The Community Home Lenders of America (CHLA) submitted a letter to the Consumer Financial Protection Bureau (CFPB) in support of changes to the loan originator compensation rule, telling CFPB Director Rohit Chopra that the current rule’s “inflexibility” in certain areas is a “detriment” to consumers.
The letter calls for increased flexibility in LO compensation restrictions, which would “[benefit] consumers without opening loopholes that would allow for anti-consumer practices,” according to the letter.
The CHLA is calling for “for flexibility from the strict prohibition against variations in LO compensation” in three areas, according to the letter: state housing finance agency (HFA) bond loans; “truly competitive situations” in order to enable a lender to match a price offer; and error on the part of the loan originator.
State HFA bond programs are more complex than other single-family loan options, which means that HFA loans are more expensive to manufacture.
Prior to the implementation of the CFPB LO comp rule, it was common for lenders to absorb the higher costs by reducing the fee to the originator. However, the CFPB rule does not currently allow for this.
“The inability to reduce loan originator compensation to offset HFA production costs under the current LO Comp rule harms consumers by discouraging lender participation in these vital programs,” the CHLA states in the letter. “Moreover, because HFA loans are generally more costly to underwrite and therefore less profitable, providing LO comp flexibility for such loans does not create financial incentives to steer borrowers to higher-priced loans.”
The CHLA also contends that “an overly restrictive limitation that compensation may not vary” interferes with the broader objective of increasing competition and consumer choice.
“Many lender groups have for some time argued for targeted flexibility for loan originators in this situation, typically asking for such flexibility when there is ‘demonstrable price competition,’” the letter states.
To address this while ensuring “demonstrable price competition,” the CHLA recommends five criteria to address concerns while also allowing for comp reductions: an agreed-upon compensation schedule between the lender and originator; facilitating borrower comparison shopping after the current lender has provided “substantial assistance” with finding the right loan option; the original lender matching the offer of the competitor; a lender not making regular use of this flexibility; and logging that all preceding requirements have been met.
In regard to comp reduction for LO mistakes, the CHLA says that a lender should have the authority to reduce compensation based on the cost incurred by the mistake.
“This is based on the simple principle that loan originators should take financial responsibility for their errors,” the letter states.
The CFPB issued an official request for comment in March as it conducts a review of Regulation Z’s mortgage loan originator rules. The goal for the CFPB is to understand the economic impact the rules have on smaller businesses in the mortgage space.
If you live in Indiana, there’s a very good chance you either got your home loan from Ruoff Mortgage, or at least considered them if you’re a homeowner.
After all, the company managed to originate nearly $3 billion in home loans last year, with roughly $2 billion coming from the Hoosier State alone.
They’ve even got an IndyCar with Ruoff Mortgage plastered along the front and sides of the vehicle, and the naming rights to the Ruoff Music Center, the largest outdoor music venue in Indianapolis.
So it’s clear they’re laser-focused on a certain region of the country, as opposed to trying to tackle the nation as a whole.
This has proven to be a successful model as they are now one of the top mortgage lenders in the nation, and #1 in Indiana.
You may also want to check out First Internet Bank of Indiana if you live in the Hoosier State.
Ruoff Mortgage Fast Facts
Independent direct-to-consumer mortgage lender
Founded in 1984, headquartered in Fort Wayne, Indiana
Employ nearly 1,000 workers across 70+ branches
Ranked the #1 mortgage lender in Indiana
Now the “Official Mortgage Partner of NASCAR”
If you’re wondering where they got their name from, they were originally known as the Dave Ruoff Mortgage Co., after founder David Ruoff.
They later changed the company name to Ruoff Mortgage, and today employ around 1,000 employees across some 70 branches.
As noted, they are highly-concentrated in the Midwest, with another $500 million in volume coming from nearby Ohio and Michigan, leaving a small amount of business scattered across remaining states.
They are also big on home purchase lending, with such loans accounting for nearly 75% of overall volume.
The remainder came from refinance loans, including rate and term and cash out loans.
Ruoff Mortgage also operates two sister companies, Centurion Land Title (title insurance) and Accucomp Appraisal Services (home appraisals).
At the moment, they are licensed in 46 states and D.C., with Alaska, Hawaii, Nevada, and New York the exceptions.
The company is big on partnerships, and has 50+ at last glance, including NASCAR, the Indianapolis Colts, Andretti Autosport, the Cincinnati Reds, and the Columbus Blue Jackets.
Their latest venture is signing on to become MLS club Charlotte FC’s Official Mortgage Company.
How to Apply for a Home Loan with Ruoff Mortgage
They offer a digital mortgage experience known as Loan Butler
Allows you to apply for a home loan via smartphone, tablet, or computer
You can order a credit report, digitally verify income/employment, and upload documents
Those purchasing a home can also generate a pre-approval letter on the fly in 10 minutes
Ruoff Mortgage offers a digital mortgage solution known as “Loan Butler,” which lets you complete most of the loan process from your smartphone, tablet, or desktop computer.
You’re able to initiate a credit check on your own to view your credit report and credit scores, digitally verify assets, income and employment, upload documents securely, and eSign disclosures.
Once your loan is submitted, you’ll be able to log in to the loan portal to check loan status, see so-called milestone updates, and/or get in touch with your loan officer.
In terms of selecting a loan officer, they have a directory on their website that allows you to search by name or location.
