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Why mortgage rates are still high despite the Fed rate cuts

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Mortgage rates have increased as the Fed decreases its benchmark rate, and there are a few drivers behind that trend.

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The calendar has turned to a new year, bringing with it a tricky environment for mortgage borrowers to navigate. Closing out the year on a positive note, mortgage rates fell by a full percentage point after the Federal Reserve delivered three consecutive rate cuts. The moves dropped the federal funds rate — the rate banks charge to lend each other money — from a range of 5.25% to 5.50% in September to 4.25% to 4.50% in December.

Inflation also trended downward in 2024, though the decline wasn’t significant.  A year ago, the annual inflation rate stood at 3.1%, which dipped over the summer and ticked back up in November to settle at 2.7%, according to the latest Consumer Price Index. Mix in a stronger-than-expected jobs report in December, and you can understand the Fed’s decision to cut rates and the potential for lower mortgage rates.

When the Fed cuts rates, it often leads to lower mortgage rates because borrowing costs drop overall. Unfortunately, though, mortgage rates have instead climbed higher since the Fed rate cuts. Here’s why that’s happened.

Compare today’s top mortgage loan rates online now.

Why mortgage rates are still high despite the Fed rate cuts

According to Freddie Mac data, the average rate on a 30-year, fixed-rate mortgage is 7.01% as of January 14, 2025. That’s nearly 1% higher than the 6.09% average rate from September 19, 2024, which was the rate immediately available after the Fed’s first rate cut in over four years. But as experts point out, the Fed’s decisions aren’t the only indicator of where mortgage rates are headed.

“If only it were that simple,” says Sarah DeFlorio, vice president of mortgage banking at William Raveis Mortgage. “The best benchmark for mortgage rates is the ten-year treasury. Yields, unfortunately, are the highest they have been in over a year, and that typically means we will see rates continue to tick up until this settles down.”

DeFlorio also cites inflation concerns from tariffs, global unrest and data showing inflation isn’t yet under control as factors driving market nervousness. 

“Hopefully, as we move through this year, things will settle down, and we will see a meaningful and lasting dip in rates,” DeFlorio says.

Robert Johnson, CEO of Economic Index Associates and professor at Creighton University’s Heider College of Business, also agrees other factors are at play. 

“While Federal Reserve monetary policy is a factor influencing interest rates, it is certainly not the only factor. Fiscal policy, expected trade policy and the strength of the U.S. economy are also factors that influence interest rates. It appears that in the current environment, these other factors are counteracting dovish monetary policy,” Johnson says.

Find the most affordable mortgage loan options for you here.

How the bond market impacts mortgage rates

As mentioned, mortgage rates haven’t fallen in line with the Fed’s rate cuts because they depend on factors beyond the agency’s benchmark rate, such as the economy and 10-year Treasury bond yields. For example, when the 10-year treasury rate goes up, mortgage rates tend to follow, and vice-versa. 

Although treasury bonds and mortgage rates tend to move in similar patterns, they’re not the same. Mortgages come with higher risk, which is why their interest rates have historically been 1.7% to 2.25% higher. On January 9, for example, the average mortgage rate of 6.93% was 2.25% higher than the 10-year Treasury rate of 4.68%. 

These above-average bond rates are one reason mortgage rates remain high. They raise borrowing costs for lenders by increasing the returns investors are looking for on mortgage-backed securities, which lenders then pass on to borrowers.

“Higher yields mean higher rates. Banks are always quick to raise rates when we see these jumps in the market and, of course, much slower to bring them down,” DeFlorio says. 

How soon might mortgage rates start to decline?

It could be a while before mortgage rates drop significantly, at least until the Fed signals they believe inflation is well under control. To better grasp which way rates may be heading, pay attention to inflation, jobs and consumer confidence reports, to gauge economic trends. For now, patience may be necessary.

“I have been saying for a while that it would be late 2025 before we see any noticeably lower rates, and even that may be too early,” says Mason Whitehead, branch manager at Churchill Mortgage. 

Whitehead also notes that mortgage rates in the 6% and 7% range could persist for some time, making it unlikely that waiting will result in significantly lower rates in the near future. 

Still, rates are on par with historical norms, notes Whitehead. 

