Mat Ishbia (pictured), president and CEO of United Wholesale Mortgage (UWM), has greeted news of a new FHFA refinance option for low-income borrowers as a great opportunity for borrowers and brokers. He explained that the program, which offers refinance loans to borrowers earning 80% of area median income (AMI) at 50 basis points lower in fees with appraisal cost coverage up to $500, should drive a nice new wave of refinances to brokers if they market themselves right. He also explained some of the reasons why the FHFA and director Calabria are making a push to expand refinancing options to lower income people and how brokers can take the chance to help more people out.
“Originators, and mortgage brokers specifically, are out there trying to help a lot of consumers,” Ishbia said. “What they have to do is show each consumer that there’s enough benefit for them to refinance. To make it a good deal, you want to offer them the best rate possible. That half point lower eliminates some concerns for the borrower as it drops the actual rate by 12.5 to 15 basis points. If the borrower was at 3.5% and could go to 3.125% because of rates, now they can go to 3%.
“On top of that it gives originators the ability to cover the appraisal for the borrower, knowing they’re going to get reimbursed up to $500 from the lender as well.”
Ishbia believes that this move from the FHFA, taken along with the recent agency restrictions on investment and second-home lending, represent a desire at the FHFA to improve access to homeownership by reaching a segment of borrowers that have been overlooked in recent guidelines. Ishbia noted that these lower-income borrowers might not have been able to participate in the 2020 refi boom. This program now gives originators a chance to find those borrowers, explain the program, and tell them they can make the refi happen without the borrower paying appraisal costs.
Access and eligibility, Ishbia explained, should be very straightforward. If an existing borrower is earning less than 80% of AMI and has a loan of under $300,000, they’re eligible for this price break and free appraisal. He said that when brokers and originators push to offer these loans to their clients as they become available during the summer, UWM is there with marketing support and communications platforms that mortgage pros can avail themselves of.
While this program should incentivize a new spate of refinances, Ishbia doesn’t think it will keep eligible borrowers from moving until the summer. If someone can get a good rate now and is ready to refi, he believes it’s a worthwhile deal for brokers. When the program does come online and likely drives another spike in refinances, Ishbia said that UWM will be ready to keep turnaround times as low as possible.
“There’s a lot of things coming out to help brokers originate loans for consumers that want to refinance or purchase,” Ishbia said. “Brokers should know that UWM is going to be there to support them. We’re going to make sure that brokers have all the tools – from technology, to products, to great pricing – to help more clients who want a product like this from the FHFA. UWM will be one of the first ones to roll this out as soon as it comes.”