So you can find someone nearby, or check out individual reviews first, then make contact with the loan officer of your choice.
Those who just want to get started can simply fill out a short contact form on their website, at which point someone will reach out to help you begin the application process.
You can also call or email them at any point if you have questions or need more hands-on assistance.
They also say they’re fast, with the average loan going from submission to clear-to-close in just 17 days.
Lastly, they claim you’ll only spend about 10 minutes at the closing table when it comes time to fund your loan thanks to Ruoff’s Digital Closing Experience.
All in all, they appear to offer the latest technology along with experienced loan officers who can provide pricing and guide you through the loan process.
Loan Programs Offered by Ruoff Mortgage
Home purchase loans
New construction loans
Renovation loans
Refinance loans (rate and term, cash out, streamline)
Conventional loans backed by Fannie Mae and Freddie Mac
Government-backed loans: FHA/USDA/VA
Jumbo home loans that exceed conforming limit
Fixed-rate and adjustable-rate mortgages with various loan terms
Ruoff Mortgage offers all the major home loan types you could ask for, including home purchase loans, home construction loans, home renovation loans, and refinance loans.
They’re available on all property and occupancy types, including single-family homes, condos/townhomes, multi-unit properties, and primary, vacation, or investment properties.
So whether you’re buying a fixer-upper or refinancing an existing home loan, they should have you covered.
When it comes to renovation loans, they offer Fannie Mae HomeStyle, FHA 203(k), or a VA loan option.
If refinancing, you can do a simple rate and term refinance, or pull equity via a cash out refinance. It’s also possible to apply for a streamline refinance, such as an IRRRL.
They offer conventional loans backed by Fannie/Freddie, government-backed loans such as FHA loans, USDA loans, and VA loans, and jumbo home loans for loan amounts above the conforming limit.
In terms of loan type, you can get a fixed-rate mortgage with a 15- or 30-year term, or an adjustable-rate mortgage such as a 5/1 ARM or 7/1 ARM.
Ruoff Mortgage Rates
One slight negative to Ruoff Mortgage is the fact that they do not publicize their mortgage rates, so we’re in the dark when it comes to loan pricing.
The same goes for lender fees, which don’t appear on their website. It’s unclear what they charge, such as an application fee or loan origination fee.
As such, it’s recommended that you speak to a loan officer before applying to get loan pricing, then if you like what you hear, you can move forward.
But don’t forget to compare their interest rates and fees to those of competitors as well to ensure they are favorable.
Remember, you could be paying down this loan for the next 30 years, so put in the time to shop around!
Ruoff Mortgage Reviews
On Zillow, they have a very impressive 4.98-star rating from nearly 700 customer reviews, which is basically perfection.
After scanning their reviews, many indicated both the interest rate and closing costs were lower than expected, which is a good sign pricing-wise.
On LendingTree, they have a perfect 5-star rating, though it’s based on just seven reviews, so not a great sample size. They also boast a 100% recommend rating.
The company also notes that they’ve got a 98.2% customer satisfaction score according to Customerville.
Their only questionable reviews come via Google, where they have a 3.9-star rating from 20 reviews, thanks to a mix of 5-star and 1-star reviews.
Ruoff Mortgage is a Better Business Bureau accredited, and has been since 1986. They currently enjoy an ‘A+’ rating.
In summary, they appear to be well-liked, offer lots of different loan options, and seem to offer a fast digital mortgage experience. If pricing is also on point, they could be a suitable choice for your home loan needs.
Ruoff Mortgage Pros and Cons
The Good
Offer a digital mortgage experience
Apply from any device or use their free smartphone app
Can close fast: average 17 days clear-to-close
Mostly excellent customer reviews
A+ BBB rating, accredited company
Lots of loan programs to choose from
Mortgage calculators and mortgage glossary on site
The 30-year fixed-rate mortgage (FRM) averaged 6.67% this week, another decline from last week’s dip to 6.69%. This is the third consecutive week of rates declining, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday. This week’s numbers:
30-year fixed-rate mortgage averaged 6.67% as of June 22, 2023, down from last week when it averaged 6.69%. A year ago at this time, the 30-year FRM averaged 5.81%.
15-year fixed-rate mortgage averaged 6.03%, down from last week when it averaged 6.10%. A year ago at this time, the 15-year FRM averaged 4.92%.
What the experts are saying: “Mortgage rates slid down again this week but remain elevated compared to this time last year,” said Sam Khater, Freddie Mac’s chief economist. “Potential homebuyers have been watching rates closely and are waiting to come off the sidelines. However, inventory challenges persist as the number of existing homes for sale remains very low. Though, a recent rebound in single-family housing starts is an encouraging development that will hopefully extend through the summer.” Realtor.com economist, Jiayi Xu commented: “The Freddie Mac fixed rate for a 30-year mortgage declined for the third week in a row by 2 basis points to 6.67% as markets absorbed a strong uptick in new construction. While the headline CPI dropped significantly in May to 4.0%, the core CPI— which includes goods and services excluding volatile food and energy – has not retreated as much as the overall inflation in recent months, creating a troubling situation for policymakers. Meanwhile, the Fed opted not to raise short-term rates at June’s FOMC meeting, choosing to wait for additional data and see how recent rate increases are influencing price growth and the real economy. In the coming months, we may see a faster slowdown in inflation because the growth in the shelter index, the largest contributor to inflation growth, has passed its peak and started to trend down in April. “Nevertheless, as the inflation is well-above the 2% target and the labor market is still strong, FOMC signaled that the Federal Funds rate will be half a point higher than previously expected at the end of 2023, which is also half a point higher than the current rate. In other words, borrowing, including home purchases, will likely remain expensive through the remainder of the year. With the potential for additional rate hikes ahead, mortgage rates will remain elevated throughout the remainder of the year. As a result, affordability will continue to be an important factor in buyers’ home purchasing decisions. According to Realtor.com’s recent hottest markets report, home buyers continue to flock to relatively inexpensive markets below the national median price, leading to notable price growth in these otherwise affordable areas. The heightened competition in these markets may worsen the conditions faced by buyers with financial constraints, particularly due to the already limited supply of affordable homes. While the rise in new construction is encouraging, there is a pressing need to build homes catering to all income levels. Our joint research with the National Association of REALTORS confirms this urgent necessity, especially in the lowest price tier where the shortage of affordable housing is most severe.