“The issue is that so many consumers now think that the rates we had in 2020 and 2021 are ‘normal’ and want to ‘wait for rates to drop.’ Historically, a rate in the 6’s is actually very good,” Whitehead says.

The bottom line

Even if mortgage rates aren’t falling as quickly as you may hope, you might reap benefits by buying a home now rather than waiting for rates to fall. If your finances are solid and you can comfortably afford the mortgage and other homeownership costs, buying now could help you lock in your housing costs as rents continue to rise. You might also face less buyer competition — and a lower likelihood of a bidding war — by purchasing now before the housing market heats up.

As the saying goes, “date the rate, marry the house.” If rates fall in the future, you can refinance to take advantage of the lower rate. If you do decide to buy now, compare quotes from several lenders to get the most competitive rate.

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December Mortgage Lock Data Reveals Year-Over-Year Increases Across All Loan Types Despite Seasonal Downturn | U.S.

Optimal Blue’s December 2024 Market Advantage report highlights annual mortgage production gains and record low conforming loan share

PLANO, Texas, Jan. 14, 2025 (SEND2PRESS NEWSWIRE) — Optimal Blue today released its December 2024 Market Advantage mortgage data report, showcasing year-over-year (YoY) growth in mortgage activity, even as seasonal trends led to a month-over-month (MoM) decline in rate lock volumes. Overall, December mortgage lock volume was up 26% YoY, driven by an 18% increase in purchase locks, a 43% rise in cash-out refinances, and an 82% jump in rate-and-term refinances.

“December’s data illustrates how the market can adapt to shifting conditions,” said Brennan O’Connell, director of data solutions at Optimal Blue. “While a seasonal dip was expected, the year-over-year growth reflects resilience and an increasing demand for refinance opportunities driven by rate adjustments. Notably, conforming loan share has hovered around historic lows for the past five months, hitting 51% last month. This trend illustrates how borrowers are relying increasingly on government and non-conforming loans to finance in a challenging market.”

Key findings from the Market Advantage report, derived from direct-source mortgage lock data, include:

  • Rates fluctuate, ending December higher: After initial declines, rates rose throughout the month. The Optimal Blue Mortgage Market Indices (OBMMI) 30-year conforming rate ended December at 6.83%, up 16 bps from the end of November. FHA and VA rates followed suit, rising 14 bps and 18 bps, respectively. Jumbo rates fell slightly, ending just below 7%.
  • Refinance activity spikes: The share of refinance locks climbed to 24%, the highest since September. Rate-and-term refinances surged 33% MoM, while cash-out refinances saw a 3% decline. Purchase volumes dropped 13% MoM, in line with seasonal norms, while cash-out refinances decreased 3%.
  • Production mix shifts continue: The conforming loan share dropped another 1.5% MoM to 51%, the lowest figure since Optimal Blue began reporting lock data in January 2018, marking continued movement away from GSE-eligible products. FHA, VA, and non-conforming loans gained ground, with FHA locks rising to 21%, VA at nearly 11.5%, and non-conforming loans at 16%.
  • Purchase credit quality hits seven-year high: Average homebuyer credit scores were higher each month in 2024 than the previous 72 months.
  • MoM credit trends are stable: Average credit scores for purchase and rate-and-term refinance locks fell by 2 points to 737 and 727, respectively. Cash-out refinance scores rose slightly, increasing by 2 points to 697.
  • Loan amounts plateau as home prices decline: The average loan amount rose by $500 to $376.9K, while average home purchase prices dropped $4.1K to $473.7K.

The full Market Advantage report, which provides more detailed findings and additional insights into U.S. mortgage market trends, can be viewed at: https://www2.optimalblue.com/wp-content/uploads/2025/01/OB_MarketAdvantage_MortgageDataReport_Dec2024.pdf

This month’s Market Advantage podcast features Shant Banosian, executive vice president of sales at Rate, as a guest commentator. Access the podcast: https://market-advantage.captivate.fm/listen.

About the Market Advantage Report

Optimal Blue issues the Market Advantage mortgage data report each month to provide early insight into U.S. mortgage trends. Leveraging lender rate lock data from the Optimal Blue PPE – the mortgage industry’s most widely used product, pricing, and eligibility engine – the Market Advantage provides a view of early-stage origination activity. Unlike self-reported survey data, mortgage lock data is direct-source data that accurately reflects the in-process loans in lenders’ pipelines.

