July 19: Letters on LO comp lawsuit, signing bonuses, and tariffs; Securitization news; Saturday Spotlight: Finance of America

“I received an e-mail saying, ‘At Rand McNally, we can even read maps backwards’ and I thought, ‘That’s just spam.’” It is good for those employed in our industry to keep a close eye on mortgage payment delinquencies, and this map shows where homeowners are behind on payments. It is also good for originators to keep a close eye on demographics (like our Saturday Spotlight below). Between 2023 and 2024, the U.S. population aged 65 and older grew by 3.1 percent to 61.2 million, while the population under 18 slightly declined to 73.1 million. Over the past two decades, the share of older adults has risen steadily, shrinking the gap between seniors and children to less than 12 million. From 2020 to 2024, the older population surged by 13 percent, far outpacing the modest growth of working-age adults and the decline in children. Those aged 65 and older certainly did not have cell phones. 74 percent of adults would support banning middle and high school students from using cellphones in class, which is up from 68 percent compared to that question posed in the fall. Opposition to such proposed bans also declined from 24 percent to 19 percent. Support for banning phones all day is considerably more split (44 percent in favor, 46 percent opposed) but that has also shifted in the months since the issue was polled. Among respondents aged 18 to 29, support for banning phones in class rose particularly sharply, increasing from 45 percent in Fall 2024 to 57 percent when polled in June.

Saturday Spotlight: Finance of America

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“Power your business forward with reverse.”

At Finance of America, we help homeowners 55 and older unlock home equity to support their modern retirement goals. Our innovative, flexible reverse mortgage solutions offer long-term growth opportunities nationwide for mortgage brokers and originators. 

Founded in 2003, we offer FHA-insured Home Equity Conversion Mortgages (HECMs) and a suite of proprietary products. Our HomeSafe product is a jumbo reverse mortgage with loans up to $4 million. HomeSafe Second is a smart HELOC alternative that doesn't require the borrower to make a new monthly mortgage payment. 

In April, we launched our national “A Better Way with FOA” campaign to raise awareness and educate borrowers on how reverse mortgages can be a powerful tool for unlocking home equity at 55 and beyond. We’re expanding the industry by introducing new proprietary products, deepening borrower education, and equipping more mortgage professionals to offer reverse solutions to their clients.

Jonathan Scarpati, our former Senior Vice President of Wholesale Lending, was recently promoted to Chief Production Officer to support this momentum. With over 20 years of industry experience, Scarpati was instrumental in growing the wholesale channel. His current role overseeing both wholesale and retail production will allow him to improve operational efficiency and scale our impact for borrowers and partners.

Our proudest moments are seeing how reverse mortgages change lives for the better. From helping Ann renovate her forever home to giving Susan the freedom to travel and supporting Craig as he helped his family through tough times, these stories reflect the powerful, personal impact of unlocking home equity. Empowering homeowners to live with confidence and purpose drives everything we do.

If you want to better support clients 55 and older, contact us to explore how partnering with Finance of America can help you strengthen and diversify your business — now and into the future.

The borrower must meet all loan obligations, including meeting all loan obligations under the first lien mortgage, living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.

The HomeSafe reverse mortgage is a proprietary product of Finance of America Reverse LLC and is not affiliated with the Home Equity Conversion Mortgage (HECM) program. HomeSafe products are only available in certain states. Please contact us for a complete list of availability.

Finance of America | NMLS #2285

(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.) 

loanDepot LO comp lawsuit

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Friday’s Commentary discussed the developments where loanDepot is the defendant in a case involving originator compensation practices. The information prompted several emails, mostly saying that the practice is not restricted to “LD.” For example:

“I found the loanDepot litigation fascinating and frustrating at the same time. The practice they describe of simply labeling a lead/client as internal, etc., in order to offer a more competitive rate (and reducing commissions) is a practice that many non-bank lenders utilize to compete. Most, if not all, of the distributed retail branch model lenders in the top 10, to name just a few in our market, openly admit to this practice. It would be great if the playing field could be leveled as it is long overdue.”

Signing bonuses: yes, they still exist

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From Washington I received this note about signing bonuses and the required time spent working for a company.

“It’s amazing, to me, what a one-way street a small number of lenders want. ‘Come work for us because we LOVE what you are doing, and we are willing to pay up for it!’ Could you imagine what would happen in professional sports if there was a crawl back arrangement tied to production? So many things can go wrong when one moves employment that are beyond the originator’s control… interest rate movement, for example. I wonder about all the embarrassment a lender would go through with when these LOs obtain a good lawyer and discovery? I can’t see how a company could do anything but restrict your movement for a period of time. Scratch back the money while having an ‘at will’ employment arrangement? If they are dumb enough to give it to you all at once, then they should just have to take it out of the seven points they made on the gain on sales they got in 2020-2022, which for some lenders amounted to hundreds of millions of profit.”

