Spouse of Quicken Loans executive sues AIME’s Anthony Casa for defamation

Theresa Niemiec, wife of Quicken Loans Executive Vice President Austin Niemiec, has filed a defamation lawsuit against Anthony Casa, CEO of the Association of Independent Mortgage Experts, for comments he made about her in a video message that he filmed and sent to her husband and others in the mortgage industry.

The civil complaint, seen by HousingWire, alleges: “On July 2, 2020, while at a social gathering with many people in the vicinity, Casa filmed and then widely distributed and published per se defamatory video clips and drafted and sent per se defamatory text messages directed to Mr. Niemiec wherein Casa disparaged and demeaned Mrs. Niemiec.”

Specifically, the lawsuit alleges that Casa mentioned sexual acts supposedly performed by Mrs. Niemiec and portrays her as “promiscuous and having a lack of chastity and faithfulness.”

The complaint alleges that Casa sent the defamatory video clips and text messages to a number of people in addition to Austin Niemiec. One source told HousingWire that the video was uploaded to YouTube at some point then removed, although HousingWire was not able to see the video on YouTube.

The lawsuit also states that Theresa Niemiec asked for a retraction of the inflammatory statements on July 6, and instead Casa sent an “antagonistic, threatening, mocking and sarcastic” text message to Austin Niemiec on July 7, as well as demeaning follow-up messages. 

In the lawsuit, Theresa Niemiec seeks the following reparations:

  • The immediate publication of a full retraction by Casa to each of the recipients of the defamatory statements by Casa personally publishing a video to each of the recipients wherein he personally makes clear that the each of the defamatory statements was false, untrue and fabricated and issuing a full apology to Theresa Niemiec and her husband without sarcasm or ridicule;
  • Immediately furnishing a list identifying the name and contact information of each recipient of the defamatory statements;
  • An order of judgment in favor of Theresa Niemiec and against Casa as follows:
    • A. Special Damages in an amount in excess of $25,000
    • B. Exemplary damages in an amount in excess of $25,000;
    • C. Interest, costs and attorney fees; and
    • D. Such other and further relief as is appropriate.

Theresa Niemiec’s attorney, Jeffrey Morganroth, told HousingWire: “Mrs. Niemiec filed the lawsuit against Mr. Casa because the conduct spelled out in the complaint is outrageous, disturbing and disgusting. Under no circumstances should the tortuous and unlawful behavior described in the complaint be accepted. To make and circulate malicious, demeaning, misogynistic and wholly untrue statements by videos and text messages about the wife of a leader in your marketplace when you are supposed to be the head of a trade association is inexcusable. 

“Further, when that behavior is pointed out, and demanded to be retracted, to double down with even more hostile, threatening, demeaning and disparaging statements, as described in the complaint, shows a serious lack of character and judgment,” Morganroth said.

When contacted by HousingWire, Casa issued this statement:

“Two and a half years ago, when we created this association, we did it to combat the unfair practices of big banks and to give a voice to the small brokers across the United States. Those brokers have been bullied for years and they needed someone to stand strong and be their voice. It is not news to anyone that I have taken a very combative approach and I did that because we needed to bring attention to what was going on against banks that have a lot more money and resources than we do.

“However, during a heated conversation via text message, I sent some private communications that I understand were inappropriate and hurtful to select parties who previously engaged with me in an equally unprofessional manner.

“I do regret sending these messages and apologize to those hurt by my actions,” Casa continued. “I will own that I let my emotions get the best of me. One of the toughest challenges of leadership is admitting mistakes but more importantly learning and growing from them. What makes me sad is that what I said does not reflect my values and I will address that directly with my team and ensure that all of our members know that my statements do not reflect the values of this association.”

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FHA employs “waterfall method” to expand home retention measures

The Federal Housing Administration announced on Wednesday an expanded menu of its loss mitigation options in succession with the U.S Department of Housing and Urban Development’s eviction prevention and stability toolkit in an effort to help homeowners avoid foreclosure. The FHA’s loss mitigation options employ a “waterfall method” to assess a homeowner’s eligibility if they do not qualify for its COVID-19 National Emergency Standalone Partial Claim.