Nothing herein shall be construed as, nor is Optimal Blue providing, any legal, trading, hedging, or financial advice.

About Optimal Blue

Optimal Blue effectively bridges the primary and secondary mortgage markets to deliver the industry’s only end-to-end capital markets platform. The company helps lenders of all sizes and scopes maximize profitability and operate efficiently so they can help American borrowers achieve the dream of homeownership. Through innovative technology, a network of interconnectivity, rich data insights, and expertise gathered over more than 20 years, Optimal Blue is an experienced partner that, in any market environment, allows lenders to optimize their advantage from pricing accuracy to margin protection, and every step in between. To learn more, visit https://OptimalBlue.com/.

NEWS SOURCE: Optimal Blue

Keywords: Mortgage, Optimal Blue Market Advantage report, FHA and VA rates, refinance opportunities driven by rate adjustments, PLANO, Texas

This press release was issued on behalf of the news source (Optimal Blue) who is solely responsibile for its accuracy, by Send2Press® Newswire. Information is believed accurate but not guaranteed. Story ID: S2P123332 APDF15TBLLI

To view the original version, visit: https://www.send2press.com/wire/december-mortgage-lock-data-reveals-year-over-year-increases-across-all-loan-types-despite-seasonal-downturn/

© 2025 Send2Press® Newswire, a press release distribution service, Calif., USA.

Disclaimer: This press release content was not created by nor issued by the Associated Press (AP). Content below is unrelated to this news story.

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Mortgage and refinance rates today, January 14, 2024: Fixed rates go up

Today’s fixed mortgage rates have increased. According to Zillow, the current 30-year fixed mortgage rate has risen by 10 basis points to 6.88%, and the 15-year fixed rate is up nine basis points to 6.16%. Interest rates on adjustable-rate mortgages (ARMs) have mostly decreased — but ARM rates are still similar to or higher than fixed rates right now, so they aren’t necessarily the better deal.

When shopping for a mortgage lender, ask them about which types of home loans you qualify for. For example, you might discover you’re eligible for both a conventional and FHA loan. Then, talk with the loan officer about which would be the better deal for you in the short and long term.

Dig deeper: Best mortgage lenders for first-time home buyers

Here are the current mortgage rates, according to our latest Zillow data:

  • 30-year fixed: 6.88%

  • 20-year fixed: 6.76%

  • 15-year fixed: 6.16%

  • 5/1 ARM: 6.81%

  • 7/1 ARM: 6.98%

  • 30-year VA: 6.36%

  • 15-year VA: 5.75%

  • 5/1 VA: 6.50%

  • 30-year FHA: 6.33%

  • 5/1 FHA: 6.39%

Remember that these are the national averages and rounded to the nearest hundredth.

Read more: How to get the lowest mortgage rates possible

These are the current mortgage refinance rates, according to the latest Zillow data:

  • 30-year fixed: 6.92%

  • 20-year fixed: 6.97%

  • 15-year fixed: 6.19%

  • 5/1 ARM: 6.85%

  • 7/1 ARM: 7.15%

  • 30-year VA: 6.28%

  • 15-year VA: 5.97%

  • 5/1 VA: 6.27%

  • 5/1 FHA: 6.50%

Again, the numbers provided are national averages rounded to the nearest hundredth. Refinance rates are usually higher than purchase rates.

A mortgage calculator can help you see how various mortgage term lengths and interest rates will affect your monthly payments. Use the free Yahoo Finance mortgage calculator to play around with different outcomes.

Our calculator also considers factors like property taxes and homeowners insurance when calculating your estimated monthly mortgage payment. This gives you a better idea of your total monthly payment than if you just looked at mortgage principal and interest.

As a rule of thumb, 15-year mortgage rates are lower than 30-year mortgage rates. When comparing 15- versus 30-year mortgage rates, know that the shorter term will save you money on interest in the long run. However, your monthly payments will be higher because you’re paying off the same loan amount in half the time.

For example, with a $400,000 mortgage with a 30-year term and a 6.88% rate, you’ll make a monthly payment of about $2,629 toward your mortgage principal and interest. As interest accumulates over decades, you’ll end up paying $546,459 in interest.