Tariffs (news, volatility, and potential impact) matter

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Chris Maloney, Vice President and Mortgage Strategist with BOK Financial, put some thoughts to paper expressing how many believe the “on again, off again” tariffs and how they may impact housing & psychology also impact markets.

“It may be sad that in this day and age we still need to argue against the mercantilist ideas expressed by the Trump administration in its drive for higher tariffs and a positive ‘trade balance,’ but when it comes to economics it seems that no question is ever truly settled.

“Another thing that never seems to get settled is what level the new tariffs are to be. At the moment, come August 1 it'll be 30 percent on goods from the EU and Mexico, 35 percent from Canada and 50 percent from Brazil, for some examples. It's almost comically difficult to keep track of the tariffs that have been imposed, announced, threatened, paused, or removed by the new administration. That they are coming, though, is certain, and that the American people will pay for it in higher prices, lower standards of living and higher unemployment is also certain, if history is our guide.

“The cruel joke on the American people is that the income tax was pushed through back in 1913 with a promise that with its imposition the tariff question (and all the political tumult and corruption it caused) would be negated as there would no longer be a need for them to fund the government. Now, we have both an income tax and a tariff, though admittedly over the past half century the latter has played but a minute part in raising revenue for the federal government. The Trump administration, touting the trillions of dollars it expects to flow into the government's coffers from its tariff policy, wants to change that.

“Now raising revenue with tariffs is a perfectly legitimate policy and unobjectionable; but using tariff policy to try to effect economic outcomes such as the trade balance or unemployment is a completely different beast and, again using history as a guide, a foolish idea. Recall the infamous Smoot-Hawley tariffs signed into law by President Hoover in June 1930. The stock market crash of November 1929 may have heralded the Great Depression, but unemployment rose to 9 percent two months later then gradually fell to 6.3 percent by June 1930.

“Despite repeatedly warnings from businesses and economists, Hoover signed the new tariffs into law, promising they would reduce imports, increase demand for domestic manufacturers and lower unemployment. Within five months, unemployment spiked to over 10 percent and never dropped below double digits until the country entered World War Two in 1941. And to say Trump's fixation on the trade balance is illogical is an understatement: during the disastrous 1930s the United States had an export surplus every single year in tandem with that double-digit unemployment. It's never just one thing that affects an economy, but between retaliatory tariffs from foreign nations and FDR's destruction of the monetary standard, Hoover's tariffs certainly helped to turn a routine economic downturn into a devastating, decade-long depression.

“Last, besides the reduction in employment and increased prices that higher tariffs will engender, the cost of housing will rise from the higher costs of the imported products that fall under the new impositions. While it is impossible to know for certain at this time where this will all shake out, a recent study by the National Association of Home Builders estimates a new home will cost almost $11,000 more in consequence. After a ~40 percent increase in building materials since the beginning of the decade along with a 55 percent spike in home prices, this is the last thing that would-be American homeowners need.” Thank you, Chris.

Investors drive mortgage rates

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If you were Ford, would you produce a car no one wanted? Do perfume makers manufacture scents that no one buys? No, and as an industry that manufactures mortgages, the demand from investors drives prices which in turn drive rates that our borrowers see. So, it is good or originators to see who’s doing what in the capital markets.

Recently Sequoia (think Redwood Trust, long time aggregator, issuer, and investor) raised $478 million in a residential mortgage-backed security (RMBS). Sequoia Mortgage Trust 2025-6 (SEMT 2025-6) has issued 60 residential mortgage-backed certificates which are supported by 402 loans with a total balance of $478.8 million. The security was comprised of first lien, fully amortizing fixed-rate mortgages with 15- and 30-year maturity terms, which were acquired by Redwood Residential Acquisition Corp. from various mortgage originators. The collateral is characterized by a weighted average (WA) original credit score of 779 and moderate borrower equity, with a WA original loan-to-value (LTV) of 70 percent and WA original combined LTV of 70 percent, KBRA says.

The sponsor is RWT Holdings, the seller is Redwood Residential Acquisition Corp., the trustee is Wilmington Trust, National Association, and the master servicer is Nationstar Mortgage. Morgan Stanley is the bookrunner.

Fitch says the borrowers have a strong credit profile with a weighted average Fitch model FICO score of 779 and a 37 percent debt-to-income ratio. The borrowers also have moderate leverage, with a 79 percent sustainable loan-to-value ratio (sLTV) and a 70 percent mark-to-market combined LTV ratio (cLTV).

