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Improving minority lending; Truist buys Service Finance; Floify 😃

By August 12, 2021 No Comments

Two things are happening right now to improve mortgage lending to minorities

OK, so we all know that the current administration is making a big show about increasing home equity levels among all races. But up until now, it’s been just that; All talk.

Now there are two developments that are aimed at increasing mortgage lending to minorities and both come at the challenge in very different ways.

The first way is very straightforward, though it doesn’t directly address race, per se. Instead, it intends “to expand access to credit in a safe and sound manner.”

The Federal Housing Finance Agency announced that Fannie Mae will consider rental payment history in its risk assessment processes. With the update to Fannie Mae's systems, future borrowers will have the benefit of a positive rental payment history being included in an underwriting decision. 

In a statement, the FHFA said there is no additional burden – either for the borrower or for the lender – to make use of this feature.

“For many households, rent is the single largest monthly expense. There is absolutely no reason timely payment of monthly housing expenses shouldn't be included in underwriting calculations,” said FHFA Acting Director Sandra Thompson. “With this update, Fannie Mae is taking another step toward understanding how rental payments can more broadly be included in a credit assessment, providing an additional opportunity for renters to achieve the dream of sustainable homeownership.”​

Thompson is also joining forces with HUD leader Marcia Fudge, who is creating the Property Appraisal and Valuation Equity (PAVE) Task Force, which is intended to combat appraisal discrimination, first, by learning why it exists. This is the second way the administration wants to increase minority homeownership.

The news arrives a month after President Biden addressed the issue at a press conference and ordered Fudge to find a solution to appraisal discrimination.

“To date, homes owned by black families are usually valued at a lower rate than homes owned by white families,” Biden said at a press conference in June.

Over the next six months, the Task Force will investigate the causes and consequences of asset misvaluations and undervaluations.

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Truist lands massive non-bank purchase

Truist formed in December 2019 as the result of the merger of BB&T and SunTrust Banks. And ever since then it’s been on a years-long push into the financial digital technology space, finally leading to its largest non-bank purchase.

The bank announced plans to spend $2 billion to buy Service Finance, a leading national provider of point-of-sale services primarily for the home improvement industry.

“The acquisition of Service Finance expands the scale and capabilities of our wholesale payments businesses, enabling Truist to deliver innovative financing solutions to Service Finance's nationwide network of dealers and serve homeowners across the country,” Mike Maguire, Truist's head of national consumer finance and payments, said in a statement.

Service Finance, based in Boca Raton, Fla., would be merged into Truist's point-of-sale business that includes Sheffield Financial, which focuses on the power equipment, power sports, trailer and other consumer products segments. 

Together, the two groups would serve more than 250 manufacturers, associations and other sponsors spanning 29,000 contractors and dealers. Truist said the combination would give it a significant national presence in the point-of-sale lending sector.

More than 80% of Service Finance's loan applications are completed on its mobile application. Originations are projected to exceed $2.5 billion in 2021 and have grown at approximately 30% annually over the past three years.

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Floify launches product promising to simplify loans for mortgage brokers

Floify just released Floify TPO, the company's new automated loan submission platform that directly supports wholesale lenders and their third-party originators. 

According to Floify, wholesale lenders can use Floify TPO to dramatically improve visibility, communication, and efficiency throughout their TPO channel, resulting in shorter loan cycle times and a dynamic mortgage borrowing experience.

“Building on the success we've experienced from the Floify point-of-sale system, Floify TPO ensures brokers have everything they need to further simplify the loan submission process and stay competitive in today's digital mortgage market,” said Floify CEO Dave Sims in a statement.

Floify's new TPO solution is also packaged with the company's flagship point-of-sale system, which further accelerates the application, document collection and submission process by removing the need for the third-party originator to be involved in file creation.

Floify TPO also equips loan originators with over 70 productivity integrations, which include credit reporting, customer relationship management (CRM), verification of income/employment/assets, mortgage pricing engines, loan origination systems, automated underwriting systems (AUS), e-signature solutions, and more.

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