Fast money: Lenders race to close on home mortgages

In competitive landscape, mortgage companies are promising borrowers cash payments if a loan fails to close in 21 days

National /
Mar.March 27, 2019 03:30 PM

LoanDepot CEO Anthony Hsieh (Credit: iStock)

Mortgage lenders are racing to close on home loans within a few weeks and if they fail to deliver, some borrowers can expect a cash payment.

Chase Home Lending recently announced it will pay borrowers $1,000 if it doesn’t close on a mortgage in 21 days, while Brooklyn-based Eave will offer up to $100,000 if it fails to deliver, according to the Wall Street Journal. This comes amid recent drops in mortgage rates, which have increased demand for these loans.

The race to close is driven by an increasingly competitive mortgage landscape. The majority of mortgages are now provided by nonbank lenders compared to a decade ago when banks took up a much larger market share.

The nonbank lending companies claim they are able to reduce time and costs by using algorithms and software.

LoanDepot, one of the largest nonbank lenders recently announced a new mortgage called the “mello smartloan,” that it can close in eight days, the Journal reported.

The company said in some situations it can avoid the time of going through an in-person appraisal. Instead, in some cases, it is able to get an “appraisal waiver” through Freddie Mac and Fannie Mae.

While nonbank lending platforms appear to provide easier access to getting a mortgage or refinancing, there are potential problems. A paper by researchers from the Federal Reserve Board and UC Berkeley said these alternative lenders could face liquidity risks and have fewer safeguards to protect themselves if borrowers began defaulting on their payments.

[WSJ] — Keith Larsen


Related Articles

arrow_forward_ios
The partially collapsed 12-story Champlain Towers South condo building (Getty)
Inside the tug-of-war over the Surfside condo site’s future
Inside the tug-of-war over the Surfside condo site’s future
 Adam Neumann (Getty, Bal Harbour Florida)
Ex-WeWork CEO Adam Neumann inks $44M deal for Bal Harbour properties
Ex-WeWork CEO Adam Neumann inks $44M deal for Bal Harbour properties
Alex Sapir and Giovanni Fasciano with Arte by Antonio Citterio in Surfside (Photos via Arte by Antonio Citterio/PR Newswire)
Miami penthouse sets cryptocurrency sale record: $22.5M
Miami penthouse sets cryptocurrency sale record: $22.5M
(iStock)
South Florida resi construction starts soar in March
South Florida resi construction starts soar in March
Eden Multifamily heads Jay Massirman and Jay Jacobson with Cypress Equity Investments CEO Michael Sorochinsky (rendering courtesy of MSA Architects)
Eden Multifamily, Cypress Equity score $24M construction loan for Tamarac apartments
Eden Multifamily, Cypress Equity score $24M construction loan for Tamarac apartments
(iStock)
Home prices across globe hit records, prompting worries of bubble
Home prices across globe hit records, prompting worries of bubble
Steven and Beth Millner with One Thousand Ocean (Patrick McMullan/Getty, Google Maps)
Private equity honcho pays $5M for Boca Raton condo
Private equity honcho pays $5M for Boca Raton condo
From left: Jim Cohen, Nancy Corey, Nathan Zeder, Alicia Cervera Lamadrid, Phil Gutman and Mike Pappas (iStock)
South Florida’s pandemic-fueled residential market poised for bull run in 2021
South Florida’s pandemic-fueled residential market poised for bull run in 2021
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...