FHA compared the waterfall method to that of a filter, meaning when homeowners fail to meet the qualifications of servicing interventions they are moved down the waterfall of options as servicers attempt to get the borrower into a sustainable mortgage payment.

“Due to the fact that servicers are facing an unprecedented number of loss mitigation actions on the backside of this, we want to make it as easy for them as possible to get borrowers in a feasible situation on the other side of forbearance,” said HUD official Joe Gormley.

FHA’s COVID-19 home retention waterfall for homeowners who occupy their FHA-insured single-family residences now requires servicers to assess homeowners for the following at or before the end of their forbearance period:

  • The COVID-19 National Emergency Standalone Partial Claim takes all past due mortgage amounts and puts them in a separate, junior lien of up to 30% of the mortgage’s unpaid principal balance. This junior lien is only repayable when the mortgage ends.
  • If a homeowner does not qualify for the COVID-19 Standalone Partial Claim they are directed to the COVID-19 Owner-Occupant Loan Modification. This modifies the rate and term of the existing mortgage.
  • If a homeowner is not eligible for either of the first two solutions, they may be eligible for the COVID-19 Combination Partial Claim and Loan Modification. It allows for the use of a partial claim up to 30% of the unpaid principal balance – any other amounts owed are handled through a mortgage modification.
  • Finally, the COVID-19 FHA HAMP Combination Loan Modification and Partial Claim is for homeowners who are not eligible for any other home retention solution. It reduces the amount of documentation needed to obtain a COVID-19 FHA HAMP Combination Loan Modification and Partial Claim.

As of right now, these options are available for homeowners whose mortgages were current or less than 30 days past due as of March 1, 2020.

Subsequently, the HUD released an eviction prevention and stability toolkit to encourage Public Housing Authorities and House Choice Voucher landlords to prepare and implement strategies that will mitigate economic hardships due to COVID-19 while keeping families in their homes.

“The toolkit is composed of a PHA best practices guide, tenant brochure with tips to avoid eviction, HCV landlord flyer to encourage engagement with tenants before the moratorium expires, and repayment agreement guidance in addition to sample documents to provide increased clarity for landlords and renters utilizing the resources,” Gormley said.

In June, the FHA extended its foreclosure and eviction moratorium through August 31, 2020, and enacted a policy shift aimed at borrowers who met all FHA requirements for a mortgage at the time of closing but were impacted by the pandemic before receiving the FHA’s endorsement for insurance on the loan. 

“As I am sure you’ve read these last couple of weeks, the eviction narrative continues to gain steam. These resources are a means to quell ‘fears’ and show homeowners, renters, landlords and lenders the myriad of options and flexibilities that are available to them,” said HUD official Kasey Lovett.

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HousingStack Phase 2: Transaction Management

HousingStack HW+

HousingStack is a real estate technology landscape that provides a dynamic visual that reflects the rapid changes in the sector. The HousingStack is exclusively for HW+ members. To join the HW+ community, go here.

While leads flow from various sources and opportunities come into focus, things get real as they move to the transaction stage. This is where forms are filled in, agreements get signed, offers turn into contracts and lots and lots of paperwork flies through people’s hands. For any one sale, there could easily be 25 to 40 documents to manage (contracts, disclosures, inspection reports, HOA forms, more disclosures). As such, it’s no surprise that there would be a lot of action around the transaction. 

Scott Petronis
HW+ Columnist

This segment of the HousingStack includes companies that are primarily focused on moving transactions through the process including Digital Forms, Digital Disclosures, eSignatures and Digital Transactions, which generally include Compliance. What’s interesting here is that, although this is where the rubber meets the road in terms of actually generating the commissions that pay for everything, this area has far fewer players than the segments focused on generating all of the leads. Given that tens of millions of leads turn into between 5 million and 6 million transactions every year, it probably makes sense.

Another interesting aspect of this segment is that many MLSs provide solutions here (via vendor partnerships) to offer digital transaction management as a member benefit. Even beyond that, two specific Realtor associations even jumped into the mix with their own solutions. You don’t get deals across the finish line (confidently, securely and within local and state rules and regulations) without a well-managed process and the technology to support it. 

