Correspondent sellers make big gains with inspection-based waivers

For November 2023, GSE originations totaled $47.7BN, down 9.86% on the prior month. For property valuations, $41.1BN (86.1%) closed using appraisals, down 9.56%, and $5.78BN (12.1%) closed utilizing appraisal waivers, also down by 12.35% on the prior month. Lenders closed $845MM (1.77%) with inspection-based waivers, down 7.27% on October 2023.

Overall, inspection-based waivers comprised 12.76% of the combined appraisal waiver (non-appraisal) solutions by loan amount, the highest month in 2023. By number of loans delivered, inspection-based waivers are now 15.8% of all waiver solutions.

Despite lower originations, 460 lenders have now directly delivered loans using the Freddie Mac ACE+ PDR (Automated Collateral Evaluation plus Property Data Report) and Fannie Mae Value Acceptance and Property Data (VA+PD) solutions; out of a total of 1,791 active GSE sellers in 2023. The number of lenders is actually higher due to correspondent sellers taking advantage of the solutions.

Banks, credit unions and IMBs

The Freddie Mac ACE+ PDR market share of inspection-based waivers increased to 54%, with volume up 1% over the prior month. There are now 261 lenders who have delivered loans year-to-date, including 149 independent mortgage companies and 112 banks and credit unions; the number of participants has doubled in the last 3 months.

In contrast, Fannie Mae VA+PD market share reduced to 46% as utilization dropped 15.4% month-over-month. Fannie Mae participation increased slightly for the year with 363 lenders participating, including 172 community banks and credit unions, and 191 non-banks.

In addition to the direct agency sellers we have identified a further 215 out of a total of 618 correspondent sellers who are delivering loans through a correspondent aggregation channel. These lenders are not direct agency sellers and bring the total number of lenders using the solutions to 675 year-to-date.

Correspondent aggregators options growing

Retail channels were 59.96% of inspection-based waivers, with loan delivery shrinking 6.95% to $507M. Mortgage brokers volume reduced 13.2% to 24.8% and $210M delivered. Delivery from correspondent sellers is now 15.26% at $129M, and grew 3% on the prior month. We cover the growing participation of correspondent sellers in a companion article.

Correspondent sellers

In a month with originations declining $5.2BN, a little over 50% of the lenders delivering loans in November increased inspection-based waivers on the prior month. Rocket grew again by 18% to remain the largest participant, with United Wholesale and PennyMac also large contributors. Other notable increases were from NewRez, Amerihome, Prime Lending, Flagstar, Truist and Freedom.

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