More on Firm Behavior in Mortgage Winter

In recent posts, we discussed how some firms are implementing strategies to maintain origination volumes in Mortgage Winter. These include private securitizations and the use of buydowns. A more traditional approach would be direct market subsidies. The larger commercial banks have used various subsidy programs to assist low-income and first-time borrowers for some time, likely in compliance with their CRA obligations. More recently, some nonbanks have stepped up in this area, motivated by maintaining their volumes in a very challenging market.

The ball got rolling back in April when United Wholesale Mortgage (UWM) launched its Conventional One Program, where a borrower with 50 or lower AMI who puts 1% down receives a 2% grant from the bank up to $4,000. In June, Rocket Loans instituted its One+ Program, offering a similar deal but for borrowers with AMI at 80 or lower. Not to be outdone, in July, UWB broadened its program to include borrowers at 80 AMI or less.

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