Digital forms

It all starts with local and state forms. It used to all start with paper, then carbon paper. Today the process is a bit more sophisticated. The forms are digital, but they’re still forms. Any brokerage that wants to transact business needs to do so on the approved forms. However, there are very few companies that can provide easy and comprehensive access to those forms digitally due to copyright laws and licensing requirements. While a number of Digital Transaction systems (or transaction management systems) do provide integrated forms access, brokerages rely on a very small handful of companies for forms. 

zipLogix has provided zipForm (or a derivation of it) for about 30 years and truly capitalized on its early relationship with NAR. One of its most formidable competitors was TransactionDesk from Instanet Solutions. Both are now part of LoneWolf Technologies. Another option on this front, Form Simplicity, offers similar services throughout Florida and the U.S. 

While not the sexiest technology, as I mentioned, it all starts with forms. And options here are limited. 

Digital disclosures

With all of the d*** disclosures required in a real estate transaction, you’d think this space would be more crowded. In some states (in particular in one that rhymes with malifornia), the disclosures seem to be more voluminous than the actual contracts. 

Two companies have started to make a dent here, and it’s no surprise that they’re both in California. Disclosures.io, which got its start in 2016, and Glide, which was founded in 2018. Both have a focus on the disclosure side of things but Disclosures.io also provides offer management and activity tracking to provide a level of visibility into the process. 

Neither company covers the entire U.S. as it’s got to be a painstaking process. However, there’s clearly a need to better manage this part of the process and I imagine others will start jumping into this, along with forms in general. 


Even with digital forms, it wasn’t until passage of the Digital Signature Act of 1999 that digital signatures were widely recognized as legal and binding. This paved the way to transforming the process to entirely digital so that documents could be shared, reviewed, commented on, edited, then signed without ever having to go to print. 

Numerous digital signature providers exist today, some wholly focused on the real estate space, but none come to mind more immediately than DocuSign. Started in 2003, the company was already well-positioned to make a massive dent in the eSignature space early on. A $5 million investment by NAR’s Second Century Ventures in 2009 solidified DocuSign’s fate as the dominant player in real estate. It also made NAR about $20 million, based on the sale of stock after DocuSign filed its IPO in 2018. 

Other popular players in this segment include ZorroSign, GoPaperless and HelloSign, which all provide broader eSignature solutions for real estate and beyond. Authentisign, another product of LoneWolf Technologies, is offered exclusively for real estate. 

Digital Transactions

With 22 companies vying for business in this segment, it’s clearly the focal point for technology providers. So it’s no surprise that this is where the action is considering that productive brokerages and agents spend a significant portion of their energy marshaling deals through to close. 

Some transaction management systems provide more functionality than others; for example, some incorporate digital forms, some add in things like agent onboarding and commission management and most include eSignature capabilities. But the main capabilities include an ability to start from a digital form, checklists to manage processes, a way to collaborate and communicate, the ability to manage folders and documents during and after the transaction and some form of compliance and file completion. Each has its own unique way of fulfilling these requirements and some have integrations with other systems making it easier to move data around.

A handful of players dominate this segment with products like TransactionDesk and zipTMS (both owned by Lone Wolf Technologies) being distributed widely by many MLSs. Others like SkySlope (owned by Fidelity National Financial), dotLoop (owned by Zillow) and Brokermint round out the top five players. There are an additional 18 products available including some developed by big names. They include DocuSign Rooms from DocuSign, BackAgent (now owned by PropertyBase) and Paperless Pipeline. Many players have highly localized businesses in specific regions and even states, and the two most recent entrants, Transactly and Offer to Close, also offer transaction coordinators along with technology. In fairness, several others do as well.

Wrapping Up

While there’s been a lot of investment in this area over the years, the most significant moves have been on the acquisition front rather than piles of money flowing into startups. The biggest moves include Lone Wolf Real Estate Technologies (powered by Vista Equity Partners) acquiring both Instanet and zipLogix, Fidelity National Financial buying SkySlope and Zillow picking up dotLoop. And with Docusign making investments here as well, there’s bound to be more news on that front. 

Even with all of the options and the fact that many MLSs offer solutions as a member benefit, there are still tens of thousands of agents not using a digital system for transactions…or at least there were before this COVID-19 pandemic. Perhaps that’s all changed now and it’s no longer a nice-to-have but a need-to-have. One’s thing’s certain, if you’re doing any significant volume and you’re not using digital tools, you need to evaluate your options.