If you get a $400,000 15-year mortgage with a 6.16% rate, you’ll pay about $3,410 monthly toward your principal and interest. However, you’ll only pay $213,818 in interest over the years.

If that 15-year mortgage monthly payment is too high, remember you can always make extra mortgage payments on your 30-year loan to pay off your mortgage faster and ultimately pay less interest.

With a fixed-rate mortgage, your rate is locked in from day one. However, you will get a new rate if you refinance your mortgage.

An adjustable-rate mortgage keeps your rate the same for a set period of time. Then the rate will go up or down depending on several factors, such as the economy and the maximum amount your rate can change according to your contract. For example, with a 7/1 ARM, your rate would be locked in for the first seven years, then change every year for the remainder of your term.

Adjustable rates sometimes start lower than fixed rates, but once the initial rate-lock period ends, you risk your interest rate going up. ARM rates have also been starting higher than fixed rates recently, so they’re not as good of a deal as usual.

Dig deeper: Adjustable-rate vs. fixed-rate mortgage — Which should you choose?

In 2024, mortgage rates trended downward from early August to the Sept. 18 Federal Reserve meeting, when the central bank announced a 50-basis-point slash to the federal funds rate. Since that announcement, mortgage rates have increased or held steady for the most part.

The Fed decreased its rate again at its November and December meetings (by 25bps each time). The trajectory of future mortgage rates will largely depend on the Federal Reserve’s decision on whether or not to cut the federal funds rate at its 2025 meetings.

When economists expect a Fed rate cut at its upcoming meeting, mortgage interest rates typically decrease ahead of the meeting rather than after. There’s still almost another month until the next Fed meeting, but according to the CME FedWatch tool, it looks likely the fed funds rate will stay the same at the January meeting. This means rates probably won’t significantly drop in the next couple of months.

Dig deeper: How the Federal Reserve rate decision impacts mortgage rates

According to Zillow data, today’s 30-year fixed rate is 6.88%, and the 30-year refinance rate is 6.92%. These are the national averages, so keep in mind the average in your state or city could be different. Your rate will also vary depending on your personal finances.

Mortgage rates will probably gradually drop throughout 2025, but they’re unlikely to plummet anytime soon.

Mortgage rates should go down in 2025, though probably not as drastically as previously expected. Depending on what happens with the economy, inflation, and the Fed, any decreases may be relatively small.

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DOJ opposes tossing of Rocket appraisal bias suit

The Department of Justice is asking a Colorado federal court to reject Rocket Mortgage’s plea to throw out a suit accusing it of appraisal bias.

In a filing, the DOJ lays out a number of arguments to cement the standing of its litigation pegged against the Detroit, Michigan-based lender. The suit claims Rocket relied on an allegedly biased appraisal, which resulted in a borrower having their refinance application tossed.

One of the most notable arguments from the DOJ is its assertion that mortgage lenders do hold accountability for relying on third-party appraisals that are biased.

“Contrary to Rocket’s contention, it cannot escape liability merely because another party was the one who initially acted with discriminatory intent,” the federal agency wrote in a filing Jan.9. 

The DOJ noted that while mortgage lenders cannot “influence an appraiser,” a rule which is codified in the Truth in Lending (TILA) regulation, companies do have the right to request a second appraisal, or ask an appraiser to consider other factors in appraising a property, which Rocket did not do. Law360 first covered the most recent DOJ filing.

“The appraisal independence statute did not require Rocket to use a discriminatory appraisal,” the DOJ added. “As alleged, Rocket could have avoided relying on the discriminatory appraisal by ordering another appraisal from a different appraiser, or by requesting that [Maksym] Mykhailyna consider more appropriate comparable sales.”

Rocket’s interpretation on the matter is entirely different.

In a statement, the mortgage lender, which is also suing the Department of Housing and Urban Development for these claims, said it “categorically disagrees with the government’s response” to its motion to dismiss.

“The facts are clear – as a lender, Rocket Mortgage must remain independent from the appraisal process,” the mortgage lender wrote. “Rocket Mortgage offered our client a path to challenge the appraisal through a value reconsideration process which complies with the law, but she declined to engage in that process on two separate occasions.”

