Enact postpones IPO
Sigh. This is one time we aren’t happy with correctly calling something. Here at Rise&Shred we often point to how mortgage money markets perform (stocks, bonds) as an indicator of the liquidity levels in the industry (Remember, the credit crisis started as a liquidity lock!).
Earlier this week we mentioned the “mortgage market was losing steam” and we pointed to the fact that the Genworth-spin-off mortgage insurer Enact’s looming IPO would be “entering a very competitive and unstable market.”
Yesterday, Genworth came to its senses.
Genworth decided to postpone the planned initial public offering of its mortgage insurer Enact Holdings citing trading volatility in that sector.
“In light of the recent significant trading volatility in the mortgage insurance (MI) sector, Genworth's Board of Directors determined that current market pricing for the planned offering does not accurately reflect Enact's value,” Genworth Chief Executive Tom McInerney said in a statement. “Therefore, we have decided to postpone the IPO and will continue to evaluate our options as market conditions develop.”
The company remains positive on its long-term outlook for the mortgage insurance sector given strong trends in the U.S. housing market, and expects further tailwinds as the economy recovers from the coronavirus pandemic, he added.
Genworth has sufficient liquidity to meet near-term needs and is not dependent on the IPO, he said.
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Rocket falls hard on news it is under investigation for securities violations
Speaking of hard times, Rocket is the subject of an investigation by a shareholder-rights firm.
Labaton Sucharow said it is investigating alleged “potential securities violations and breach of fiduciary duty claims” against Detroit-based real estate mortgage company Rocket Companies.
Rocket also reported that closed loan origination volume fell quarter-over-quarter and it forecast a further decline in the second quarter.
Both are causing this to happen to the company’s value.
Interestingly enough, United Wholesale CEO Mat Ishbia was asked about competition from Rocket on a call with investors and analysts.
“I think I heard you mention you're doing more same-store business with your broker customers now with that sharper pricing changes. But historically, when you ease back on those pricing incentives after a competitive period, how much of that market share do you end up keeping?” asked Michael Kaye an analyst at Wells Fargo.
“…quite honestly, a couple of the brokers that did [not] go all in with UWM, that stayed with Fairway and Rocket were interestingly the refi shops that are — have very low comp, very low refis. Their business has fallen off consistently because that's all they sell,” Ishbia said.
“People that only sell rate will not win in any mortgage market, whether you're a retail, wholesale, anybody. You have to sell value, and our value is technology. Our value is service. Our value is partnership. And yes, our value is having a competitive price, and our brokers know that,” he added.
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ATTOM: Home equity keeps growing and growing and growing
The count of equity-rich properties in the first quarter of 2021 represented 31.9 percent, or about one in three, of the 55.8 million mortgaged homes in the United States, according to ATTOM Data Solutions.
That was up from 30.2 percent in the fourth quarter of 2020, 28.3 percent in the third quarter and 26.5 percent in the first quarter of 2020 – one of many measures showing how the U.S. housing market continues fending off economic damagecaused by the worldwide Coronavirus pandemic.
“The ongoing price spikes we’re seeing help to cut down the number of seriously underwater properties and boost the level of
equity-rich properties,” said Todd Teta, chief product officer with ATTOM Data Solutions.
“However, that may shift once the foreclosure moratorium is lifted and that’s something we’re watching, partly because it could limit equity gains and draw people underwater,” Teta said. “For now, though, the equity picture remains one of many signs that the long U.S. housing market boom keeps charging ahead.”
The recent report also shows that just 2.6 million, or one in 21, mortgaged homes in the first quarter of 2021 were considered seriously underwater, with a combined estimated balance of loans secured by the property at least 25 percent more than the property’s estimated market value.
That figure represented 4.7 percent of all U.S. properties with a mortgage, down from 5.4 percent in the prior quarter, 6 percent in the third quarter of 2020 and 6.6 percent a year ago.
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