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These housing markets are most vulnerable to pandemic impacts

In a second-quarter report from ATTOM Data Solutions, it was revealed that housing markets most at risk due to the economic impact of COVID-19 are located on the East Coast.

More specifically, 11 suburban counties around New York City, five around Washington, D.C. and four around Baltimore are more at risk, ATTOM said.

Other states stretching from Connecticut to Florida and Illinois were home to 43 of the 50 counties most vulnerable to the economic impact of the pandemic.

“Home sales data from around the country is starting to show that eight years of price gains may be coming to an end amid the economic damage flowing from the virus pandemic,” said Todd Teta, chief product officer at ATTOM, in the report. “It’s still too early to make any definitive calls, but the latest numbers show storm clouds gathering over the market.”

West coast states had fewer counties at risk, ATTOM said.

There are four western counties in California, with none in other West Coast or southwestern states, that are considered at risk.

The only western counties among the top 50 most at risk, according to ATTOM, were Humboldt County, California; Madera County, California; Riverside County, California; and Shasta County, California.

“With this second special report on the potential impact of the pandemic, we see pockets around the country that appear more or less poised to withstand downward pressure on prices and other market conditions,” Teta continued. “Over the next few months, enough data should come in to tell us how things will most likely pan out.”

This new information doesn’t stray too far away from ATTOM’s report in April, explaining that the virus had made 14 of New Jersey’s 21 counties the most vulnerable in the U.S. at the time.

The top 50 most vulnerable markets at the time also included four in New York, three in Connecticut, 10 from Florida, only one in California, zero in other West Coast states and only one in the Southwest.

Although there are more at risk markets, 26 of the 50 least vulnerable counties from among the 406 included in the report in Q2 were in Colorado, Oregon, Texas and Wisconsin.

The largest included Harris County, Texas, where Houston is; Dallas, Tarrant and Collin counties, all located in the Dallas-Fort Worth metro area, and Travis County, Texas, where Austin is.

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What would it take to trigger a housing downturn in the second half of 2020?

At its beginning, the COVID-19 crisis had many consumers and housing professionals alike bracing for a housing crash. And with good reason: We were, and are, facing the biggest health and economic shock in recent modern-day history.  

But what many didn’t account for was that the U.S. housing market was somewhat inoculated against the economic turmoil of the COVID-19 crisis by having great demographics for housing along with long-standing low mortgage rates.

Logan Mohtashami
Logan Mohtashami

U.S. demographics in the years 2008-2019 were too young and too old to generate strong demand for home purchases, and this was one of the reasons we had the weakest housing recovery ever recorded in history, even with low mortgage rates. In fact, MBA purchase applications, adjusted to population, were lowest in 2014, five years into the last expansion with mortgage rates under 5% for most of the cycle.

Today, the rate of growth in purchase applications is faster on a year-over-year basis than before the COVID-19 crisis, and at a higher level than in 2018 and 2019.  For the last four weeks, the rate of growth in purchase applications was +21%, +18%, +15% and +33%, compared to the same weeks last year. This high, double-digit rate of growth is so impressive that it is unlikely to be sustained in the second half of 2020.

HW purchase

As shown by the purchase application data, the housing market had a “V-shaped” recovery.  The housing bears, though, are saying this V-Shape will turn into a W, meaning there will be another significant downturn. Just because the housing bears have been wrong for the last seven to eight years doesn’t mean that they will be wrong this time as well.  

To that point, I thought it would be useful to outline what would need to happen in 2020 in order for there to be a steep downturn in the housing market.

1. Fear of the virus spirals out of control

In the early months of this year when the virus first took hold, many would-be buyers and sellers decided to postpone any housing transaction activities like listing homes and open houses until after virus transmission rates were under control. Some buyers and sellers even canceled their transactions. 

If a resurgence of infections results in a paralyzed market once again, more Americans will skip the home buying or selling process until a vaccine is in play. Keep in mind that purchase application data is about to run into its seasonality time frame where the total volumes will fall. However, as long as we stay flat to positive for the rest of the year we will be ok in 2020. 

