In the latest 3 Points video from United Wholesale Mortgage (UWM), CEO Mat Ishbia identifies some positive changes happening in the industry to keep everyone’s hope alive.
First, Ishbia brings up positive changes made to the FHA. The U.S. Department of Housing and Urban Development (HUD) released a new mortgage letter on July 7 addressing the impact of COVID-19, which includes some changes on how to calculate income: FHA borrowers can take out the period of COVID-19 if it negatively impacts their income.
For instance, if you made $60,000 pre-COVID but then it dipped to $30,000 during the pandemic before going back to $60,000, underwriters don’t have to average the three incomes. Instead, they can use the $60,000 income to qualify for the loan.
Additionally, Ishbia mentions that appraisals used to be good for up to 120 days, but now it’s 180 days — more aligned with other GSEs.
Another opportunity may arise if HUD decides to cut premiums for FHA borrowers, though that remains just a rumor for now, he said. Overall, Ishbia relays his excitement that the FHA is looking at ways to make their program better for consumers and loan officers across the board.
The second point in Ishbia’s video is declining demand for non-agency loans, including non-agency jumbo and non-agency Non-QM. Overall, there’s a lot less demand than people expected, Ishbia says.
“Everyone talked for years, ‘Hey, if rates go up, the non-agency market is going to carry us through.’ That’s not actually happening,” Ishbia said. “The market is down for that as well.”
With rates going up and the housing market facing volatility, non-agency programs have declined just as fast, or perhaps even faster, than the agency loans. Ultimately, Non-QM and non-agency loans will not save your business, Ishbia intimated.
Real business remains in the agency market with Fannie Mae, Freddie Mac, FHA, VA, and USDA loans, he said. According to Ishbia, that’s where the majority of the volume is and that’s where it’s going to continue to stay going forward.
Yet, UWM continues to roll out non-agency options, such as Prime Jumbo Max and Prime Jumbo Max ARM loans for its broker partners, and it began accepting bank statement loans in early 2022. All are non-agency loans.
Ishbia's third point is that Fannie Mae tightened its credit box as of July 10 — Fannie Mae DU version 11.0. Currently, most of the focus is on cash-out refinances with multiple high-risk factors, and Fannie Mae has been known to tighten the credit box under these conditions. It’s not a surprise, Ishbia says, and should not cut down approvals by a significant amount.
“Understanding DU’s risk and eligibility matrix and how they’re thinking about it going forward is good for all of us to understand,” Ishbia said.
