in consumer contracts to limit liability amounts, waive class action rights, and force customers into arbitration. The bureau views such contracts as restricting the ability of consumers to complain and to file lawsuits.?

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