2. Desperation selling with no demand to pick up the inventory through 2020

Since the year is more than half over and we have not seen any desperation selling despite the huge shifts in employment, I don’t believe this is likely. Homeowners today are in a much better position to avoid desperate selling. We didn’t have a credit consumer bubble going into this crisis. Homeowners have much more nested equity and better financial profiles. Additionally, forbearance programs are available for homeowners who have lost employment due to the COVID-19 crisis. 

By 2021, we will be able to determine if these forbearance programs have prevented distress, income loss or equity needed selling. Because a lot of homeowners from 2010-2017 have good nested equity and U.S demographics are solid for housing, I do not expect demand to drop dramatically and supply to increase as we experienced during the bubble bust years of 2006 to 2011. 

Due to high unemployment, we will see more foreclosures and short sales then we had before the COVID-19 crisis but because this will be balanced with a decent demand due to better demographics, I don’t expect a nationwide home price crash like many have talked about over the years. 

3. Government tightens lending

The third thing that would need to happen in order for the V-shaped recovery in housing to take a downturn would be for the U.S. government to tighten lending. 

Today, credit is tighter then it was before the COVID-19 crisis, but standards are still liberal for well-qualified buyers. 

In a few interviews this year, I talked about credit getting tighter after the mortgage meltdown in March but this only affected 4.5% to 6.2% of all loans that could have closed before March 9. The Twitter housing bears overplayed the tight credit thesis in an effort to foment fear of a housing collapse, saying that a lot of loans would be affected instead of 6%. 

The housing bears need infection rates to skyrocket, desperate sellers and tighter government standards for lending in order for the U.S. housing market to snatch defeat from the jaws of victory in 2020.

Because homebuying is a process of many steps, the COVID-19 crisis will have an impact on housing for years to come. This is a given.  

It is also a given, however, that we still have over 138,000,000 employed workers – and this is only the non-farm payroll data that represent the majority but not all working Americans. Yes, we have suffered tremendous job losses, but we still have a large working population. We want to get back to having over 160,000,000 people working as we did in February 2020. 

Just remember the existing home sales market needs only 4 million mortgage buyers per year to keep demand stable. As long as purchase application data stay flat to positive on a year-over-year basis, housing should be okay for the second half of the year. In 2021, we will have a new set of variables to deal with.

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Is a foreclosure wave on the horizon?

As COVID-19 swept across the U.S., shutting down businesses and forcing many into unemployment, fear of a foreclosure wave has been rising.

As borrowers came close to defaulting on their loans, rules were set in place that forced servicers to offer forbearance options for all borrowers, even without them having to show evidence of need. And what’s more, Fannie Mae and Freddie Mac each issued a statement Monday, reiterating that borrowers are not required to repay their missed payments all at once when their forbearance period ends.

But as the forbearance periods draw closer to ending in 2021, that has many servicers wondering what to expect from the defaulting borrowers. Is a foreclosure tsunami at hand? One expert argues that it’s not.

CJ Patrick Founder Rick Sharga explains in an upcoming HousingWire Magazine article this economic downturn looks significantly different than what one would expect to see if a foreclosure crisis were looming.

Historically, there’s been a reliable pattern that starts with an economic downturn, followed by rising unemployment, delinquent mortgage payments, defaulted loans and, finally, foreclosures. But COVID-19 disrupted that pattern, stopping a strong economy in its tracks. Unemployment rates went from 50-year lows to record highs virtually overnight, not because of weakness in the economy, but because the government essentially shut the economy down in an effort to limit the spread of the coronavirus.

The unusual nature of this pandemic-induced unemployment is one of the reasons that the normal pattern may not apply this time. Why? Unemployment hit certain industries much harder than others – travel and tourism, hospitality, retail, restaurants and personal services. These are all industries made up of relatively low-earning, hourly wage employees who tend to be renters, not homeowners. According to the U.S. Census Bureau, the homeownership rate for households making less than the median income is about 50%; for households making more than the median income, the homeownership rate is about 80%. Homeownership rates are also lower for young adults, and adults without a college education, both fairly typical traits of employees within the most impacted industries.

In the article, Sharga also talks about why forbearance does not equal foreclosure, why recent and distant history favor a recovery and what could go wrong from here. The full article will be released in the August issue of HW Magazine. Sign up here to get your copy.  