Overall, 93 percent of the pool loans are for primary residences, while 7 percent are loans for second homes. Also, 79 percent of the loans were originated through a retail channel, and 100 percent of the loans are designated as safe-harbor qualified mortgage loans. Fitch views the pool's home price values as 11 percent above a long-term sustainable level (versus 11 percent on a national level as of 4Q24, down slightly since the previous quarter). Housing affordability is the worst it has been in decades, driven by high interest rates and elevated home prices, it says. Home prices increased 3 percent year-on-year nationwide as of February 2025 despite modest regional declines but are still supported by limited inventory.

On July 8, Fannie Mae announced its latest sale of non-performing loans as part of the company's ongoing effort to reduce the size of its retained mortgage portfolio, including the company's twenty-seventh Community Impact Pool (CIP). The two larger pools include approximately 1,352 deeply delinquent loans totaling $288.8 million in unpaid principal balance (UPB), and the CIP includes approximately 32 loans totaling $8.1 million in UPB. The CIP consists of loans geographically located in the Florida area. All pools are available for purchase by qualified bidders. This sale of non-performing loans is being marketed in collaboration with BofA Securities, Inc., and First Financial Network. Bids are due on the two larger pools by July 30, 2025, and on the CIP by August 11, 2025. Terms of Fannie Mae’s non-performing loan transactions require the buyer of the non-performing loans to offer loss mitigation options designed to be sustainable for borrowers. All buyers of non-performing loans are required to honor any approved or in-process loss mitigation efforts at the time of closing, including loan modifications. Interested bidders are invited to register for future announcements, training and other information here. 

Chase Home Lending Mortgage Trust 2025-7 is issuing $501.7 million in residential mortgage-backed securities (RMBS) across 44 classes, backed primarily by prime jumbo loans originated and serviced by JPMorgan Chase Bank. The $528.1 million loan pool consists of 412 high-quality, fixed-rate, fully amortizing loans with strong borrower credit profiles, averaging a FICO score of 775, a 74.6 percent combined loan-to-value ratio, and significant liquid reserves. Both Fitch and Moody’s assigned top ratings (primarily AAA) to most senior tranches, noting the deal’s conservative structure, low-risk loan pool, and strong credit enhancements aimed at mitigating tail-end risk as the pool seasons.

A&D Mortgage, in partnership with Atlas Merchant Capital and Imperial Fund Asset Management, has closed a $426.67 million non-QM securitization, its second of the year and 25th overall, underscoring the growing demand for flexible, non-traditional mortgage solutions. The ADMT 2025-NQM2 deal, backed by 1,136 loans with an average borrower credit score of 742 and featuring 100 percent servicing by A&D, was rated by both S&P Global and Fitch, reflecting strong loan quality and investor confidence. With nearly half of the loans supporting investment properties and 37.4 percent classified as non-QM, the transaction highlights A&D’s leadership in meeting the needs of creditworthy borrowers outside conventional guidelines while offering attractive, diversified assets to institutional investors.

Fannie Mae announced the sale of non-performing loans totaling approximately $205.8 million in unpaid principal balance as part of its effort to reduce its retained mortgage portfolio. The sale includes two large pools of around 1,119 deeply delinquent loans and a smaller Community Impact Pool (CIP) of 40 loans located in Florida. Bids are due by May 15 for the larger pools and May 27 for the CIP. Buyers are required to offer sustainable loss mitigation options, honor existing modification efforts, and market foreclosed properties to owner-occupants and non-profits before investors, aligning with Fannie Mae’s borrower-focused policies.

Ginnie Mae's mortgage-backed securities (MBS) portfolio outstanding continues to increase. For example, it grew to $2.73 trillion as of February 2025. In addition, Ginnie Mae issued $33.8 billion in total MBS, resulting in a net portfolio growth of $11.7 billion. Ginnie Mae facilitated the pooling and securitization of over 100,000 loans for first-time homebuyers year to date. Key highlights from the February issuance include: $32.3 billion in Ginnie Mae II MBS, $1.4 billion in Ginnie Mae I MBS, including nearly $1.3 billion for multifamily housing loans, and the pooling and securitization of loans for more than 101,000 households, including 45,000 first-time homebuyers. For detailed information on monthly MBS issuance, unpaid principal balance, Real Estate Mortgage Investment Conduit issuance, and a broader analysis of global market trends, visit Ginnie Mae Disclosure.

For something that veers toward “cute” instead of “funny” this morning, here’s a short video of some dessert water hole action.

Visit www.ChrismanCommentary.com for more information on our industry partners, access archived commentaries, or subscribe to the Daily Mortgage News and Commentary. You can also explore the Chrisman Marketplace, a centralized hub connecting mortgage professionals with trusted vendors and solutions. If you’re interested, check out my periodic blog on the STRATMOR Group website. This month’s piece is titled, “The Tax and Spending Bill: The Impact on Borrowers.” The Commentary’s podcast is available on all major platforms, including Apple and Spotify.

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