Fast money: Lenders race to close on home mortgages

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
Photo illustration of Ron DeSantis (Getty, iStock)

DeSantis announces $250M rental, mortgage assistance fund

DeSantis announces $250M rental, mortgage assistance fund
Gov. Ron DeSantis (Credit: Joe Raedle/Getty Images)

Florida extends freeze on evictions and foreclosures to July

Florida extends freeze on evictions and foreclosures to July
Governor Ron DeSantis (Credit: Eva Marie Uzcategui/Getty Images)

Florida governor extends freeze on evictions, foreclosures

Florida governor extends freeze on evictions, foreclosures
Gables Town Colony apartment complex, Sue Ansel of Gables Residential

Gables Residential scores $85M loan for Boca Raton apartment complex

Gables Residential scores $85M loan for Boca Raton apartment complex
Florida Gov. Ron DeSantis (Credit: Joe Raedle/Getty Images)

SoFla prepares for flood of foreclosures and evictions after governor’s freeze

SoFla prepares for flood of foreclosures and evictions after governor’s freeze
Florida Gov. Ron DeSantis (Credit: Joe Raedle/Getty Images)

Florida governor freezes evictions and foreclosures for 45 days

Florida governor freezes evictions and foreclosures for 45 days
South Florida lenders and landlords battle new coronavirus reality

South Florida lenders and landlords battle new coronavirus reality

South Florida lenders and landlords battle new coronavirus reality
From left: Edgardo Defortuna, Stephan Burke, Ron Shuffield, Ana Bozovic, Carol Cassis, and Mark Zilbert

South Florida’s residential sales shift to virtual reality as business slows

South Florida’s residential sales shift to virtual reality as business slows
arrow_forward_ios

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

Loading...