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Mortgage forbearances drop to a two-month low

There are 4.14 million mortgages in forbearance this week, a two-month low, Black Knight said in a report on Friday.

The number dropped by 435,000 from last week – the largest decline of the pandemic, according to the report.

Measured as a share of all mortgages, the forbearance rate fell to 7.8% from 8.6% in the prior week, the report said.

The decline comes as the number of COVID-19 infections spikes to record levels in several of the nation’s largest states, including Texas and California, which could fuel layoffs. Also looming is the July 31 expiration date of the CARES Act’s beefed-up unemployment benefit that could lead to an increase in forbearance requests.

“Recent spikes in COVID-19 around much of the country and the scheduled expiration of expanded unemployment benefits both represent significant uncertainty for the weeks ahead,” said Andy Walden, an economist and director of market research for Black Knight.

About 6% of mortgages backed by Fannie Mae and Freddie Mac are now in forbearance, down from 6.8% last week, the report said. That’s about 1.7 million mortgages with an unpaid principal balance of $354 billion.

About 11.6% of home loans back by the Federal Housing Administration and the Veterans Administration have suspended payments, down from 12.3% last week, Black Knight said. That’s about 1.4 million home loans with an unpaid principal balance of $240 billion, according to the report.

In addition, there are 1.1 million private-market mortgages in forbearance, representing an 8.2% share, down from 9.3% last week, Black Knight said. Private-market mortgages aren’t backed by a government agency or a GSE. They could be jumbo mortgages held by banks or home loans packaged into private-label bonds. The unpaid principal balance for those mortgages is $304 billion.

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[PULSE] Ginnie Mae restricts long-time legitimate business activity of mortgage servicers

Ginnie Mae’s newly imposed restriction on repooling of reperforming forborne loans yet again penalizes servicers acting as essential service providers in the continuing efforts to protect mortgagors facing financial hardship due to COVID-19. 

Let me count some of the ways Ginnie Mae servicers are bearing the brunt of mortgagor forbearance under the CARES Act: no servicing fee income during forbearance of up to a year (and potentially longer should Congress decide its necessary); no relief from advance requirements for the period of such forbearance; no revision of the structural impediments to private financing to fund advances; and no reimbursement for the cost of funds for advances. 

Guest Author
Laurence Platt

Yet, investors in Ginnie Mae securities generally are insulated against the risk of mortgagor forbearance under the CARES Act because they are timely paid on the securities they hold irrespective of borrower or servicer defaults. 

In issuing APM-20-07 on June 29, 2020, Ginnie Mae decided to further protect investors from the potential enhanced prepayment risk resulting from early pool buyouts of forborne loans. This protection, however, comes at the expense of servicers.

By restricting servicers from relying on long-standing, legitimate business activity – early pool buyouts coupled with the repooling of reperforming loans – Ginnie Mae has elected to deem a routine activity as inappropriate because it is unnecessary and, gosh, may produce a profit. 


Under the Ginnie Mae program, servicers (labeled as “issuers”) are required to advance to Ginnie Mae securities holders the regularly scheduled mortgage payments on the underlying pooled mortgage loans backing the securities if the mortgagors do not pay. 

This obligation lasts until the defaulted loan is purchased out of the pool by the servicer or is paid off by either the mortgagor or through mortgage insurance or guaranty proceeds. Backed by the full faith and credit of the federal government, Ginnie Mae guarantees the servicers’ advance obligations to securities holders.

A servicer purchases loans out of pools backing Ginnie Mae securities for one of three reasons:

  1. It may elect to repurchase a loan that is unpaid for three consecutive months or is delinquent for four consecutive months (such as a loan that continues to be one month delinquent for four consecutive months). For this purpose, Ginnie Mae considers a loan in forbearance to be unpaid. Many servicers make this election if they have the funds to do so in order to cease the obligation to advance regularly scheduled mortgagor payments of principal and interest. 
  2. Except with respect to trial modifications, Ginnie Mae prohibits the modification of pooled loans, and, thus, a servicer effectively is required to repurchase a delinquent loan to be modified. 
  3. As a last resort after exhaustion of efforts to cure, Ginnie Mae requires the servicer to repurchase a loan that proves to be ineligible for mortgage insurance or guaranty, since such insurance or guaranty is a statutory requirement for Ginnie Mae to issue guaranteed securities backing a pool of mortgage loans. 