“However, there is still some good news for home sellers. As improving homes before selling is one of the top concerns among sellers, lower prices for household furnishings and supplies may bring a sense of relief. While this improvement primarily affects sellers, buyers may also benefit, as the high cost of home repairs are often passed on to them in the end. In May, the household furnishing and supplies index increased 4.1% over the prior year while the core inflation increased 5.3%. Compared to the previous month, prices for household furnishing and supplies dropped 0.4% versus an increase of 0.4% for core prices, on a seasonally adjusted basis.”
In the two years after a notorious Surfside, Florida condo collapse, new temporary rules and increased enforcement have been instituted to ensure building safety, but these measures have also intensified the challenge involved in finding affordable financing in this market.
“There are more and more buildings that don’t meet the warrantable guidelines,” said Melissa Cohn, regional vice president, William Raveis Mortgage, referring to the standards buildings must meet for government-sponsored enterprises to back condominium unit loans.
At the same time the banking crisis reportedly reduced the supply of low-rate condo unit financing.
“You have the secondary market in the last two or three months somewhat collapsing, where you see these banks are starting to fold,” said Orest Tomaselli, president of project approval at CondoTek. “Some of these are banks that have provided residential mortgage financing to owners and purchasers in these condominium developments.”
Borrowers are still able to pay up for other options in the private market but these developments have generally limited the availability of more cost-effective loans for buyers of condo units, Cohn said.
“There are still financial institutions that will lend at market rates in nonwarrantable buildings,” said Cohen. “But they may not drop the rates below market for anyone.”
That’s a concern, because condos can be a source of scarce affordable housing in a high-cost market, and while Surfside-inspired rules as now configured are aimed at making buildings and units safer, some think they run the risk of having a counterproductive impact on financing.
“If it becomes more difficult to make those loans, it will become more difficult for people to enter into the housing system,” said Taylor Stork, chief operating officer of Developer’s Mortgage Company and president of the Community Home Lenders of America. “Most of our borrowers are first-time homebuyers in metropolitan areas and they tend to go toward the housing stock that is less expensive. In those areas, it’s more likely that a condominium will be an option.”
A growing list of “unavailable” buildings
To understand Surfside’s ripple effects in the condo market, consider the list of buildings that don’t meet Fannie Mae’s lending requirements.
The growth in the so-called unavailable list, which is constantly changing in line with the status of different buildings relative to Fannie’s requirements, has drawn attention because it’s caught an increasing number of condo associations and would-be borrowers by surprise.
“Hundreds of buildings have been added since Surfside,” said Tomaselli. “It seems like every day, there’s another one going on.”
Some of the market frustration with the list has stemmed from the fact that only Fannie, lenders and other entities with a permissible business purpose have had access to what traditionally have been called unwarrantable condos and they’ve been loath to share it outside of that.
“Approved parties that access [Condo Project Manager] for project eligibility information are not permitted to disclose Fannie Mae eligibility determination to third parties,” a Fannie Mae spokesman said in an emailed statement. (CPM will become mandatory for full reviews in July.)
The access restriction has meant some buildings have been unaware that they’re on the list until someone tries to finance a unit. The listing isn’t even always related to post Surfside rules, but the increased enforcement of other traditional condo standards in response to the collapse.
The CHLA, National Association of Realtors, and the Community Association Institute have all called for public access to the list and guidance as to how buildings can regain eligibility. (Lenders have said some fixes can be done in time to close a loan but others are more complex.) The trade groups also are asking for a minimum 60 day comment period before any condo lending rule changes.
There’s some precedent for a public list. Unlike Fannie’s technology and Freddie Mac’s platform for condo information, which provides feedback based more on discrete criteria rather than by building, the Federal Housing Administration’s list is public.
The FHA’s specific lookup tool provides information on building approvals and rejections and is designed for specific searches related to a particular property or area. While it has different criteria and costs than the GSEs (of the three, only Fannie and Freddie lend on cooperatives), some of the FHA’s feedback on buildings may mirror theirs.
CPM also is formatted as a lookup tool and its exclusive use mandate narrows the channels through which Fannie loans can get done, Stork said. Not only vendors but some originators who don’t work directly with Fannie, like aggregators or brokers, lack direct access to the system.
The situation can lead to frustration and costs for borrowers because once a loan has property-specific information, lenders tend to start worrying about time-sensitive disclosure requirements and start a more detailed application process. For borrowers in this market, that can come with the usual mortgage costs like the appraisal in addition to, for example, fees buildings charge for supplying certain condo information, said Stork.
