The Mortgage Scoop Can't Get a Mortgage

Growing up, I was a bit of a weird kid with niche interests. Not like eating-glue-sticks-and-collecting-dead-bugs weird. More like: while my classmates were sneaking copies of Maxim under their mattresses, I was up late flipping through the duPont Registry, a glossy, expensive magazine w/ hundreds of pages of luxury 💎 home listings from around the world.

I'd walk into the living room & explain to my parents why a particular Mediterranean-style mansion in Boca wouldn’t sell at ask. “Look, it has a dated interior, only a two-car garage & there are better homes nearby — they won’t get $4.8M.” I obsessed over these houses & daydreamed about the day I'd be successful enough to buy one.

Three decades later, I'm married, I have two small kids, & I'm still renting in Brooklyn. Our landlord recently informed us he's selling our 3-unit building & moving to… Florida. My wife has decided it's time we buy a home. There will be no Boca manse, obviously, but homeownership in Brooklyn is finally within reach.

Just two small problems:

Most conventional lenders want to see two years of self-employment income on tax returns. I'm nine months into The Mortgage Scoop (thanks for subscribing!), so my business income won't fly & my wife’s income alone probably wouldn’t qualify us for something that works. We have options down the road, so this is no pity party but there's a certain irony in running The Mortgage Scoop & not being able to land a mortgage myself.

If you've got suggestions, send them my way: [email protected].

Alright, enough about me. Here's what's on tap today: Highlands Residential's pending M&A deal; Mortgage Cadence went from offer letters to layoffs in a matter of days; racial discrimination claims hit Wells Fargo's mortgage division; how Bill Pulte’s much-hyped credit report changes are actually shaking out in the wild; & where LO Comp reform stands.

The buzz in Washington is that it was actually FHFA Director Bill Pulte who called Will Lansing shortly before the press conference to see if the FICO CEO would agree to lower credit costs. 

Lansing reportedly committed to a “99 cent” pull on the phone, but said he’d need a $65 activation fee. Sources said Pulte declined Lansing’s offer, but then hilariously teased his commitment to the 99-cent credit pull in the press conference w/o mentioning the $65 execution fee. 

During the press conference, Pulte also repeatedly stated that rental payments will now be factored in on credit scores for GSE loans. While both VantageScore & FICO 10T do reflect rental payments, Pulte’s statements don’t precisely reflect how it works. 

"There's basically no change in how rental payments are going to help consumers," one D.C. source said. "The number one thing is, it has to be reported on credit to have an effect at all. The second part that nobody's really talking about is that the GSEs have been using it for a long time if it's on the credit report — because they don't use scores to qualify you at all. Fannie's been that way for at least 5 years, Freddie more recently." 

Moreover, though Pulte said VantageScore is available immediately, the GSEs have not yet released pricing grids. Until they do, lenders won’t send VantageScore loans to the GSEs. To boot, the LOSs don’t yet have an option to input two scores so the delivery mechanism isn’t there yet anyway.

Now, getting back to FICO’s counter-offer of sorts, one mortgage executive said it technically complies w/ the 99-cent mandate, but he believes the activation fee kicks it up to roughly ~$200 for a tri-merge since it’s per-bureau. Double that for a co-borrower. The exec noted that the industry uses a standard of roughly 70% joint applications in credit reporting bundles, so that’s somewhere around $280 for bundled pricing of a closed loan on FICO Direct. Add bureau costs & you’re at roughly $500 in credit report costs.

Look, more competition in the space is a good thing. But we’re all still waiting for real substantive change to hit. How much longer will we wait?

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Nonprofit group Americans for Financial Reform says Wells Fargo denied Black, Latino & Asian mortgage applicants roughly 2x as frequently as white applicants, per a study that analyzed almost 25K North Carolina mortgage apps & more than 16K loans at Wells Fargo between ‘20 & ‘24.

“Only 15% of Wells Fargo mortgage applications were from Black (7.2%) or Latino (7.8%) applicants between 2020 and 2024—far below their share of the adult population (20.7% and 8.9%, respectively; 30% in total),” the study says. “Only 13.3% of Wells Fargo’s mortgage loans went to Black (6.4%) and Latino (6.9%) applicants over this period.”

In that 5-year span, Wells Fargo rejected 22.5% of Black applicants, 25.6% of Latino applicants & 20.3% of Asian applicants, though just 10.3% of white applicants were denied. These disparities remained even when adjusted for income.

The study relies on HMDA data, so we don’t know how much the credit scores factored into approvals/denials. Wells Fargo has faced several other racial discrimination cases in home lending over the last decade. 

When PartnerOne officially took control, many employees of Mortgage Cadence were excited for the future. There was a feeling that previous owners Accenture under-invested in the mortgage tech firm. 

The early days under PartnerOne have certainly been dramatic. As I previously reported, a recent RIF affected over 50 U.S. staffers. Some long-term Mortgage Cadence employees received new offer letters shortly after the takeover, which were signed by both parties, & only to get laid off a couple days later, sources said. Those employees were allegedly told they hadn’t worked at the new company long enough to qualify for severance…

Mortgage Cadence said it had no comment. 

Texas-based IMB Highlands Residential Mortgage is working to acquire an IMB. This one, plus an update on LO Comp reforms, is just for paid subscribers.