“This is exactly why Rocket Mortgage filed suit against the Department of Housing and Urban Development, to correct the conflicts between the government’s regulations requiring appraiser independence and its enforcement actions seeking to hold lenders liable for the conduct of independent licensed appraisers,” the megalender added in a written statement. HUD first filed a suit against Rocket in July 2024 accusing it, an appraisal management company and an appraiser of discriminating against a Black homeowner four years prior.

Four months later, the DOJ filed a separate suit accusing Rocket, AMC Solidifi and the appraiser of violating the Fair Housing Act. According to the DOJ litigation, Francesca Cheroutes had her Denver home undervalued in 2021 because of her race and Rocket Mortgage canceled her refinance application once she reported this alleged discrimination to the company.

Rocket retaliated with its own litigation filed in December 2024 against HUD, and asked for the DOJ’s case to be dropped. 

The lender argued at the time that the only reason it was included in the case by the government entities was to bring “headlines to their claim.”

“[The] filings highlight the conflict between HUD’s regulations and the DOJ’s enforcement positions,” said Bill Emerson, president of Rocket Companies, in a statement one month prior. “We are looking forward to laying out all the facts of this case in court.”

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20 banks with the largest mortgage subservicing volume in Q3

Enjoy complimentary access to top ideas and insights — selected by our editors.

The top five banks in the list of subservicers had a combined unpaid principal balance of nearly $1.8 trillion at the end of last year’s third quarter. While many subservicers saw a decrease between the second and third quarters, Cornerstone Capital Bank saw an increase of 33.44%.

The data in this ranking came from National Mortgage News’ MortgageStats site, which pulls information from quarterly call reports available from the Federal Financial Institutions Examination Council.

This data reflects the principal balance of subserviced first-lien closed-end mortgages on residential properties with one to four units. It includes participations, and excludes loans in foreclosure at quarter-end.

See which banks were in the top 20 through the end of September.

Banks ranked by servicing value in Q3

Rank Company Q3 servicing value Q2 servicing value Percent change
20 Barrington Bank & Trust $12,123,000,000 $12,076,000,000 0.39%
19 Ameris Bank $13,260,000,000 $12,894,000,000 2.84%
18 Bell Bank $14,169,000,000 $13,768,000,000 2.91%
17 Firstbank of Colorado $14,464,000,000 $14,626,000,000 -1.11%
16 NexBank $15,188,000,000 $15,158,000,000 0.20%
15 Gateway First Bank $16,750,000,000 $16,755,000,000 -0.03%
14 Cornerstone Capital Bank $23,181,000,000 $17,372,000,000 33.44%
13 Arvest Bank $31,329,000,000 $31,332,000,000 -0.01%
12 Huntington National Bank $33,565,000,000 $33,404,000,000 0.48%
11 Citibank $47,664,000,000 $45,887,000,000 3.87%
10 Regions Bank $68,423,000,000 $69,111,000,000 -1.00%
9 Bank of America $77,302,000,000 $79,177,000,000 -2.37%
8 Flagstar Bank $78,840,000,000 $77,308,000,000 1.98%
7 Fifth Third Bank $95,808,000,000 $97,280,000,000 -1.51%
6 Citizens Bank $96,121,000,000 $96,439,000,000 -0.33%
5 PNC Bank $199,955,000,000 $202,828,000,000 -1.42%
4 U.S. Bank $215,286,000,000 $225,780,000,000 -4.65%
3 Truist Bank $221,143,000,000 $208,270,000,000 6.18%
2 Wells Fargo $507,319,000,000 $521,181,000,000 -2.66%
1 JPMorgan Chase $656,113,000,000 $642,763,000,000 2.08%

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Fairway eyes reverse mortgage expansion in 2025

Fairway Independent Mortgage Corporation, a large mortgage lender and a top 10 lender in the reverse mortgage industry, will aim to expand its focus on its reverse mortgage arm in 2025 owing to the efforts of David Lazowski, the company’s new president of national recruiting and growth.

Emboldened by its efforts in the purchase mortgage arena and hoping to replicate it with its use of the Home Equity Conversion Mortgage (HECM) for Purchase (H4P) program, Fairway is seeking to “expand its reverse mortgage channel through aggressive recruiting, strategic partnerships, and […] integration of its forward and reverse businesses,” the company said in an announcement.

