UWM deploys construction-permanent loans

Michigan-based lender United Wholesale Mortgage (UWM) has introduced a build-permanent loan which covers the cost of building a house and then turns into a permanent mortgage once construction is complete.

Starting Feb. 1, UWM’s single-closing construction loans will be available on eligible 15- and 30-year fixed conventional loans and 7- and 10-year adjustable rate mortgages (ARMs), the Bank announced on Wednesday. Company.

The loan will cover a maximum construction period of 11 months with a one month amendment. It is available for investments, purchases of primary and secondary residences as well as rate/term refinancing.

“The streamlined process and certainty of offering one-time closing new construction loans is unmatched and will allow brokers to be the heroes of builders, real estate agents and contractors, and bring their borrowers into the home of their dreams,” said Mat Ishbia, President and CEO. of UWM, said in a statement.

This type of loan has only one set of closing costs to pay, which reduces the borrower’s overall costs. It also has an interest rate with automatic change if the market improves once construction is complete, as well as a down payment, a full credit report to order, and approval, according to the company.

UWM will allow all parties involved to communicate information throughout the approval process, providing checklists for project and builder approvals.

Once the loan is closed, UWM says it will handle the rest of the process, staying in direct communication with the builder during subsequent draws, as well as subsequent inspections, to confirm the project is on track.

The loan product is the latest offering from UWM, which has stepped up its efforts to increase market share in a squeezed margin environment.

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UWM – who took the original contender’s crown rocket mortgage in the third quarter thanks to its aggressive pricing strategy – also took another big step recently to reduce prices in 2023.

The lender offers a maximum of 40 basis points per loan to its brokers, with full access to 125 basis points, to gain market share.

While mortgage lawyers said the “Control your Price” initiative doesn’t seem to clearly cross the legal line, they raised compliance issues – including the rules that govern loan officer compensation; fair loan; and unfair, deceptive and abusive acts. These areas of compliance fall under the aegis of regulatory bodies such as the Consumer Financial Protection Bureau (CFPB) and the United States Department of Housing and Urban Development (HUD), according to the lawyers.

UWM’s assistant general counsel and chief compliance officer said there was “no unique regulatory risk with this program.”

UWM, which generated $33.5 billion in the third quarter, launched temporary 2-1 and 1-0 buyouts before expanding to jumbo loans and recently announced a fixed fee of $37.35 for reports. credit.

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