“A borrower can easily put $1,000 to $1,500 into a transaction and then learn that it is never going to be approved, and there’s no way that the lender, or the borrower, or even the Realtor could know all of this, in many cases,” Stork said. “First-time homebuyers generally don’t have that money just laying around.”
Fannie’s spokesperson said that it considers lenders it works with to be “in the best position to have conversations with their customers about mortgage finance.”
With the advent of the banking crisis, more private lenders are increasingly likely to pile on if they become aware of Fannie’s approval status for a building, either by seeing it as signifying risks they should charge more for or that they should avoid financing it altogether.
“Being on that list, it sometimes can mean that other lending shuts down in the building as well,” Tomaselli said.
Therein lies a key dilemma in the wake of Surfside: lenders may have less tolerance for giving money to buildings with strained finances just when condos are most likely to need more cash to ensure their structures are sound.
Layers of rules and costs to navigate
Fannie and Freddie’s temporary criteria in response to Surfside have focused on restricting single-family financing for units in buildings that have deferred maintenance and public repair directives related to unsafe conditions.
The GSEs have noted that as they get a better sense of the mitigants that could be used to address the risks in aging condo buildings Surfside epitomized, they could rethink their criteria. Lenders generally would like that to result in some more leeway, but think further tightening might be more likely.
Meanwhile, even with the temporary constraints, the share of condo and co-op loan acquisitions at Fannie Mae has remained largely consistent around 9% as of year-end 2022.
And sometimes those constraints are necessary, lenders agree. As much as the market is short of housing at affordable entry-level price points and the buy-in cost for owning a condo may be lower than a traditional home, if a building’s not sound or ongoing maintenance and assessments won’t be financially manageable for a particular borrower in the future, they shouldn’t get a loan.
“The piece that Fannie Mae’s focused on…is how do we ensure sustainable homeownership,” Jake Williamson, senior vice president, single-family collateral risk management, in an online video forecast about the condo outlook. “Part of that is keeping in mind the ongoing cost.”
Adding to that concern are regional rules that have been put into place in areas where condos are concentrated. Access to this type of housing has been increasingly costly and constrained.
In Florida, June marks not only two years since Surfside, it’s also the 12-month anniversary of the state’s Building Safety Act. Because of its passage, buildings have been grappling with how to make assessments for new structure and reserve requirements affordable to their unit owners
“Each association or board president is going to have to take a damn good look at their resident constituents and figure out what their ability to pay is,” said Greg Main-Baillie, executive managing director for the Florida Development Services Group at Colliers. “Unfortunately, some board presidents could end up putting their buildings into default if they don’t.”
Baille, who acts as an owner’s representative and project consultant for condo associations facing inspections and structural repairs, said he doesn’t deal directly in unit financing, but noted building finances are inextricably linked to those of single-family owners and mortgagors.
State or regional programs that help some unit owners obtain financial assistance to help with assessments could mitigate condo default risk, Main-Baille said. Miami-Dade County has offered up to $50,000 to owners with an area median income of 140% or less.
Condo boards also might want to judiciously use a home equity loan of credit related to their multifamily building mortgage to, for example, extend the amount of time unit assessments can be spread out over, reducing monthly payments for potential future owners, he suggested.
“It may be better for the condo to actually go and leverage that debt on the behalf of their residents than the residents going and sourcing loans themselves, and it’s probably going to be cheaper too,” he said.
While the costs associated with Florida’s rules have been the most prominent so far, given the national impact of Surfside on Fannie’s temporary standards and the wide distribution of states on the unavailable list, it’s likely regional responses will grow too and become a factor in lending. New York City, for example, also has had some problems with aging infrastructure. Local rules were implemented in response to it in the past.
“Florida is really the only one that is pushing this mandate to this level and degree at this point in time…but you just have to wait to find out if more states will start following suit,” Maine-Baille said.
The total number of unavailable buildings in the Sunshine State topped several hundred at the end of May, according to lender estimates. As of May 31, every state but three had at least one building on it. The exceptions were Arkansas, North and South Dakota. The number of buildings listed per state was generally under 100 and sometimes as low as one at that time. The state with the second largest numbers of listed buildings was California, which had over 200.
Today we’ll take a deep dive into a major credit union that’s also a sizable mortgage lender, Pentagon Federal Credit Union, or PenFed for short.
While originally intended to serve the U.S. military, veterans, and various defense department government employees, today anyone can join PenFed, whether part of those groups or not.
For example, if you have no military affiliation whatsoever, it’s possible to join if your employer is eligible or if you make a small donation to an organization.
PenFed has been around since 1935, and today serves more than two million members worldwide with a whopping $25 billion in assets.
They lend in all 50 states and the District of Columbia, as well as in Guam, Puerto Rico, and Okinawa. Let’s learn more.
PenFed Mortgage Fast Facts
Members-only credit union federally insured by NCUA
Founded in 1935, headquartered in Alexandria, Virginia
Anyone free to join regardless of lack of military background
Offer checking and savings accounts, credit cards, mortgages, and HELOCs
Licensed to lend in all 50 states, D.C., Guam, Puerto Rico, and Okinawa
Funded $18.9 billion in home loans last year
Did about a fifth of total loan volume in home state or Virginia
Also operate a wholly-owned title insurance company called PenFed Title, LLC and real estate brokerage called PenFed Realty
As noted, anyone can join PenFed, though they are a members-only credit union. So once you become a member, you can take advantage of their many product offerings, including home mortgages.
