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A note to Scoopers: I know I said Wednesday there probably wouldn't be an edition today. I lied. Too much happened.
In today's edition: how Figure can bring the speed, automation & cost advantages that transformed the HELOC game to RTL/DSCR via its $717M Kiavi acquisition. Plus: what Brian Johnson's CFPB nomination signals for the bureau, an incredibly stupid-but-smart(?) mortgage fraud scheme, a flight from conventional loans, fresh non-QM guideline changes, recruiting battles over small producers, pondering FHA streamline reforms & much more.
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What's On Tap - June 12
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The CFPB May Actually Have a Boss Again 🧑💼
Former CFPB Deputy Director Brian Johnson has been nominated for the top job on a permanent basis, potentially relieving CFPB Hater Russ Vought as acting director. I asked a few agency sources (there aren't many left ☹️) what they thought. Overall, feedback was positive, even optimistic.
“The most encouraging thing is that it appears to be a real pick that will look to operate the bureau (albeit in a more limited fashion) vs. trying to close it,” said one staffer.
The Chopra days of regulation by enforcement action are clearly over. The bigger question is whether the CFPB looks more like it did under Kathy Kraninger or Vought. It’s worth noting that the agency recently updated its website w/ enforcement & supervisory priorities (sorry, LO Comp watchers), but the actual supervisory work hasn’t exactly kicked off yet…
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Mortgage Lenders Hate This One Trick (Because it’s Fraud lol) 🤔
Apparently you can get away w/ mortgage fraud for years by straight up inventing HUD programs b/c the lenders won’t check. FFS.
Richard Cunningham, a former D.C. Housing Authority employee turned developer, last week pleaded guilty to a $15M mortgage fraud scheme. It was uh, pretty crafty, I guess.
Cunningham, who ran Cunningham Real Estate Partners w/ his wife Je’syl, first falsified mortgage statements to make it appear he had more equity than he did. Next, he took genuine HUD Housing Assistance Program lease documents & changed “HAP” to “VAP,” inventing a “Veterans Assistance Payments” program that has never existed. He even forged signatures & falsified rent rolls showing veteran tenants.
Except “VAP,” not “WAP.”
Lenders funded about $12.1M of the $14.9M Cunningham sought. But like, nobody called HUD once to ask, “What is VAP?” Not one?! Incredible. Cunningham will be sentenced on Dec. 4. The DOJ didn’t name the lenders…
Figure is Coming for Hard Money & DSCR 🤑
Figure was hardly the only well-capitalized player interested in acquiring Kiavi. Other overtures were considered but in the end, Figure appeared to be the best fit for future scale & product growth opportunities, sources in the know told The Scoop.
As for why Kiavi was even a seller to begin w/, non-QM lenders told me that the fix-and-flip market is “pretty tough right now” & while Kiavi is the closest thing to a brand name in the space, there were only so many growth opportunities for them solo.
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