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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