Last year, the Alexandria, VA-based credit union did roughly $18.9 billion in total home loan origination volume, with about a fifth of it in its home state of Virginia.
A good chunk was also originated in the nearby states of Maryland and Florida, along with Texas and faraway California.
Home purchase loans accounted for roughly 50% of volume, with 25% rate and term refinances, almost 20% cash out refinances, and the remainder HELOCs.
And while most of their home loans were fixed-rate mortgages, they offer a variety of adjustable-rate mortgages as well.
How to Apply for a Home Loan with PenFed Mortgage
Members can submit their loan application directly from their account on PenFed Online
They ask that you call them or submit a call back request online if refinancing or inquiring about a HELOC
Those looking to generate a pre-approval can do so right away via the online portal
They offer a digital mortgage loan experience that allows you to complete most tasks electronically
Assuming you’re a PenFed member, it’s possible to get the ball rolling simply by calling them up directly or by filling out a short call back request form on their website.
If you’re looking for a mortgage pre-approval for a home purchase, you can also begin on your own via the PenFed online portal.
Speaking of real estate, PenFed operates an affiliated real estate brokerage known as PenFed Realty, which is backed by Berkshire Hathaway HomeServices.
Like many other banks and lenders, PenFed offers a digital mortgage experience where you can eSign disclosures, scan and upload documents, receive real-time status updates, and check loan progress 24/7.
PenFed also operates its own title insurance company, which might speed up the loan process and/or result in discounts on such services.
Loan Programs Available at PenFed Mortgage
Home purchase loans
Refinance loans (rate and term and cash out)
Conventional loans backed by Fannie Mae and Freddie Mac
Jumbo loans up to $5 million loan amounts
VA loans for eligible military and veterans
Home equity lines of credit (HELOCs)
Various fixed-rate and adjustable-rate options available
PenFed offers both home purchase financing and refinance loans on a variety of property types, including single-family homes and condos/townhomes, along with multi-unit properties.
It’s possible to finance a primary residence, second home, or investment property using a conventional loan backed by Fannie Mae and Freddie Mac, or a jumbo home loan that exceeds the conforming loan limit.
They also specialize in VA loans seeing that they were originally geared specifically toward military and veterans.
While they don’t offer FHA loans or USDA loans, which is a major downside for some borrowers, they do offer a home equity line of credit (HELOC) product, with the possibility to tap equity up to 90% CLTV.
PenFed pays most of the closing costs on the HELOC, and will waive the $99 annual fee if $99 in interest is paid during the preceding 12-month period.
The only caveat on that product is if you pay it off or close it within 36 months you’ll need to reimburse the full amount of the PenFed-paid closing costs for the loan.
PenFed also offers some unique proprietary loan programs like their 15/15 ARM or their 5/5 ARM if you’re looking for something a little different.
And they offer traditional ARMs like the 5/6 ARM and 7/6 ARM, along with the usual fixed-rate options like a 30-year and 15-year fixed.
PenFed Mortgage Rates
One nice thing about PenFed is the fact that they openly advertise their mortgage rates for all to see on their website.
You don’t need to sign in to see their rates – simply surf over to their site to see today’s rates on a variety of products including conventional fixed-rate loans, jumbo fixed-rate loans, and VA loans.
They don’t advertise their ARM rates so you’ll either need to click on “Get My Rate” to generate your own mortgage rate quote on their website or call in for pricing if you want an adjustable-rate mortgage.
From what I saw, their mortgage rates were competitive, especially since they say they don’t charge lender fees.
Additionally, those purchasing a home get a lender credit ranging from $500 to $2,500 depending on loan amount, which can be used to offset any third-party closing costs like the home appraisal or title insurance.
All in all, PenFed’s mortgage rates seem competitive and the lack of lender fees makes them even more desirable when you consider the mortgage APR.
PenFed Mortgage Reviews
They have a rather marginal 3.8-star rating out of 5 on Zillow, though it’s only based on about two dozen customer reviews. Still, it leaves a lot to be desired.
Similarly, they have a 3.9-star rating out of 5 on WalletHub from a much larger sample size of about 6,000 reviews, but that may include non-mortgage related products.
However, quite a few seem to focus on their mortgage or home equity products, so you’ll be able to read about relevant customer experiences.
It’s the same story over at Bankrate, a 3-star rating from eight reviews. Again, not a lot there, but still seems to be consistent with other ratings sites.
While they aren’t a Better Business Bureau accredited company, they do currently have an ‘A+’ BBB rating based on complaint history.
But their customer reviews on the BBB website are rather poor, with a 1.2-star rating on 75 reviews at last glance.
So it seems they’re struggling a bit in the customer satisfaction department, despite having a solid website, competitive mortgage rates, and no lender fees.
PenFed Mortgage Pros and Cons
The Good
They openly advertise their mortgage rates which appear to be competitive
Don’t charge lender fees
Lender credit specials on home purchase loans
Can apply for a mortgage online via digital process
Offer lots of home loan programs including home equity products
Jumbo loan amounts as high as $5 million
Free mortgage calculators on their website
They service their home loans
The Maybe Not
Limited number of branches if you don’t live by a base
One of the more unique mortgage originators out there is First Republic Bank, due to both their large volume of jumbo home loans and adjustable-rate mortgages.