Lazowski will collaborate with Fairway’s reverse mortgage leaders including VP of reverse mortgage recruiting Tim Harder and president of reverse mortgage lending Dan Ventura to accomplish these goals, the company said.

“Our forward mortgage success provides an incredible foundation to expand our reverse mortgage business, especially HECM for Purchase,” said Lazowski in a statement. “By recruiting top talent and building meaningful partnerships, we can create seamless connections between forward and reverse channels, empowering both our loan officers and clients.”

This initiative will include new educational efforts and materials aimed at ideal H4P referral partners including real estate agents, homebuilders and financial advisors, the company said. H4P remains a severely underutilized variation of the HECM loan, and the team said it wants to highlight that attribute “and equip loan officers with tools to self-source business effectively and optimize those lead channels,” the company said.

Ventura added that a current lack of awareness can translate into a market opportunity, so long as the company can adequately educate originators while “simplifying messaging,” he said.

Harder said that the company’s recruitment goals will be bolstered by monthly confidential virtual meetings with outside originators who may be seeking to “elevate their reverse business,” he said.

The first such virtual event will take place on Jan. 30, and interested parties can register online.

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Over 400K mortgages may be underinsured for flood risk: CFPB

The Consumer Financial Protection Bureau (CFPB) has found that homeowners facing flooding from rivers and creeks are more likely to be underinsured against flood risk than homeowners in coastal areas, according to a report published on Monday.

The report is based on a sample of mortgage applications from 2018 to 2022, and it examines flood risk in the southeast and central southwest census regions of the United States, according to flood risk data from the Federal Emergency Management Agency (FEMA) and the First Street Foundation.

Through its analysis, the CFPB found that the flood risk exposure of the mortgage market is more extensive and more geographically dispersed than previously understood. In total, the CFPB believes that over 400,000 mortgaged homes may be underinsured for flooding events in the southeast and central southwestern parts of the U.S. alone.

This is due to the National Flood Insurance Program being based off of FEMA’s flood insurance maps, which the CFPB asserts may not capture accurate flood risk exposure.

“Homeowners with a mortgage are therefore likely to be underinsured for flooding if the FEMA flood insurance maps do not accurately measure future flood risk,” the CFPB wrote in a statement.

Additionally, their finding showed that homeowners in coastal areas generally had higher incomes and assets, which the CFPB says suggest that they are the best positioned to recover from flooding.

In contrast, homeowners living near inland waterways, like streams and rivers, are less likely to have other financial resources to draw on to recover from a flood.

Due to these differences, the CFPB says homeowners may have significantly different access to insurance and different financial outcomes based on the source of their flooding risk. Additionally, the CFPB believes that homeowners who may be underinsured are least likely to be able to self-insure and successfully recover from a flooding event.

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Wildfire damage with a reverse mortgage? Here’s what to do

It’s imperative for reverse mortgage borrowers to contact their insurance carrier if their property has been damaged in the ongoing Southern California wildfires, and to let their servicer know of anything that could impact their occupancy of their property due to the terms of Federal Housing Administration (FHA)-backed reverse mortgage loans.

These were the top-line takeaways that reverse mortgage servicing experts and professionals shared with HousingWire’s Reverse Mortgage Daily (RMD) when asked about the essential information that borrowers, and the professionals who serve them, should know right now.

Disaster areas, HUD action

There is an exception for those who live in Presidentially Declared Major Disaster Areas (PDMDAs) according to Jared Skrabala, who oversees servicing and asset management at Reverse Market Insight (RMI).

“HUD does not require servicers to follow separate occupancy requirements for natural disaster victims; however, they do provide some relevant guidance for servicers on properties impacted by a PDMDA,” Skrabala told RMD.

“First and foremost, borrowers should contact their servicer immediately if they are impacted by a natural disaster (either by damage to their property or if they have evacuated their property). The servicer will be able to evaluate the borrower’s circumstances, work with the borrower, and provide specific direction on any next steps.”

Generally, borrowers should reach out to their servicer for “any temporary absences from the property” of more than two months. While the U.S. Department of Housing and Urban Development (HUD) does not provide any separate occupancy requirements for servicers to follow for any borrowers inside a PDMDA; there is guidance in its Single Family Housing Handbook 4000.1.

