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Nonbanks dominate; Blend CEO = $$$; Biden to fire FHFA 😱

By June 24, 2021 No Comments

Nonbanks crushed mortgage lending in 2020

Nonbanks issued more than two-thirds of mortgages in 2020, their highest market share on record. And that shouldn’t come as a surprise.

Nonbank mortgage lenders have been gaining ground (WSJ paywall) on banks for the past decade. These lenders, which don’t take deposits or offer other banking services, have made up more than half of the market since 2016. Seven of the 10 biggest U.S. mortgage lenders were nonbanks at the end of 2020, according to the research firm,

 IMF.

At Rocket Cos.’s Quicken Loans, the nation’s largest mortgage lender, loan volume more than doubled in 2020, compared with an increase of less than 10% at runner-up Wells Fargo.

Yet lenders are preparing for mortgage demand to cool in the coming months, the result of rising interest rates that makes refinancing less attractive for a large number of borrowers. Mortgage originations are expected to fall more than 9% to $3.47 trillion in 2021, according to the Mortgage Bankers Association.


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Blend IPO will make Nima Ghamsari billion$$$, if all goes well

Blend filed for its IPO.

According to the filing, Blend Labs cofounder Nima Ghamsari stands to make a potential $10.9 billion in incentive pay if all goes well.

How does it break down?

Blend’s board of directors has awarded Ghamsari 78.2 million stock options priced at $2.86 a share that vest over a 10-year period, dependent upon the company’s stock skyrocketing in the years after it goes public. 

Ghamsari’s so-called “Founder and Head of Blend Long-Term Performance Award,” revealed in Blend’s S-1 filing on Monday, will begin vesting 15-months after Blend’s IPO with no price hurdle. It will then be awarded in tranches based on increasingly demanding stock price hurdles, which could be worth billions for Ghamsari.

The hot fintech’s IPO will likely be a $3.3B+ valuation for the company and it will trade under the symbol BLND.

The company boasted in its S-1 that its software handles more than $5B of mortgage applications on an average day for Wells Fargo, U.S. Bank, Lennar Mortgage, Opendoor and other clients. All in, BLND had nearly 300 client firms as of Dec. 31, including 31 of America’s top 100 financial firms in terms of assets under management.

“We live in a world where consumers can hail a ride with a few taps on a mobile device or complete a purchase online with a single click of a mouse, yet it still can take weeks to get a loan and require in-person visits to a branch office,” the company wrote in its S-1. “We believe the future of banking will look radically different. … Consumers will be able to glance at their mobile phone and see in an instant everything the bank can do for them, personalized to their specific financial situation. And when a consumer is ready to choose a product, they’ll be able to check out in one tap.”


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Supreme Court rules Biden can fire FHFA head, so he will. Fannie Mae investors claim dismissed

The Supreme Court ruled that the structure of the FHFA, which dictates the activities of Fannie and Freddie, is unconstitutional.

This means the President now has the ability to hire and fire FHFA directors at will. Which several sources say, he did yesterday.

“The President must be able to remove not just officers who disobey his commands but also those he finds ‘negligent and inefficient,’… those who exercise their discretion in a way that is not ‘intelligen[t] or wis[e],’ … those who have ‘different views of policy,’” and “those who come ‘from a competing political party who is dead set against [the President’s] agenda,” the opinion reads.

Additionally, the top court upheld the earlier ruling that investors in Fannie Mae stock, who saw their fortunes wiped out when the firm went into government control, do not have access to remediation. Meaning, they can’t sue to get their investment $$$ back.

“The shareholders’ statutory claim must be dismissed,” the ruling stated. “Where, as here, the FHFA’s challenged actions did not exceed its “powers or functions” “as a conservator,” relief is prohibited.”


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