Unlike most mortgage bankers that stick to fixed-rate conforming loans and home loans backed by the government, they mostly make jumbos that don’t adhere to the guidelines of those agencies.
In fact, they don’t even bother with FHA loans, USDA loans, or VA loans.
As such, they tend to cater to high-net worth individuals who are also relatively low-risk borrowers relative to the rest of the population, including billionaires like Mark Zuckerberg.
Let’s learn more about this premium mortgage lender, which may be a good fit if you need a very large home loan.
First Republic Bank Fast Facts
Headquartered in San Francisco, CA, founded in 1985
Publicly traded depository bank valued at more than $25B+
Offer home loans, construction loans, and HELOCs
Funded more than $14.5B in mortgages in 2019
Most of loan volume came from states of CA, MA, and NY
Specialize in jumbo home loans for high-net worth individuals
First Republic Bank was founded by its current CEO Jim Herbert back in 1985 in the city of San Francisco.
Today, the company is publicly traded on the NYSE and valued at more than $25 billion.
Based on their numbers through the first nine months of 2020, they likely originated more than $20 billion in home loans last year, which would be quite a jump from 2019.
Most of their loan volume comes from just a few states, including California, Massachusetts, and New York, though they’re nationally licensed.
Perhaps more interesting, about 75% of the home loans they extend to customers are adjustable-rate mortgages.
That’s basically unheard of in the industry, especially with fixed mortgage rates breaking record lows left and right.
In fact, the 7/1 ARM accounted for nearly 40% of their mortgage business, while the 5/1 ARM grabbed another 25%.
The rest went with a more traditional 30-year or 15-year fixed, which tells you their clients often put their money to work elsewhere, and are likely able to pay off their loans whenever they wish without fear of a rate adjustment.
How to Apply for a Mortgage with First Republic Bank
It’s unclear if they offer a digital mortgage application
You’ll need to visit a branch, call them, or request a call to get started
Expect a thorough underwriting process since they deal with high-dollar loan amounts
Loan processing, underwriting, and funding are done in-house and they service their own loans
To get started, you’ll either need to visit a physical bank branch, call them up on the phone, or fill out a short contact form on their website and wait for a call back.
My assumption is they offer a very high-touch, personalized home loan experience, as opposed to say a Rocket Mortgage or other fintech-fueled lender.
That’s not to say they don’t offer a digital mortgage application as well (unknown), but when you’re dealing with super jumbo loans, they likely do a bit more hand-holding.
And because they’re dealing with high-dollar loan amounts, there’s a good chance you’re underwriting process will be a bit more rigorous, with mention of three years of tax returns (as opposed to the standard two) on their application checklist.
I wish they’d share about their home loan process, but their website is a bit light on details.
However, they do seem to process, underwrite, and fund loans in house, and there’s a good chance they’ll service your loan as well since it’ll likely stay in their bank portfolio.
Home Loan Programs Offered by First Republic Bank
Home purchase loans
New construction loans (all-in-one construction-to-perm)
Refinance loans (rate and term and cash out)
Jumbo home loans
Conforming home loans
Home equity lines of credit (HELOCs)
Eagle Community Home Loan (for borrowers in underserved minority areas)
Fixed-rate and adjustable-rate options available
As noted, First Republic Bank is big on jumbo home loans, no pun intended. In fact, roughly 80% of their total production exceeded the conforming loan limit.
And while they do originate conforming home loans as well, their average loan size exceeded $1.6 million.
In other words, they’re financing very expensive homes, mostly in very pricey regions of the country, such as California and New York.
Oh, and they’re offering mortgages to the very, very wealthy, such as Mark Zuckerberg, who went with an ARM that featured an interest rate of 1.05%.
So it’s clear they’re not your everyday mortgage lender, but if you are rich, they could be a good choice, as they’ll likely have options others won’t.
In terms of loan programs, you can get a home purchase loan, a refinance loan, or a new construction loan on a variety of different property types, including single-family homes, condos/co-ops, and multi-unit properties.
You can finance a primary residence, a vacation home (popular with the wealthy), or a non-owner occupied investment property.
To be fair, it’s not all high net-worth lending at First Republic Bank.
They also created their “Eagle Community Home Loan” program back in 2015, which offers discounted fixed rates and waived non-recurring closing costs to borrowers in underserved minority areas.
Since it was launched, they’ve extended more than $1.8 billion in mortgages to borrowers located primarily in African-American or Hispanic/Latino neighborhoods.
First Republic Bank Mortgage Rates
You won’t find mortgage rates on the First Republic Bank website, which differs from some of the other big depository banks that do feature their rates.
This doesn’t say anything about how competitive they are, it’s just not what they lead with.
Ultimately, First Republic Bank is a premium bank so you’re not going to see mortgage rates in large font and discounted lender fees.
However, as we’ve seen with some of their celebrity borrowers, they do offer very low mortgage rates, especially on adjustable-rate mortgages and jumbo loans.
But if you need pricing, you’ll need to get in touch with a banker first, then you can shop their rate with other lenders.
The one advantage First Republic Bank might have is that their competitors may not even be able to offer the same loan products, including high-dollar loan amounts and short-term ARMs.
Still, you should take the time to compare lenders, especially if we’re talking about a very large loan amount, where even an eighth of a percent difference in rate can result in hundreds of dollars a month.