This guidance “requires servicers to invoke a 90-day moratorium on loans subject to foreclosure,” Skrabala said. “For the loan to qualify for the moratorium, the loan must be called due and payable for reasons other than death of the last remaining borrower and the loan cannot be subject to a deferral period.” This means that non-borrowing occupants that do not qualify for a deferral period would also “not be subject to a foreclosure moratorium,” he added.

“HUD also provides a 90-day extension for all servicing deadlines, including deadlines to request due and payable of a HECM loan which includes cases where a borrower has failed to primarily occupy the property or failed to return their annual occupancy certificate timely (which may have been caused or delayed due to the natural disaster),” he said.

HUD announced on Friday that the 90-day HECM extension, along with other mortgage relief, is now in effect from President Joe Biden’s disaster declaration on Jan. 8.

A servicer could still conceivably request a HECM loan be accelerated to due and payable status since a moratorium only applies to those loans already in that state, but “only provides an extension of time for the servicer to request due and payable approval without falling out of compliance with these due and payable requirements,” Skrabala noted.

This means that it is “critical for borrowers to communicate with their servicer when they are impacted by a natural disaster,” he said. “The servicer will be in the best position possible to work directly with the borrower and avoid acceleration of the loan to due and payable.”

Steps to take

Gail Balettie and Jory Kelly of reverse mortgage servicer Celink explained some of the resources for impacted borrowers, including several action items. But the company is also emphasizing the human cost and impact of the devastation being seen in the Los Angeles area, Balettie said.

“We want to express our concern for the well-being of those residents,” Balettie told RMD. “Our thoughts and prayers are with all of those impacted communities. We are ready to assist borrowers; our call center team has been updated on this disaster.”

At the top of the list is to “contact your insurance carrier if there is damage to your property,” the pair said. “This will start the insurance claim process and they will perform a damage assessment. Take pictures of the damage, if possible.”

Then, notify the loan servicer and “provide them with a copy of all damage assessments, claim adjuster’s worksheets and inspection reports.” Borrowers are then advised to contact the Federal Emergency Management Agency (FEMA) to register for assistance, which can be done online or over the phone. Insurance policy coverage can vary, but there may be resources available to borrowers through FEMA “or other organizations for assistance not covered by your insurance,” the pair said.

Following an insurance damage assessment, they may issue a claim check to both the reverse mortgage borrower and the servicer. “You will likely need to endorse the check and send it to your mortgage servicer,” they said.

Bad actors already go out of their way to target older homeowners, and may see an opportunity to exploit this crisis, according to the Celink representatives and other industry professionals who spoke with RMD.

“When making repairs, be cautious. Home repair scams and price gouging often increase when a natural disaster hits,” Balettie and Kelly said. “Get multiple bids, in writing, from established contractors with a physical address and be wary of unusually low bids. Ask for references from satisfied customers. Avoid paying contractors in cash with no paper trail.”

This caution was also echoed by George Morales, a longtime reverse mortgage professional who resides within the impacted area.

“Unfortunately, our older homeowners may have a propensity to be targeted more by scammers,” Morales said. “That’s been on my mind thinking about older homeowners in this area, particularly because my parents were reverse mortgage customers here before they passed.”

See more of our California wildfire coverage here.

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HUD settles with PHH over alleged mortgage payment fees that violated FHA rules

The U.S. Department of Housing and Urban Development (HUD) on Monday announced that it has reached a settlement with PHH Mortgage Corp., a division of the Onity Group, over the alleged imposition of fees for borrowers making payments on their mortgages, which is in violation of Federal Housing Administration (FHA) requirements.

Describing the settlement as “historic,” HUD said in a statement that it “provides the largest reimbursement amount to the most FHA borrowers in HUD’s history.”

“One of the most sacred responsibilities we have at HUD is to ensure inclusive and fair access to housing for all, which includes protecting families with FHA mortgage payments from junk fees,” HUD acting secretary Adrianne Todman said. “This settlement serves as a reminder that HUD will always hold FHA mortgage companies accountable to ensure the people we serve are treated fairly.”

HousingWire reached out to representatives of PHH but did not receive an immediate response.

