CEO and president of United Wholesale Mortgage, Mat Ishbia, is back with another announcement, updating brokers and UWM partners on what to expect and think about heading into 2022.
First up is desktop appraisals. Acting Director of the FHFA, Sandra Thompson, announced in October 2021 that Fannie Mae and Freddie Mac are permanently offering desktop appraisals. Ishbia announced this offer will be coming March 19, 2022 through DU.
“Is it going to solve all problems? No. But is it good? Yes,” Ishbia said. “Purchase transactions, one-unit principal residence, 90% LTV or less – you can do a desktop appraisal. It’s going to trigger on DU and you’re going to see it come through.”
Ishbia stated that brokers will still need appraisers to acquire a floor plan and some additional materials, so will it be much cheaper? Ishbia threw his hands in the air, shrugged his shoulders and said, “I don’t know. Probably the same price, maybe a little cheaper, but the reality is that it will be faster and more efficient. Appraisers will be able to do it without going to the house, similar to what happened during Covid.”
Second update on the list is that the FHFA announced it will be increasing LLPAs on second homes and some high balance loans starting April 1, 2022. Ishbia notes that many lenders are putting these fees into their rate sheets today, charging them to borrowers or brokers now. As a result, second homes declined in market share to 3.87 – a massive change, Ishbia notes. High balance loans decline by a quarter to three quarters of a point.
Ishbia notes these changes will be negative to a lot of consumers, but is convinced something good can come out of it. “They’re going to be focused on affordability and focus on consumers with lower income situations. There are going to be new programs coming out…so second homes and high balance are not the focus of Fannie and Freddie Mac and FHFA.”
Ishbia told UWM partners to be aware of this change moving forward, and look at the opportunities that could come from this. For example, Ishbia pointed out this could make private-label securities (PLS) more popular, “with some arbitrage in there” he added, since those loans don’t go through Fannie Mae and Freddie Mac. Brokers should keep their eyes peeled moving forward and “be aware these hits are coming out in almost everyone’s rate sheet very soon.”
Lastly, Ishbia addresses the big elephant in the room: interest rates are going up. As of now, 30-year interest rates are up, and are currently projected to reach 3.5% this year or 3.9% or higher next year. Now brokers need to consider whether they can be dominant in purchase business or if they can do cash-out refinances. These will become more relevant heading into 2022. Ishbia recommends shorter terms if brokers want to do refinances.
Ishbia closes out the video with the same questions many brokers are asking themselves right now: How am I going to react to interest rates going up? How am I going to increase purchase business? How do I pivot to dominate in 2022?