First Republic Bank Mortgage Reviews
It’s somewhat difficult finding customer reviews for First Republic Bank, possibly because they deal with high-end clients who may not bother writing reviews.
Nonetheless, there are some out there if you dig a little bit. For example, they have a 3.5-star rating on Yelp from roughly 100 reviews.
You are able to fine-tune to include words like “mortgage” to see what folks said about that specific line of business.
Additionally, they’ve got a 3.8-star rating out of 5 on WalletHub based on 100+ reviews, though not all pertain to their mortgage division. Comb through and you can find mortgage-specific ones.
There are also some Google reviews for each branch if you search via Google Maps for a branch near you. But all in all, somewhat light in the reviews department.
Lastly, First Republic Bank is not Better Business Bureau accredited, but does enjoy an ‘A+’ rating based on its history of dealing with complaints.
First Republic Bank Mortgage Pros and Cons
The Good
Can get a very large home loan (they specialize in jumbo loans)
They offer portfolio loans that their competitors may not be able to
Offer home equity lines of credit
In-house loan processing, underwriting, funding
A+ BBB rating
They may service your loan after closing
Free mortgage calculators and home buyer resources
The Maybe Not
Do not offer FHA loans, USDA loans, or VA loans
Limited number of bank branches
Need to speak to someone before applying for a mortgage
Of the estimated 211,154 residential units foreclosed on in California during 2009, roughly 77,145 were rental units, according to a new report focused on tenant rights.
The foreclosures resulted in the displacement of an estimated 208,795 tenants who were living in single-family homes, condos, and multi-family apartments, despite likely making on-time mortgage payments every month.
From 2008 to 2009, there was a 70 percent increase in the foreclosure rate of apartment buildings of five units or more – single-family foreclosures fell 3.1 percent year-to-year.
An overwhelming 85 percent of the foreclosed properties went back to banks and mortgage lenders in 2009, while private investors took the rest.
During the year, banks forfeited more than $776 million in rental income, focusing on booting tenants by hiring lawyers to litigate eviction cases and having real estate agents carry out cash-for-keys deals.
“Once the properties are vacated, they become prime targets for vandalism, further contributing to plunging property values, and creating legal liability for banks as the owners of blighted vacant property,” the Tenants Together report said.
“Furthermore, banks continue to tarnish their standing in local communities by maintaining their policies to evict rent- paying tenants.”
Fannie Mae and Freddie Mac have implemented post-foreclosure programs to assist renters, but many banks apparently continue to see tenants as obstacles to future profits.
Tenants Together is calling for better tenant protections, including making the “Protecting Tenants at Foreclosure Act” (PTFA) permanent, passing local “just cause for eviction” laws, providing tenant notification when a landlord receives a foreclosure filing, and boosting legal funding for tenants in foreclosure situations.
Currently, PTFA provides tenants with the right to a 90-day notice to vacate after foreclosure and requires new owners to allow tenants with leases to continue occupying properties until the end of the lease term, unless sold to a buyer who intends to occupy the property as their primary residence.
Housing starts New, privately‐owned housing unit starts in May were at a seasonally adjusted annual rate of 1,631,00 – a massive 21.7 percentage-point increase from the revised April number of 1,340,000, and 5.7% over the 1,543,000 new housing units started in May 2022. Roughly 997,000 of the new housing starts this May were for single-family … [Read more…]
Nestled in a region known for its vineyards, farmland, and beautiful landscapes, Brentwood, California, has tons to offer the 66,000 people who choose to call it home. The city’s location offers a balance of calm suburban living with convenient access to the hustle and bustle of larger cities like San Francisco and Oakland. While its outdoor activities, community events, and the Mediterranean climate appeal to many, it’s crucial to consider all aspects of relocating to Brentwood.
But is Brentwood, CA, a good place to live? Luckily, we’ve got you covered. If you’re looking at homes for sale in Brentwood, apartments for rent, or are just curious about what the area has to offer, this Redfin guide is for you. To give you a taste, here are 10pros and cons to consider before moving to Brentwood, CA.
5 pros of living in Brentwood, CA
There’s a lot to love about Brentwood, from warm weather to convenient access to nature and big-city living. Here are six benefits of living in Brentwood.
1. Location
Brentwood is located conveniently near untouched nature and major metropolises. It’s about an hour’s drive from San Francisco and even closer to Oakland, making it possible for residents to commute for work or easily enjoy their amenities. This gives people the ability to enjoy a quieter, more suburban lifestyle while still having easy access to big-city benefits like diverse dining options, cultural attractions, sports events, and shopping.
2. High-quality living
Brentwood is known for its luxury suburban homes and upscale neighborhoods, often with well-kept yards and beautiful landscaping. Housing options can vary from comfortable single-family homes to large estates, ensuring there’s something to fit a variety of lifestyle preferences.
If you’re looking for a luxury home in Brentwood, you’ll find plenty of options, ranging from $800,000 homes to multi-million dollar properties. Make sure to connect with a local Redfin Premier agent for knowledgeable, customized service.
3. Outdoor activities
Brentwood is nestled among several natural attractions, making it an ideal place for outdoor enthusiasts. Local parks, trails, and golf courses offer plenty of space for recreational activities. Particularly notable is the proximity to Mount Diablo State Park, which offers extensive hiking trails, opportunities for wildlife viewing, and stunning panoramic views at the summit. Other popular options include Marsh Creek Regional Trail, Contra Loma Regional Park, Round Valley Regional Preserve, and Big Break Regional Shoreline.