Servicers routinely obtain private financing to fund loan repurchases, referred to as “early pool buyouts,” and the cost of funds on such financing often is lower than the pass-through rate on the securities or the cost of continuing to make advances on the pooled loan.

A modified or delinquent loan that reinstates as a reperforming loan is eligible to be repooled to back newly issued Ginnie Mae mortgage-backed securities. Proceeds from the sale of these securities is the source of funds to repay the early pool buyout financing; depending on the interest rates of the repooled loans relative to current market yields, the sale also may generate secondary market gains.

One way to reinstate a delinquent FHA-insured loan and thereby make it eligible for repooling is through a “stand alone partial claim.” The USDA has a similar concept called a “mortgage recovery advance.” A “partial claim” is a no-interest junior loan secured by the mortgaged property, the proceeds of which are used to bring the loan current.

In the case of COVID-19, no payments by the mortgagor are due on the “stand alone partial claim” until the payoff, maturity or acceleration of the insured mortgage, including for the sale of the mortgaged property, a refinancing or the termination of FHA insurance on the mortgage. 

By using a junior lien, the loan does not need to be modified. Presently, a servicer may accomplish a “stand alone partial claim” or a “mortgage recovery advance” without repurchasing the delinquent loan from the pool, but servicers routinely combine the permissible early buyout of a delinquent loan, a reinstatement through a “stand alone partial claim” or “mortgage recovery advance,” and a repooling of the reperforming loan into newly issued securities.

What did Ginnie Mae do?

Under the new APM, “any Reperforming Loan that entered into forbearance, of any type, regardless of duration, on or after March 1, 2020, and is bought out on or after July 1, 2020, as reflected in the Issuer’s servicing system of record, is ineligible collateral for Ginnie Mae securities backed by any existing pool types.” 

Instead, Ginnie Mae is creating a new pool type to securitize this type of reperforming loan based on a seasoning requirement. First, the borrower under a reperforming loan must have made timely payments for the six months immediately preceding the month in which the associated mortgage-backed securities are issued. Second, the issue date of the mortgage-backed securities must be at least 210 days from the last date the loan was delinquent. This restriction does not apply to modified loans, only reperforming loans.

“Reperforming Loans” are not limited to loans that are reinstated through a “stand alone partial claim” or “mortgage recovery advance.” The term is broadly defined to be a loan that is not more than thirty days delinquent, previously was bought out of a Ginnie Mae pool, and has the same rate and terms as the originally pooled loans.

This means that the new policy prohibits repooling of loans that are reinstated solely as a result of the borrower’s repayment of forborne amounts and resumption of regularly scheduled payments.

Why did Ginnie Mae do it?

The APM only hints at the reason behind Ginnie Mae’s change in position, stating that “Ginnie Mae seeks to ensure that transactional activity related to these options does not impair market confidence in Ginnie Mae securities.” It highlights that FHA’s “Stand Alone Partial Claim” and USDA’s “Mortgage Recovery Advance” do not require pool repurchases unless the terms of the loan require modification. 

Ginnie Mae states that it is implementing the new pooling eligibility restrictions “to ensure that loan buyout activity is aligned with borrower and MBS program interests … while continuing to provide for buyout transactions that are appropriate and necessary.” 

While not expressly stated, the purpose seems to be to prevent any enhanced prepayment risk to Ginnie Mae securities holders resulting from early pool buyouts, which Ginnie Mae correctly notes are not required to effect a “Stand Alone Partial Claim” or “Mortgage Recovery Advance” in order to cause the delinquent loan to be reinstated as a reperforming loan.

What does it mean for issuers?

Simply put, Ginnie Mae is depriving servicers of a long-standing, legitimate, elective business strategy under the Ginnie Mae program apparently because this discretionary activity is not necessary to enable a servicer to cease servicing advances in respect of forbearance. Generating a profit from repooling reperforming loans somehow is viewed as a nefarious activity. 

But perhaps generating a bit of profit from such repooling is a necessary and appropriate survival tool for servicers to offset the costs they bear and the servicing fee income they lose in implementing the CARES Act’s requirements. 