The settlement does not constitute an admission of fault by either party, HUD explained. It settles allegations that PHH charged fees to borrowers at the time they made a mortgage payment — either over the phone through a representative or through an interactive voice system, or online if the borrower was not enrolled in PHH’s paperless statement program.

“These required payments are sometimes referred to as ‘pay-to-pay’ or ‘convenience’ fees,” HUD said. “Charging these ‘convenience fees’ violates FHA requirements because accepting and processing mortgage payments is considered part of a mortgagee’s ordinary servicing activities for which it is already paid. Therefore, charging a borrower such additional fees is prohibited absent explicit HUD approval — which PHH never sought or obtained.”

The total payout of about $3.7 million will provide restitution to “approximately 51,500 borrowers for 490,000 transactions between May 2021 and February 2023, when PHH ceased charging these fees,” HUD said. Included in the total is $245,000 that PHH will pay HUD for administrative expenses.

“Eligible borrowers who were charged these improper fees will automatically receive either credit to their mortgage account or a check if they no longer have a mortgage serviced by PHH,” HUD explained.

The settlement is part of a broader Biden administration priority to tackle so-called “junk fees” across the financial services industry. HUD added that it “has identified multiple other mortgage servicers that may have charged borrowers fees similar to the PHH fees, and the Department is pursuing reimbursement for those borrowers as well.”

The inauguration of President-elect Donald Trump next week may change some of HUD’s regulatory and enforcement priorities. Trump’s nominee to lead the agency, Scott Turner, will have his Senate confirmation hearing on Thursday, where he will field questions from Democratic and Republican lawmakers.

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What Happens To Your Mortgage After Disaster?

The L.A. wildfires have ravaged countless residential homes, leaving entire neighborhoods all but gone. If your home is damaged as a result of a natural disaster, you’re still responsible for paying your mortgage — even if the structure is uninhabitable or completely destroyed. Once you and your family are safely out of harm’s way, take these steps to set up payment relief.

Mortgage relief after natural disaster

Whether your home was completely lost or sustained damage in the Southern California wildfires, contact your mortgage servicer as soon as possible to learn about assistance or relief options. The servicer is the company you make your monthly payments to, and might or might not be the same as the lender you applied with to get the loan.

If you don’t know your servicer, try searching Fannie Mae’s lookup tool or Freddie Mac’s lookup tool. Alternatively, you can try calling Mortgage Electronic Registration Systems (MERS) at 888-679-6377 or visiting the MERS website. This method requires more detailed knowledge of your loan, however, which you might not have access to if loan documents were destroyed.

In natural disasters, servicers typically offer forbearance, a temporary pause in payments during which you won’t have to pay late fees or risk foreclosure, for up to 12 months. 

You might learn that your servicer proactively extended you forbearance if your home was in an affected area. Generally, this automatic forbearance lasts three months. 

No matter what, do not stop making payments without contacting your servicer. Without a forbearance agreement in place, your credit could suffer, you could be charged late fees and you risk foreclosure.

What happens when disaster forbearance ends?

Depending on your servicer, you might have to repay what you missed in one lump sum, over time in a payment plan or by some other arrangement. You might also be eligible for a loan modification to make your mortgage more affordable moving forward. Make sure you understand what repayment rules and options apply to your situation.

What if you were buying or selling a home?

If you were in the process of buying or selling a home, review the purchase agreement for an “act of God” or force majeure clause. Depending on the contract, you might be able to get your earnest money refunded if you were the buyer, for example.

You might have already heard from your real estate agent, loan officer or settlement agent regarding closing delays or cancellations. If the property was damaged, it might need to be reappraised, or the sale might be off completely. Likewise, the closing date could be delayed if there’s a power outage, a hold on new homeowners insurance policies or office closures. 

Be wary of scammers in these interactions — they often act in the wake of natural disaster. If you receive an email from your settlement agent, call the agent first to confirm the email is legitimate. Do not wire any funds without taking this step.

What to do if you lost mortgage documents

If you lost mortgage documents in a disaster and don’t have a digital record, contact your mortgage servicer to request copies. For documents like your house deed, you might need to reach out to your county assessor’s office or deed registry. For homeowners insurance policies, contact your insurance provider directly. 

More resources for homeowners affected by natural disaster