If you’re in the mood for parks in the city, consider checking out City Park, a popular community gathering spot located in downtown Brentwood, or Blue Goose Park, which is named after a historic train.
4. Wine culture
Brentwood and its surrounding areas boast a thriving wine industry, with numerous wineries and vineyards that add to the region’s charm. Residents have the unique advantage of being able to indulge in wine tastings and tours, immersing themselves in the artistry and craftsmanship behind winemaking.
Popular wineries and vineyards for tasting and touring include Tamayo Family Vineyards, Hannah Nicole Vineyards, and Vine + Grain.
5. Community and culture
Brentwood hosts a variety of community events throughout the year that provide entertainment for all ages. The Brentwood Farmers’ Market offers an array of fresh local produce and artisan goods, while festivals like the popular Brentwood CornFest celebrate the area’s agricultural heritage with music, food, and activities. If you like music, the city hosts Concerts in the Park every summer, bringing live music to the city during warm evenings.
5 cons of living in Brentwood
While Brentwood has many positives, there are notable downsides as well. Here are five to be aware of before making the move.
1. High cost of living
One major downside of living in Brentwood is its high cost of living. While many people may enjoy the luxury lifestyle that Brentwood offers, it’s prohibitively expensive for others.
Housing, in particular, can be costly. For example, the median sale price for a home in Brentwood is $816,000, nearly twice the national average. Apartments are also expensive, with a one-bedroom apartment costing an average of $2,525.
2. Traffic and commuting
While Brentwood’s location offers easy access to larger cities, commuting can be challenging. The freeways can become congested, especially during peak rush hour periods. While there are public transportation options, they can also be time-consuming. This means that if you live in Brentwood but work in San Francisco, for example, you will likely have a long commute each day.
3. Hot weather
Brentwood’s weather is generally pleasurable, but summers can become excessively hot. The city is in a hot Mediterranean climate, meaning summer temperatures frequently reach into the high 90s to over 100 degrees Fahrenheit. Heat waves can make this even worse. If you aren’t used to hot weather or don’t enjoy it, summers will be challenging.
4. Limited nightlife
Brentwood is a quieter city, so its nightlife options may seem limited, especially when compared to larger cities like San Francisco or Los Angeles. While there are restaurants and bars in the area, you won’t find a vibrant nightlife scene.
If you’re in the mood for good food, though, there are plenty of options, including Shirasoni, Chianti’s, and Baltaire.
5. Growth and development
Brentwood has experienced significant growth over the past few decades, with its population increasing nearly 300% since 2000. This has transformed the area from a small agricultural town to a more developed suburban city. While this growth has brought many conveniences, it also brought more traffic, pollution, and less charm. If you want to move to Brentwood for its small-town feel, you may be slightly disappointed.
Fannie Mae is sharing more credit risk with the private sector, completing two offerings consisting of single-family pools totaling 81,000 mortgages with a combined unpaid balance of $26.6 billion.
The government-sponsored enterprise transferred $789 million of mortgage credit risk to 21 private insurers and reinsurers, according to a press release Thursday. The pools are the sixth and seventh such transactions this year, adding to the $25.2 billion of insurance coverage the GSE has acquired through its Credit Insurance Risk Transfer program.
The deal was brokered by professional services firm Aon PLC and sub-brokered by a new partner, Protecdiv, a minority business enterprise that is an insurance and reinsurance broker.
“We hope their participation will help draw more diverse-led firms into this space,” said Rob Schaefer, vice president of Capital Markets at Fannie Mae.
The first pool, CIRT 2023-6, covers 30,000 single-family mortgages with a combined outstanding UPB of $9.65 billion. The mortgages have loan-to-value ratios between 60.01% and 80%. Fannie said it would retain risk for the first 130 basis points of loss on the pool. After the $125 million loss would be absorbed, 20 reinsurers will cover the next 405 basis points of loss up to $391 million.
The second pool, CIRT 2023-7, has 51,000 single-family mortgages with an unpaid principal balance of $16.9 billion and LTVs between 80.01% and 97%, according to Fannie. The GSE will retain risk for the first 155 basis points of loss, or $262 million, while 20 reinsurers will cover the next $398 million, or 235 basis points of loss.
The insurance is based on actual losses for 12.5 years, but the coverage can be reduced after a period of one year and each month thereafter depending on paydowns and serious delinquencies. Fannie can also pay a cancellation fee and opt out any time after five years.
The GSE continues to forecast a recession in the second half of this year, but borrowers meanwhile account for delinquencies at the end of the first quarter near some of their lowest levels on record, according to the Mortgage Bankers Association.
Fannie through the CIRT program is responsible for insurance on $850 billion of single-family loans, it said. The GSE shares its risk through CIRTs and other forms of credit-risk transfers. It passed Freddie Mac last year in single-family credit risk transfers for the first time since 2019.
However, Freddie has a larger cumulative reference pool since its program began in 2013, totalling over $3.26 trillion for Freddie compared to over $2.98 trillion for Fannie. That is largely because Fannie Mae stopped all credit risk transfer activity between March 2020 and October 2021, in part due to COVID-19’s disruption of the markets, but also because of a change to the government-sponsored enterprises’ capital framework by former Federal Housing Finance Agency Director Mark Calabria, which increased the risk weighting for these securities.