In isolation, insulating investors in Ginnie Mae securities from enhanced prepayment risk relating to forbearance certainly is a worthy public policy goal. When compared to the costs, expenses and lost revenue servicers are bearing in respect of forbearance, one has to wonder whether Ginnie Mae is fairly balancing the interests of servicers and investors.

In this regard, the new restriction is a material adverse change on servicers, which is predicated on neither any legislative change requiring the revision nor any real abuse by servicers that the policy is designed to correct. 

While Ginnie Mae may have the authority to revise the Mortgage-Backed Securities Guide from time to time, servicers have a right to reasonably rely on the basic construct of the program without material adverse changes not grounded in law or abuse. Servicers create, acquire and finance their Ginnie Mae MSRs based on this reasonable expectation.

As a matter of sound public policy, as well as acting in good faith and dealing fairly with its contract counterparties, Ginnie Mae should not unilaterally and materially alter the rights and obligations of issuers in an adverse way without just cause.

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Fewer U.S. tenants paid July’s rent

Multifamily housing saw fewer tenants making their rent payments for July as the COVID-19 pandemic worsened.

According to RealPage and the National Multifamily Housing Council‘s research, 77.4% of renters living in professionally-managed apartments in the U.S. made their rent payment as of July 6. This has ticked down slightly from a year ago when it was 79.7%.

Monthly payments received by July 6 came from 83.5% of residents in Class A properties, the most luxurious apartments, while 81.5% from those living in Class B properties and 68.9% from those living in Class C properties paid July’s rent.

“It is clear that state and federal unemployment assistance benefits have served as a lifeline for renters, making it possible for them to pay their rent,” Doug Bibby, NMHC President said in a statement.

The most significant drop was seen in metro New York, RealPage said. July rent payments came from 59.3% of households as of July 6.

The decline came after New York Gov. Andrew Cuomo extended eviction moratoriums through August, New York protests called for him to extend that period, and Ithaca, New York, announced it was cancelling rent.

COVID-19 hotspots Texas, Florida and Arizona had collection rates of 86%, 85% and 85%, respectively. This is down about three percentage points year over year in these locations.

LendingTree said that 31% of renters said they don’t think they will be able to make next month’s rent payment on time, either. The enhanced unemployment benefits that are part of the CARES Act expire at the end of the month.

“Unfortunately, there is a looming July 31 deadline when that aid ends,” Bibby said. “Without an extension or a direct renter assistance program that NMHC has been calling for since the start of the pandemic, the U.S. could be headed toward historic dislocations of renters and business failures among apartment firms, exacerbating both unemployment and homelessness.”

In June, the share of total rent collected on the first day was 10%. In April and May it was 12%, and in the January through March period it was 16%, according to LeaseLock. The total amount of rent collected by June 6 was 80.8%, NMHC said.

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People movers: Sierra Pacific Mortgage, Premier Sotheby’s International Realty and Proper Title

Sierra Pacific Mortgage has named Jeff Lochmandy as its vice president and divisional sales director for third-party originations.

With over 30 years of experience in the mortgage industry, Lochmandy was previously at HomePoint Financial as its managing director.

“I am energized by the opportunity to provide Sierra Pacific with both the know-how and momentum they’re seeking to become dominant in the wholesale lending channel,” said Lochmandy. “The company is exceptionally positioned to achieve its goals, and I’m glad to be part of that.”

Premier Sotheby’s International Realty has announced the appointment of John Gleeson to the role of senior vice president of development services, responsible for Florida and North Carolina.

Prior to joining Sotheby’s, Gleeson was the vice president of London Bay Homes and spent nearly two decades as an executive at Bonita Bay Group.

“I am excited to be working with one of the most discerning luxury real estate brands, and a talented team led by Budge Huskey,” Gleeson said. “I look forward to overseeing the continued growth of new development business across the company’s dynamic footprint.”

Proper Title has promoted Kathy Kwak to executive vice president and has brought on Zjacobe Snyder as senior escrow officer.

Kwak has 14 years of experience in the real estate industry as an attorney and underwriting counsel. Kwak joined Proper Title in 2017, starting as director of title and making her way to vice president, and now executive vice president.

Snyder is a 25-year veteran of the title industry, most recently spending 12 years as an escrow officer at Fidelity National Title Insurance.

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